Arbitration for Transportation Workers? The Anticipated Push To Expand the FAA Exemption

As we indicated in a January 17, 2019 blog article, the New Prime v. Oliveira, 139 S. Ct. 532 (2019), opinion was likely to lead to uncertainty in the transportation industry.  Some imaginative commentators even forecast that the Federal Arbitration Act (FAA) Section 1 exemption could be a tool to unravel arbitration agreements with class waivers in a broad swath of companies that transport, carry or deliver goods or commodities.  We believe those commentators, however, are construing Section 1 far too broadly and out of context.

Now, we are seeing some of the arguments regarding the scope of the FAA’s Section 1 play out in Rittman v. Amazon.com, Case No. 2:16-cv-01554 (W.D. Wash.)  Rittmann involves a Fair Labor Standards Act collective action alleging that Amazon did not properly compensate its delivery drivers.  But, it has now focused on whether Amazon’s local delivery drivers (who may also use other means of delivery) fall within Section 1 exemption, making their arbitration agreements unenforceable after New Prime.  For those who may have forgotten, Section 1 excludes from the Act’s coverage: “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.”  9 U.S.C. § 1. Continue Reading

Fifth Circuit Addresses Notices of Collective Action for Those Who Signed Arbitration Agreements Requiring Only Individual Claims

Return to sender post stamp on white envelope, top viewThe intersection of Fair Labor Standards Act (FLSA) collective action procedures and employee arbitration agreements waiving aggregate actions has led to differing approaches among the district courts. In JPMorgan Chase & Co. (Case No. 18-20825, decided Feb. 21, 2019), the Fifth Circuit found that a district court does not have “discretion to send or require notice of a pending FLSA collective action to employees who are unable to join the action because of binding arbitration agreements.” And the same prohibition applied to requiring the employer to give contact information for those employees. Slip op. at 13 and n.23.

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Another Court Rejects Class Claims Contending That Vocational Students Are Really Employees

Mature adult man with tangled long curly hair and beard shearing himself with scissors. He is holding scissors with right hand. The background is white. Shot in studio with a medium format camera.In yet another challenge regarding the employment status of students and interns as employees, the Second Circuit has concluded quite rightfully that vocational students – even those at for-profit institutions – are still students.

We’ve seen this argument before in the context of both students and interns. (November 15, 2018, December 12, 2017, and May 13, 2013) Citing various tests, the plaintiffs challenge their status as interns or students, and contend that instead they were actually employees entitled to the minimum wage and overtime under the Fair Labor Standards Act (FLSA). These claims caused many internship opportunities to dry up, and have rarely succeeded, but they are still brought on occasion anyway.

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Background Check Disclosures with State Law Information Are Illegal, Ninth Circuit Declares in Class Action Case

Tired businessman with stack of office files

Check your background check disclosure forms. Now.

The Ninth Circuit has now declared that background check disclosure forms that include state law disclosures are illegal. Gilberg v. California Check Cashing Stores, LLC, Case No. 17-16263 (9th Cir. Jan. 29, 2019).

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Texas District Court Refuses to Certify Class of Nurses in Wage Antitrust Case

heap of dollars with stethoscope

Expert’s Report Didn’t Adequately Explain Causation

While antitrust cases are often good candidates for class action treatment, it is still important for the plaintiffs to demonstrate a connection between the alleged anti-competitive conduct and the alleged harm, as a recent case from the Western District of Texas found. In Maderazo v. VHS San Antonio Partners, L.P., Case No. SA-06-CA-535-OG (W.D. Tex. Jan. 22, 2019), the plaintiffs were registered nurses working for hospitals in the San Antonio area. They contended that between 2002 and 2007, the hospitals conspired to hold down the wages paid to their nursing staffs. This was accomplished, they contended, through a combination of participation in salary surveys and in-person, email and telephone communications between human resources employees of different hospitals. The proposed class had between roughly 5,000 and 11,000 members. Following what appears from the docket to have been nearly 10 years of litigation, the plaintiffs filed an amended motion to certify the class.

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District Court Decertifies Hostile Environment Sexual Harassment Suit Against Trucking Company

A beautiful, pensive woman in a broken down truck. Rifles in the back window.Most employment class actions today are wage and hour matters, but class actions for alleged discrimination are still brought and can present their own unique challenges for both plaintiffs and the defense. Apart from the procedural differences between Fair Labor Standards Act collective actions and Rule 23 class actions, one key difference between wage and hour cases and those for discrimination is the need to determine the employer’s intent. In sexual harassment cases, there is an additional element regarding how the plaintiff subjectively viewed the claimed conduct, adding another layer of determinations the court must make, one that may not be susceptible to class action treatment.

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New Prime Decision Adds Uncertainty to Arbitration in the Transportation Industry

Vintage red delivery van, isolated on white. With clipping path.

The U.S. Supreme Court’s decision in New Prime v. Oliveira, No. 17-340 (Jan. 15, 2019), has added uncertainty to arbitration agreements in the transportation industry by holding that the Federal Arbitration Act (FAA) § 1 exception covers both employees and independent contractors of a trucking company.

In a unanimous opinion written by Justice Neil Gorsuch, the Court found that the 1925 vintage language of § 1 of the FAA excluding “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce” applied beyond the formal employee or master-servant relationship to “agreements to perform work.”

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Supreme Court Decides First Arbitration Case on Its Docket – Henry Schein, Inc. v. Archer & White Sales, Inc.

Lost businessman in the fog with various circle signs pointing in opposite directions

As we noted in our Dec. 19, 2018, blog article, there were three arbitration cases involving the Federal Arbitration Act (FAA), all argued in October 2018, pending on the Court’s docket. Now, in a unanimous opinion written by Justice Brett Kavanaugh, Henry Schein, Inc. v. Archer & White Sales, Inc., No. 17-1272 (Jan. 8, 2019), has been decided. And as we sensed based on the oral argument, there was not much sympathy for the “wholly groundless” exception to the contractual delegation of arbitrability questions to an arbitrator.

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Courts Remain Skeptical of Certifying Data Privacy Class Actions

Hacker Stealing Data with Binary Data Technology Abstract

In this era where there appears to be a new data security incident announced each month, there is surprisingly little class certification jurisprudence for data security class actions. Indeed, to date we know of only four decisions that have addressed class certification of data privacy actions, excluding settlement certification, and only one of those addresses the release of employee data: Dolmage v. Combined Ins. Co. of Am., No. 14 C 3809, 2017 WL 1754772, at *7 (N.D. Ill., May 3, 2017); In re Target Corp. Customer Data Sec. Breach Litig., 309 F.R.D. 482, 484 (D. Minn., 2015); In re Hannaford Bros. Co. Customer Data Sec. Breach Litig., 293 F.R.D. 21, 33 (D. Me., 2013); and In re TJX Companies Retail Sec. Breach Litig., 246 F.R.D. 389, 397-98 (D. Mass., 2007). With only one exception (Target), courts have refused to certify contested data privacy classes.

The theme of decisions denying class certification is that causation and damages in data security actions are individualized questions that defeat the commonality or predominance tests of Rule 23(a) and Rule 23(b)(3). For example, in Dolmage, the defendant insurance company’s vendor posted Social Security numbers and other personal information of thousands of the defendant’s employees online. Dolmage, 2017 WL 1754772 at *1-2. The court, however, refused to certify a class of the employees and explained why data security cases may be unsuitable for class resolution. Id. at *6-10.

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California Off-the-Clock Case Involving Independent Contractors Crumbles

An inspector looks over a residential roof at the peak.

Extensive expert report still fails to establish fairness and manageability for trial.

A growing number of courts are questioning classwide proof in off-the-clock cases, and those examining expert testimony in such matters are increasingly coming to the conclusion that they cannot be fairly managed for trial.

We’ve blogged this issue several times (see, for example, January 8, 2019 and April 9, 2018). Another interesting recent example is the decision of the California Court of Appeal in McCleery v. Allstate Insurance Co., Case No. B282851 (Cal. App. Dec. 14, 2018). The McCleery plaintiffs were property inspectors working for various insurers who had been classified as independent contractors. They alleged that they were, in fact, employees and that they had been deprived of the minimum wage, overtime, and meal and rest periods under California law.

The case looked like hundreds of others brought in California, but it did have the interesting combination of independent contractor and off-the-clock (actually timekeeping) issues. It was also unusual in that the trial court initially refused to certify the class but was reversed by the court of appeal to more carefully review the plaintiffs’ proposed trial plan.

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