Lamps Plus, Inc. v. Varela

(Slip Opinion) OCTOBER TERM, 2018 1

Syllabus

NOTE: Where it is feasible, a syllabus (headnote) will be released, as is

being done in connection with this case, at the time the opinion is issued.

The syllabus constitutes no part of the opinion of the Court but has been

prepared by the Reporter of Decisions for the convenience of the reader.

See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337.

SUPREME COURT OF THE UNITED STATES

Syllabus

LAMPS PLUS, INC., ET AL. v. VARELA

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR

THE NINTH CIRCUIT

No. 17–988. Argued October 29, 2018—Decided April 24, 2019

In 2016, a hacker tricked an employee of petitioner Lamps Plus, Inc.,

into disclosing tax information of about 1,300 company employees.

After a fraudulent federal income tax return was filed in the name of

respondent Frank Varela, a Lamps Plus employee, Varela filed a pu-

tative class action against Lamps Plus in Federal District Court on

behalf of employees whose information had been compromised. Rely-

ing on the arbitration agreement in Varela’s employment contract,

Lamps Plus sought to compel arbitration—on an individual rather

than a classwide basis—and to dismiss the suit. The District Court

rejected the individual arbitration request, but authorized class arbi-

tration and dismissed Varela’s claims. Lamps Plus appealed, arguing

that the District Court erred by compelling class arbitration, but the

Ninth Circuit affirmed. This Court had held in Stolt-Nielsen S. A. v.

AnimalFeeds Int’l Corp., 559 U. S. 662, that a court may not compel

classwide arbitration when an agreement is silent on the availability

of such arbitration. The Ninth Circuit ruled that Stolt-Nielsen was

not controlling because the agreement in this case was ambiguous ra-

ther than silent on the issue of class arbitration.

Held:

1. This Court has jurisdiction. An order that both compels arbitra-

tion and dismisses the underlying claims qualifies as “a final decision

with respect to an arbitration” within the meaning of 9 U. S. C.

§16(a)(3), the jurisdictional provision on which Lamps Plus relies.

See Green Tree Financial Corp.-Ala. v. Randolph, 531 U. S. 79, 89.

Varela attempts to distinguish Randolph on the ground that the ap-

peal here was taken by the party who had already secured the relief

it requested, i.e., Lamps Plus had already obtained an order dismiss-

ing the claim and compelling arbitration. But Lamps Plus did not se-

2 LAMPS PLUS, INC. v. VARELA

Syllabus

cure the relief it requested, since it sought individual rather than

class arbitration. The shift from individual to class arbitration is a

“fundamental” change, Stolt-Nielsen, 559 U. S., at 686, that “sacrific-

es the principal advantage of arbitration” and “greatly increases risks

to defendants,” AT&T Mobility LLC v. Concepcion, 563 U. S. 333,

348, 350. Avoiding these consequences gives Lamps Plus the “neces-

sary personal stake” to appeal. Camreta v. Greene, 563 U. S. 692,

702. Pp. 3–5.

2. 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. Pp. 5–12.

(a) “Arbitration is strictly a matter of consent,” Granite Rock Co.

v. Teamsters, 561 U. S. 287, 299 (internal quotation marks omitted),

and the task for courts and arbitrators is “to give effect to the intent

of the parties,” Stolt-Nielsen, 559 U. S., 684. In carrying out that re-

sponsibility, it is important to recognize the “fundamental” difference

between class arbitration and the individualized form of arbitration

envisioned by the FAA. Class arbitration “sacrifices the principal ad-

vantage of arbitration—its informality—and makes the process slow-

er, more costly, and more likely to generate procedural morass than

final judgment.” Concepcion, 563 U. S., at 348. Because of such “cru-

cial differences,” Stolt-Nielsen, 559 U. S., at 687, this Court has held

that courts may not infer consent to participate in class arbitration

absent an affirmative “contractual basis for concluding that the party

agreed to do so,” id., at 684. Silence is not enough. Id., at 687. That

reasoning controls here. Like silence, ambiguity does not provide a

sufficient basis to conclude that parties to an arbitration agreement

agreed to “sacrifice[ ] the principal advantage of arbitration.” Con-

cepcion, 563 U. S., at 348. This conclusion aligns with the Court’s re-

fusal to infer consent when it comes to other fundamental arbitration

questions. See, e.g., First Options of Chicago, Inc. v. Kaplan, 514

U. S. 938, 945. Pp. 6–9.

(b) The Ninth Circuit’s contrary conclusion was based on the

state law contra proferentem doctrine, which counsels that contractu-

al ambiguities should be construed against the drafter. That default

rule is based on public policy considerations and seeks ends other

than the intent of the parties. Such an approach is flatly inconsistent

with “the foundational FAA principle that arbitration is a matter of

consent.” Stolt-Nielsen, 559 U. S., at 684. Varela claims that the rule

is nondiscriminatory and gives equal treatment to arbitration agree-

ments and other contracts alike, but an equal treatment principle

cannot save from preemption general rules “that target arbitration

either by name or by more subtle methods, such as by ‘interfer[ing]

with fundamental attributes of arbitration,’ ” Epic Systems Corp. v.

Cite as: 587 U. S. ____ (2019) 3

Syllabus

Lewis, 584 U. S. ___, ___. This conclusion is consistent with the

Court’s precedents holding that the FAA provides the default rule for

resolving certain ambiguities in arbitration agreements. See, e.g.,

Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U. S.

614, 626. Pp. 9–12.

701 Fed. Appx. 670, reversed and remanded.

ROBERTS, C. J., delivered the opinion of the Court, in which THOMAS,

ALITO, GORSUCH, and KAVANAUGH, JJ., joined. THOMAS, J., filed a con-

curring opinion. GINSBURG, J., filed a dissenting opinion, in which

BREYER and SOTOMAYOR, JJ., joined. BREYER, J., and SOTOMAYOR, J.,

filed dissenting opinions. KAGAN, J., filed a dissenting opinion, in

which GINSBURG and BREYER, JJ., joined, and in which SOTOMAYOR, J.,

joined as to Part II.

Cite as: 587 U. S. ____ (2019) 1

Opinion of the Court

NOTICE: This opinion is subject to formal revision before publication in the

preliminary print of the United States Reports. Readers are requested to

notify the Reporter of Decisions, Supreme Court of the United States, Wash-

ington, D. C. 20543, of any typographical or other formal errors, in order

that corrections may be made before the preliminary print goes to press.

SUPREME COURT OF THE UNITED STATES

_________________

No. 17–988

_________________

LAMPS PLUS, INC., ET AL., PETITIONERS v.

FRANK VARELA

ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF

APPEALS FOR THE NINTH CIRCUIT

[April 24, 2019]

CHIEF JUSTICE ROBERTS delivered the opinion of the

Court.

The Federal Arbitration Act requires courts to enforce

covered arbitration agreements according to their terms.

See 9 U. S. C. §2. In Stolt-Nielsen S. A. v. AnimalFeeds

Int’l Corp., 559 U. S. 662 (2010), we held that a court may

not compel arbitration on a classwide basis when an

agreement is “silent” on the availability of such arbitra-

tion. Because class arbitration fundamentally changes the

nature of the “traditional individualized arbitration”

envisioned by the FAA, Epic Systems Corp. v. Lewis, 584

U. S. ___, ___ (2018) (slip op., at 8), “a party may not be

compelled under the FAA to submit to class arbitration

unless there is a contractual basis for concluding that the

party agreed to do so,” Stolt-Nielsen, 559 U. S., at 684

(emphasis in original). We now consider whether the FAA

similarly bars an order requiring class arbitration when

an agreement is not silent, but rather “ambiguous” about

the availability of such arbitration.

I

Petitioner Lamps Plus is a company that sells light

2 LAMPS PLUS, INC. v. VARELA

Opinion of the Court

fixtures and related products. In 2016, a hacker imper-

sonating a company official tricked a Lamps Plus em-

ployee into disclosing the tax information of approximately

1,300 other employees. Soon after, a fraudulent federal

income tax return was filed in the name of Frank Varela,

a Lamps Plus employee and respondent here.

Like most Lamps Plus employees, Varela had signed an

arbitration agreement when he started work at the com-

pany. But after the data breach, he sued Lamps Plus in

Federal District Court in California, bringing state and

federal claims on behalf of a putative class of employees

whose tax information had been compromised. Lamps

Plus moved to compel arbitration on an individual rather

than classwide basis, and to dismiss the lawsuit. In a

single order, the District Court granted the motion to

compel arbitration and dismissed Varela’s claims without

prejudice. But the court rejected Lamps Plus’s request for

individual arbitration, instead authorizing arbitration on

a classwide basis. Lamps Plus appealed the order, argu-

ing that the court erred by compelling class arbitration.

The Ninth Circuit affirmed. 701 Fed. Appx. 670 (2017).

The court acknowledged that Stolt-Nielsen prohibits forc-

ing a party “to submit to class arbitration unless there is a

contractual basis for concluding that the party agreed to

do so” and that Varela’s agreement “include[d] no express

mention of class proceedings.” 701 Fed. Appx., at 672.

But that did not end the inquiry, the court reasoned,

because the fact that the agreement “does not expressly

refer to class arbitration is not the ‘silence’ contemplated

in Stolt-Nielsen.” Ibid. In Stolt-Nielsen, the parties had

stipulated that their agreement was silent about class

arbitration. Because there was no such stipulation here,

the court concluded that Stolt-Nielsen was not controlling.

The Ninth Circuit then determined that the agreement

was ambiguous on the issue of class arbitration. On the

one hand, as Lamps Plus argued, certain phrases in the

Cite as: 587 U. S. ____ (2019) 3

Opinion of the Court

agreement seemed to contemplate “purely binary claims.”

Ibid. At the same time, as Varela asserted, other phrases

were capacious enough to include class arbitration, such

as one stating that “arbitration shall be in lieu of any and

all lawsuits or other civil legal proceedings relating to my

employment.” Ibid. The Ninth Circuit followed California

law to construe the ambiguity against the drafter, a rule

that “applies with peculiar force in the case of a contract of

adhesion” such as this. Ibid. (quoting Sandquist v. Lebo

Auto., Inc., 1 Cal. 5th 233, 248, 376 P. 3d 506, 514 (2016)).

Because Lamps Plus had drafted the agreement, the court

adopted Varela’s interpretation authorizing class arbitra-

tion. Judge Fernandez dissented. In his view, the agree-

ment was not ambiguous, and the majority’s holding was a

“palpable evasion of Stolt-Nielsen.” 701 Fed. Appx., at

673.

Lamps Plus petitioned for a writ of certiorari, arguing

that the Ninth Circuit’s decision contravened Stolt-Nielsen

and created a conflict among the Courts of Appeals. In

opposition, Varela not only disputed those contentions but

also argued for the first time that the Ninth Circuit lacked

jurisdiction over the appeal, and that this Court therefore

lacked jurisdiction in turn. We granted certiorari. 584

U. S. ___ (2018).

II

We begin with jurisdiction. Section 16 of the FAA gov-

erns appellate review of arbitration orders. 9 U. S. C. §16.

Varela contends that the Ninth Circuit lacked statutory

jurisdiction because section 16 permits appeal from orders

denying motions to compel arbitration, §16(a)(1)(B), but

not orders granting such motions, §16(b)(2). Brief for

Respondent 9–12; see also post, at 3 (BREYER, J., dissent-

ing). This argument is beside the point, however, because

Lamps Plus relies for jurisdiction on a different provision

of section 16, section 16(a)(3).

4 LAMPS PLUS, INC. v. VARELA

Opinion of the Court

Section 16(a)(3) provides that an appeal may be taken

from “a final decision with respect to an arbitration that is

subject to this title.” We construed that provision in Green

Tree Financial Corp.-Ala. v. Randolph, 531 U. S. 79

(2000), a case where, as here, the District Court had is-

sued an order both compelling arbitration and dismissing

the underlying claims. We held that such an order direct-

ing “the parties to proceed to arbitration, and dismiss[ing]

all the claims before [the court], . . . is ‘final’ within the

meaning of §16(a)(3), and therefore appealable.” Id., at

89.1

Varela attempts to distinguish Randolph on the ground

that the appeal here was taken by the party who sought

an order to dismiss the claim and compel arbitration,

Lamps Plus. He claims the company “lacked standing to

appeal the dismissal,” because the District Court’s order

“provided precisely the relief Lamps Plus sought.” Brief

for Respondent 13, 15.

——————

1 JUSTICE BREYER repeatedly refers to the order in this case as “inter-

locutory,” post, at 5–7 (dissenting opinion), but—as the language quoted

above makes clear—Randolph expressly held that such an order is

“final” under the FAA. JUSTICE BREYER also claims that Randolph

“explicitly reserved the [jurisdictional] question that we face now,” post,

at 7, but Randolph reserved a different question. In that case, the

District Court had denied a motion to stay. We noted that, if the

District Court had entered a stay instead of dismissing the case, an

appeal would have been barred by 9 U. S. C. §16(b)(1). That said, we

expressly refrained from addressing whether the District Court should

have granted the stay. See 531 U. S., at 87, n. 2. That is the question

we reserved. JUSTICE BREYER would have us take up that question

today, post, at 3, 7, but there is no basis for doing so. The FAA provides

that a district court “shall on application of one of the parties stay” the

case pending the arbitration. 9 U. S. C. §3 (emphasis added). Here, no

party sought a stay. Thus, JUSTICE BREYER’s jurisdictional analysis is

premised on two events that did not happen—a District Court ruling

that was never issued denying a stay request that was never made. In

short, JUSTICE BREYER has written an opinion for a case other than the

one before us.

Cite as: 587 U. S. ____ (2019) 5

Opinion of the Court

But Lamps Plus did not secure the relief it requested. It

sought an order compelling individual arbitration. What

it got was an order rejecting that relief and instead com-

pelling arbitration on a classwide basis. We have ex-

plained—and will elaborate further below—that shifting

from individual to class arbitration is a “fundamental”

change, Stolt-Nielsen, 559 U. S., at 686, that “sacrifices the

principal advantage of arbitration” and “greatly increases

risks to defendants,” AT&T Mobility LLC v. Concepcion,

563 U. S. 333, 348, 350 (2011). Lamps Plus’s interest in

avoiding those consequences gives it the “necessary per-

sonal stake in the appeal” required by our precedent.

Camreta v. Greene, 563 U. S. 692, 702 (2011).2

III

The Ninth Circuit applied California contract law to

conclude that the parties’ agreement was ambiguous on

the availability of class arbitration. In California, an

agreement is ambiguous “when it is capable of two or more

constructions, both of which are reasonable.” 701 Fed.

Appx., at 672 (quoting Powerine Oil Co. v. Superior Ct., 37

Cal. 4th 377, 390, 118 P. 3d 589, 598 (2005)). Following

our normal practice, we defer to the Ninth Circuit’s inter-

pretation and application of state law and thus accept that

the agreement should be regarded as ambiguous. See,

e.g., Expressions Hair Design v. Schneiderman, 581 U. S.

___, ___ (2017) (slip op., at 7).3

——————

2 And contrary to Varela’s contention, Brief for Respondent 14–15,

and JUSTICE BREYER’s dissent, post, at 6–7, this is hardly a case like

Microsoft Corp. v. Baker, 582 U. S. ___ (2017). There, we held that

plaintiffs cannot generate a final appealable order by voluntarily

dismissing their claim. Here, Lamps Plus was the defendant, and the

District Court compelled class arbitration over the company’s vigorous

opposition.

3 JUSTICE KAGAN offers her own interpretation of the contract, con-

cludes that it unambiguously authorizes class arbitration, post, at 2–4,

and criticizes us for “disregard[ing] the actual contract the parties

6 LAMPS PLUS, INC. v. VARELA

Opinion of the Court

We therefore face the question whether, consistent with

the FAA, an ambiguous agreement can provide the neces-

sary “contractual basis” for compelling class arbitration.

Stolt-Nielsen, 559 U. S., at 684. We hold that it cannot—a

conclusion that follows directly from our decision in Stolt-

Nielsen. Class arbitration is not only markedly different

from the “traditional individualized arbitration” contem-

plated by the FAA, it also undermines the most important

benefits of that familiar form of arbitration. Epic Systems,

584 U. S., at ___ (slip op., at 8); see Stolt-Nielsen, 559

U. S., at 686–687. The statute therefore requires more

than ambiguity to ensure that the parties actually agreed

to arbitrate on a classwide basis.

A

The FAA requires courts to “enforce arbitration agree-

ments according to their terms.” Epic Systems, 584 U. S.,

at ___ (slip op., at 5) (quoting American Express Co. v.

Italian Colors Restaurant, 570 U. S. 228, 233 (2013)).

Although courts may ordinarily accomplish that end by

relying on state contract principles, First Options of Chi-

cago, Inc. v. Kaplan, 514 U. S. 938, 944 (1995), state law is

preempted to the extent it “stands as an obstacle to the

accomplishment and execution of the full purposes and

objectives” of the FAA, Concepcion, 563 U. S., at 352 (in-

ternal quotation marks omitted). At issue in this case is

the interaction between a state contract principle for

addressing ambiguity and a “rule[ ] of fundamental im-

——————

signed,” post, at 14. JUSTICE SOTOMAYOR, on the other hand, concludes

that the contract is ambiguous about class arbitration but criticizes us

for treating the contract as . . . ambiguous. Post, at 2–3 (dissenting

opinion). Again, we simply follow this Court’s ordinary approach,

which “accord[s] great deference” to the courts of appeals in their

interpretation of state law. Expressions Hair Design, 581 U. S., at ___,

(slip op., at 7) (quoting Pembaur v. Cincinnati, 475 U. S. 469, 484 n. 13

(1986) (collecting cases)).

Cite as: 587 U. S. ____ (2019) 7

Opinion of the Court

portance” under the FAA, namely, that arbitration “is a

matter of consent, not coercion.” Stolt-Nielsen, 559 U. S.,

at 681 (internal quotation marks omitted).

“[T]he first principle that underscores all of our arbitra-

tion decisions” is that “[a]rbitration is strictly a matter of

consent.” Granite Rock Co. v. Teamsters, 561 U. S. 287,

299 (2010) (internal quotation marks omitted). We have

emphasized that “foundational FAA principle” many

times. Stolt-Nielsen, 559 U. S., at 684; see also, e.g., How-

sam v. Dean Witter Reynolds, Inc., 537 U. S. 79, 83 (2002);

First Options, 514 U. S., at 943; Mastrobuono v. Shearson

Lehman Hutton, Inc., 514 U. S. 52, 57 (1995); Volt Infor-

mation Sciences, Inc. v. Board of Trustees of Leland Stan-

ford Junior Univ., 489 U. S. 468, 479 (1989); Mitsubishi

Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U. S.

614, 626 (1985).

Consent is essential under the FAA because arbitrators

wield only the authority they are given. That is, they

derive their “powers from the parties’ agreement to forgo

the legal process and submit their disputes to private

dispute resolution.” Stolt-Nielsen, 559 U. S., at 682.

Parties may generally shape such agreements to their

liking by specifying with whom they will arbitrate, the

issues subject to arbitration, the rules by which they will

arbitrate, and the arbitrators who will resolve their dis-

putes. Id., at 683–684. Whatever they settle on, the task

for courts and arbitrators at bottom remains the same: “to

give effect to the intent of the parties.” Id., at 684.

In carrying out that responsibility, it is important to

recognize the “fundamental” difference between class

arbitration and the individualized form of arbitration

envisioned by the FAA. Epic Systems, 584 U. S., at ___

(slip op., at 8); see also Concepcion, 563 U. S., at 349, 351;

Stolt-Nielsen, 559 U. S., at 686–687. In individual arbitra-

tion, “parties forgo the procedural rigor and appellate

review of the courts in order to realize the benefits of

8 LAMPS PLUS, INC. v. VARELA

Opinion of the Court

private dispute resolution: lower costs, greater efficiency

and speed, and the ability to choose expert adjudicators to

resolve specialized disputes.” Id., at 685. Class arbitra-

tion lacks those benefits. It “sacrifices the principal ad-

vantage of arbitration—its informality—and makes the

process slower, more costly, and more likely to generate

procedural morass than final judgment.” Concepcion, 563

U. S., at 348. Indeed, we recognized just last Term that

with class arbitration “the virtues Congress originally saw

in arbitration, its speed and simplicity and inexpensive-

ness, would be shorn away and arbitration would wind up

looking like the litigation it was meant to displace.” Epic

Systems, 584 U. S., at ___ (slip op., at 8). Class arbitration

not only “introduce[s] new risks and costs for both sides,”

ibid., it also raises serious due process concerns by adjudi-

cating the rights of absent members of the plaintiff class—

again, with only limited judicial review. See Concepcion,

563 U. S., 349; see also Stolt-Nielsen, 559 U. S., at 686

(citing Ortiz v. Fibreboard Corp., 527 U. S. 815, 846

(1999)).

Because of these “crucial differences” between individ-

ual and class arbitration, Stolt-Nielsen explained that there

is “reason to doubt the parties’ mutual consent to resolve

disputes through classwide arbitration.” 559 U. S., at 687,

685–686. And for that reason, we held that courts may

not infer consent to participate in class arbitration absent

an affirmative “contractual basis for concluding that the

party agreed to do so.” Id., at 684. Silence is not enough;

the “FAA requires more.” Id., at 687.

Our reasoning in Stolt-Nielsen controls the question we

face today. Like silence, ambiguity does not provide a

sufficient basis to conclude that parties to an arbitration

agreement agreed to “sacrifice[ ] the principal advantage of

arbitration.” Concepcion, 563 U. S., at 348.

This conclusion aligns with our refusal to infer consent

when it comes to other fundamental arbitration questions.

Cite as: 587 U. S. ____ (2019) 9

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For example, we presume that parties have not authorized

arbitrators to resolve certain “gateway” questions, such as

“whether the parties have a valid arbitration agreement at

all or whether a concededly binding arbitration clause

applies to a certain type of controversy.” Green Tree Fi-

nancial Corp. v. Bazzle, 539 U. S. 444, 452 (2003) (plural-

ity opinion). Although parties are free to authorize arbitra-

tors to resolve such questions, we will not conclude that

they have done so based on “silence or ambiguity” in their

agreement, because “doing so might too often force unwill-

ing parties to arbitrate a matter they reasonably would

have thought a judge, not an arbitrator, would decide.”

First Options, 514 U. S., at 945 (emphasis added); see also

Howsam, 537 U. S., at 83–84. We relied on that same

reasoning in Stolt-Nielsen, 559 U. S., at 686–687, and it

applies with equal force here. Neither silence nor ambigu-

ity provides a sufficient basis for concluding that parties to

an arbitration agreement agreed to undermine the central

benefits of arbitration itself.4

B

The Ninth Circuit reached a contrary conclusion based

on California’s rule that ambiguity in a contract should be

construed against the drafter, a doctrine known as contra

proferentem. The rule applies “only as a last resort” when

the meaning of a provision remains ambiguous after ex-

hausting the ordinary methods of interpretation. 3 A.

Corbin, Contracts §559, pp. 268–270 (1960). At that point,

contra proferentem resolves the ambiguity against the

drafter based on public policy factors, primarily equitable

——————

4 This Court has not decided whether the availability of class arbitra-

tion is a so-called “question of arbitrability,” which includes these

gateway matters. Oxford Health Plans LLC v. Sutter, 569 U. S. 564,

569, n. 2 (2013). We have no occasion to address that question here

because the parties agreed that a court, not an arbitrator, should

resolve the question about class arbitration.

10 LAMPS PLUS, INC. v. VARELA

Opinion of the Court

considerations about the parties’ relative bargaining

strength. See 2 E. Farnsworth, Contracts §7.11, pp. 300–

304 (3d ed. 2004); see also 11 R. Lord, Williston on Con-

tracts §32:12, pp. 788–792 (4th ed. 2012) (stating that

application of the rule may vary based on “the degree of

sophistication of the contracting parties or the degree to

which the contract was negotiated”); Restatement (Second)

of Contracts §206, pp. 80–81, 105–107 (1979) (classifying

contra proferentem under “Considerations of Fairness and

the Public Interest” rather than with rules for interpreting

“The Meaning of Agreements”); 3 Corbin, Contracts §559,

at 270 (noting that contra proferentem is “chiefly a rule of

public policy”). Although the rule enjoys a place in every

hornbook and treatise on contracts, we noted in a recent

FAA case that “the reach of the canon construing contract

language against the drafter must have limits, no matter

who the drafter was.” DIRECTV, Inc. v. Imburgia, 577

U. S. ___, ___ (2015) (slip op., at 10). This case brings

those limits into focus.

Unlike contract rules that help to interpret the meaning

of a term, and thereby uncover the intent of the parties,

contra proferentem is by definition triggered only after a

court determines that it cannot discern the intent of the

parties. When a contract is ambiguous, contra

proferentem provides a default rule based on public policy

considerations; “it can scarcely be said to be designed to

ascertain the meanings attached by the parties.” 2

Farnsworth, Contracts §7.11, at 303. Like the contract

rule preferring interpretations that favor the public inter-

est, see id., at 304, contra proferentem seeks ends other

than the intent of the parties.

“[C]lass arbitration, to the extent it is manufactured by

[state law] rather than consen[t], is inconsistent with the

FAA.” Concepcion, 563 U. S., at 348. We recently reiter-

ated that courts may not rely on state contract principles

to “reshape traditional individualized arbitration by man-

Cite as: 587 U. S. ____ (2019) 11

Opinion of the Court

dating classwide arbitration procedures without the par-

ties’ consent.” Epic Systems, 584 U. S., at ___ (slip op., at

8). But that is precisely what the court below did, requir-

ing class arbitration on the basis of a doctrine that “does

not help to determine the meaning that the two parties

gave to the words, or even the meaning that a reasonable

person would have given to the language used.” 3 Corbin,

Contracts §559, at 269–270. Such an approach is flatly

inconsistent with “the foundational FAA principle that

arbitration is a matter of consent.” Stolt-Nielsen, 559

U. S., at 684.

Varela and JUSTICE KAGAN defend application of the

rule on the basis that it is nondiscriminatory. It does not

conflict with the FAA, they argue, because it is a neutral

rule that gives equal treatment to arbitration agreements

and other contracts alike. See Brief for Respondent 18,

25–26; post, at 6–9 (KAGAN, J., dissenting). We have

explained, however, that such an equal treatment princi-

ple cannot save from preemption general rules “that target

arbitration either by name or by more subtle methods,

such as by ‘interfer[ing] with fundamental attributes of

arbitration.’ ” Epic Systems, 584 U. S., at ___ (slip op., at 7)

(quoting Concepcion, 563 U. S., at 344).

That was the case in Concepcion. There, the Court

considered the general contract defense of unconscionabil-

ity, which had been interpreted by the state court to bar

class action waivers in consumer contracts, whether in the

litigation or arbitration context. See id., at 341–344. The

general applicability of the rule did not save it from

preemption under the FAA with respect to arbitration

agreements, because it had the consequence of allowing

any party to a consumer arbitration agreement to demand

class proceedings “without the parties’ consent.” Epic

Systems, 584 U. S., at ___ (slip op., at 8) (describing the

“essential insight” of Concepcion). That, for the reasons

we have explained, “interferes with fundamental attrib-

12 LAMPS PLUS, INC. v. VARELA

Opinion of the Court

utes of arbitration and thus creates a scheme inconsistent

with the FAA.” Concepcion, 563 U. S., at 344; see Epic

Systems, 584 U. S., at ___–___ (slip op., at 8–9). The same

reasoning applies here: The general contra proferentem

rule cannot be applied to impose class arbitration in the

absence of the parties’ consent.5

Our opinion today is far from the watershed JUSTICE

KAGAN claims it to be. Rather, it is consistent with a long

line of cases holding that the FAA provides the default

rule for resolving certain ambiguities in arbitration

agreements. For example, we have repeatedly held that

ambiguities about the scope of an arbitration agreement

must be resolved in favor of arbitration. See, e.g.,

Mitsubishi Motors Corp., 473 U. S., at 626; Moses H. Cone

Memorial Hospital v. Mercury Constr. Corp., 460 U. S. 1,

24–25 (1983). In those cases, we did not seek to resolve

the ambiguity by asking who drafted the agreement.

Instead, we held that the FAA itself provided the rule. As

in those cases, the FAA provides the default rule for re-

solving ambiguity here.

* * *

Courts may not infer from an ambiguous agreement

that parties have consented to arbitrate on a classwide

basis. The doctrine of contra proferentem cannot substi-

——————

5 Varela and JUSTICE KAGAN contend that our use of contra

proferentem in Mastrobuono v. Shearson Lehman Hutton, Inc., 514

U. S. 52, 57 (1995), establishes that the rule is not preempted by the

FAA. Brief for Respondent 33–35; post, at 8 (dissenting opinion). In

Mastrobuono, however, we had no occasion to consider a conflict be-

tween the FAA and contra proferentem because both rules led to the

same result. Our holding was primarily based on the FAA policy

favoring arbitration, 514 U. S., at 62, and only after establishing that

did we apply contra proferentem, noting that the rule was “well suited

to the facts of this case,” id., at 63. See also EEOC v. Waffle House,

Inc., 534 U. S. 279, 293, n. 9 (2002) (explaining that Mastrobuono

resolved an ambiguous provision by “read[ing] the agreement to favor

arbitration under the FAA rules”).

Cite as: 587 U. S. ____ (2019) 13

Opinion of the Court

tute for the requisite affirmative “contractual basis for

concluding that the part[ies] agreed to [class arbitration].”

Stolt-Nielsen, 559 U. S., at 684.

We reverse the judgment of the Court of Appeals for the

Ninth Circuit and remand the case for further proceedings

consistent with this opinion.

It is so ordered.

Cite as: 587 U. S. ____ (2019) 1

THOMAS, J., concurring

SUPREME COURT OF THE UNITED STATES

_________________

No. 17–988

_________________

LAMPS PLUS, INC., ET AL., PETITIONERS v.

FRANK VARELA

ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF

APPEALS FOR THE NINTH CIRCUIT

[April 24, 2019]

JUSTICE THOMAS, concurring.

As our precedents make clear and the Court acknowl-

edges, the Federal Arbitration Act (FAA) requires federal

courts to enforce arbitration agreements “just as they

would ordinary contracts: in accordance with their terms.”

Howsam v. Dean Witter Reynolds, Inc., 537 U. S. 79, 87

(2002) (THOMAS, J., concurring in judgment). Federal

courts must therefore apply “background principles of

state contract law” when evaluating arbitration agree-

ments. Arthur Andersen LLP v. Carlisle, 556 U. S. 624,

630 (2009); Perry v. Thomas, 482 U. S. 483, 492, n. 9

(1987). “In this endeavor, ‘as with any other contract, the

parties’ intentions control.’ ” Stolt-Nielsen S. A. v. Ani-

malFeeds Int’l Corp., 559 U. S. 662, 682 (2010) (quoting

Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc.,

473 U. S. 614, 626 (1985)). Thus, where an agreement is

silent as to class arbitration, a court may not infer from

that silence that the parties agreed to arbitrate on a class

basis. 559 U. S., at 687.

Here, the arbitration agreement between Varela and

Lamps Plus is silent as to class arbitration. If anything,

the agreement suggests that the parties contemplated only

bilateral arbitration.* App. to Pet. for Cert. 24a (waiving

——————

* Two intermediate California courts have held, based on similar lan-

2 LAMPS PLUS, INC. v. VARELA

THOMAS, J., concurring

“any right I may have to file a lawsuit or other civil action

or proceeding relating to my employment with the Com-

pany” (emphasis added)); ibid. (“The Company and I mu-

tually consent to the resolution by arbitration of all claims

. . . that I may have against the Company” (emphasis

added)); id., at 24a–25a (“Specifically, the Company and I

mutually consent to the resolution by arbitration of all

claims that may hereafter arise in connection with my

employment” (emphasis added)). This agreement provides

no “contractual basis” for concluding that the parties

agreed to class arbitration, Stolt-Nielsen, supra, at 684,

and I would therefore reverse on that basis.

The Court instead evaluates whether California’s contra

proferentem rule, as applied here, “ ‘stands as an obstacle

to the accomplishment and execution of the full purposes

and objectives’ of the FAA.” Ante, at 6 (quoting AT&T

Mobility LLC v. Concepcion, 563 U. S. 333, 352 (2011)). I

remain skeptical of this Court’s implied pre-emption prec-

edents, see Wyeth v. Levine, 555 U. S. 555, 582–604 (2009)

(opinion concurring in judgment), but I join the opinion of

the Court because it correctly applies our FAA precedents,

see Epic Systems Corp. v. Lewis, 584 U. S. ___ (2018);

Concepcion, supra.

——————

guage, that an arbitration agreement did not authorize class arbitra-

tion. See Nelsen v. Legacy Partners Residential, Inc., 207 Cal. App. 4th

1115, 1129–1131, 144 Cal. Rptr. 3d 198, 210–211 (2012); Kinecta

Alternative Financial Solutions, Inc. v. Superior Court of Los Angeles

Cty., 205 Cal. App. 4th 506, 517–519, 140 Cal. Rptr. 3d 347, 356–357

(2012), disapproved of on other grounds by Sandquist v. Lebo Automo-

tive, Inc., 1 Cal. 5th 233, 376 P. 3d 506 (2016).

Cite as: 587 U. S. ____ (2019) 1

GINSBURG, J., dissenting

SUPREME COURT OF THE UNITED STATES

_________________

No. 17–988

_________________

LAMPS PLUS, INC., ET AL., PETITIONERS v.

FRANK VARELA

ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF

APPEALS FOR THE NINTH CIRCUIT

[April 24, 2019]

JUSTICE GINSBURG, with whom JUSTICE BREYER and

JUSTICE SOTOMAYOR join, dissenting.

Joining JUSTICE KAGAN’s dissenting opinion in full, I

write separately to emphasize once again how treacher-

ously the Court has strayed from the principle that “arbi-

tration is a matter of consent, not coercion.” Stolt-Nielsen

S. A. v. AnimalFeeds Int’l Corp., 559 U. S. 662, 681 (2010)

(internal quotation marks omitted).

Congress enacted the Federal Arbitration Act (FAA) in

1925 “to enable merchants of roughly equal bargaining

power to enter into binding agreements to arbitrate com-

mercial disputes.” Epic Systems Corp. v. Lewis, 584 U. S.

___, ___ (2018) (GINSBURG, J., dissenting) (slip op., at 19)

(emphasis in original). The Act was not designed to gov-

ern contracts “in which one of the parties characteristically

has little bargaining power.” Prima Paint Corp. v. Flood

& Conklin Mfg. Co., 388 U. S. 395, 403, n. 9 (1967); see

Gilmer v. Interstate/Johnson Lane Corp., 500 U. S. 20, 42

(1991) (Stevens, J., dissenting) (“I doubt that any legisla-

tor who voted for [the FAA] expected it to apply . . . to form

contracts between parties of unequal bargaining power, or

to the arbitration of disputes arising out of the employ-

ment relationship.”); Miller, Simplified Pleading, Mean-

ingful Days in Court, and Trials on the Merits: Reflections

on the Deformation of Federal Procedure, 88 N. Y. U.

2 LAMPS PLUS, INC. v. VARELA

GINSBURG, J., dissenting

L. Rev. 286, 323 (2013) (The FAA was “enacted in 1925

with the seemingly limited purpose of overcoming the

then-existing ‘judicial hostility’ to the arbitration of con-

tract disputes between businesses.”).

The Court has relied on the FAA, not simply to over-

come once-prevalent judicial resistance to enforcement of

arbitration disputes between businesses. In relatively

recent years, it has routinely deployed the law to deny to

employees and consumers “effective relief against power-

ful economic entities.” DIRECTV, Inc. v. Imburgia, 577

U. S. ___, ___ (2015) (GINSBURG, J., dissenting) (slip op.,

at 9). Arbitration clauses, the Court has decreed, may pre-

clude judicial remedies even when submission to arbitra-

tion is made a take-it-or-leave-it condition of employment

or is imposed on a consumer given no genuine choice in

the matter. See Epic, 584 U. S., at ___–___ (GINSBURG, J.,

dissenting) (slip op., at 21–22) (surveying “court decisions

expansively interpreting” the FAA); Circuit City Stores,

Inc. v. Adams, 532 U. S. 105, 132 (2001) (Stevens, J.,

dissenting) (“There is little doubt that the Court’s inter-

pretation of the [FAA] has given it a scope far beyond the

expectations of the Congress that enacted it.”); Miller,

supra, at 324 (describing as “extraordinary” “judicial

extension of the [FAA] to a vast array of consumer con-

tracts . . . characterized by their adhesive nature and by

the individual’s complete lack of bargaining power”).

Propelled by the Court’s decisions, mandatory arbitration

clauses in employment and consumer contracts have

proliferated. See, e.g., Economic Policy Institute, A. Col-

vin, The Growing Use of Mandatory Arbitration 2, 4‒6

(Apr. 6, 2018) (mandatory arbitration imposed by private-

sector employers on nonunionized employees notably

increased between 1995 and 2017), online at

https://www.epi.org/files/pdf/144131.pdf (all Internet

materials as last visited Apr. 22, 2019); Consumer Finan-

cial Protection Bureau, Arbitration Study §1.4.1 (Mar.

Cite as: 587 U. S. ____ (2019) 3

GINSBURG, J., dissenting

2015) (“Tens of millions of consumers use consumer finan-

cial products or services that are subject to . . . arbitration

clauses.”), online at https://files.consumerfinance.gov/f/

201503_cfpb_arbitration-study-report-to-congress-2015.pdf.

Piling Pelion on Ossa, the Court has hobbled the capacity

of employees and consumers to band together in a judicial

or arbitral forum. See Epic, 584 U. S., at ___, n. 12

(GINSBURG, J., dissenting) (slip op., at 22, n. 12) (noting

Court decisions enforcing class-action waivers imposed by

the party in command, who wants no collective proceed-

ings). The Court has pursued this course even though

“neither the history nor present practice suggests that

class arbitration is fundamentally incompatible with

arbitration itself.” AT&T Mobility LLC v. Concepcion, 563

U. S. 333, 362 (2011) (BREYER, J., dissenting).

Employees and consumers forced to arbitrate solo face

severe impediments to the “vindication of their rights.”

Stolt-Nielsen, 559 U. S., at 699 (GINSBURG, J., dissenting).

“Expenses entailed in mounting individual claims will

often far outweigh potential recoveries.” Epic, 584 U. S.,

at ___ (GINSBURG, J., dissenting) (slip op., at 27); see

American Express Co. v. Italian Colors Restaurant, 570

U. S. 228, 246 (2013) (KAGAN, J., dissenting) (“[The de-

fendant] has put [the plaintiff] to this choice: Spend way,

way, way more money than your claim is worth, or relin-

quish your . . . rights.”); Concepcion, 563 U. S., at 365

(BREYER, J., dissenting) (“What rational lawyer would

have signed on to represent the [plaintiffs] for the possibil-

ity of fees stemming from a $30.22 [individual] claim?”);

Resnik, Revising Our “Common Intellectual Heritage”:

Federal and State Courts in Our Federal System, 91 Notre

Dame L. Rev. 1831, 1888 (2016) (“Few individuals can

afford to pursue small value claims; mandating single-file

arbitration serves as a means of erasing rights, rather

than enabling their ‘effective vindication.’ ”).

Today’s decision underscores the irony of invoking “the

4 LAMPS PLUS, INC. v. VARELA

GINSBURG, J., dissenting

first principle” that “arbitration is strictly a matter of

consent,” ante, at 7 (internal quotation marks and altera-

tions omitted), to justify imposing individual arbitration

on employees who surely would not choose to proceed solo.

Respondent Frank Varela sought redress for negligence by

his employer leading to a data breach affecting 1,300

employees. See Complaint in No. 5:16‒cv‒00577 (CD

Cal.), Doc. 1, ¶¶1, 59. The widely experienced neglect he

identified cries out for collective treatment. Blocking

Varela’s path to concerted action, the Court aims to ensure

the authenticity of consent to class procedures in arbitra-

tion. Ante, at 7‒8. Shut from the Court’s sight is the

“Hobson’s choice” employees face: “accept arbitration on

their employer’s terms or give up their jobs.” Epic, 584

U. S., at ___, n. 2 (GINSBURG, J., dissenting) (slip op., at 7,

n. 2); see Circuit City, 532 U. S., at 139 (Souter, J., dis-

senting) (employees often “lack the bargaining power to

resist an arbitration clause if their prospective employers

insist on one”).

Recent developments outside the judicial arena amelio-

rate some of the harm this Court’s decisions have occa-

sioned. Some companies have ceased requiring employees

to arbitrate sexual harassment claims, see McGregor,

Firms May Follow Tech Giants on Forced Arbitration,

Washington Post, Nov. 13, 2018, p. A15, col. 1, or have

extended their no-forced-arbitration policy to a broader

range of claims, see Wakabayashi, Google Scraps Forced

Arbitration Policy, N. Y. Times, Feb. 22, 2019, p. B5, col. 4.

And some States have endeavored to safeguard employees’

opportunities to bring sexual harassment suits in court.

See, e.g., N. Y. Civ. Prac. Law Ann. §7515 (West 2019)

(rendering unenforceable certain mandatory arbitration

clauses covering sexual harassment claims). These devel-

opments are sanguine, for “[p]lainly, it would not comport

with the congressional objectives behind a statute seeking

to enforce civil rights . . . to allow the very forces that had

Cite as: 587 U. S. ____ (2019) 5

GINSBURG, J., dissenting

practiced discrimination to contract away the right to

enforce civil rights in the courts.” Barrentine v. Arkansas-

Best Freight System, Inc., 450 U. S. 728, 750 (1981) (Burger,

C. J., dissenting).

Notwithstanding recent steps to counter the Court’s

current jurisprudence, mandatory individual arbitration

continues to thwart “effective access to justice” for those

encountering diverse violations of their legal rights.

DIRECTV, 577 U. S., at ___ (GINSBURG, J., dissenting)

(slip op., at 1). The Court, paradoxically reciting the

mantra that “[c]onsent is essential,” ante, at 7, has facili-

tated companies’ efforts to deny employees and consumers

the “important right” to sue in court, and to do so collec-

tively, by inserting solo-arbitration-only clauses that

parties lacking bargaining clout cannot remove. Compu-

Credit Corp. v. Greenwood, 565 U. S. 95, 115 (2012)

(GINSBURG, J., dissenting). When companies can “muffl[e]

grievance[s] in the cloakroom of arbitration,” Merrill

Lynch, Pierce, Fenner & Smith, Inc. v. Ware, 414 U. S.

117, 136 (1973), the result is inevitable: curtailed en-

forcement of laws “designed to advance the well-being of

[the] vulnerable.” Epic, 584 U. S., at ___ (GINSBURG, J.,

dissenting) (slip op., at 26). “Congressional correction of

the Court’s elevation of the FAA over” the rights of em-

ployees and consumers “to act in concert” remains “urgently

in order.” Id., at ___ (slip op., at 2).

Cite as: 587 U. S. ____ (2019) 1

BREYER, J., dissenting

SUPREME COURT OF THE UNITED STATES

_________________

No. 17–988

_________________

LAMPS PLUS, INC., ET AL., PETITIONERS v.

FRANK VARELA

ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF

APPEALS FOR THE NINTH CIRCUIT

[April 24, 2019]

JUSTICE BREYER, dissenting.

Although I join JUSTICE GINSBURG’s and JUSTICE

KAGAN’s dissents in full, I also dissent for another reason.

In my view, the Court of Appeals lacked jurisdiction to

hear this case. Consequently, we lack jurisdiction as well.

See 28 U. S. C. §1254. My reason for reaching this conclu-

sion is the following. The Federal Arbitration Act, at §4,

says that a “court,” upon being satisfied that the parties

have agreed to arbitrate a claim, “shall make an order

directing the parties to proceed to arbitration in accord-

ance with the terms of the agreement.” 9 U. S. C. §4.

Section 16 of the Act then says that “an appeal may not be

taken from an interlocutory order . . . directing arbitration

to proceed under section 4 of this title.” §16(b)(2) (empha-

sis added). And directing arbitration to proceed is just

what the District Court did here. App. to Pet. for Cert.

23a.

I

These statutory provisions reflect a congressional effort

(in respect to a specific subject matter) to help resolve a

more general problem. Too few interlocutory appeals will

too often impose upon parties delay and expense that an

interlocutory appeal, by quickly correcting a lower court

error, might have spared them. But too many interlocu-

2 LAMPS PLUS, INC. v. VARELA

BREYER, J., dissenting

tory appeals will too often unnecessarily delay proceedings

while a party appeals and loses. And delays can clog the

appellate system, thereby slowing down the workings, and

adding to the costs, of the judicial system seen as a whole.

Congress’ jurisdictional statutes consequently compro-

mise, providing, for example, for interlocutory appeals in

some instances, such as cases involving injunctive orders,

see, e.g., 28 U. S. C. §1292(a)(1), or where important sepa-

rable legal questions are at issue, see, e.g., Ashcroft v.

Iqbal, 556 U. S. 662, 671 (2009), or where a district court

certifies an open legal question to a court of appeals for

determination, see, e.g., 28 U. S. C. §1292(b). But often

statutes and rules require the parties to proceed to the end

of a trial before obtaining appellate review. See, e.g.,

§1291.

The statutory provisions before us are a local species of

this jurisdictional genus. In them, Congress limited inter-

locutory review of orders concerning arbitration in a way

that favors arbitration. Consequently, §16(a) of the FAA

will normally allow an immediate appeal where arbitra-

tion is denied, but §16(b) will normally require parties to

wait until the end of the arbitration in order to bring legal

questions about that proceeding to a court of appeals.

A couple of examples illustrate the point. Take first §4

of the FAA. Section 4 provides that a “court,” upon being

satisfied that the parties have agreed to arbitrate a claim,

“shall make an order directing the parties to proceed to

arbitration in accordance with the terms of the agree-

ment.” 9 U. S. C. §4. Section 16(a) of the FAA provides

that a party may immediately appeal a district court order

refusing to compel arbitration under §4, while §16(b)

provides that a party generally may not immediately

appeal a district court order compelling arbitration under

§4. Compare §16(a)(1)(B) (“An appeal may be taken from”

an order “denying a petition under section 4 of this title”)

with §16(b)(2) (“[A]n appeal may not be taken from an

Cite as: 587 U. S. ____ (2019) 3

BREYER, J., dissenting

interlocutory order . . . directing arbitration to proceed

under section 4 of this title”).

Section 3 of the FAA provides another good example.

Where a suit contains several claims, and the district

court has determined that the parties agreed to arbitrate

only a subset of those claims, §3 of the FAA provides that

the district court must stay the litigation at the request of

either party. See §3 (providing that a court, when refer-

ring claims for arbitration, “shall on application of one of

the parties stay” the case “until such arbitration has been

had”). The stay relieves the parties of the burden and

distraction of continuing to litigate any remaining claims

while the arbitration is ongoing. And true to the FAA’s

proarbitration appellate scheme, §16(a) permits immediate

appeals of district court orders refusing to enter a stay,

while §16(b) generally prohibits immediate appeals of

district court orders granting a stay. Compare §16(a)(1)(A)

(“An appeal may be taken from” an order “refusing a stay

of any action under section 3 of this title”) with §16(b)(1)

(“[A]n appeal may not be taken from an interlocutory

order . . . granting a stay of any action under section 3 of

this title”).

I could go on. Section 16(a) of the FAA permits immedi-

ate appeal of an interlocutory order granting an injunction

against arbitration, while §16(b) generally prohibits im-

mediate appeal of an order refusing to enjoin an arbitra-

tion. Compare §16(a)(2) with §16(b)(4). Section 16(a) of

the FAA permits immediate appeal of an order denying an

application to compel arbitration pursuant to §206, while

§16(b) generally prohibits immediate appeal of an order

compelling arbitration pursuant to §206. Compare

§16(a)(1)(C) with §16(b)(3). Et cetera.

The point, however, is that the appellate scheme of the

FAA reflects Congress’ policy decision that, if a district

court determines that arbitration of a claim is called for,

there should be no appellate interference with the arbitral

4 LAMPS PLUS, INC. v. VARELA

BREYER, J., dissenting

process unless and until that process has run its course.

With §16’s structure, and Congress’ policy in mind, we

can turn to the facts of this case.

II

Respondent Frank Varela is an employee of petitioner

Lamps Plus, Inc. At the outset of their employment re-

lationship, Varela and Lamps Plus agreed to arbitrate

employment-related claims. Varela later filed suit against

Lamps Plus on behalf of himself and a class of Lamps

Plus’ employees. Lamps Plus asked the District Court to

compel arbitration. And the District Court granted Lamps

Plus’ request. Despite having won the relief that it re-

quested, Lamps Plus appealed the District Court’s order

because Lamps Plus objected to the District Court’s con-

clusion that the parties’ agreement permitted arbitration

on a classwide basis. The Court of Appeals affirmed the

District Court’s judgment. And we granted Lamps Plus’

petition for certiorari to consider whether the Court of

Appeals erred in so ruling.

But on those facts, I think that the Court lacks jurisdic-

tion over Lamps Plus’ petition. When Lamps Plus re-

sponded to Varela’s lawsuit by seeking a motion to compel

arbitration, and the District Court granted that motion,

this case fell neatly into §16(b)’s description of unappeal-

able district court orders under the FAA. The parties were

obligated by the FAA to arbitrate their dispute without

the expense and delay of further litigation. If, after arbi-

tration, the parties were dissatisfied with the award or

with the District Court’s arbitration related decisions,

§16(a) of the FAA provides for an appeal at that later date.

See §§16(a)(1)(D)–(E) (permitting appeals of orders con-

firming, modifying, or vacating an award); see also

§16(a)(3) (permitting appeal of “a final decision with re-

spect to an arbitration”). But, in the interim, §16(b) de-

prived the Court of Appeals of jurisdiction to hear any

Cite as: 587 U. S. ____ (2019) 5

BREYER, J., dissenting

such complaint. See §§16(b)(1)–(4). I recognize that

Lamps Plus is dissatisfied with the arbitration that the

District Court ordered here. But the District Court’s order

nonetheless granted the motion compelling arbitration,

leaving Lamps Plus to bring its claim to an appellate court

only after the arbitration is completed. See §16(b)(2). I

believe we should enforce the statutory provisions that

lead to this conclusion.

Lamps Plus offers three arguments in response. First,

Lamps Plus suggests the Court of Appeals had jurisdiction

over Lamps Plus’ appeal because the District Court order

at issue here not only granted Lamps Plus’s motion to

compel arbitration, but also granted Lamps Plus’ motion

to dismiss the case. See Brief for Petitioners 29. Lamps

Plus points out that §16(a) permits the appeal of “a final

decision with respect to an arbitration.” 9 U. S. C.

§16(a)(3). Lamps Plus reasons that, so long as a decision

is final, it is appealable under the FAA.

I disagree because I do not believe that the District

Court had the discretion to dismiss the case immediately

after granting Lamps Plus’ motion to compel arbitration.

Section 4 of the FAA permits a district court to compel the

parties to arbitrate their claim, and §16(b)(2) explains that

“an appeal may not be taken from an interlocutory order

. . . directing arbitration to proceed under section 4 of this

title.” Thus, the District Court order compelling arbitra-

tion was interlocutory and generally unappealable. As I

have just explained, to read the statute any other way

would contravene §16’s proarbitration appeal scheme by

turning an interlocutory order that would have been un-

appealable under §16(b) of the Act into a dismissal order

that is appealable under §16(a).

And because the order granting Lamps Plus’ motion to

compel was interlocutory, the District Court’s dismissal of

the case—in the very same order, see App. to Pet. for Cert.

23a—did not give the Court of Appeals jurisdiction over

6 LAMPS PLUS, INC. v. VARELA

BREYER, J., dissenting

Lamps Plus’ appeal. An improper dismissal cannot create

appellate jurisdiction to review an interlocutory order.

Our decision in Microsoft Corp. v. Baker, 582 U. S. ___

(2017), holds as much. The plaintiffs in Microsoft sought

to appeal a district court order denying certification of a

class. Under Federal Rule of Appellate Procedure 23(f),

plaintiffs can ordinarily bring such an appeal only with

the court of appeals’ permission. But the plaintiffs in

Baker, who had been denied permission to appeal, tried to

circumvent that denial by stipulating to a voluntary dis-

missal of their claims. The voluntary dismissal, they

claimed, was an appealable “final decisio[n]” under 28

U. S. C. §1291. And in their appeal of the dismissal, they

would be free to also seek review of the order denying

class certification. We disagreed. As we explained there,

to permit plaintiffs to “transform a tentative interlocutory

order into a final judgment . . . simply by dismissing their

claims with prejudice” would be to “undermine §1291’s

firm finality principle, designed to guard against piece-

meal appeals, and subvert the balanced solution Rule 23(f)

put in place for immediate review of class-action orders.”

Microsoft, supra, at ___, ___ (slip op., at 2, 16) (citation

omitted).

The same reasoning applies here. Section 16(a)(3) of the

FAA, like 28 U. S. C. §1291, creates appellate jurisdiction

only over “final decisions.” Despite that jurisdictional

limit, Lamps Plus, like the plaintiffs in Microsoft, seeks

review of an interlocutory order. Like the plaintiffs in

Microsoft, Lamps Plus attempts to obtain appellate review

by “transform[ing]” an interlocutory order into a final

decision. 582 U. S., at ___ (slip op., at 16). Like the plain-

tiffs in Microsoft, Lamps Plus has done so based on an

order “purporting to end the litigation”—an order that

Lamps Plus itself “persuade[d] a district court to issue.”

Ibid. And like the plaintiffs in Microsoft, Lamps Plus does

not “complain of the ‘final’ order that dismissed [the] case,”

Cite as: 587 U. S. ____ (2019) 7

BREYER, J., dissenting

but instead seeks “review of only the inherently interlocu-

tory order” compelling arbitration. Ibid. (alterations

omitted). Therefore, like the Court in Microsoft, I would

hold that Lamps Plus cannot, by securing an unlawful

dismissal, find a way around the appellate jurisdiction

scheme that Congress wrote into the FAA.

Second, Lamps Plus suggests that this Court has al-

ready decided that a district court order compelling arbi-

tration and dismissing a plaintiff’s complaint creates no

jurisdictional problem. Brief for Petitioners 29–30.

Lamps Plus cites Green Tree Financial Corp.-Ala. v. Ran-

dolph, 531 U. S. 79 (2000), in support of that argument.

And according to Lamps Plus, “this Court held in Ran-

dolph” that “when a district court orders arbitration and

dismisses the plaintiff’s claims,” the order is “final” and

therefore appealable under §16 of the FAA. Brief for

Petitioners 29–30.

But Randolph does not control the jurisdictional aspect

of this case. The Randolph Court explicitly reserved the

question that we face now, stating: “Had the District

Court entered a stay instead of a dismissal in this case,

that order would not be appealable. 9 U. S. C. §16(b)(1).

The question whether the District Court should have taken

that course is not before us, and we do not address it.”

Randolph, supra, at 87, n. 2 (emphasis added). Thus,

although the Randolph Court stated that §16(a)(3) of the

FAA permits appeals of final orders entered under the

FAA, the Court did not decide whether a district court

could convert an interlocutory, unappealable order under

§16(b) into an appealable order under §16(a) by entering a

dismissal instead of a stay. For that reason, Randolph

does not answer the jurisdictional question here.

Third, and finally, Lamps Plus suggests that the Court

of Appeals had jurisdiction because the District Court

“effectively denied Lamps Plus’s motion to compel arbitra-

tion” when the District Court interpreted the arbitration

8 LAMPS PLUS, INC. v. VARELA

BREYER, J., dissenting

agreement to permit class arbitration. Brief for Petition-

ers 31 (emphasis deleted). Leaning heavily on dicta from

Stolt-Nielsen S. A. v. AnimalFeeds Int’l Corp., 559 U. S.

662 (2010), Lamps Plus argues that class arbitration is so

“fundamental[ly]” different from individual arbitration

that the fact that “the district court purported to grant

Lamps Plus’s motion is not controlling.” Brief for Peti-

tioners 31.

But Stolt-Nielsen cannot bear the weight Lamps Plus

would place on it. We held in Stolt-Nielsen that a party

may not be compelled to “submit to class arbitration un-

less there is a contractual basis for concluding that the

party agreed to do so.” 559 U. S., at 684. We did not hold

that class arbitration is not arbitration at all. And be-

cause class arbitration is arbitration, the District Court’s

interpretation of Lamps Plus and Varela’s arbitration

agreement to permit class arbitration could not create

appellate jurisdiction over the District Court order compel-

ling the parties to arbitrate their dispute. See 9 U. S. C.

§16(b)(2) (prohibiting interlocutory appeals of district

court orders “directing arbitration to proceed”).

Nor did we hold in Stolt-Nielsen (or anywhere else) that

§16 of the FAA permits appeals of interlocutory orders

directing arbitration to proceed, so long as the order incor-

porates some ruling that one party dislikes. If that were

the rule, then §16’s limitations on appellate jurisdiction

would be near meaningless. Consequently, the courts of

appeals have—rightly, I believe—long recognized that

they lack jurisdiction over appeals from orders that compel

arbitration, “albeit not in the ‘first-choice’ ” manner of the

party that moved to compel. Al Rushaid v. National Oil-

well Varco, Inc., 814 F. 3d 300, 304 (CA5 2016). See also,

e.g., Blue Cross Blue Shield of Mass., Inc. v. BCS Ins. Co.,

671 F. 3d 635, 638 (CA7 2011) (concluding that the court

of appeals lacked jurisdiction over an order compelling

arbitration but denying a motion to direct arbitrators to

Cite as: 587 U. S. ____ (2019) 9

BREYER, J., dissenting

“hold separate rather than consolidated proceedings”);

Bushley v. Credit Suisse First Boston, 360 F. 3d 1149, 1154

(CA9 2004) (similar holding with respect to a request that

arbitration take place before a different forum); Augustea

Impb Et Salvataggi v. Mitsubishi Corp., 126 F. 3d 95, 98

(CA2 1997) (similar holding with respect to a request that

the parties arbitrate in a different location). As one of

those courts explained, “[p]ursuant to the plain meaning of

th[e] statute . . . a party cannot appeal a district court’s

order unless, at the end of the day, the parties are forced

to settle their dispute other than by arbitration.” Id., at

99. And Lamps Plus’ characterization of the District

Court’s order compelling arbitration as an “effectiv[e]

den[ial]” of Lamps Plus’ motion “does not make it so.”

Blue Cross Blue Shield, supra, at 637.

Consequently, I would hold that we lack jurisdiction

over this case. But because the Court accepts jurisdiction

and decides the substantive legal question before us, I

shall do the same. And in respect to that question I agree

with JUSTICE GINSBURG and JUSTICE KAGAN, and I join

their dissents.

Cite as: 587 U. S. ____ (2019) 1

SOTOMAYOR, J., dissenting

SUPREME COURT OF THE UNITED STATES

_________________

No. 17–988

_________________

LAMPS PLUS, INC., ET AL., PETITIONERS v.

FRANK VARELA

ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF

APPEALS FOR THE NINTH CIRCUIT

[April 24, 2019]

JUSTICE SOTOMAYOR, dissenting.

I join JUSTICE GINSBURG’s dissent in full and Part II of

JUSTICE KAGAN’s dissent.1 This Court went wrong years

ago in concluding that a “shift from bilateral arbitration to

class-action arbitration” imposes such “fundamental

changes,” Stolt-Nielsen S. A. v. AnimalFeeds Int’l Corp.,

559 U. S. 662, 686 (2010), that class-action arbitration “is

not arbitration as envisioned by the” Federal Arbitration

Act (FAA), AT&T Mobility LLC v. Concepcion, 563 U. S.

333, 351 (2011). See, e.g., id., at 362–365 (BREYER, J.,

dissenting). A class action is simply “a procedural device”

that allows multiple plaintiffs to aggregate their claims, 1

W. Rubenstein, Newberg on Class Actions § 1:1 (5th ed.

2011), “[f]or convenience . . . and to prevent a failure of

justice,” Supreme Tribe of Ben-Hur v. Cauble, 255 U. S.

356, 363 (1921). Where, as here, an employment agree-

ment provides for arbitration as a forum for all disputes

relating to a person’s employment and the rules of that

forum allow for class actions, an employee who signs an

——————

1 I am not persuaded at this point that the Court of Appeals lacked

jurisdiction over this case, and for that reason I do not join JUSTICE

BREYER’s dissenting opinion. Nevertheless, I believe that JUSTICE

BREYER’s opinion raises weighty issues that are worthy of further

consideration if raised in the appropriate circumstances in the lower

federal courts.

2 LAMPS PLUS, INC. v. VARELA

SOTOMAYOR, J., dissenting

arbitration agreement should not be expected to realize

that she is giving up access to that procedural device.

In any event, as JUSTICE KAGAN explains, the employ-

ment contract that Frank Varela signed went further. It

states that “ ‘any and all disputes, claims or controversies

arising out of or relating to[ ] the employment relationship

between the parties[ ] shall be resolved by final and bind-

ing arbitration.’ ” Post, at 2 (quoting App. to Pet. for Cert.

24a). It adds that Varela and Lamps Plus “consent to the

resolution by arbitration of all claims that may hereafter

arise in connection with [Varela’s] employment.” Id., at

24a–25a. And it provides for arbitration “ ‘in accordance

with’ ” the rules of the arbitral forum, which in turn allow

for class arbitration. Post, at 3 (opinion of KAGAN, J.)

(citing App. to Pet. for Cert. 25a–26a). That is enough to

persuade me that the contract was at least ambiguous as

to whether Varela in fact agreed that no class-action

procedures would be available in arbitration if he and his

co-workers all suffered the same harm “relating to” and

“in connection with” their “employment.” See id., at 24a–

25a. And the court below was correct to turn to state law

to resolve the ambiguity.

The Court today reads the FAA to pre-empt the neutral

principle of state contract law on which the court below

relied. I cannot agree. I also note that the majority

reaches its holding without actually agreeing that the

contract is ambiguous. See ante, at 5 (“[W]e defer to the

Ninth Circuit’s interpretation and application of state

law”). The concurrence, meanwhile, offers reasons to

conclude that the contract unambiguously precludes class

arbitration, see ante, at 1–2, and n. (opinion of THOMAS,

J.), which would avoid the need to displace state law at

all.2 This Court normally acts with great solicitude when

——————

2 The majority notes that I criticize it for not checking for such an off-

ramp while being unable to take one myself. See ante, at 6, n. 3. But

Cite as: 587 U. S. ____ (2019) 3

SOTOMAYOR, J., dissenting

it comes to the possible pre-emption of state law, see, e.g.,

Medtronic, Inc. v. Lohr, 518 U. S. 470, 485 (1996), but the

majority today invades California contract law without

pausing to address whether its incursion is necessary.

Such haste is as ill advised as the new federal common

law of arbitration contracts it has begotten.

——————

the majority never suggests that it shares my rationale as to why the

contract is ambiguous. In other words, the reasons that I reach the

issue that the majority decides say nothing about whether the majority

would get there itself, short of deferring to the lower federal court.

Cite as: 587 U. S. ____ (2019) 1

KAGAN, J., dissenting

SUPREME COURT OF THE UNITED STATES

_________________

No. 17–988

_________________

LAMPS PLUS, INC., ET AL., PETITIONERS v.

FRANK VARELA

ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF

APPEALS FOR THE NINTH CIRCUIT

[April 24, 2019]

JUSTICE KAGAN, with whom JUSTICE GINSBURG and

JUSTICE BREYER join, and with whom JUSTICE

SOTOMAYOR joins as to Part II, dissenting.

The Federal Arbitration Act (FAA or Act) requires

courts to enforce arbitration agreements according to their

terms. See ante, at 6. But the Act does not federalize

basic contract law. Under the FAA, state law governs the

interpretation of arbitration agreements, so long as that

law treats other types of contracts in the same way. See

DIRECTV, Inc. v. Imburgia, 577 U. S. ___, ___ (2015) (slip

op., at 6). That well-established principle ought to resolve

this case against Lamps Plus’s request for individual

arbitration. In my view, the arbitration agreement Lamps

Plus wrote is best understood to authorize arbitration on a

classwide basis. But even if the Court is right to view the

agreement as ambiguous, a plain-vanilla rule of contract

interpretation, applied in California as in every other

State, requires reading it against the drafter—and so

likewise permits a class proceeding here. See Sandquist v.

Lebo Auto., Inc., 1 Cal. 5th 233, 247, 376 P. 3d 506, 514

(2016). The majority can reach the opposite conclusion

only by insisting that the FAA trumps that neutral state

rule whenever its application would result in class arbitra-

tion. That holding has no basis in the Act—or in any of

our decisions relating to it (including the heavily relied-on

2 LAMPS PLUS, INC. v. VARELA

KAGAN, J., dissenting

Stolt-Nielsen S. A. v. AnimalFeeds Int’l Corp., 559 U. S.

662, 686 (2010)). Today’s opinion is rooted instead in the

majority’s belief that class arbitration “undermine[s] the

central benefits of arbitration itself.” Ante, at 9. But that

policy view—of a piece with the majority’s ideas about

class litigation—cannot justify displacing generally appli-

cable state law about how to interpret ambiguous con-

tracts. I respectfully dissent.

I

From its very beginning, the arbitration agreement

between Lamps Plus and Frank Varela announces its

comprehensive scope. The first sentence states: “[T]he

parties agree that any and all disputes, claims or contro-

versies arising out of or relating to[ ] the employment

relationship between the parties[ ] shall be resolved by

final and binding arbitration.” App. to Pet. for Cert. 24a.

The phrase “any and all disputes, claims, or controversies”

encompasses both their individual and their class vari-

ants—just as any other general category (e.g., any and all

chairs) includes all particular types (e.g., desk and reclin-

ing). So Varela’s class action (which arose out of or related

to his employment) was a “dispute, claim or controversy”

that belonged in arbitration.

The next paragraph continues in the same vein, by

describing what Varela gave up by signing the agreement.

“[A]rbitration,” the agreement says, “shall be in lieu of any

and all lawsuits or other civil legal proceedings relating to

my employment.” Ibid.; see ibid. (similarly waiving the

right “to file a lawsuit or other civil action or proceeding”).

That is the language of forum selection: Any and all ac-

tions (both individual and class) that I could once have

brought in court, I am agreeing now to bring in arbitra-

tion. The provision carries no hint of consent to surrender

altogether—in arbitration as well as court—the ability to

bring a class proceeding.

Cite as: 587 U. S. ____ (2019) 3

KAGAN, J., dissenting

Further on, the remedial and procedural terms of the

agreement support reading it to authorize class arbitra-

tion. The arbitrator, according to the contract, may

“award any remedy allowed by applicable law.” Id., at

26a. That sweeping provision easily encompasses class-

wide relief when the “any and all disputes” that the con-

tract’s first sentence places in arbitration call for such

remedies.1 And under the agreement, the arbitration shall

be conducted “in accordance with” the rules of either of

two designated arbitration providers—both of which fur-

nish rules for arbitrators to conduct class proceedings. Id.,

at 25a–26a; see, e.g., American Arbitration Assn., Sup-

plementary Rules for Class Arbitrations (2011).

Even the section Lamps Plus cites in arguing that the

agreement bars class arbitration instead points to the

opposite conclusion. In describing what the agreement

covers, one provision states: “The Company and I mutually

consent to the resolution by arbitration of all claims or

controversies (‘claims’), past, present or future that I may

have against the Company.” App. to Pet. for Cert. 24a; see

id., at 24a–25a (“Specifically, the Company and I mutually

consent to the resolution by arbitration of all claims that

may hereafter arise in connection with my employment”).

Lamps Plus (along with the concurrence, see ante, at 1–2

(opinion of THOMAS, J.)) highlights “th[e] repeated use of

singular personal pronouns” there, contending that it is

incompatible with a form of arbitration that also involves

——————

1 In discussing another arbitration provision, this Court identically

reasoned: “[I]t would seem sensible to interpret the ‘all disputes’ and

‘any remedy or relief’ phrases to indicate, at a minimum, an intention

to resolve through arbitration any dispute that would otherwise be

settled in a court, and to allow the chosen dispute resolvers to award

the same varieties and forms of damages or relief as a court would be

empowered to award.” Mastrobuono v. Shearson Lehman Hutton, Inc.,

514 U. S. 52, 61–62, n. 7 (1995) (internal quotation marks omitted).

Here, that means sending to arbitration (among other things) class

disputes seeking class relief.

4 LAMPS PLUS, INC. v. VARELA

KAGAN, J., dissenting

other parties’ claims. Brief for Petitioners 17. But the use

of the first person singular merely reflects that the agree-

ment is bilateral in nature—between Varela and Lamps

Plus. Those pronouns do not resolve whether one of those

parties (“I”) can bring to arbitration class disputes, as well

as individual disputes, relating to his employment. The

part of the quoted section addressing that question is

instead the phrase “all claims or controversies.” And that

phrase supplies the same answer as the agreement’s other

provisions. For it too is broad enough to cover both indi-

vidual and class actions—the ones Varela brings alone and

the ones he shares with co-workers.2

II

Suppose, though, you think that my view of the agree-

ment goes too far. Maybe you aren’t sure whether the

phrase “any and all disputes, claims or controversies”

must be read to include class “disputes, claims or contro-

versies.” Or maybe you wonder whether the surrounding

“I” and “my” references limit that phrase’s scope, rather

than merely referring to one of the contract’s signatories.

In short, you can see reasonable arguments on both sides

——————

2 An additional semantic point that Lamps Plus makes essentially

concedes my reading of the agreement. At oral argument, Lamps Plus

acknowledged that the contract would authorize class arbitration if it

provided that Varela could bring to the arbitral forum any “lawsuits,”

rather than any “claims,” he had or could have brought against the

company. Tr. of Oral Arg. 31–32. The idea is apparently that suits can

be classwide while claims must be personal. But even assuming

(without accepting) that is so, the agreement never speaks only of

“claims.” Even when that word appears alone (rather than alongside

“disputes” or “controversies”), it in fact functions as a defined term

meaning “claims or controversies.” See App. to Pet. for Cert. 24a

(referring to “all claims or controversies (‘claims’)”). And if lawsuits are

not necessarily personal (as Lamps Plus admits), then neither are

controversies. So by Lamps Plus’s own reasoning, Varela should be

able to bring to arbitration all controversies (including classwide ones)

he had or could have brought to court.

Cite as: 587 U. S. ____ (2019) 5

KAGAN, J., dissenting

of the interpretive dispute—for allowing, but also for

barring, class arbitration. You are then in the majority’s

position, “accept[ing]” the arbitration agreement as “am-

biguous.” Ante, at 5. What should follow?

Under California law (which applies unless preempted)

the answer is clear: The agreement must be read to au-

thorize class arbitration. That is because California—like

every other State in the country—applies a default rule

construing “ambiguities” in contracts “against their draft-

ers.” Sandquist, 1 Cal. 5th, at 247, 376 P. 3d, at 514; see

Cal. Civ. Code Ann. §1654 (West 2011); see also Brief for

Contract Law Scholars as Amici Curiae 10–12, and n. 4

(listing decisions from all 50 States applying that rule).

This anti-drafter canon—which “applies with peculiar

force” to form contracts like Lamps Plus’s—promotes

clarity in contracting by resolving ambiguities against the

party who held the pen. Sandquist, 1 Cal. 5th, at 248, 376

P. 3d, at 514 (quoting Graham v. Scissor-Tail, Inc., 28 Cal.

3d 807, 819, n. 16, 623 P. 2d 165, 172, n. 16 (1981)); see

Ayres & Gertner, Filling Gaps in Incomplete Contracts, 99

Yale L. J. 87, 91, 105, n. 80 (1989). And the rule makes

quick work of interpreting the arbitration agreement here.

Lamps Plus drafted the agreement. It therefore had the

opportunity to insert language expressly barring class

arbitration if that was what it wanted. It did not do so. It

instead (at best) left an ambiguity about the availability of

class arbitration. So California law holds that Lamps Plus

cannot now claim the benefit of the doubt as to the agree-

ment’s meaning. Even the majority does not dispute that

point. See ante, at 5, 9.

And contrary to the rest of the majority’s opinion,3 the

FAA contemplates that such a state contract rule will

control the interpretation of arbitration agreements.

——————

3 I say “the majority’s,” but although five Justices have joined today’s

opinion, only four embrace its reasoning. See n. 8, infra.

6 LAMPS PLUS, INC. v. VARELA

KAGAN, J., dissenting

Under the FAA, courts must “enforce arbitration agree-

ments according to their terms.” Epic Systems Corp. v.

Lewis, 584 U. S. ___, ___ (2018) (internal quotation marks

omitted) (slip op., at 5); see 9 U. S. C. §4 (requiring that

“arbitration proceed in the manner provided for in such

agreement”). But the construction of those contractual

terms (save for in limited circumstances, addressed below)

is “a question of state law, which this Court does not sit to

review.” Volt Information Sciences, Inc. v. Board of Trus-

tees of Leland Stanford Junior Univ., 489 U. S. 468, 474

(1989). The Court has made that crucial point many

times. Nothing in the FAA (as contrasted to today’s ma-

jority opinion) “purports to alter background principles of

state contract law regarding” the scope or content of

agreements. Arthur Andersen LLP v. Carlisle, 556 U. S.

624, 630 (2009). Or again: When ruling on an arbitration

agreement’s meaning, courts “should apply ordinary state-

law principles.” First Options of Chicago, Inc. v. Kaplan,

514 U. S. 938, 944 (1995). Or yet again: The interpreta-

tion of such an agreement is “a matter of state law to

which we defer.” DIRECTV, Inc., 577 U. S., at ___ (slip

op., at 6). In short, the FAA does not federalize contract

law.

Except when state contract law discriminates against

arbitration agreements. As this Court has explained, the

FAA came about because courts had shown themselves

“unduly hostile to arbitration.” Epic Systems, 584 U. S., at

___ (slip op., at 5). To remedy that problem, Congress

built an “equal-treatment principle” into the Act, requiring

courts to “place arbitration agreements on an equal footing

with other contracts.” Kindred Nursing Centers L. P. v.

Clark, 581 U. S. ___, ___ (2017) (slip op., at 4); AT&T

Mobility LLC v. Concepcion, 563 U. S. 333, 339 (2011)

(internal quotation marks omitted); see 9 U. S. C. §2 (mak-

ing arbitration agreements “valid, irrevocable, and en-

forceable, save upon such grounds as exist at law or in

Cite as: 587 U. S. ____ (2019) 7

KAGAN, J., dissenting

equity for the revocation of any contract”). So any state

rule treating arbitration agreements worse than other

contracts “stand[s] as an obstacle” to achieving the Act’s

purposes—and is preempted. Concepcion, 563 U. S., at

343. That means the FAA displaces any state rule dis-

criminating on its face against arbitration. See id., at 341.

And the Act likewise preempts any more subtle law “dis-

favoring contracts that (oh so coincidentally) have the

defining features of arbitration agreements.” Kindred

Nursing, 581 U. S., at ___ (slip op., at 5). What matters,

as this Court reiterated last Term, is whether the state

law in question “target[s]” arbitration agreements, bla-

tantly or covertly, for substandard treatment. Epic Sys-

tems, 584 U. S., at ___ (slip op., at 7).4 When the law does

so, it cannot operate; when, conversely, it treats arbitra-

tion agreements the same as all other contracts, the FAA

leaves it alone.

Here, California’s anti-drafter rule is as even-handed as

contract rules come. It does not apply only to arbitration

contracts. Nor does it apply (as the rule we rejected in

Concepcion did) only a tad more broadly to “dispute-

resolution contracts,” pertaining to both arbitration and

litigation. 563 U. S., at 341 (holding that a ban on

collective-action waivers in those contracts worked to “disfa-

vor[ ] arbitration”). Instead, the anti-drafter rule, as even

the majority admits, applies to every conceivable type of

——————

4 In its many decades of FAA caselaw, the Court has preempted state

law in just one other, “narrow” circumstance: Whatever state law might

say, courts must find “clear and unmistakable evidence” before deciding

that an agreement authorizes an arbitrator to decide a so-called “ques-

tion of arbitrability.” Green Tree Financial Corp. v. Bazzle, 539 U. S.

444, 452 (2003) (plurality opinion) (internal quotation marks and

alterations omitted); Oxford Health Plans LLC v. Sutter, 569 U. S. 564,

569, n. 2 (2013). As the majority acknowledges, that requirement is not

at issue here because Varela and Lamps Plus agreed that a judge

should decide the availability of class arbitration (even assuming that

question is one of arbitrability). See ante, at 9, n. 4.

8 LAMPS PLUS, INC. v. VARELA

KAGAN, J., dissenting

contract—and treats each identically to all others. See

Sandquist, 1 Cal. 5th, at 248, 376 P. 3d, at 514 (“This

general principle of contract interpretation applies equally

to the construction of arbitration provisions”); ante, at 9–

10. And contrary to what the majority is left to insist, the

rule does not “target arbitration” by “interfer[ing] with

[one of its] fundamental attributes”—i.e., its supposed

individualized nature. Ante, at 11 (internal quotation

marks omitted); see ante, at 7–9. The anti-drafter rule

(again, quite unlike Concepcion’s ban on class-action

waivers) takes no side—favors no outcome—as between

class and individualized dispute resolution. All the anti-

drafter rule asks about is who wrote the contract. So if,

for example, Varela had drafted the agreement here, the

rule would have prevented, rather than permitted, class

arbitration.5 Small wonder, then, that this Court has

itself used the anti-drafter canon to interpret an arbitra-

tion agreement. See Mastrobuono v. Shearson Lehman

Hutton, Inc., 514 U. S. 52, 62 (1995) (construing an

ambiguous arbitration agreement against the drafter’s

interest). In that case (as properly in any other), the

rule’s through-and-through neutrality made preemption

unthinkable.6

So this case should come out Varela’s way even if the

agreement is ambiguous. To repeat the simple logic appli-

cable here: Under the FAA, state law controls the inter-

——————

5 Similarly,

if Lamps Plus, as the agreement’s author, had wanted

class arbitration (perhaps because that would resolve many related

cases at once) and Varela had resisted it (perhaps because he thought

his case better than the others), the anti-drafter rule would have

prevented, rather than permitted, class arbitration.

6 Our decision in DIRECTV, Inc. v. Imburgia, 577 U. S. ___ (2015),

also assumed that a court may generally apply a State’s anti-drafter

rule to arbitration agreements. It was only because the court there

applied that rule to an unambiguous contract—in contrast to what the

court would have done in a non-arbitration case—that we reversed its

decision. See id., at ___, ___ (slip op., at 7, 10).

Cite as: 587 U. S. ____ (2019) 9

KAGAN, J., dissenting

pretation of arbitration agreements unless that law dis-

criminates against arbitration; the anti-drafter default

rule is subject to no such objection; the rule therefore

compels this Court to hold that the agreement here au-

thorizes class arbitration. That the majority thinks the

contract, as so read, seriously disadvantages Lamps Plus,

see ante, at 7–8, is of no moment (any more than if state

law had instead construed the contract to produce adverse

consequences for Varela). The FAA was enacted to protect

against judicial hostility toward arbitration agreements.

See supra, at 6. But the Act provides no warrant for

courts to disregard neutral state law in service of ensuring

that those agreements give defendants the best terms

possible. Or said otherwise: Nothing in the FAA shields a

contracting party, operating against the backdrop of im-

partial state law, from the consequences of its own draft-

ing decisions. How, then, could the majority go so wrong?

Stolt-Nielsen offers the majority no excuse: Far from

“control[ling]” this case, ante, at 8, that decision addressed

a different situation—and explicitly reserved decision of

the question here. In Stolt-Nielsen, the contracting par-

ties entered into a formal stipulation that “they had not

reached any agreement on the issue of class arbitration.”

559 U. S., at 673. The case thus involved not the mere

absence of express language about class arbitration, but a

joint avowal that the parties had never resolved the issue.

Facing that oddity, an arbitral panel compelled class

arbitration based solely on its “own conception of sound

policy.” Id., at 675; see id., at 676 (“[T]he panel did [noth-

ing] other than impose its own policy preference”). This

Court rejected the panel’s decision for that reason, holding

that a party need not “submit to class arbitration unless

there is a contractual basis for concluding that the party

agreed to do so.” Id., at 684. But the Court went no fur-

ther. In particular, it did not resolve cases like this one,

where a neutral interpretive rule (even if not an express

10 LAMPS PLUS, INC. v. VARELA

KAGAN, J., dissenting

term) enables an adjudicator to determine a contract’s

meaning. To the contrary, the Court disclaimed any view

on that question. Yes, the Court held, “a contractual

basis” was needed for class arbitration. Ibid. (emphasis

added). But given the panel’s reliance on policy alone, the

Court explained that it had “no occasion to decide what

contractual basis” was required. Id., at 687, n. 10 (empha-

sis added); see Oxford Health Plans LLC v. Sutter, 569

U. S. 564, 571 (2013) (“We overturned the arbitral decision

[in Stolt-Nielsen] because it lacked any contractual basis

for ordering class procedures,” not because it relied on an

inadequate one).

Indeed, parts of Stolt-Nielsen—as well as later deci-

sions—indicate that applying the anti-drafter rule to

ambiguous language provides a sufficient contractual

basis for class arbitration. In Stolt-Nielsen, we faulted the

arbitrators for failing to inquire whether the relevant law

“contain[ed] a default rule” that would construe an arbi-

tration clause “as allowing class arbitration in the absence

of express consent.” 559 U. S., at 673 (internal quotation

marks omitted). We thus implied that such a default

rule—like the anti-drafter canon here—can operate to

authorize class arbitration when an agreement’s language

is ambiguous. And that is just how Concepcion (the other

decision the majority relies on, see ante, at 7–8, 10–12)

understood Stolt-Nielsen’s reasoning. Said Concepcion:

We held in Stolt-Nielsen “that an arbitration panel ex-

ceeded its power [by] imposing class procedures based on

policy judgments rather than the arbitration agreement

itself or some background principle of contract law that

would affect its interpretation.” 563 U. S., at 347 (empha-

sis added); see Oxford Health, 569 U. S., at 571 (similarly

noting that Stolt-Nielsen criticized the arbitrators for

failing to consider whether a “default rule” resolved the

class arbitration question (internal quotation marks omit-

ted)). The Court has thus (rightly) viewed the use of

Cite as: 587 U. S. ____ (2019) 11

KAGAN, J., dissenting

default rules as a run-of-the-mill aspect of contract inter-

pretation, which (so long as neutrally applied) can support

class arbitration.

And nothing particular to the anti-drafter rule justifies

a different conclusion, as the majority elsewhere suggests,

see ante, at 9–11.7 That rule, proclaims the majority,

reflects “public policy considerations,” rather than

“help[ing] to interpret the meaning of a term” as under-

stood by the parties. Ante, at 10. The majority here notes

that some commentators have viewed some equitable

factors as supporting the rule, see ante, at 9–10—which is

no doubt right. But see 11 R. Lord, Williston on Contracts

§30:1, p. 11 (4th ed. 2012) (Williston) (stating that the rule

is not justified by public interest considerations). But if

the majority means to claim—as it must to prove its

point—that the anti-drafter rule has no concern with what

“the part[ies] agreed to,” Stolt-Nielsen, 559 U. S., at 684,

then the majority is flat-out wrong. From an ex ante

perspective, the rule encourages the drafter to set out its

intent in clear contractual language, for the other party

then to see and agree to. See Ayres & Gertner, 99 Yale L.

J., at 91, 105, n. 80 (stating the modern view); 2 W. Black-

——————

7 The majority actually sends conflicting signals about the extent to

which its holding extends beyond the anti-drafter rule to other back-

ground principles that serve to discern the meaning of ambiguous

contract language. Many of the majority’s statements indicate that any

tool for resolving contractual ambiguity is forbidden if it leads to class

arbitration. See, e.g., ante, at 6 (stating flatly that “an ambiguous

agreement [cannot] provide the necessary ‘contractual basis’ for compel-

ling class arbitration”). But the part of the opinion focusing on the

anti-drafter rule suggests that today’s holding applies to only a subset

of contract default rules—to wit, those (supposedly) sounding in “public

policy considerations.” See ante, at 9–11. On that theory of the deci-

sion, courts and arbitrators will have to work out over time which

interpretive principles fall within that category. The majority’s own

flawed analysis of the anti-drafter canon, see infra, at 11–12, indicates

the perils of that undertaking.

12 LAMPS PLUS, INC. v. VARELA

KAGAN, J., dissenting

stone, Commentaries on the Laws of England 380 (1766)

(anticipating that view by 200-plus years). And from an

ex post perspective, the rule enables an interpreter to

resolve any remaining uncertainty in line with the parties’

likely expectations. See 11 Williston §30:1, at 11. Consider

this very contract. Lamps Plus, knowing about the anti-

drafter rule, still chose not to include a term prohibiting

class arbitration. And Varela, seeing only the language

sending “any and all disputes, claims, or controversies” to

arbitration, had no reason to think class disputes barred.

Cf. ibid. (“[T]he party addressed will understand ambigu-

ous language in the sense most favorable to itself ”). The

upshot is that the rule (as this Court recognized in another

arbitration case) protects against “unintended” conse-

quences. Mastrobuono, 514 U. S., at 63.

And even if that were not so evident, the FAA does not

empower a court to halt the operation of such a garden-

variety principle of state law. Nothing in the Act’s text

requires the displacement of state contract rules, as the

majority implicitly concedes. See ante, at 6. Nor do the

Act’s purposes, so long as the state rule (as is true here)

extends to all contracts alike, without disfavoring arbitra-

tion. See supra, at 6–7. The idea that the FAA blocks a

state rule satisfying that standard because (a court finds)

the rule has too much “public policy” in it comes only from

the majority’s collective mind. That approach disrespects

the preeminent role of the States in designing and enforc-

ing contract rules. It discards a universally accepted

principle of contract interpretation in favor of unsupported

assertions about what the parties must have (or could not

possibly have) consented to. It subordinates authoritative

state law to (at most) the impalpable emanations of federal

policy, impossible to see except in just the right light.8 For

——————

8 Given this extraordinary displacement of state law—which, as I

have shown, no precedent commands, see supra, at 9–10—I must admit

Cite as: 587 U. S. ____ (2019) 13

KAGAN, J., dissenting

that reason, it would never have graced the pages of

the U. S. Reports save that this case involves . . . class

proceedings.

The heart of the majority’s opinion lies in its cataloging

of class arbitration’s many sins. See ante, at 7–8. In that

respect, the opinion comes from the same place as (though

goes a step beyond) this Court’s prior arbitration deci-

sions. See, e.g., Concepcion, 563 U. S., at 350 (lamenting

that class arbitration “greatly increases risks to defend-

ants” by “aggregat[ing] and decid[ing] at once” the “dam-

ages allegedly owed to tens of thousands of potential

claimants”); Epic Systems, 584 U. S., at __ (slip op., at 8)

(similarly bemoaning the greater costs and complexity of

class proceedings). The opinion likewise has more than a

little in common with this Court’s efforts to pare back

class litigation. See, e.g., Comcast Corp. v. Behrend, 569

U. S. 27 (2013); Wal-Mart Stores, Inc. v. Dukes, 564 U. S.

338, 348–360 (2011). In this case, the result is to disre-

gard the actual contract the parties signed. And to dis-

miss the neutral and commonplace default rule that would

construe that contract against the drafting party. No

matter what either requires, the majority will prohibit

class arbitration. Does that approach remind you of any-

thing? It should. Here (again) is Stolt-Nielsen as Concep-

cion described it: The panel exceeded its authority by

——————

to not understanding JUSTICE THOMAS’s full concurrence in today’s

opinion. See ante, at 2 (expressing “skeptic[ism]” about the majority’s

reasoning but joining its opinion out of a (misplaced) respect for prece-

dent). I would think the opinion a hard pill to swallow for someone who

believes that any implied preemption “leads to the illegitimate—and

thus, unconstitutional—invalidation of state laws.” Wyeth v. Levine,

555 U. S. 555, 604 (2009) (THOMAS, J., concurring in judgment); see,

e.g., Bates v. Dow Agrosciences LLC, 544 U. S. 431, 459 (2005) (THOMAS,

J., concurring in judgment in part) (“[P]re-emption analysis is not a

freewheeling judicial inquiry into whether a state statute is in tension

with federal objectives” (internal quotation marks and alteration

omitted)).

14 LAMPS PLUS, INC. v. VARELA

KAGAN, J., dissenting

“imposing class procedures based on policy judgments

rather than the arbitration agreement itself or some back-

ground principle of contract law that would affect its

interpretation.” 563 U. S., at 347; see supra, at 10. Sub-

stitute “foreclosing” for “imposing” and that is what the

Court today has done. It should instead—as the FAA

contemplates—have left the parties’ agreement, as con-

strued by state law, alone.