Case of the Day: Lamps Plus v. Varela
The case of the day is Lamps Plus, Inc. v. Varela (S. Ct. 2019). A hacker tricked Lamps Plus into disclosing tax information of more than a thousand employees. One of the employees, Frank Varela, was the victim of identity theft when someone using his information filed a fraudulent tax return in his name. Varela sued on behalf of a purported class of similarly situated Lamps Plus employees. Lamps Plus moved to compel arbitration on the grounds that Varela’s employment contract had an arbitration clause. The motion also sought an order requiring Varela to arbitrate his claim on an individual basis rather than a class basis. The District Court granted the motion to compel arbitration but denied the motion to require individual rather than class arbitration, and the Ninth Circuit affirmed. The Ninth Circuit held that the agreement to arbitrate was ambiguous under California law, and it applied the California rule of construction contra proferentem to hold that Varela could arbitrate his claims on behalf of a class. The Supreme Court granted a petition for cert. (more…)