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.

Incidentally, we noted the problems with rulings such as this, here. The Sixth Circuit has held that a district court need not send notice to those who cannot participate in the litigation because of an arbitral agreement. Plaintiffs frequently cite the desire to flood the defendant with scores or hundreds of individual arbitration requests to use the expense as a hammer to compel settlement, and obtaining a class listing is the first step in such a strategy. The Fifth Circuit, in JP Morgan Chase & Co., 916 F.3d 494, 504 (5th Cir. 2019), has similarly held that a court cannot send notice to claimants who signed arbitration agreements. We blogged that decision, here.

Facebook, for its part, moved the court to stay its decision and to certify the matter for appeal pursuant to 28 U.S.C. section 1292(b). That motion was supported by the U.S. Chamber of Commerce, which filed an amicus brief shortly afterwards. Both argued that under these circumstances, the provision of notice to employees who had signed arbitration agreements would undermine the very policy that favored their enforcement. Facebook also raised the somewhat paradoxical result that a court was inviting claimants to assert claims in litigation that, as a matter of law, had to be asserted in arbitration.

On April 9 the district court granted that motion without a written opinion. Thus, the case will now go on for further motion practice before the Seventh Circuit.

The Bigger litigation is important in two respects. First, it deals with one of the plaintiffs’ most often cited strategies for avoiding the impact of arbitration agreements. Second, it reflects one of the problems both sides face in conditional certification orders – the very limited appellate review. In this instance the court did grant a stay and interlocutory review, but that usually is not the case.

The bottom line: If it accepts the case for interlocutory review, the Seventh Circuit may become the third federal appellate court to consider whether notice can or must be sent to FLSA potential class members who have signed arbitration agreements.