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

Greg MersolBy Greg Mersol on Posted in FLSA

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

Ninth Circuit Again Complicates CAFA Removal Standards

Matthew GoodmanBy Matthew Goodman on Posted in Class Action Fairness Act

Congress enacted the Class Action Fairness Act to address perceived problems with the handling of class actions by courts. Among its provisions was one permitting removal of more class action claims to federal court. The Ninth Circuit in particular was unfriendly to these new provisions, but, we had thought, the Supreme Court put the matter to rest in 2014 (See our December 16, 2014 blog), and last year we noted that the Ninth Circuit seemed to have accepted and was applying the standards enunciated by the Supreme Court (See our September 30, 2019 blog).

We may have spoken too soon, at least with respect to some Ninth Circuit panels. Continue Reading

Once More Before the High Court – Henry Schein, Inc. v. Archer And White Sales, Inc. – But New Questions Emerge

John LewisBy John Lewis on Posted in Arbitration Agreements

We know now under Epic Systems that arbitration agreements with class action waivers can be enforced, but questions continue to emerge from specific arbitral agreements and instances where they are silent on certain issues, such as who determines whether a dispute is arbitrable in the first place.

In 2019, some may have thought that the certiorari-worthy issues in Henry Schein, Inc. v. Archer And White Sales, Inc. were resolved by the Supreme Court. The case arose from an antitrust action involving the manufacture and distribution of dental equipment. See the Supreme Court opinion at 139 S. Ct. 524, 529 (2019). We wrote about that unanimous January 8, 2019 opinion in our blog post of Jan. 15, 2019, noting that while that 2019 opinion “spelled the death knell for the ‘wholly groundless’ exception” as applied by the Fifth Circuit, “other issues lurk in the background.” Indeed, the court remanded the case for the Fifth Circuit to determine if the parties’ arbitration agreement “in fact delegated the arbitrability question to an arbitrator.” The Court of Appeals was also authorized to address “other arguments that Archer And White has properly preserved.” See 139 S. Ct. at 531. Continue Reading

Eleventh Circuit Upholds Small Fee Award in FLSA Case

Greg MersolBy Greg Mersol on Posted in FLSA

When is a win not a win?

One ace in the hand of plaintiffs’ counsel in Fair Labor Standards Act (FLSA) litigation (as well as claims under Title VII, the Americans with Disabilities Act or the Age Discrimination in Employment Act) is their ability to recover attorney fees should they prevail. While that is, indeed, a strong card, it can be overplayed, as a recent case demonstrates.

In Vasconcelo v. Miami Auto Max, Inc., Case No. 19-10679 (11th Cir. Nov. 25, 2020), the plaintiff brought an FLSA claim based on alleged problems with the employer’s commission draw system that he contended deprived him of the minimum wage in some weeks. The employer made a Rule 68 offer of judgment for $3,500 plus reasonable attorney fees, an offer the plaintiff rejected. Continue Reading

Food Delivery Driver Opinion Sheds More Light on the FAA Exemption and Use of CPR Arbitration Rules

John LewisBy John Lewis on Posted in Arbitration

Plaintiff Jacob McGrath filed a nationwide Fair Labor Standards Act (FLSA) action ultimately involving approximately 4,000 food delivery drivers for DoorDash Inc. alleging that the drivers, known as “Dashers,” were misclassified as independent contractors and not paid for all hours they worked. DoorDash responded by filing a motion to compel arbitration for those individuals who joined the litigation via consent forms but had not opted out of arbitration under the provisions of the relevant arbitration agreements.

Judge Edward M. Chen of the Northern District of California granted the motion on November 5th after rejecting a number of potentially impactful arguments made by the plaintiffs. McGrath v. DoorDash, Inc., No. 19-cv-05279 (N.D. Cal. Nov. 5, 2020). Continue Reading

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

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