Split 5 to 4, Supreme Court Deals a Blow to Class Arbitrations

In Economy, Judiciary and Courts On

WASHINGTON — The Supreme Court ruled on Wednesday that workers at a California business could not band together to seek compensation for what they said was their employer’s failure to protect their data.

The vote was 5 to 4, with the court’s conservative members in the majority.

The decision was the latest in a line of rulings allowing companies to use arbitration provisions to bar both class actions in court and class-wide arbitration proceedings. In earlier 5-to-4 decisions concerning fine-print contracts with consumers and employment agreements, the court ruled that arbitration provisions can require disputes to be resolved one by one.

Those rulings can make it difficult for consumers and workers to pursue minor claims even where their collective harm was substantial.

Wednesday’s decision, Lamps Plus v. Varela, No. 17-988, started in 2016, when a hacker posing as a company official persuaded an employee of Lamps Plus, which sells lighting fixtures, to disclose the tax filings of about 1,300 workers. The hacker used the information to file a fraudulent tax return in the name of Frank Varela, a Lamps Plus employee.

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