Class Arbitration After Concepcion and Lamps Plus
A shipping company and a group of animal feed importers agreed to arbitrate their disputes, and when a price fixing dispute produced hundreds of nearly identical claims, the two sides ended up stipulating to something unusual: that their own contract reached no agreement at all, one way or the other, about whether a class could be certified. The arbitration panel imposed class treatment anyway. Stolt-Nielsen S.A. v. AnimalFeeds International Corp., 559 U.S. 662 (2010), threw that ruling out, five to three with Justice Sotomayor recused, holding that imposing class arbitration on parties who had stipulated they never agreed to it is fundamentally at odds with the consent the Federal Arbitration Act requires.
That single ruling did more work than it is usually given credit for. It arrived a year before AT&T Mobility LLC v. Concepcion and did not need the preemption theory Concepcion supplied, because Stolt-Nielsen was never about whether a state could force class procedures onto an arbitration clause; it was about what the clause itself, read on its own terms, actually authorized. Concepcion answered a different question, whether a state rule treating class waivers as unconscionable could survive at all, and answered it by knocking the state rule out regardless of what the parties had agreed. Between them the two cases closed off both routes into class arbitration: a court could no longer import a class procedure through state contract doctrine, and an arbitrator could no longer infer one from a contract that was merely quiet about it.
A third route stayed open by accident, and Oxford Health Plans LLC v. Sutter, 569 U.S. 564 (2013), shows exactly how narrow it is. A pediatrician's contract with the insurer said no civil action could be brought in court over a dispute arising under the agreement, and an arbitrator read that broad exclusion as authorizing class treatment too. Oxford challenged the ruling right away, losing in the district court and the Third Circuit, and challenged it again after Stolt-Nielsen came down, asking the arbitrator to reconsider; he reaffirmed his own reading, and Oxford lost that second challenge as well. A unanimous Court, in an opinion by Justice Kagan, upheld the class arbitration anyway, not because the arbitrator was right, but because a court reviewing an arbitral award under the Federal Arbitration Act asks only whether the arbitrator was interpreting the contract, not whether the interpretation was a good one.
Lamps Plus, Inc. v. Varela closed even that path for new disputes by taking the interpretive question away from arbitrators in the first instance. Ambiguity about whether a clause authorizes class treatment no longer gets resolved in favor of either party's preferred reading; it gets resolved against class treatment as a matter of law, because the majority treated the stakes of the choice as too consequential to leave to an ordinary contract default. Oxford Health survives as a relic of a shorter window when an arbitrator's own generous reading of ambiguous language, once made, was nearly impossible to unwind. Nothing like it will happen again under a contract signed after 2019, because the ambiguity that made Sutter's case possible no longer produces an open question for an arbitrator to answer.
California employment law found a way around all three cases without ever asking an arbitrator to certify anything as a class. The state's Private Attorneys General Act lets an aggrieved employee sue an employer for Labor Code violations on the state's behalf, collecting penalties for herself and for every other employee the violation reached, a mechanism the California Supreme Court had shielded from arbitration entirely in Iskanian v. CLS Transportation Los Angeles, LLC. Viking River Cruises, Inc. v. Moriana, 596 U.S. 639 (2022), took that shield away. Justice Alito's opinion, on the point that the FAA preempts Iskanian's rule against dividing a PAGA action into the claims belonging to the individual plaintiff and the claims belonging to everyone else, held for a majority of the Court; the judgment as a whole drew eight votes, with only Justice Thomas dissenting. An employer with an arbitration clause could now compel arbitration of the plaintiff's own Labor Code claim.
What happened to the rest of the lawsuit is where the opinion got interesting, because the majority went a step further than the preemption question required it to. Reasoning from its own view of California's standing rules, the majority suggested that once a plaintiff's individual claim leaves the courthouse for arbitration, she loses the statutory standing PAGA requires to keep pursuing the claims she brought on behalf of everyone else, so the representative action should be dismissed. Justice Sotomayor's concurrence flagged that this was the Court's own guess about state law, not a holding California's own courts were bound by, writing that if the guess was wrong, California courts "will have the last word" on what its own standing statute means.
They did not wait long to take it. Adolph v. Uber Technologies, Inc., 14 Cal. 5th 1104 (2023), rejected the premise the Viking River majority had rested on, holding that a plaintiff who was an aggrieved employee when he filed his PAGA claim keeps his statutory standing to pursue the representative portion in court no matter what happens to his individual claim afterward, arbitration included. The two requirements for that standing, the court held, are simply that the plaintiff was employed by the defendant and that a Labor Code violation was committed against him, both of which are fixed at the moment the case is filed. Compelling the individual claim into arbitration changes where that claim gets decided. It does not unmake the standing the plaintiff already had.
An employer that wanted to use its arbitration clause to make a PAGA lawsuit disappear entirely now cannot do it through Viking River alone; the individual claim goes to arbitration and the representative claim for every other employee stays in court. The next employer to test this arrangement will not repeat Viking River's own losing argument that arbitrating the individual claim strips a plaintiff of standing to pursue the rest; Adolph closed that door. Expect the fight instead to move to what an arbitrator's own factual findings in the individual proceeding are worth against the representative claim left behind in state court, and expect a California Court of Appeal to take up that exact question sometime in the next two or three years.