Employers have increasingly been including arbitration agreements in their contracts with their workers. These clauses require the worker to give up any right to sue their employer in court, instead of requiring them to pursue all legal disputes in arbitration, where employers have significant advantages over their workers.
Because arbitration was initially designed as a way to resolve disputes between businesses, it was not set up to handle classes of plaintiffs, and as a result, most people tend to interpret arbitration clauses as automatically banning class arbitration.
But a new data breach lawsuit filed against Lamps Plus alleges employees should be able to file class arbitrations, as long as the arbitration agreement does not specifically ban class arbitration.
The case involves a class of workers who are attempting to sue Lamps Plus for allegedly failing to properly secure their IRS information, which was stolen in a data breach. The case went before the U.S. District Court for the Central District of California, wherein the company tried to have the case moved to arbitration, but the plaintiffs claimed the arbitration agreement was invalid and asked to be certified as a class. The court partially ruled in favor of Lamps Plus by agreeing to enforce the arbitration agreement, but it also ruled that the case could go forward as a class arbitration.
The decision was appealed to the Ninth Circuit Court of Appeals, which agreed with the lower court to enforce the arbitration agreement, but on a class basis. That decision was further appealed to the U.S. Supreme Court, which has agreed to consider the case. Continue reading