While the Supreme Court’s opinion in Southwest Airlines Co. v. Saxon, 142 S. Ct. 1783 (2022), brought needed clarity to the analysis of the class of workers excluded as “transportation workers” by the residual clause of the Federal Arbitration Act (FAA), many questions remain. We blogged about the Saxon decision on June 8, 2022.
Class action disability discrimination cases can be particularly difficult. While there is little question of whether a particular individual is in a protected group in a typical case involving race, gender or age, the question of whether an individual is disabled can be more complex. Further, questions may arise regarding the extent of a disability, whether it requires accommodation, the appropriate type of accommodation and how the claimed conduct relates to the disability.
For businesses using independent contractor vendors, misclassification claims are usually well-suited for class certification. A plaintiff’s path toward certifying a class can be relatively smooth when all vendors of a particular kind are treated as contractors. The argument goes that if one is misclassified, all are misclassified.
But a new Ninth Circuit ruling may help businesses change the path toward class certification into a dead-end road.
On June 15, the U.S. Supreme Court finally brought closure to the long-running, unsettled issue of whether California’s prohibition against arbitration agreement waivers of the right to bring representative actions under the California Labor Code Private Attorneys General Act (PAGA) is preempted by the Federal Arbitration Act (FAA). California’s appellate courts and the Ninth Circuit Court of Appeals have long held that such waivers are unenforceable under California state law (the Iskanian Rule). In Viking River Cruises, Inc. v. Moriana (U.S.S.C. Case No. 20-1573) (Viking River Cruises), the Supreme Court held that while the FAA does not preempt the Iskanian Rule’s prohibition on wholesale waivers of PAGA claims, the FAA does preempt the Iskanian Rule insofar as that rule precludes division of PAGA actions into individual and non-individual claims through an agreement to arbitrate.
For years courts have been struggling to determine the proper application of the Section 1 exemption of the Federal Arbitration Act (FAA). See 9 U.S.C. § 1. Now the U.S. Supreme Court has brought some clarity to the analysis. In Southwest Airlines Co. v. Saxon, Case No. 21-309 (June 6, 2022), the court unanimously concluded that Latrice Saxon, an airline ramp supervisor, was part of the “class of workers engaged in foreign or interstate commerce” and consequently was exempted from the FAA’s coverage. Saxon alleged that she regularly had to handle baggage, airmail and commercial cargo that had moved throughout the country, although Southwest disputed this on the ground that Saxon was merely a supervisor in charge of managing the people who actually handle baggage. See 993 F.3d 492, 494 (7th Cir. 2021).
In a much-anticipated opinion, the Supreme Court unanimously held this morning that a party claiming waiver of the right to arbitrate need not show prejudice, in Morgan v. Sundance, Inc., Case No. 21-328 (May 23, 2022). While the holding on this point is clear, the Court very explicitly declined to address a series of related issues raised by the parties. Thus, the opinion will likely make it easier to assert waiver, but many questions remain unanswered.
The case arose from a claim asserted by an hourly employee of a Taco Bell franchise, who had signed an agreement to arbitrate when he applied for work. In addition to his own claim, he asserted a nationwide collective action for unpaid wages under the Fair Labor Standards Act. For reasons the opinion does not disclose, the employer litigated the matter in federal court for nearly eight months, including filing a motion to dismiss and participating in mediation, both of which were unsuccessful. It then moved to compel arbitration pursuant to the Federal Arbitration Act (FAA).
Our prior blog articles predicted that the outcome in Badgerow v. Walters, No. 20-1143, might turn on whether the plain text of the Federal Arbitration Act (FAA) or its purposes would prevail. See our June 16 and Nov. 9, 2021 blog articles on the Badgerow case and the employment dispute that fueled it. As it turns out, Justice Elena Kagan and seven of her colleagues followed the “clear statutory directive” of the FAA and held that federal courts do not have subject matter jurisdiction to confirm or vacate an award under Sections 9 and 10 of the FAA. See 596 U.S. ____ (2022).
In 2021, the California Supreme Court handed down two important decisions, Donohue v. AMN Services, LLC and Ferra v. Loews Hollywood, LLC, that reinforce and refine tried-and-true lessons about meal and rest breaks. As California employers look ahead to their 2022 goals and try to lessen their risk of class action employment claims based on meal and rest break issues, compliance with these decisions should be top of mind.
Donohue: Do Not Round, Do Use a Drop-Down Menu
The first case, Donohue, was about an employer that rounded time punches to the nearest preset time increment. The employer in Donohue also used a timekeeping system that prompted an employee who punched a noncompliant break to select whether (a) she was provided an opportunity to take a break but chose not to, (b) she was provided a chance to take a break but chose to take a shorter break, or (c) she was not provided an opportunity to take a break.
By John B. Lewis
In two prior blogs, we have focused on a dispute over federal court jurisdiction to confirm or vacate an arbitration award under Section 9 and Section 10 of the Federal Arbitration Act (FAA). The dispute resulted in a Fifth Circuit opinion that ultimately made its way to the U.S. Supreme Court. See our blog post on Nov. 9, 2021. Now the Fifth Circuit has taken on a new FAA issue – who are the “parties” to the controversy for purposes of determining federal court jurisdiction? Does it include state-court pleadings or only “the parties to the petition to compel arbitration”? See ADT L.L.C. v. Richmond, No. 21-10023 (5th Cir. Nov. 10, 2021).
Telesforo Aviles was employed by ADT to install home security systems. At some point, Aviles began spying on customers with cameras he set up. Upon discovering this, ADT terminated Aviles, but only after over 200 customers were impacted. Kamala Richmond believed she and her family were victims. They sued ADT and Aviles in a Texas court seeking over $1 million in damages. The Richmonds’ contract with ADT, however, contained an arbitration provision. ADT then filed an action under Section 4 of the FAA in federal court based on complete diversity between the Richmonds and ADT, a citizen of Florida and Delaware.
One might expect that the plain text of a statutory provision would be in line with the overall goal of the law. But when that statute is the Federal Arbitration Act (FAA), it’s not necessarily the case. And many people even differ on what the original intent of the FAA was in 1925. In our June 16, 2021 blog article, we outlined the issues and challenges in Badgerow v. Walters, No. 20-1143, which was argued before the Supreme Court on Nov. 2, 2021. In Badgerow, the Court must decide whether federal courts have subject matter jurisdiction to confirm or vacate an award under Sections 9 and 10 of the FAA, as opposed to Section 4, which governs petitions to compel arbitration. See 9 U.S.C. §§ 9 and 10 compared to § 4.
As we stated in our June 16 blog, if the Court’s opinion is driven solely by the language of the act’s Section 4, it could have a far different result then the presumed purpose of the FAA – to facilitate enforcement of arbitration agreements.