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

Seventh Circuit Decertifies Sexual Harassment Class That Relied on Novel Theory

Sexual harassment of prison staff by prison inmates is a difficult issue. Courts have rightly held that harassment by inmates can be actionable when the employer fails to take reasonable steps to combat it, but prisoners are not employees and are already incarcerated, so they require very different remedies than those generally used in the workplace.

The Seventh Circuit recently addressed the issue of harassment by prisoners in Howard v. Cook County Sheriff’s Office and County of Cook, Case No. 20-1723 (7th Cir. Mar. 4, 2021). The Howard case was brought by 10 women who worked in or for the Cook County Jail. Around 100,000 inmates pass through that facility each year, and it houses an average of 6,500 inmates on any given day. The crux of their claim was that women working in the facility were constantly subjected to sexual harassment by inmates. They supported their claim with more than 1,700 filed reports of sexual harassment by male inmates, affidavits and the jail’s own policies, and they sought certification of a class of approximately 2,000 nonsupervisory women who worked in the jail or the adjacent courthouse. Continue Reading

Order Sending Former Mail Sorter to Arbitration Teaches Some Lessons About Who Is a Transportation Worker and Agreement Coverage

Since 2019, we have been tracking the decisions struggling to interpret the scope of the Federal Arbitration Act (FAA) Section 1 exemption for transportation workers. In other words, we’ve looked at who qualifies as a transportation worker “actually engaged in the movement of goods in interstate commerce,” as Circuit City Stores Inc. v. Adams, 532 U.S. 105, 119 (2001) defined it, without explaining the definition.

Now Judge Beth Labson Freeman of the Northern District of California has applied the transportation worker definition in a class action case in which a former mail sorter for UPS Mail Innovations, Inc. (UPSMI) sued UPSMI and Staffmark Investment, LLC (Staffmark), a staffing agency, with five class action claims and a representative claim under the California Private Attorneys General Act (PAGA). Five of those claims related to failure to provide meal periods, rest breaks, wages and improper practices involving that conduct. In response, Staffmark and UPSMI sought to compel arbitration of the individual claims, to dismiss the class claims and to stay the PAGA claims. Judge Freeman ultimately rejected Tracee Sheppard’s argument that she was a transportation worker exempt from the FAA, granted the motions to compel arbitration, dismissed the class claims and remanded the PAGA claim to state court. Sheppard v. Staffmark Investment, LLC, No. 20-cv-05443 (N.D. Cal. Feb. 23, 2021). Continue Reading

Implicit Waiver of The Right to Arbitrate by Litigation – A Massachusetts District Court Addresses The Factors

Complex cases can present difficult legal issues but may also illuminate how courts evaluate questions such as when a party has waived its right to arbitrate. This is true regardless of the type of claims presented because the analytical framework spans diverse areas of law. District Judge Allison D. Burroughs’ recent Memorandum and Order addresses arbitrability issues and waiver of the right to seek arbitration in a  detailed fashion. In re: Intuniv Antitrust Litigation, Case No. 1:16-cv-12653-ADB, (D. Mass.), originally decided Jan. 29, 2021, but filed Feb. 11, 2021.

Judge Burroughs’ opinion arose from an agreement between the brand and generic manufacturers of a drug called Intuniv, an ADHD medication. Defendants Shire LLC and Shire U.S., Inc. (“Shire”) manufacture Intuniv, a brand name for extended release guanfacine hydrochloride. Defendants Actavis LLC and related entities (“Actavis”) and Shire together produce Intuniv’s generic counterpart. The plaintiffs claim they were forced to pay inflated prices for Intuniv because of an anticompetitive agreement to delay competition for brand and generic Intuniv in violation of the Sherman Act.

Important arbitration and waiver issues emerged from this antitrust class action environment. It is those issues that this blog article examines.

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Florida Court Denies Conditional Certification in Tip Credit Case

Court also rejects ‘fail-safe class’ allegations

The restaurant industry has been among the hardest hit during the current pandemic, but that has not prevented plaintiffs from pursuing class and collective action claims against it. A recent case, however, has rejected two fairly common problems inherent in these kinds of cases.

In Balassiano v. Fogo De Chao Churrascaria (Orlando) LLC, Case No. 6:19-cv-2140-Orl-78EJK (M.D. Fla.), the plaintiff worked at the Orlando location of the Fogo de Chao Brazilian-style restaurant chain. Because of the Brazilian theme and the serving of meat off of skewers, several roles inside the restaurants have Brazilian titles and the lines between preparing and serving food are different from those in a more traditional American restaurant. Continue Reading

Ninth Circuit Rejects Airline’s Constitutional Challenges to California’s Wage Statement Statute

Virtually by definition, many transportation workers, and many employees of airlines and railroads in particular, regularly travel and work in many states. For the most part, that does not impede their work or their employers’ businesses, but what if one state’s laws (read California’s) are unusually burdensome?

That issue arose in a pair of class action cases filed in California district courts in which the plaintiffs, airline employees who frequently traveled out of state, complained that their wage statements did not comply with the dictates of California Labor Code § 226. Both district courts granted summary judgment in favor of the defendant airline. When the cases reached the U.S. Court of Appeals for the Ninth Circuit, it certified the question of whether Labor Code § 226 applied to these employees under state law. In June of last year, the California Supreme Court answered that question and held that employees who perform duties across the country – pilots, flight attendants and other interstate transport workers – are entitled to California-compliant wage statements (under Labor Code § 226) so long as California serves as their base of work operations. Ward v. United Airlines, Inc. 466 P.3d 309, 325 (Cal. 2020).

With that question answered, the Ninth Circuit addressed, and largely rejected, a series of arguments by the employer that the application of § 226 would violate federal law and the federal Constitution. Ward v. United Airlines, Inc. Case No. 16-16415 (9th Cir., Feb. 2, 2021). Continue Reading

Seventh Circuit Fires Warning Shot, USERRA May Require Paid Military Leave

In a case that it characterized as one of first impression in the federal courts of appeals, the Seventh Circuit held last week that the Uniformed Services Employment and Reemployment Rights Act, 38 U.S.C. § 4301 et seq. (“USERRA”), may, in some circumstances, require employers to provide paid leave to employees absent from work due to military service. White v. United Airlines, Inc., Case No. 19-2546 (February 3, 2021).

The plaintiff in White was an airline pilot and a reserve member of the United States Air Force.  Periodically, the plaintiff took short-term leave from his employment to attend military training sessions required for individuals in reserve status. Although the employer’s policies offered pay for some types of leave such as for jury duty, the plaintiff’s military leave was unpaid.  In addition to lost pay, the plaintiff’s military leave also resulted in a reduction of his collectively bargained profit-sharing payments because such payments were calculated as a percentage of total wages. Continue Reading

Ninth Circuit Holds Employee Expense Per Diem Can Constitute ‘Wages’ to Determine the Regular Rate

In a case involving two certified classes, the Ninth Circuit Court of Appeals concluded this week that an employer’s per diem paid to traveling employees to reimburse for the cost of meals, incidentals and housing while working away from home can constitute a “wage.” Clark v. AMN Services, LLC, Case No. 19-55784 (9th Cir., Feb. 8, 2021). As such, the per diem payments should have been included in the calculation of the employees’ “regular rate of pay” for determining overtime compensation.

Under the federal Fair Labor Standards Act (FLSA), employees are entitled to overtime pay at 1.5 times an employee’s “regular rate of pay.” An employee’s “regular rate of pay” includes the employee’s ordinary hourly rate of pay, as well as other compensation, such as non-discretionary bonuses. Therefore, an employee’s “regular rate of pay” may be higher than an employee’s ordinary hourly rate of pay. Expense reimbursements are not included in an employee’s “regular rate of pay.” Class action cases involving the regular rate are now becoming more common. Continue Reading

Seventh Circuit Finds Class of 37 Does Not Meet Rule 23’s Numerosity Requirement

As numbers go, 37 isn’t as famous as, say, 1 or 13. It’s a prime number, the atomic number of rubidium and the age of the peasant Dennis in the movie Monty Python and the Holy Grail, but not much else. Now, however, it may also have significance as a number too small to meet Rule 23(a)’s numerosity requirement in the right circumstances.

In Anderson v. Weinert Industries, Inc., Case No. 20-1010 (7th Cir. Jan. 28, 2021), the plaintiff sought to pursue claims for unpaid overtime wages against a Wisconsin roofing company. The claims were initially brought under the Fair Labor Standards Act (FLSA) and appear to have been conditionally certified under FLSA section 16(b), but there were only three opt-ins. Faced with a tiny collective, the plaintiff changed tactics and sought Rule 23 certification under state law. Continue Reading

The Fifth Circuit Rejects Two-Stage Conditional Certification Procedure for FLSA Collective Actions

Court directs application of a more rigorous and more sensible standard.

Much of the current tsunami of wage and hour litigation across the country has been fueled by the use of a two-step procedure in Fair Labor Standards Act (“FLSA”) collective actions that simultaneously facilitates the bringing of such claims and puts unreasonable pressure on defendants to settle them. We’ve commented on this procedure and its effects on several occasions. (Read our August 21, 2019, June 14, 2019, July 31, 2017 blogs). That procedure is fraught with problems, is replete with inaccurate terminology, and feeds rather than streamlines litigation.

For decades, defendants have been hampered in their efforts by procedural hurdles to effective challenges, but on January 12, 2021, in Swales v. KLLM Transport Services, L.L.C., the Fifth Circuit expressly rejected that process. Instead, the Fifth Circuit rejected the two-step process and the lenient standard courts have applied in authorizing notice to the class in  favor of a more “rigorous” one-step standard. Continue Reading

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