Fifth Circuit Holds That Plaintiffs Too Can Waive Their Right To Arbitrate by Litigation

John LewisBy John Lewis on Posted in Arbitration

Few decisions have considered when a plaintiff waives his right to arbitrate through litigation conduct, but the Fifth Circuit has now done so for the second time. In Sabatelli v. Baylor Scott & White Health, Case No. 19-50047 (5th Cir. Oct. 21, 2020), a radiologist was forced to resign and filed a lawsuit raising age and disability discrimination claims in federal court. While the action alleged classwide claims for terminated Scott & White Clinic (SWC) employees over age 40, plaintiff Frank Sabatelli never took steps to certify the class.

SWC disputed Sabatelli’s claims while also pointing out that the claims were covered by the arbitration agreement in his employment contract. Still, neither party moved to compel arbitration at the pleading or discovery stage. Instead, SWC filed a motion for summary judgment. Sixteen months later, with the summary judgment motion in place, Sabatelli finally sought to arbitrate new claims for breach of the employment agreement based on lack of proper notice before his termination – not his pending discrimination claims. SWC sought dismissal of the contract claim from the arbitrator based on Sabatelli’s pursuit of his discrimination claims in federal court for more than a year. Continue Reading

Florida Decision Involving Workers Unable to Read English Illustrates the Basics for an Enforceable Arbitration Agreement

John LewisBy John Lewis on Posted in Arbitration Agreements

Sometimes, a decision can detail the requirements for an enforceable employee arbitration agreement better than a legal treatise. That is certainly true in Gustave v. SBE ENT Holdings, LLC, No. 1:19-cv-23961 (S.D. Fla. Sept. 30, 2020). In Gustave, 19 former food and beverage or kitchen workers at the Delano Hotel in Miami Beach, Florida, brought claims against the defendants for violations of Title VII of the 1964 Civil Rights Act, the Florida Civil Rights Act, the Age Discrimination in Employment Act (ADEA) and the Americans with Disabilities Act (ADA), and for a hostile and abusive working environment. The defendants had purchased the hotel in 2016 and, according to the plaintiffs, sought to “rebrand” the hotel by using younger workers.

Eventually, the defendants filed a motion to compel arbitration for 15 of the 19 plaintiffs. The motion was stayed for six months while arbitration-related discovery took place – including the plaintiffs’ depositions of at least four witnesses. Much of the discovery apparently centered around such issues as unconscionability, scope, waiver and novation, even though the plaintiffs’ signing of an Acknowledgement in which they agreed to arbitrate certain claims was undisputed. Ultimately, District Judge Robert N. Scola Jr. granted the motion to compel arbitration, but only after slogging through five counterarguments raised by the plaintiffs in opposition. Those arguments illustrate some of the basics required for an enforceable arbitration agreement. Continue Reading

Fifth Circuit Finds Grievance Settlement Extinguished FLSA Claims

Todd DawsonBy Todd Dawson on Posted in FLSA

The U.S. Court of Appeals for the Fifth Circuit’s recent decision in Stuntz v. Lion Elastomers, LLC, Case No. 19-40336 (Sept. 23, 2020), offers some reassurance to employers that wage and hour issues can be properly (and finally) resolved in grievance settlements.

The employer in Stuntz permitted its production employees to clock in as early as 30 minutes before the scheduled start of the shift, which the employer referred to as the “early relief period.” While not mandatory, employees were permitted to use the early relief period to shower, put on safety equipment, discuss plant operations and receive instructions from supervisors. Given its voluntary nature, the employer did not consider this time to be compensable. Continue Reading

North Carolina Court Rejects Collective Action Based on Regular Rate Issues

Greg MersolBy Greg Mersol on Posted in Collective Action

In some instances, it’s hard to see what benefit there is to a class action other than for the lawyers. This is particularly true in so-called “regular rate” cases challenging employer perks such as free meals, various kinds of bonuses, or other employee benefits. We’ve commented on these cases previously.

A recent case raises these same questions. In Alminiana v. Lowe’s Home Centers, LLC, Case No. 5:20-cv-00010 (W.D. N.C., Sept. 22, 2020), the complaint challenged the consequences of two benefits provided by an employer to its employees. The first was a one-time payment made by the company to its employees in 2018 to make up for 2017 changes in the tax code that year that had adversely affected them. The second was a program to promote charitable activities by paying employees for up to eight hours per year for doing volunteer work for charities. It’s pretty hard to argue with either of these. Continue Reading

Eleventh Circuit Invalidates Class Action Individual Incentive Awards

Greg MersolBy Greg Mersol on Posted in Incentive Awards

Yes, you read that right.

Class action litigation is fueled largely by the availability of often large attorney fee awards. To get a class action case in the first place, however, attorneys bringing them often entice a potential individual plaintiff into the role of class representative with the prospect of a monetary “incentive award,” usually in the thousands of dollars. Indeed, the giving of such awards has become commonplace or even routine. But is it lawful?

Apparently not. In Johnson v. NPAS Solutions LLC, Case No. 18-12344 (11th Cir. Sept. 17, 2020), the court dealt with what it described as a fairly typical settlement of a class action approved by a Florida district court. The case itself involved claimed violations of the Telephone Consumer Protection Act (TCPA), 47 U.S.C. § 227, for making automatic telephone calls without the recipient’s consent. The plaintiff contended that the defendant had made such calls to 179,642 telephone numbers and sought relief under the TCPA on behalf of a class. Continue Reading

Travel Time Compensable Under California Law Despite Contrary Union Agreement

Todd DawsonBy Todd Dawson on Posted in Wage and Hour

While California’s wage-and-hour rules recognize a number of exceptions for employees subject to a collective bargaining agreement, the California Supreme Court’s denial of review in Gutierrez v. Brand Energy Svcs. of Calif. is a reminder that such exceptions are not without limits. Case No. A154604, review denied 9/9/20.

The California wage order at issue in Gutierrez provided that “all employer-mandated travel that occurs after the first location where the employee’s presence is required by the employer shall be compensated at the employee’s regular rate of pay.” (Wage Order 16, § 5(A)). The wage order further provided that this requirement applied “to any employees covered by a valid collective bargaining agreement unless the collective bargaining agreement expressly provides otherwise.” (Id. at § 5(D), emphasis added). Continue Reading

Ninth Circuit Doesn’t Require Uber to Litigate Driver’s Data Security Breach Putative Class Action

John LewisBy John Lewis on Posted in Arbitration

A Ninth Circuit panel denied a mandamus petition attempting to overturn a district court order requiring arbitration of a putative class action brought by an Uber driver. The action claimed that Uber failed to protect drivers’ and riders’ personal information and botched a data security breach by online hackers.

The district court ultimately concluded that William Grice, an Alabama based Uber driver who never crosses state lines, did not qualify for the Federal Arbitration Act’s (FAA) § 1 exemption. As a reminder, Section 1 of the FAA exempts “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce” – the Section’s “residual clause.” 9 U.S.C. § 1 (Emphasis added). This case concerned the scope of that exception as applied to a ride-sharing service. Continue Reading

Missouri District Court Rules on Employment Class Action Procedural Quagmire

Greg MersolBy Greg Mersol on Posted in FLSA

Res judicata helps cut the Gordian knot

Rule 23 and FLSA Section 16(b) can provide myriad benefits to the plaintiffs in class actions, but in some instances the attorneys may resort to procedural runarounds to try to leverage those benefits even further. Courts have been less than receptive to these efforts, as a recent opinion from the Eastern District of Missouri demonstrates. Buchta v. Air Evac EMS, Inc., Case No. 4:19-cv-00976 (E.D. Mo. Aug. 10, 2020).

The case — really two class action cases — has a convoluted fact pattern, but we’ll hit just the high points. The disputes in the two related actions concerned claims for overtime against the same employer, an air ambulance company operating in several states in and around Kentucky. The first case, Peck v. Air Evac EMS, was filed in Kentucky in 2018 and settled in April 2019. The settlement in that case included a release of any claims relating to “failure to pay overtime,” “failure to pay wages,” and “any claim that was or could have been asserted in the action.” Following notice to the class, the Kentucky district court approved the settlement on a class-wide basis in January 2020. Continue Reading

Florida District Court Denies Conditional Certification in ‘Tip Credit’ Case

Greg MersolBy Greg Mersol on Posted in Class Certification

Tip credit issues are inherently difficult. Section 3(m) of the Fair Labor Standards Act permits an employer to count tips toward a portion of a tipped employee’s wages to meet the minimum wage (and in some instances overtime) requirements of the Act. The Department of Labor, however,  has gone back and forth over the requirements for tipped work and what the test is for the amount of side work permitted to take advantage of the tip credit. Even worse, courts have disagreed, both before and after the recent changes in the DOL guidance, over how the test is to be administered. The questions relate both to how side work is measured (i.e., is there a 20 percent limit?) and which activities actually produce tips and which ones do not.

But under either test, the question is fundamentally one that is not well-suited to class or collective action treatment. By its very nature, working in a restaurant entails ebbs and flows of customers, peaking around meal times and slowing during off times. There is disagreement over what might constitute “side work” (how about replacing a dirty piece of silverware for a customer?), and frequently side work is done in conjunction with tipped duties. Some customers want more service than others; some shifts are different from others. So it’s hard to say that even one day is similar to another, let alone that a class exists of “similarly situated” tipped servers. Continue Reading

Denial of Conditional Certification Highlights Importance of Handbook Policies

Todd DawsonBy Todd Dawson on Posted in Class Certification

A recent decision from the Eastern District of Wisconsin serves as a strong reminder that well-crafted handbook policies can sometimes save the day for employers in proposed Fair Labor Standards Act collective actions. Amandah v. Alro Steel Corp., No. 19-CV-1607-JPS (E.D. Wis. Aug. 21, 2020).

The plaintiff in Amandah brought a proposed collective action against his employer, claiming that the company unlawfully failed to compensate employees for all hours worked. Specifically, the plaintiff claimed that the employer maintained a policy encouraging employees to arrive 15 minutes early for work, but rounded the employees’ punch-in times to the scheduled start of the shift. The plaintiff’s proposed collective action encompassed hourly employees working at 73 warehouses spread across 12 states. Continue Reading

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