Recent Decisions Don’t Provide Useful Guidance on Tests for the FAA Exemption of Transportation Workers

By John Lewis on April 29, 2019 Posted in Arbitration, Arbitration Agreements

Sometimes being right is not a virtue, especially when it comes to the Federal Arbitration Act § 1 exemption. We predicted uncertainty after the New Prime v. Oliveira decision and got it. See our Jan. 17, 2019, blog post on the exemption. Indeed, if anything, recent decisions have raised more questions than answers. Part of the problem stems from the fact that in New Prime the parties admitted that Oliveira worked in interstate commerce, so applicable tests for coverage were not considered. See 139 S. Ct. 532, 539 (2019).

On April 23, 2019, District Judge John C. Coughenour of the Western District of Washington ruled on the pending motion to compel arbitration in Rittman v. Amazon.com, Case No. 2:16-cv-01554 (W.D. Wash.), Order of 4-23-19. We previously covered the case in a March 12, 2019, blog post. Continue Reading

SCOTUS Reverses Ninth Circuit on Proper Bases for Class Arbitrations

By John Lewis on April 25, 2019 Posted in Arbitration, Arbitration Agreements

The U.S. Supreme Court, in a 5-4 decision, ruled that arbitration agreements must provide a “contractual basis for concluding that the part[ies] agreed to [class arbitration].” Reversing the Ninth Circuit, Chief Justice John Roberts found not only that the Court had jurisdiction over the case but also that the state law contract construction rule dealing with ambiguity applied by the Ninth Circuit was inconsistent with the Federal Arbitration Act core principle that consent of the parties was required. See Lamps Plus, Inc. v. Varela, No. 17-988 (April 24, 2019).

The Decisions Below

Lamps Plus was subjected in 2016 to a successful phishing attack, during which one of its employees sent copies of current and former employees’ 2015 W-2 forms to a third party. Shortly thereafter, Frank Varela filed a putative class action in California federal court seeking relief for the data breach. Lamps Plus responded by seeking individual arbitration under Varela’s arbitration agreement. Instead, the district court interpreted the arbitration agreement to authorize class arbitration. A divided Ninth Circuit panel affirmed. Continue Reading

Illinois District Court Decertifies Equal Pay Act Collective Class Involving Physicians

By Greg Mersol on April 24, 2019 Posted in FLSA

Section 16(b) of the Fair Labor Standards Act (FLSA) is the provision that requires those participating in a federal claim for minimum wages or overtime to opt in to the class, making Rule 23 inapplicable. The same enforcement applies to claims under the Equal Pay Act (EPA), 29 U.S.C. Section 206(d). The EPA is itself the result of a 1963 amendment to the FLSA, predating Title VII’s prohibition on sex discrimination by several months but relying on Section 16(b), not the Equal Employment Opportunity Commission, for enforcement.

In plain English, the use of the FLSA’s enforcement mechanism means that the opt-in requirement for collective actions under the FLSA applies to the EPA as well. And that includes the use of the now-familiar procedure of a lower standard for conditional certification followed by (if granted) a period of notice and opting in, followed by a motion for decertification under a higher standard. And as with the FLSA, while conditional certification motions may be easier to obtain, holding the collective action together following decertification is much harder, as a recent case demonstrates. Continue Reading

Missouri District Court Decertifies FLSA Class of IT Workers

By Greg Mersol on April 23, 2019 Posted in FLSA

We’ve noted before that while conditional certification motions are often granted, such classes fare far less well at the second decertification stage and just as poorly on the eve of trial. See: “Ninth Circuit Affirms Decertification of FLSA Off-the-Clock Case” from Sept. 21, 2018, and “Ohio District Court Decertifies Class of Health Care Workers in Meal Break Case” from Feb. 12, 2013. The problem in many respects is that some courts will conditionally certify even questionable cases with the expectation that they will settle, and will only begin to grapple seriously with the underlying problems after the parties have expended considerable time, money and effort. A recent case demonstrates this point.

In Kumar v. Tech Mahindra (Americas) Inc., Case No. 4:16-cv-00905-JAR (E.D. Mo. March 25, 2019), the plaintiffs brought suit against an IT consulting business on behalf of an alleged class of technical workers, contending that they were misclassified as exempt from overtime. The proposed class included those working in “engineer” roles across several pay bands. They asserted claims not only under the FLSA, but also under the laws of Missouri and Washington state. Continue Reading

Illinois District Court Stays Conditional Certification Order Pending Appeal on Arbitrability Issues

By Greg Mersol on April 10, 2019 Posted in Arbitration Agreements

More games of cat and mouse

Following the Supreme Court’s decision in Epic Systems Corp. v. Lewis, 138 S. Ct. 1632 (2018), plaintiffs have tried to come up with strategies to address the impact of arbitration agreements in class and collective cases. (We blogged the Epic Systems decision here). Defendants, in turn, have had to address courts that have limited or that have refused to enforce such agreements despite the broad holdings in the Epic Systems case.

Case in point. In Bigger v. Facebook, Inc., Case No. 1:17-cv-7753 (N.D. Ill.), the plaintiff was a former client solutions manager for Facebook. She contended that she and others in related positions were misclassified as exempt and should have been paid overtime under the Fair Labor Standards Act. When the plaintiff moved for conditional certification, the defendant responded that between half and 80% of the putative class members had signed arbitration agreements and should not be provided notice or a period to opt-in as their sole remedy was in arbitration. It also sought to have the arbitration agreements declared valid and enforceable. The court granted the motion for conditional certification anyway, noting that the arbitration agreements could be addressed later on. Continue Reading

Kentucky Rejoins the Majority – New Law Permits Mandatory Arbitration Agreements

By John Lewis on March 28, 2019 Posted in Arbitration, Arbitration Agreements

A Sept. 27, 2018, Kentucky Supreme Court ruling found that mandatory arbitration agreements conditioned on employment were not enforceable. See Northern Kentucky Area Development District v. Snyder, No. 2017-SC-000277-DG. The opinion not only isolated Kentucky regarding its enforcement of arbitration agreements but also raised issues regarding the potential impact of Federal Arbitration Act (FAA) pre-emption.

In the case, Danielle Snyder, who worked as an administrative purchasing agent, brought an action under the Kentucky Whistleblower Act and Kentucky Wages and Hours Act after she was terminated. The Kentucky Supreme Court ultimately ruled that her employer “acted beyond the scope of its power when it conditioned Snyder’s employment on her willingness to sign an arbitration agreement.” And it found that “the FAA does not mandate a contrary holding . . . .”

But a careful reading of Kindred Nursing Centers Limited Partnership v. Clark, opinion 137 S. Ct. 1421 (2017), left many very skeptical of the validity of the Kentucky high court’s reasoning. Challenges based on FAA pre-emption were almost a certainty. Now, the issue is effectively moot. Continue Reading

Arbitration for Transportation Workers? The Anticipated Push To Expand the FAA Exemption

By John Lewis on March 12, 2019 Posted in Arbitration, Arbitration Agreements

As we indicated in a January 17, 2019 blog article, the New Prime v. Oliveira, 139 S. Ct. 532 (2019), opinion was likely to lead to uncertainty in the transportation industry. Some imaginative commentators even forecast that the Federal Arbitration Act (FAA) Section 1 exemption could be a tool to unravel arbitration agreements with class waivers in a broad swath of companies that transport, carry or deliver goods or commodities. We believe those commentators, however, are construing Section 1 far too broadly and out of context.

Now, we are seeing some of the arguments regarding the scope of the FAA’s Section 1 play out in Rittman v. Amazon.com, Case No. 2:16-cv-01554 (W.D. Wash.) Rittmann involves a Fair Labor Standards Act collective action alleging that Amazon did not properly compensate its delivery drivers. But, it has now focused on whether Amazon’s local delivery drivers (who may also use other means of delivery) fall within Section 1 exemption, making their arbitration agreements unenforceable after New Prime. For those who may have forgotten, Section 1 excludes from the Act’s coverage: “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” 9 U.S.C. § 1. Continue Reading

Fifth Circuit Addresses Notices of Collective Action for Those Who Signed Arbitration Agreements Requiring Only Individual Claims

By John Lewis on February 25, 2019 Posted in Arbitration Agreements, FLSA

Return to sender post stamp on white envelope, top view The intersection of Fair Labor Standards Act (FLSA) collective action procedures and employee arbitration agreements waiving aggregate actions has led to differing approaches among the district courts. In JPMorgan Chase & Co. (Case No. 18-20825, decided Feb. 21, 2019), the Fifth Circuit found that a district court does not have “discretion to send or require notice of a pending FLSA collective action to employees who are unable to join the action because of binding arbitration agreements.” And the same prohibition applied to requiring the employer to give contact information for those employees. Slip op. at 13 and n.23.

Another Court Rejects Class Claims Contending That Vocational Students Are Really Employees

By Greg Mersol on February 22, 2019 Posted in FLSA

Mature adult man with tangled long curly hair and beard shearing himself with scissors. He is holding scissors with right hand. The background is white. Shot in studio with a medium format camera. In yet another challenge regarding the employment status of students and interns as employees, the Second Circuit has concluded quite rightfully that vocational students – even those at for-profit institutions – are still students.

We’ve seen this argument before in the context of both students and interns. (November 15, 2018 , December 12, 2017, and May 13, 2013) Citing various tests, the plaintiffs challenge their status as interns or students, and contend that instead they were actually employees entitled to the minimum wage and overtime under the Fair Labor Standards Act (FLSA). These claims caused many internship opportunities to dry up, and have rarely succeeded, but they are still brought on occasion anyway.

Background Check Disclosures with State Law Information Are Illegal, Ninth Circuit Declares in Class Action Case

By Todd Lebowitz on February 1, 2019 Posted in FCRA

Tired businessman with stack of office files

Check your background check disclosure forms. Now.

The Ninth Circuit has now declared that background check disclosure forms that include state law disclosures are illegal. Gilberg v. California Check Cashing Stores, LLC, Case No. 17-16263 (9^th Cir. Jan. 29, 2019).