Arbitration Agreement with Conflicting Provision in Two Languages Saved by FAA Default Rule

The California Court of Appeal for the Second Appellate District recently added clarity to a somewhat puzzling trial court decision that had sent an employment dispute to nonbinding arbitration. See Western Bagel Co. Inc. v. Superior Court of Los Angeles County and Jose Calderon, Case No. B305625 California Court of Appeal, Second Appellate Dist. (filed June 24, 2021, certified for publication July 16, 2021). In the case, Jose Calderon filed a putative class action against Western Bagel Company claiming that the company failed to give its employees proper meal and rest breaks. Western Bagel responded by seeking to compel binding arbitration based on an arbitration agreement Calderon signed.

Because Calderon was a Spanish-speaker with only a basic English vocabulary, he was provided with both original English and Spanish versions of the arbitration agreement. And therein lies the rub! While other clauses in the English and Spanish versions of the agreement provide for or “strongly support the conclusion” of binding arbitration, the severability clause in the Spanish version of the agreement stated otherwise. It provided: Continue Reading

Has the 11th Circuit Clarified the Transportation Worker Exemption of the FAA or Just Created a Circuit Split?

In a published June 22 opinion, the Eleventh Circuit laid out a clear test for the Federal Arbitration Act (FAA) Section 1 exemption. It answered the reoccurring question “Who is a transportation worker?” See Hamrick v. Partsfleet, LLC, No. 19-13339, 2021 WL2546405 (11th Cir. June 22, 2021). Hamrick involved final-mile delivery drivers who transported goods and materials shipped from out-of-state to local warehouses and then to “their final destination” by the driver. Hamrick used his personal car to take car parts from Lakeland and Tampa, Florida warehouses to local Advance Auto Parts retailers.

While Hamrick signed an independent contractor agreement, he ultimately brought a Fair Labor Standards Act (FLSA) collective action seeking overtime compensation, liquidated damages, and declaratory and other relief, claiming he and other drivers were misclassified. Continue Reading

California Employers Must Pay Meal and Rest Period Premiums at the Regular Rate of Pay

When a California nonexempt employee is not provided a meal or rest period, Cal. Labor Code 226.7 requires an employer to pay a penalty to that employee in the amount of one hour of that employee’s “regular rate of compensation.”  It was an open question whether an employee’s “regular rate of compensation” meant the employee’s ordinary hourly rate of pay, or whether an employee’s “regular rate of compensation” has the same meaning as an employee’s “regular rate of pay” – which is the rate an employer must rely on when calculating overtime pay and includes all forms of compensation in addition to the employee’s hourly wage rate, such as non-discretionary bonuses.

In Ferra v. Loews Hollywood Hotel, LLC, Case No. S259172 (Cal. S. Ct., July 15, 2021), the plaintiff, a hotel bartender, brought a class action against the employer for allegedly underpaying penalties for missed meal or rest periods under California law. The core of her claim was that in calculating the hourly rate for the penalties, it only considered her hourly wage rate and did not consider other forms of compensation, such as incentive pay. Continue Reading

District Court Rejects Conditional Certification of FLSA Claims Inserted into Data Breach Class

Here’s a novel approach: What if you have an “off the clock” case where the court disfavors certification? Can you simply tack them onto claims in another pending class action lawsuit?

That was the tactic attempted by the plaintiffs in In Re Wawa, Inc. Data Security Litigation, Civil Action No. 19-6019 (E.D. Pa., May 24, 2021). In that case, the employer, which operated convenience stores, was the victim of a data breach. The resulting class actions arising from information stolen during the breach were divided into separate sets of claims for consumers, employees, and financial institutions. Continue Reading

Ohio District Court Rejects Multiple Challenges to Electronically Signed Arbitration Agreement

Following the United States Supreme Court’s decision three years ago in Epic Systems Corp. v. Lewis, courts have increasingly enforced arbitration agreements with class action waivers. We blogged about the Epic Systems decision here. While most courts and attorneys now accept the Epic Systems holdings, challenges are still being made but with generally little success, as a recent case demonstrates.

In Reulbach v. Life Time Fitness, Inc., Case No. 1:21 CV 1013 (N.D. Ohio, June 23, 2021), the plaintiff was employed as an hourly fitness instructor at the defendants’ fitness club. He contended that he was not paid for time performing duties such as attending meetings, training or cleaning fitness equipment. He brought suit in state court for violations of the FLSA, including collective action allegations, as well as individual claims for age discrimination. Continue Reading

The Supreme Court Now To Determine the Boundaries of Federal Court Jurisdiction Over Federal Arbitration Act Proceedings

The U.S. Supreme Court has now granted certiorari to decide if federal courts have subject matter jurisdiction to confirm or vacate an arbitration award under the Federal Arbitration Act (FAA), Sections 9 and 10.  9 U.S.C. §§ 9 & 10.  See Badgerow v. Walters, No. 20-1143 (Cert. granted 5-17-21).  The question presented is “[w]hether federal courts have subject matter jurisdiction to confirm or vacate an arbitration award under Sections 9 and 10 of the FAA where the only basis for jurisdiction is that the underlying dispute involved a federal question.”  (Emphasis added)

In its related opinion, the Fifth Circuit found a district court had subject matter jurisdiction over the plaintiff’s petition to vacate an arbitration award despite issues raised by earlier Supreme Court precedent.  See 975 F.3d 469 (2020). Continue Reading

Opinion of Wisconsin District Judge Again Illustrates that Arbitration Is a Creature of Contract

In deciding a reoccurring issue, Judge James D. Peterson of the Western District of Wisconsin found no valid arbitration agreement existed, because of a disclaimer in a 48-page employee handbook. See O’Bryan v. Pember Companies, Inc., Case No. 20-cv-664jdp, 2021 U.S. Dist. LEXIS 88300 (N.D. Wisc. May 10, 2021).

In O’Bryan, an employee of Pember Companies Inc. brought a proposed class and collective action under the Fair Labor Standards Act and Wisconsin law for unpaid wages. Pember responded with a motion to compel arbitration based on a dispute resolution procedure contained in its handbook, which provides:

I agree that all problems, claims and disputes experienced by me or Pember . . . related to my employment shall be resolved as outlined below. I agree to submit all such disputes to final and binding arbitration. Arbitration shall be the sole and exclusive forum and remedy for all covered disputes of either Pember . . . or me. (Emphasis added.)

The dispute resolution policy limited employees to individual claims and not class or collective actions. Further, the policy declared that it is “binding” and provided that the employee has read the entire provision and understands its restrictions and that the provision can only be revised by Pember’s president. But the handbook did not conclude with that language but also contained an employee acknowledgment form on its last page, which O’Bryan signed. That form, however, created enforcement problems for the dispute-resolution policy despite its seemingly straightforward language. Continue Reading

California Court Affirms Value of Employee Time Punches in Defeating Class Certification

In a sweet ruling for employers, a California court of appeal affirmed a trial court’s denial of class certification of a meal break claim due to employee timekeeping records. This decision, Salazar v. See’s Candy Shops Inc., is noteworthy, as it explains how employee timekeeping records can be used to defeat class certification following the California Supreme Court’s recent ruling that employee timekeeping records can establish a rebuttable presumption in favor of class certification.

The Claim

At issue in this case was whether the trial court properly denied class certification of a claim that the employer was not providing employees second meal breaks. Under California law, an employee is entitled to a second 30-minute meal period for shifts longer than 10 hours (absent a valid waiver). The plaintiff claimed that employees were provided a work schedule form that listed the times employees should take their two 10-minute rest periods and their first 30-minute meal period but that the schedule form did not contain any information about a second meal period. The plaintiff argued the schedule form’s failure to include a second meal period evinced a common policy of not providing second meal periods. Continue Reading

Ninth Circuit Holds That District Court Must Weigh Evidence to Determine Rule 23(b) Predominance

While statistical evidence has long been held to be probative on the issue of potential discrimination, it can also be tricky. Questions often abound regarding the collection of data used for statistical comparisons, the methodology used and the treatment of results. A recent decision from the Ninth Circuit holds that a district court cannot ignore these questions when deciding whether to certify a class but must actually resolve them when completing the requisite “rigorous” analysis.

In Olean Wholesale Grocery Cooperative, Inc. v. Bumble Bee Foods, LLC, Case No. 19-56514 (9th Cir., Apr. 6, 2021), the plaintiffs brought an antitrust case involving alleged price fixing in the canned tuna business. When the plaintiffs moved the court to certify a class of proposed purchasers of those products, the parties presented conflicting expert statistical testimony. Continue Reading

Can You Waive Appellate Review of an Arbitration Award? The Fourth Circuit Says Yes

Many arbitration agreements address the finality of any resulting award, with differing and sometimes vague language. A number of readers might assume that regardless of the agreement language, federal courts still retain jurisdiction to review awards under the Federal Arbitration Act, 9 U.S.C. § 10 (FAA). As a recent Fourth Circuit opinion reveals, the interpretation is a bit more complex than that.

In Beckley Oncology Associates, Inc. v. Abumasmah, No. 19-1751 (4th Cir., April 8, 2021), Judge Albert Diaz wrote an opinion exploring the validity of language in an employment agreement Dr. Rami Abumasmah had with Beckley Oncology Associates (BOA), which stated that an arbitrator’s award “shall be final and conclusive and enforceable in any court of competent jurisdiction without any right of judicial review or appeal” (emphasis in opinion). The employment agreement also had a severability clause stating that the invalidity of any agreement provision “shall not in any way affect the validity or enforceability of any other provision.” Continue Reading

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