Recent Supreme Court Decision Highlights Arbitration Opportunities for Builders
From NAHB Now
In a case with relevance to the home building industry, the U.S. Supreme Court held in Lamps Plus v. Varela (April 24, 2019), that the Federal Arbitration Act (FAA) envisions the use of traditional individualized arbitration, consequently, a party cannot be forced under the FAA to submit to class arbitration unless it is clearly and unmistakably permitted by an arbitration agreement (class arbitration is a type of arbitration that permits parties to bring an arbitration action on behalf of others with similar claims).
Under Lamps Plus, for example, in a matter governed by the FAA, a builder who has built multiple homes that suffer from a product defect could not be forced by those homeowners to arbitrate their claims collectively in one proceeding unless their contracts with the builder expressly provided for class arbitration. Absent that provision, the builder would be entitled to arbitrate each claim individually.
Notwithstanding this decision, to avoid any confusion, builders may wish to consult with their attorney about including an express agreement for individual arbitration.
Today, more than ever, builders need an alternative to litigation and the Lamps Plus case provides a good opportunity to revisit the subject of arbitration.