The Supreme Court Now To Determine the Boundaries of Federal Court Jurisdiction Over Federal Arbitration Act Proceedings

By John Lewis on June 16, 2021 Posted in Arbitration

The U.S. Supreme Court has now granted certiorari to decide if federal courts have subject matter jurisdiction to confirm or vacate an arbitration award under the Federal Arbitration Act (FAA), Sections 9 and 10. 9 U.S.C. §§ 9 & 10. See Badgerow v. Walters, No. 20-1143 (Cert. granted 5-17-21). The question presented is “[w]hether federal courts have subject matter jurisdiction to confirm or vacate an arbitration award under Sections 9 and 10 of the FAA where the only basis for jurisdiction is that the underlying dispute involved a federal question.” (Emphasis added)

In its related opinion, the Fifth Circuit found a district court had subject matter jurisdiction over the plaintiff’s petition to vacate an arbitration award despite issues raised by earlier Supreme Court precedent. See 975 F.3d 469 (2020). Continue Reading

Opinion of Wisconsin District Judge Again Illustrates that Arbitration Is a Creature of Contract

By John Lewis on May 17, 2021 Posted in Arbitration

In deciding a reoccurring issue, Judge James D. Peterson of the Western District of Wisconsin found no valid arbitration agreement existed, because of a disclaimer in a 48-page employee handbook. See O’Bryan v. Pember Companies, Inc., Case No. 20-cv-664jdp, 2021 U.S. Dist. LEXIS 88300 (N.D. Wisc. May 10, 2021).

In O’Bryan, an employee of Pember Companies Inc. brought a proposed class and collective action under the Fair Labor Standards Act and Wisconsin law for unpaid wages. Pember responded with a motion to compel arbitration based on a dispute resolution procedure contained in its handbook, which provides:

I agree that all problems, claims and disputes experienced by me or Pember . . . related to my employment shall be resolved as outlined below. I agree to submit all such disputes to final and binding arbitration. Arbitration shall be the sole and exclusive forum and remedy for all covered disputes of either Pember . . . or me. (Emphasis added.)

The dispute resolution policy limited employees to individual claims and not class or collective actions. Further, the policy declared that it is “binding” and provided that the employee has read the entire provision and understands its restrictions and that the provision can only be revised by Pember’s president. But the handbook did not conclude with that language but also contained an employee acknowledgment form on its last page, which O’Bryan signed. That form, however, created enforcement problems for the dispute-resolution policy despite its seemingly straightforward language. Continue Reading

California Court Affirms Value of Employee Time Punches in Defeating Class Certification

By Joseph S. Persoff and Vartan Madoyan on May 12, 2021 Posted in Class Certification

In a sweet ruling for employers, a California court of appeal affirmed a trial court’s denial of class certification of a meal break claim due to employee timekeeping records. This decision, Salazar v. See’s Candy Shops Inc., is noteworthy, as it explains how employee timekeeping records can be used to defeat class certification following the California Supreme Court’s recent ruling that employee timekeeping records can establish a rebuttable presumption in favor of class certification.

The Claim

At issue in this case was whether the trial court properly denied class certification of a claim that the employer was not providing employees second meal breaks. Under California law, an employee is entitled to a second 30-minute meal period for shifts longer than 10 hours (absent a valid waiver). The plaintiff claimed that employees were provided a work schedule form that listed the times employees should take their two 10-minute rest periods and their first 30-minute meal period but that the schedule form did not contain any information about a second meal period. The plaintiff argued the schedule form’s failure to include a second meal period evinced a common policy of not providing second meal periods. Continue Reading

Ninth Circuit Holds That District Court Must Weigh Evidence to Determine Rule 23(b) Predominance

By Greg Mersol on May 4, 2021 Posted in Antitrust

While statistical evidence has long been held to be probative on the issue of potential discrimination, it can also be tricky. Questions often abound regarding the collection of data used for statistical comparisons, the methodology used and the treatment of results. A recent decision from the Ninth Circuit holds that a district court cannot ignore these questions when deciding whether to certify a class but must actually resolve them when completing the requisite “rigorous” analysis.

In Olean Wholesale Grocery Cooperative, Inc. v. Bumble Bee Foods, LLC, Case No. 19-56514 (9th Cir., Apr. 6, 2021), the plaintiffs brought an antitrust case involving alleged price fixing in the canned tuna business. When the plaintiffs moved the court to certify a class of proposed purchasers of those products, the parties presented conflicting expert statistical testimony. Continue Reading

Can You Waive Appellate Review of an Arbitration Award? The Fourth Circuit Says Yes

By John Lewis on April 12, 2021 Posted in Arbitration

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

By Greg Mersol on March 17, 2021 Posted in Class Certification

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

By John Lewis on March 1, 2021 Posted in Arbitration, Arbitration Agreements, California

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

By John Lewis on February 18, 2021 Posted in Arbitration

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.

Florida Court Denies Conditional Certification in Tip Credit Case

By Greg Mersol on February 17, 2021 Posted in Class Certification

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

By Matthew Goodman on February 15, 2021 Posted in Wage and Hour

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