In a 5 to 4 decision, the Supreme Court ruled April 24th that workers do not have a right to class arbitration unless their employment agreements specifically guarantee it.
In 2016, California-based company Lamps Plus mistakenly disclosed the tax information of about 1,300 employees to a hacker. Lamps Plus employee Frank Varela later discovered that somebody had filed a fraudulent federal income tax return in his name. He decided to file suit against Lamps Plus in federal court on behalf of himself and others who had their tax information stolen.
Varela had signed an arbitration agreement when he was hired, and therefore the court redirected the case to be handled through arbitration – but maintained that the case could proceed as a class. The U.S. Court of Appeals for the 9th Circuit agreed, citing that the arbitration agreement did not mention class arbitration one way or the other.
Chief Justice John Roberts and the majority disagreed and found that in order for the parties to class arbitrate, an explicit allowance must be included in the original employment contract.
Dissenters argued that Lamps Plus had the opportunity to include a clause prohibiting class arbitration but did not do so. This decision is another win for powerful corporations seeking to insulate themselves from legal accountability to individuals.
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