Ohio Supreme Court Addresses Waiver of the Right to Arbitrate in the Putative Class Action Context

By John Lewis on August 19, 2019 Posted in Arbitration

In Gembarski v. PartsSource, Inc. (Slip Opinion No. 2019-Ohio-3231, decided Aug. 14, 2019), the Supreme Court of Ohio clarified the standards for waiver of the right to arbitrate in the class action context where only unnamed putative class members but not the single named plaintiff had agreed to arbitration. The court ultimately concluded that the employer did not waive the right to raise the “arbitration defense,” and that not raising arbitration in the answer had no impact on the company’s ability to challenge Civil Rule 23 issues at class certification.

The Background

In October 2012, Edward Gembarski brought a class action against his prior employer, PartsSource, claiming breach of contract, unjust enrichment, conversion, equitable restitution, constructive trust and “money had and received.” PartsSource filed an answer denying the class action allegations and that the action could proceed as a class action. Nearly three years later, in September 2015, Gembarski, for the first time, sought class certification.

The trial court referred the case handling to a magistrate. PartsSource opposed the motion to certify, arguing, among other things, that Gembarski could not meet the typicality or adequacy requirements for certification because those putative class members who signed arbitration agreements could not be part of the class. In response, Gembarski maintained that PartsSource knew of its claimed right to arbitrate at the beginning of the action yet failed to assert any “arbitration defense.”

District Court Decertifies FLSA Collective Action With Independent Contractor Issues

By Greg Mersol on August 9, 2019 Posted in FLSA

We’ve commented many times before that relatively few collective actions survive the “second stage” motion to decertify or, relatedly, an unofficial “third stage” when the trial court actually considers how the matter will be managed at trial. Here is another variation on that theme – an unusual case involving a lender’s claimed involvement in the failure to pay wages.

The case of Garcia v. Peterson, Civil Action H-17-1601 (S.D. Tex., August 5, 2019), arose out of the wind-down of Graebel Van Lines, which once billed itself as the largest privately owned moving company in the United States. The company operated through its own employees, through affiliates and by independent contractor arrangements. According to the 31 plaintiffs, all of whom worked as independent contractors for Graebel affiliates, they received limited payment or no payment at all for the services they performed during the last three to four months of the company’s operation. They settled their claims against both Graebel and its affiliates, but continued the litigation against one of its secured lenders, contending that controlled Graebel’s operations during its final months and should be liable to them. Continue Reading

Ninth Circuit Undermines Use of Time Studies in Disposing of Wage and Hour Claims in California

By Greg Mersol on August 8, 2019 Posted in Off-the-clock

Two years ago, we blogged a pair of cases with similar fact patterns and outcomes involving the successful use of time studies (See our October 13, 2017 and October 16, 2017 blog posts). In both cases, shoe retailers required employees to undergo brief security checks before leaving the store. The employees in both cases brought Rule 23 class claims under California law to recover wages and the usual list of California damages arising from the time spent in those checks. In both cases, the district court relied on time studies that the time spent was minimal, and thus granted summary judgment for the employer under the de minimis doctrine.

One of those two cases, Rodriguez v. Nike Retail Services, Inc., Case No. 17-16866 (9^th Cir., June 28, 2019), has now been reversed. Relying on the intervening California Supreme Court authority in Troester v. Starbucks Corp., 421 P.3d 1114 (Cal. 2018), the court found that the district court had improperly applied the federal de minimis doctrine to the plaintiffs’ claims. Although the state Supreme Court in Troester had rejected the federal 10-minute standard, it had left open the door to the question of whether California would apply the doctrine to a shorter span of time. The Ninth Circuit concluded, however, that the application of a shorter period was unlikely, and found that there probably was no de minimis defense available under California law.

So does that mean time studies are worthless? Nope. First, the Rodriguez case was decided under California law. Nothing in the opinion suggests that a time study could not be used effectively under existing FLSA case law. Such a study can still be used to demonstrate that the time spent in uncompensated activities was, indeed, de minimis and would not give rise to a claim under federal law. Hence, proper time studies can still be dispositive under the FLSA and the laws of most states.

Second, the studies did show that the time spent in the security checks was minimal, and thus would have lessened the amount of time (and pay) the plaintiffs were claiming. Such a reduction would also be valuable in a claim under the FLSA and its state law counterparts in several respects. It would, of course, reduce the available recovery. In many cases, it might also reduce the claim to zero, particularly in “gap time” situations in which the employees continue to earn above the minimum wage but have not worked in excess of 40 hours per week.

The bottom line: Despite recent unfavorable Ninth Circuit authority under California law, time studies can be a useful tool to limit or dispose of wage and hour claims.

The Fifth Circuit Agrees With Its Sister Circuits That Class Arbitrability Is a Gateway Issue for Courts, Not Arbitrators

By John Lewis on July 24, 2019 Posted in Arbitration, Arbitration Agreements, Class Action Litigation

In a predictable decision, the Fifth Circuit has held that the availability of class arbitration is a gateway issue for the courts to decide, absent “clear and unmistakable” language in the arbitration agreement to the contrary. The appellate court didn’t find such language in 20/20 Commc’ns v. Crawford, Case No. 18-10260 (5th Cir. July 22, 2019).

Instead, the Court followed the lead of several of its sister circuits – the Fourth, Sixth, Seventh, Eighth, Ninth and Eleventh Circuits. We previously blogged a number of those decisions dealing with “gateway issues” and arbitration (See our October 25, 2018 blog that also referenced our prior articles on the subject).

One might question why this issue deserves a blog, but it is indeed one of note because of the view of the arbitrator, one that unfortunately is not alone. In this case, the arbitration agreement used straightforward language allowing the arbitrator to “hear only individual claims” and generally forbidding class or collective arbitration. Undeterred, the arbitrator permitted class arbitration on the theory that the class action prohibition was invalid under federal law. Continue Reading

NY Law Doesn’t Prevent Arbitration of Sexual Harassment Claims

By John Lewis on July 1, 2019 Posted in Arbitration

Recent New York legislation in reaction to the #MeToo movement has sought to limit or foreclose arbitration of employment-related disputes. See N.Y. C.P.L.R. § 7515 (“§ 7515”) and its June 19, 2019, amendment, bill S6577/A842. The bill, initially signed into law in April 2018, was to “deal[] with the scourge of sexual harassment.” See N.Y. State Senate, Stenographic Rec., 241st Leg., Reg. Sess., at 1855 (Mar. 20, 2018). But some believed that the Federal Arbitration Act (FAA) would likely preempt the legislation, especially when § 7515(b) expressly provided “[e]xcept where inconsistent with federal law.”

Now, one district court has found the legislation is preempted by the FAA. See Mahmoud Latif v. Morgan Stanley & Co., LLC, et al., Case No. 1:18-cv-11528 (S.D. New York 6-26-19). On June 26, 2019, District Judge Denise Cote found provisions of New York law impacting arbitration preempted by the FAA. In reaching that conclusion, Judge Cote applied an analytical approach consistent with recent U.S. Supreme Court decisions. Continue Reading

Tennessee District Court Conditionally Certifies ADEA Collective Action

By Greg Mersol on June 14, 2019 Posted in FLSA

Connecting the dots will likely be a problem down the road . . .

The overwhelming majority of employment class or collective actions today are wage and hour matters. The two-step paradigm for certifying wage and hour claims under the Fair Labor Standards Act has, despite Congressional intent to the contrary, enabled much of that boom in overtime litigation.

The Age Discrimination in Employment Act expressly incorporates much of the FLSA’s enforcement procedure, including the section 16(b) requirement that similarly situated claimants actually opt in. Indeed, one of the most commonly cited early decisions supporting the procedure, the Lusardi opinion (118 F.R.D. 463 (D.N.J. 1987)), was actually in an ADEA case. Incidentally, the same procedure applies under the Equal Pay Act, although such claims are far less common than those for overtime. But while the ADEA uses FLSA procedures, collective actions under that statute are still much less common than those under the FLSA. Continue Reading

Can Delivery Drivers Be Compelled to Arbitrate After New Prime? New Jersey Appellate Courts Seem to Take Conflicting Positions

By John Lewis on June 10, 2019 Posted in Arbitration

After New Prime v. Oliveira, 139 S. Ct. 532 (2019), many wondered if state arbitration law could be applied when transportation workers were found to be exempt from the Federal Arbitration Act (FAA) based on § 1. See our January 17, 2019, March 12, 2019 and April 29, 2019 blog posts on the issues raised by New Prime in the transportation industry. Two New Jersey appellate panels now have considered the issue and reached what appear to be conflicting positions.

In the first decision, Colon v. Strategic Delivery Solutions, LLC, Case No. A-2378-1714 June 4, 2019), a panel of the Appellate Division considered a trial court order dismissing a class action complaint brought by three drivers who delivered pharmaceutical products and general merchandise to Strategic Delivery Solutions, LLC (SDS) customers. Without deciding whether Gloria Colon and the other plaintiffs fell within the § 1 exemption, the trial court required individual arbitration of their New Jersey wage and hour claims while dismissing their class action complaint and jury demand. Continue Reading

Sixth Circuit Affirms Complex Settlement of FLSA Claims Involving Exotic Dancers

By Greg Mersol on June 6, 2019 Posted in Wage and Hour

An FLSA collective action involving exotic dancers is brought in 2008 and settles in 2011. Five years later, the same attorneys file essentially the same case with many of the same dancers as class members against some of the same defendants. And one of those defendants has the name “Déjà vu.” What are the odds?

Whatever the odds are, that’s what happened in Jane Does 1-2 v. Déjà vu Consulting Inc., Case Nos. 17-1801/1802/1827 (6^th Cir. June 3, 2019). And in addition to the naming coincidence, the case presents a number of issues of broader importance relating to class action settlement.

Numerous cases have been brought over the employment status of exotic dancers. Often, the dancers are characterized as independent contractors living off of tips paid by customers. Frequently, disputes arrive out of whether the degree of control exercised by the dance clubs is sufficient for them to become employees. Related issues include entitlement to the minimum wage and challenges to various financial policies, such as tip sharing, mandated by the clubs. In many cases, the club will charge the dancers what is sometimes called a “stage fee” to perform. These were the issues in the first case, Doe v. Cin-Lan, Inc., Case No. 08-CV-12719 (E.D. Mich., July 15, 2011). That case settled in 2011 with the payment of money, but no requirement that the dancers be reclassified as employees. Continue Reading

Location, Location, Location. Washington Federal Court Looks To Where Benefit Plan Was Signed And Negotiated In Agreeing To Transfer ERISA Class Action To Georgia

By Gilbert Brosky on June 4, 2019 Posted in ERISA

Much like buying a home, location can mean everything when defending a class action. Therefore, it is common for defendants to try and transfer class actions to what is viewed as a more favorable jurisdiction when there is at least a significant connection with that forum. When this happens, courts apply a largely predictable set of factors and considerations in deciding the motion. Perhaps it should come as no surprise that these factors become a little less intuitive when trying to transfer an ERISA class action, at least according to the recent decision in Mayfield v. ACE American Ins. Co., 18-cv-1695 (W.D. Wash. May 13, 2019). Continue Reading