Convergys Corporation and LogistiCare Solutions, Incorporated v. NLRB – The Fifth Circuit Considers Class and Collective Action Waivers Without Arbitration Agreements

The U.S. Court of Appeals for the Fifth Circuit decided two cases considering the impact of the National Labor Relations Act (NLRA) on class or collective action waivers required by companies for their applicants and employees.

Convergys Corporation

The first decision, in Convergys Corporation v. NLRB, No. 15-60860 (5th Cir. Aug. 7, 2017), addressed whether the company violated the NLRA by having applicants and employees sign stand-alone class and collective action waivers and then taking steps to enforce the waivers. Circuit Judge Jennifer Walker Elrod, writing for the majority, found that Convergys did not violate Section 7 of the NLRA by requiring execution of the waivers and did not violate the NLRA in enforcing the waivers.

Notably, Judge Elrod explained that the court had “already rejected the Board’s position that Section 7 guarantees a right to participate in class or collective actions, holding that the use of a class or collective action is a procedure rather than a substantive right.” Continue Reading

Digging In Its Heels: Disputing The DOJ’s Position, The NLRB Remains Defiant In Supreme Court Brief That Individual Arbitration Agreements Violate Employee Rights Under The NLRA

On August 9 the National Labor Relations Board (NLRB or Board) filed its responsive brief in one of three cases before the Supreme Court that may determine the future validity of individual arbitration agreements in the employment sector. Since 2012, the Board’s position has been that arbitration agreements prohibiting collective or class litigation or arbitration impermissibly interfere with employees’ rights to engage in “concerted activity” under Section 7 of the National Labor Relations Act (NLRA). The Board’s latest brief was filed in NLRB v. Murphy Oil USA, Inc., No. 16-307, which arose from the Fifth Circuit and has been consolidated with two other cases involving Epic Systems Corp. (No. 16-285) and Ernst & Young (No. 16-300) from the Seventh and Ninth Circuits. We have extensively covered the lengthy run-up of the cases involving Epic Systems Corp., Ernst & Young and Murphy Oil USA, Inc., including the grant of certiorari, in a Jan. 17, 2017, blog post here; a subsequent Sixth Circuit opinion in a June 1, 2017, blog post; and the Department of Justice (DOJ) change of position in a June 20, 2017, blog post.

The NLRB’s brief is notable in that it reflects the Board digging in its heels on the hotly contested position that the NLRA guarantees an employee’s right to engage in collective or class procedures, regardless of the presence of an arbitration agreement under the Federal Arbitration Act (FAA) requiring individual arbitration. In a June about-face, the DOJ broke from the Board’s position and switched sides to join the employers, arguing in an amicus brief that the Board is incorrect – that “the NLRA does not specifically bar enforcement of agreements to arbitrate statutory claims or declare such agreements to be unlawful.”

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Esparza V. Ks Industries, L.P. – Separating PAGA & Unpaid Wage Claims – A Ray Of Sunshine?

We have been following how California courts deal with the intersection of Private Attorneys General Act (“PAGA”) claims and individual arbitration agreements after Iskanian v. CLS Transportation Los Angeles, LLC, 59 Cal. 4th 348 (2014) (“Iskanian”) for some time.  See, for example, our blog posts from October 7, 2015, March 8, 2017 and March 30, 2017 on the subject.  This area of law is confusing and has suffered from a lack of legislative or judicial guidance.

Now, a California court of appeals has added substantial clarity by ruling that claims for unpaid wages based on California Labor Code Section 558 where a percentage of recovery is not allocated to the Labor and Workforce Development Agency are not covered by PAGA and must be arbitrated.

In Esparza v. KS Industries, L.P., No. F072597 (Cal. Ct. App. 5th Dist., Aug 2, 2017), a former employee sought damages, individually and on behalf of other employees, seeking unpaid wages, civil penalties, interest, attorneys’ fees and costs under the Labor Code and for violation of PAGA.  When KS Industries filed a motion to compel arbitration, the employee responded that a claim for civil penalties under PAGA cannot be arbitrated, and that includes claims for recovery of wages.  The trial court denied the motion to compel and the request for a stay.  And KS Industries appealed.  Continue Reading

Florida Court Denies Conditional Certification of FLSA Case Involving Restaurant Staff

As we’ve noted before, many courts have applied the standard for conditional certification so leniently that in places the requirement of a group of “similarly situated” employees under the FLSA has all but disappeared. So, it’s refreshing to see a case that still requires at least a minimal showing of a similarly situated class – and in particular one involving restaurants, one of the most fertile sources of collective action litigation.

In Cedeno v. Kona Grill, Inc., Case No. 8:17-cv-01039-JSM-AEP (M.D. Fla., July 24, 2017), the plaintiff was a sous chef at a Kona Grill restaurant in Sarasota, Florida. He brought a collective action for alleged unpaid overtime, contending that he and others had been misclassified as exempt. He sought to represent employees holding a range of positions in the restaurant’s 46 locations in the United States and Puerto Rico. Continue Reading

Second Circuit Vacates District Court Judgment in Sex Discrimination Case Permitting an Arbitrator to Certify a Class Including Absent Class Members

In a sex discrimination case we have been following for almost six years, the Second Circuit has added a measure of rationality by vacating a lower court opinion that would have permitted an arbitrator’s certification of a class that included approximately 44,000 absent class members who had not consented to join.

The three-judge panel in Jock v. Sterling Jewelers, Inc., No. 15-3947 (2d Cir., July 24, 2017), vacated District Judge Jed Rakoff’s November 15, 2015 opinion which upheld that portion of a Class Determination Award that would bind absent class members who did not consent to be bound. See District Court Opinion and Order at 3-4. Judge Rakoff had found:

“. . . defendant’s argument on this point is foreclosed by earlier rulings in the case. The Second Circuit in [a 2011 Opinion, (“Jock I”)] stated that ‘there is no question that the issue of whether the agreement permitted class arbitration was squarely presented to the arbitrator’. All members of the class certified by the Arbitrator signed the . . . agreements; the arbitrator interpreted these agreements to permit class arbitration; and the Second Circuit upheld the Arbitrator’s authority to do so.” Id. at 4. Continue Reading

No Certification Where Loss of Data Prevents Class Identification

Junk fax case presents opportunities for some employment cases

Identifying potential class members is not an issue in most employment cases, as the employer likely has any number of employment records for each of the claimants, including personnel files, electronic data, tax forms, time records, and the like, many of which are required to be kept for a set period of time. But what if the records no longer exist or if the claims depend on data that cannot be located or readily retrieved?

That was the issue the Sixth Circuit faced in Sandusky Wellness Center, LLC v. ASD Specialty Healthcare, Inc., Case No. 16-3741 (6th Cir. July 11, 2017). In Sandusky Wellness, the plaintiff sought to bring a claim under the Telephone Consumer Protection Act (TCPA) and specifically the Junk Fax Protection Act Amendments of 2005 due to the plaintiff’s receipt of an unsolicited facsimile transmission. The facts giving rise to the case appear to have been largely undisputed. The defendant, a distributor of medical and pharmaceutical products, sent a fax to 40,343 providers based on a list of 53,502 names it had purchased as customer leads. Importantly, many of the names on the original list were pre-existing company customers that had in some fashion consented to the sending of fax solicitations. Eighteen months after the fax was sent, the specific names and numbers were deleted in the ordinary course of business. Thus, there was no record of who the recipients of the fax from the original list were and, similarly, no way to determine which of those recipients had consented through a prior business relationship. Continue Reading

Massachusetts District Court Denies Certification for Claims of Unpaid Meal Breaks

It has become almost part of the plaintiff playbook to bring wage and hour claims despite lawful employer policies by claiming some sort of “class-wide” policy of deviating from those policies. Sadly, this tactic works at least as often as not in collective action litigation, where many courts are quick to conditionally certify even questionable claims with the expectation that the employer will simply settle them. A recent case from the District of Massachusetts shows that this is not always the case.

In Romulus v. CVS Pharmacy, Inc., Civil Action No. 13-10305-RWZ (D. Mass. July 12, 2017), the plaintiffs were hourly pharmacy shift supervisors and assistant managers. They contended that they were required to remain in their stores during unpaid meal breaks (which they contended constituted time worked) when no other manager was present. They alleged that they were entitled to overtime under Massachusetts law for that time. It’s not clear from the opinion why they did not assert FLSA claims, but based on the case’s prior procedural history, it may have been partly due to an effort to keep the claims in state court. See Romulus v. CVS Pharmacy, Inc., 770 F.3d 67, 70–72 (1st Cir. 2014). Continue Reading

California Supreme Court Denies Sequenced Discovery in Representative PAGA Action

On July 13, 2017, the California Supreme Court rejected lower court holdings that limited an employee’s ability to secure statewide employee contact and employment information in a representative PAGA action, when the plaintiff only worked in one of the employer’s stores.

In Williams v. Superior Court of Los Angeles County (Marshalls of CA, LLC), Case No. S227228, Michael Williams sued Marshalls of CA, a retailer with approximately 130 stores in the state, for alleged wage and hour violations. Williams contended that Marshalls had failed to provide him and other aggrieved individuals with required meal and rest breaks or compensation, and that the retailer had a “systematic company-wide policy” of not paying premiums for missed breaks. Moreover, he alleged that Marshalls failed to give timely wage payment or complete and accurate wage statements to employees.

In discovery, Williams tendered two special interrogatories seeking “the name, address, telephone number, and company employment history of each nonexempt California employee in the period March 2012 through February 2014, as well as the total number of such employees.” Marshalls objected, indicating that there were approximately 16,500 employees covered. Williams moved to compel responses. Continue Reading

Seventh Circuit Rejects Rule 67 Deposit Into Court Account as Easier Alternative to Rule 68 Offer of Judgment

Over the years, Rule 68 offers of judgment have been touted as a means of picking off class representatives and a potentially easy way to terminate a class or collective action before it starts. It rarely really works that way, as many courts, particularly those that are disposed to class actions, have found endless ways of finding them unenforceable. We’ve blogged some of these attempts in the past, but the Supreme Court’s decision Genesis Healthcare Corp. v. Symczyk, 133 S. Ct. 1523 (2013), seemed to give some slight hope that such an attempt might work. In Campbell-Ewald Co. v. Gomez, 136 S. Ct. 663 (2016), however, the Court largely negated the Symczyk holding and seemed to have put at least one nail in the coffin of the claim that an unaccepted offer of judgment could moot a class action. (We blogged that decision here.) Continue Reading

Court Dismisses Class Action Claims Based on Afghanistan Labor Code

United States lawsuits involving the law of Afghanistan are uncommon, but it is common for employees to bring suit based on work done abroad generally, and not just in that one country. A recent case, however, illustrates that while the United States may be a more convenient forum, even a class action may founder if the law of the host country provides for no relief.

In Allen v. Fluor Corp., Civil Action no. 3:16-CV-1219-D (N.D. Tex. June 15, 2017), the plaintiffs were United States citizens who worked for a contractor in Afghanistan that provided noncombat logistical services. Presumably, this is a euphemism for “not military.” They contended that they worked overtime hours and were entitled to overtime pay based on Afghanistan’s Labor Code, and sought to pursue their claims on a class-wide basis.

The defendant moved to dismiss based primarily on the argument that (1) the dispute raised a “political question” that was beyond the court’s jurisdiction; and (2) the contractors were not covered by Afghan law because they were considered foreigners without the requisite work permits. The thrust of the first argument was that Afghanistan is a theater of war and courts should not interfere in matters that might increase costs or discourage contractors from accepting engagements. The court rejected this argument for a multitude of reasons, including that the contractor’s work was unrelated to policy, political or military decisions. Continue Reading

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