DOJ Changes Position in a Class Waiver Case Pending Before the Supreme Court

By John Lewis on June 20, 2017 Posted in Class Action Waivers

Last Friday, the U.S. Department of Justice (DOJ), in a rare move, changed its position in a class waiver case pending before the U.S. Supreme Court. On Jan. 13, 2017, the Court granted certiorari in three consolidated cases to resolve whether arbitration agreements with class and collective waivers are enforceable under the Federal Arbitration Act (FAA) despite the National Labor Relations Board’s (NLRB’s) current interpretation of Sections 7 and 8 of the National Labor Relations Act (NLRA). We have extensively covered the lengthy run-up to the cases involving Epic Systems Corp., Ernst & Young and Murphy Oil USA Inc., including the grant of certiorari, in a Jan. 17, 2017, blog here and a subsequent Sixth Circuit opinion in a June 1, 2017, blog.

The consolidated cases include one involving the NLRB, NLRB v. Murphy Oil USA, Inc., No. 16-307. Initially the deputy solicitor general, Edwin S. Kneedler, was counsel of record on the certiorari petition in Murphy Oil filed on Sept. 9, 2016. But on June 16, that position changed in the DOJ’s amicus, or “friend of the court,” brief with Jeffrey B. Wall, acting solicitor general, as counsel of record. The brief described the basis for the office’s “reconsideration” after the new administration took office:

Although the Board’s interpretation of ambiguous NLRA language is ordinarily entitled to judicial deference, courts do not defer to the Board’s conclusion as to the interplay between the NLRA and other federal statutes. We do not believe that the Board in its prior unfair-labor-practice proceedings, or the government’s certiorari petition in Murphy Oil, gave adequate weight to the congressional policy favoring enforcement of arbitration agreements that is reflected in the FAA. Continue Reading

Supreme Court Limits Review of Certification Denials

By Greg Mersol on June 14, 2017 Posted in Class Certification

One of the difficulties of class action litigation that continues to vex employers is the frequent inability to obtain meaningful review of certification decisions. Because, the reasoning goes, certification orders are interlocutory in nature, there is no right of immediate review. While since 1998 there has been the potential for review of orders granting or denying certification of Rule 23 class actions under Rule 23(f), the decision whether to review is purely discretionary, akin to a petition for writ of certiorari. That discretion has been exercised in such a way that review of even highly questionable decisions is frequently unavailable and cases can continue to proceed and to increase cost and risk even while a petition for review is pending. These problems are even worse in so-called “conditional certification” decisions under the Fair Labor Standards Act (FLSA), where no review is available at all.

Ironically, while this problem is one primarily facing employers, attempts to find new ways to obtain interlocutory appellate review have come mainly from the plaintiffs’ bar. One method, when faced with the decision not to certify a case (or a decertification order) is for the plaintiffs to dismiss their own claims without prejudice to create a “final appealable order” and then to seek review at that time. We blogged about one such effort, which ultimately proved unsuccessful, in the case of Camesi v. University of Pittsburgh Medical Center, 729 F.3d 239 (3d Cir. 2013), and FLSA case. The Fourth Circuit reached a similar decision in Rhodes v. E.I. du Pont de Nemours & Co., 636 F.3d 88 (4^th Cir. 2011), while the Ninth and Second Circuits had allowed such tactics. Continue Reading

Time Spent In Post-Shift Security Checks Once Again Held Not Compensable

By Greg Mersol on June 12, 2017 Posted in FLSA, Retail, Wage and Hour

If you have Amazon Prime, you get free delivery in two business days. If you want to pay extra (whether Amazon Prime or not), you can get your order the next day. So how long does it take for Amazon to get rid of a case the United States Supreme Court says is meritless? Seven years now … and counting.

We’ve previously blogged the case of Integrity Staffing Solutions, Inc. v. Busk, 135 S. Ct. 513 (2014). That case considered the issue of whether time spent by Amazon warehouse workers going through security checks at the end of their workdays was compensable. The case was initially filed in 2010. Reversing the U.S. Court of Appeals for the Ninth Circuit, a unanimous Supreme Court held in 2014 that the time was not compensable, concluding that the time spent was not “integral and dispensable” to the workers’ duties. Continue Reading

NLRB V. Alternative Entertainment, Inc. – Sixth Circuit Joins the Seventh and Ninth Circuits in Rejecting Class Waivers

By John Lewis on June 1, 2017 Posted in Arbitration

In a strangely timed opinion, the Sixth Circuit has entered the fray over whether class and collective waivers in employee arbitration agreements violate the National Labor Relations Act (NLRA). Strangely timed because on January 13, 2017, the U.S. Supreme Court granted certiorari in three consolidated cases that will resolve if arbitration agreements with class and collective waivers are enforceable under the Federal Arbitration Act (FAA), irrespective of the Board’s current interpretation of the NLRA. We have been following the developing law in this area for years and addressed the Supreme Court’s grant of certiorari in a January 17, 2017 blog here. We also analyzed the Ninth and Seventh Circuit opinions in blogs on May 31, 2016 and August 24, 2016.

The consolidated cases, referenced above, will be argued during the Supreme Court’s upcoming term, which begins in October 2017, and an opinion will likely be issued in late 2017 or early 2018. So these issues should be finally resolved soon, and the case will likely either act as a de facto stamp of approval or an effective reversal of the Sixth Circuit’s decision. Continue Reading

Professional Cheerleader Case Presents Independent Contractor and Joint Employer Lessons

By Greg Mersol on May 30, 2017 Posted in Independent Contractors

sad teen cheerleader after losing game Unlike, say, mortgage loan officers or computer programmers, the population of professional cheerleaders is relatively small, but an ongoing case involving independent contractor and joint employer issues for one such group presents lessons for many others.

The Buffalo Jills were the cheerleading squad at Buffalo Bills professional NFL games. For almost 30 years, they performed services at games and elsewhere through various contractors. They not only cheered for the team at football games, but also made public appearances, published an annual swimsuit calendar, and had other activities such as an “Ambassador Squad” to give more women the chance to participate and even junior cheerleader programs. In 1995, they briefly tried to organize. Continue Reading

Independent Contractor Trucker Dodges FAA Arbitration and Keeps His Class Action Alive

By John Lewis on May 19, 2017 Posted in Arbitration, Independent Contractors

Traffic jam In Oliveira v. New Prime, Inc., No. 15-2364 (May 12, 2017), the U.S. Court of Appeals for the First Circuit confronted two arbitration-related questions of first impression in that Circuit. In the case, Dominic Oliveira had signed an Independent Contractor Operating Agreement with New Prime, Inc., which contained an arbitration provision governed by the Commercial Arbitration Rules of the American Arbitration Association. Believing he was underpaid as an independent contractor, Oliveira stopped driving but later was rehired by the same entity as a company driver. Oliveira contends that his job duties as a company driver and an independent contractor were “substantially identical.”

Oliveira eventually filed a class action against the Company based upon the Fair Labor Standards Act (FLSA) and the Missouri minimum-wage statute for failing to pay drivers the minimum wage. He also brought a class claim for breach of contract or unjust enrichment and an individual claim under Maine’s labor statutes. The Company moved, in part, to compel arbitration under the Federal Arbitration Act (FAA). The district court denied the motion to compel, concluding that the application of Section 1 of the FAA, exempting contracts of employment of transportation workers from the operation of the statute, was for the court not an arbitrator. But, the court found that discovery was needed to determine if Oliveira was an employee or an independent contractor before the court could determine whether the contract was covered by Section 1. Hence, the district court denied the motion to compel without prejudice and the Company appealed. Continue Reading

Supreme Court Rejects State Rule That Subjects Arbitration Agreements to Higher Standards

By John Lewis on May 16, 2017 Posted in Arbitration

Some wondered why the U.S. Supreme Court granted certiorari in Kindred Nursing Centers L.P. v. Clark, No. 16-32, and after oral argument on February 22, 2017, many felt they knew the outcome. Indeed, Justice Stephen Breyer commented during that argument:

“. . . Of course I’m highly suspicious as you can tell from my tone of voice. What I really think has happened is that Kentucky just doesn’t like the Federal law. That’s what I suspect.”

And Justice Ruth Bader Ginsburg asked:

But what about the principle that making an arbitration agreement harder to form than other agreements violates the Federal Arbitration Act. . . . [T]he main rule is equal footing. Arbitration we thought to be on the same footing as all other contracts. If you make the arbitration agreement harder to form because you have to have this explicit reference than other contracts, doesn’t that discriminate against arbitration agreements?

While everyone knows you can’t read too much into oral argument, there did seem to be some genuine skepticism among the justices. Continue Reading

California Supreme Court Clarifies “Day of Rest” Requirements

By Lucas Paule on May 10, 2017 Posted in Retail, Wage and Hour

California’s employment laws have consistently caused headaches for employers because even minor technical violations of these laws can fuel class action litigation and prove costly.

However, a recent decision by the California Supreme Court, Mendoza v. Nordstrom, Inc. (SC S224611), provides some clarity by tackling three burning questions regarding California’s day of rest statutes – Labor Code sections 552 and 556. Section 552 prohibits an employer from “caus[ing] his employees to work more than six days in seven.” Section 556 provides an exception to this rule “when the total hours of employment do not exceed 30 hours in any week or six hours in any one day thereof.”

In Mendoza, former employees of Nordstrom filed a class action against the retail chain in California state court for, among other things, failing to provide statutorily guaranteed days of rest. Nordstrom removed the action to federal court, which granted summary judgment on all claims other than the day of rest claims. The district court ruled in favor of Nordstrom after a trial on the merits. The case was then appealed to the Ninth Circuit, which filed an order requesting that the California Supreme Court resolve three unsettled questions of California law. Continue Reading

Arguments for Class Arbitration with an Agreement That Doesn’t Mention It, Again Fail

By John Lewis on May 3, 2017 Posted in Arbitration

The predicted demise of litigation over the availability of class arbitration has not taken place. And the new cases occur in many areas of the law. (See our November 11, 2013, March 12, 2015, September 9, 2015, and March 23, 2016, blog articles dealing with “gateway issues” and the availability of class arbitration). The most recent decision actually involves oil and gas leases rather than employment claims, but addresses the sometimes vexing issue of whether an agreement that does not even mention class arbitration can still be found to implicitly authorize it.

This was the ultimate issue addressed by district court Judge Matthew W. Brann in Chesapeake Appalachia L.L.C. v. Scout Petroleum LLC et al., Case No. 4:14-CV-0620 (M.D. Pa. April 28, 2017). In Chesapeake Appalachia, Scout Petroleum first attempted to bring a class arbitration for itself and a putative class of thousands of landowners to resolve a dispute about the calculation of royalties under the terms of the natural gas leases. Those leases contained an arbitration provision which provided:

ARBITRATION. In the event of a disagreement between Lessor and Lessee concerning this Lease, performance thereunder, or damages caused by lessee’s operations, the resolution of all such disputes shall be determined by arbitration in accordance with the rules of the American Arbitration Association. All fees and costs associated with the arbitration shall be borne equally by Lessor and Lessee. Continue Reading

Sixth Circuit Narrowly Construes CAFA’s Local Controversy Exception

By Greg Mersol on May 2, 2017 Posted in Class Action Fairness Act

Congress passed the Class Action Fairness Act (CAFA) in 2005 to address a series of well-documented abuses of the class action process. Among the protections of the act were provisions enabling class action defendants to remove class action cases more readily than had been allowed before. 28 U.S.C. § 1332(d). The new CAFA removal provisions very generally permitted removal of class actions filed in state court when the amount in controversy exceeds $5 million, there are at least 100 class members and any class member is a citizen of a different state from any defendant. 28 U.S.C. § 1332(d)(2), (10). Desiring to keep such claims in state court, plaintiffs have devised ways to thwart removal by, for example, artificially deflating the amount in controversy or deliberately withholding demands for higher amounts until the time for removal has arguably passed. We’ve blogged some of these efforts here. While many of these cases have been decided in contexts outside employment, they apply with equal force in cases arising from workplace disputes. Continue Reading