The Legality of Class Action Waivers in Arbitration Agreements – SCOTUS Finally Speaks

The controversy surrounding the validity of employment arbitration agreements with class action waivers has been simmering since at least 2012. Now, with the Supreme Court’s decision in Epic Systems Corp. v. Lewis, we have an answer: They “must be enforced as written” despite any debatable policy within the National Labor Relations Act that suggests otherwise. Before we analyze the majority and dissenting opinions, let’s take a quick look backward.

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Washington Court Denies Plaintiffs’ Motion for Summary Judgment on Various Overtime Issues

Overconfidence won’t overcome questions of fact

Most practitioners and human resource professionals are already familiar with the increasingly difficult wage and hour laws in California and its “Mini Me” to the east, New York state. But some other states, including Oregon and Washington, have their own unique – though perhaps less burdensome – overtime laws.

In Mendis v. Schneider National Carriers, Case No. C15-0144-JCC (W.D. Wa., May 8, 2018), the plaintiffs, a class of truck drivers, brought suit under Washington state law for alleged unpaid overtime. Although the drivers were paid on a piece rate basis, they contended that they should have received overtime computed in accordance with Washington law rather than the arguably lower federal calculation. Emboldened by court rulings finding that they were entitled to overtime and certifying the class, the plaintiffs moved for partial summary judgment on a variety of issues, including the sufficiency of the employer’s time records and that of a “willful” violation that would double the claimed damages.

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Gutierrez v. Wells-Fargo Bank – Eleventh Circuit Sheds More Light on Waiver of Arbitration Rights in Putative Class Setting

Whether a defendant has waived its right to arbitrate as to unnamed class plaintiffs has been a troubling issue. Some courts base their analysis on their lack of jurisdiction over unnamed putative class members. Still others focus on how long the case has been pending and whether the defendant knew that some putative class members had arbitration agreements. Now, the Eleventh Circuit in Gutierrez v. Wells Fargo Bank, NA, No. 16-16820 (11th Cir. May 10, 2018), has added greater clarity to the analysis. The Gutierrez opinion resulted from five class actions brought by bank customers in 2008 and 2009 claiming that they were unlawfully charged overdraft fees by their banks. The opinion details a lengthy history of arbitration-related issues in the district and appellate courts.

The Procedural History

In November 2009, the district ordered all defendant banks to file motions directed to the complaints, including those to compel arbitration, by Dec. 8, 2009. Rather than move to arbitrate the claims of the named plaintiffs, Wells Fargo joined several other banks in filing a comprehensive motion to dismiss.

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Proposed Rule 23 Amendment for Class Action Settlement: Sea Change or Codification of the Status Quo?

We’ve noted several times in this blog the difficulties parties may face when trying to obtain court approval for a settlement they have reached. Recognizing many of these issues, new amendments to Federal Rule of Civil Procedure 23(e) are scheduled to take effect on Dec. 1, 2018.

One of the proposed amendments requires that “[t]he parties must provide the court with information sufficient to enable it to determine whether to give notice of the proposal to the class.” Proposed Rule 23(e)(1)(A). Under the new rule, the court must direct notice if the parties show the court that it will likely be able to (1) approve the settlement proposal and (2) certify the class for purposes of judgment on the proposal. At first glance, this appears to be a significant change to Rule 23(e), requiring settling parties to provide significantly more information at the preliminary approval stage than Rule 23 previously required. In practice, however, this is probably just the codification of the status quo for many courts and class counsel.

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California District Court Denies Certification of Class of Retail Loss Prevention Employees

Plaintiffs’ Arguments Miss the [fill in the blank]

One of the justifications and requirements for class treatment is that the plaintiffs’ claims all can be resolved in one stroke. This concept, which is embodied in the related elements of commonality and typicality and central to the Supreme Court’s Dukes decision, is frequently glossed over by parties or courts eager to confer class action status on a given dispute. In many cases, this is done not by looking at the evidence or the facts the plaintiffs must prove in order to establish their claims but largely by simply restating the claims themselves. But not all courts will sidestep such strategies.

In Faraji v. Target Corporation, Case No. 5:17-CV-00155-ODW-SP (C.D. Cal. Apr. 30, 2018), the plaintiff had the awkward job title of “executive team leader in asset protection,” which went by the equally awkward abbreviation ETL-AP. Even if you try to pronounce it (etlap?), it’s still awkward. The duties, however, were important for the operation of a large retail store.

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Ninth Circuit Finds Evidence at Class Certification Not Required to Be Admissible − The Last Word on the Issue?

In a 28-page opinion, a panel of the Ninth Circuit overturned a district court’s denial of class certification, in part, because the lower court required supporting evidence to be admissible. This decision certainly represents a split among the circuits and is also arguably contrary to the Supreme Court’s 2011 decision in Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011).

Writing for the majority in Sali v. Corona Regional Medical Center, No. 15-56460 (9th Cir. May 3, 2018), Judge Salvador Mendoza Jr. found that the district court had abused its discretion in denying certification of classes involving registered nurses. Those nurses claimed they were underpaid because of the Medical Center’s rounding of time, regular-rate calculations, wage statements and waiting time issues.

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Will SCOTUS Finally Decide What Language Authorizes Class Arbitration? Lamps Plus, Inc. v. Varela Might Just Do It.

As we noted in prior blog articles, questions regarding what authorizes class arbitration continue to arise despite class action waivers in many arbitration agreements. (See our Nov. 11, 2013, March 12, 2015, Sept. 9, 2015, March 23, 2016, and May 3, 2017, blog articles dealing with “gateway issues” and the availability of class arbitration.) Now, the U.S. Supreme Court has granted certiorari in a case that might finally resolve the issue. See Lamps Plus, Inc. v. Varela, No. 17-988, certiorari granted April 30, 2018. In its petition, Lamps Plus presented the question “[w]hether the Federal Arbitration Act forecloses a state-law interpretation of an arbitration agreement that would authorize class arbitration based solely on general language commonly used in arbitration agreements.”

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Sixth Circuit Reverses FLSA Holding on Church Volunteers

Ernest Angley is an evangelist and purported faith healer who operates a large church in Akron known as Grace Cathedral. It would be difficult to parody him, as his appearance, mannerisms and method of faith healing are already almost over the top. He has his own TV show (and network), and you can find lots of clips of him on YouTube if you are so inclined. He also has a large and dedicated following.

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California Court Issues Broad Decision on Illinois BIPA Class Claims

California District Court construes Illinois’s statute more broadly than Illinois’s own courts do.

On April 16, 2018, the court in In Re Facebook Biometric Info. Privacy Litigation, 3:15-cv-03747 (N.D. Cal.), certified class action claims under Illinois’ Biometric Information Privacy Act (BIPA). This lawsuit involves Facebook’s Tag Suggestions feature. The plaintiffs in that case claim that Facebook’s “Tag Suggestions” performs facial recognition on Facebook users’ photos to identify them, without providing advance notice or obtaining their consent. Facebook has contested these allegations throughout the litigation and contends that it has not violated BIPA. We previously posted about this lawsuit, and the court’s finding that plaintiffs’ allegations of procedural violations of BIPA’s information and consent provisions were sufficient to confer standing.

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Off-the-Clock Cases Stumble

In virtually every case, so-called off-the-clock disputes come down to the situations of individuals rather than classwide conduct. An employee may claim that a night supervisor told them not to record time after midnight. An individual employee may construe criticism that they are working too slowly as an admonition not to record time. Employees may find it too inconvenient to put in for breaks or meal periods they have missed for worktime emergencies. Given that the employees must prove not only that they worked off the clock but also that the employer was aware of it, almost by definition these claims should devolve into individual inquiries. For this reason, while such claims are increasingly common, careful review often reveals that they should not be maintained on a class or collective basis.

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