Ambiguity Cannot Support Arbitration for Employee Class
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Ambiguity Cannot Support Arbitration for Employee Class

An employee filed a class action against his employer for mishandling of his, and about 1,300 other employees’, tax information which had been compromised and used to file fraudulent federal income tax returns. The employer sought to compel individual arbitration based on an arbitration agreement in the named plaintiff’s employment contract. The trial court compelled arbitration, but held that the agreement was ambiguous as to whether class arbitration was available therefore it was free to compel arbitration on a classwide basis. Relying on the rules of construction, the Ninth Circuit affirmed stating under California law the ambiguous agreement should be construed against the drafter and in favor the employee’s construction to allow class arbitration. Handing a win to the employer, the U.S. Supreme court held under the Federal Arbitration Act an ambiguous agreement cannot provide the necessary contractual basis for concluding that the parties agreed to submit to class arbitration.

Lamps Plus Inc v Varela