Fifth Circuit Holds That the Company in Class Action Waived Its Right to Arbitrate Because of Litigation Conduct

The standards for determining when a party waives its right to arbitrate through participation in litigation have never been uniform among the circuits or easily applied. The recent Fifth Circuit opinion in Forby v. One Technologies, L.P. (Case No. 17-10883, decided Nov. 28, 2018) illustrates the difficulty of applying the “prejudice” requirement in a consumer fraud and unjust enrichment class action.

In Forby, the district court found that:

[w]hile . . . Forby has suffered some prejudice . . . she has not suffered prejudice to the extent required by existing precedent .  . . .  The only prejudice that Forby has adequately demonstrated is delay, and delay alone is insufficient to establish that Forby has been prejudiced by Defendants’ invocation of the judicial process.

Continue Reading

Central District of California Denies Certification in Mortgage Loan Officer Case

FLSA Conditional Certification Denied Too

The position of mortgage loan officer has been a fertile source of wage and hour claims, but a recent case from the Central District of California reflects that certification of a class, even involving such a “target” position, is by no means guaranteed.

In Fernandez v. Bank of America, Case No. CV 17-6104-MWF (JCx) (C.D. Cal. Nov. 27, 2018), the defendant bank employed mortgage loan officers who were paid primarily by commission. Anticipating increases in the salary requirements under the FLSA, it reclassified the loan officers from exempt to non-exempt in 2016. According to the court’s opinion, between commissions and other incentives, these employees could earn between approximately $30,000 and more than $600,000 annually. The plaintiffs, a group of loan officers, brought suit, contending that they had been misclassified and that the bank had failed to provide them separate compensation for time spent in training and other activities that did not directly generate commissions. They asserted claims not only under California law but also under the Fair Labor Standards Act. They moved the court for certification of the class under California law and for conditional certification under the FLSA. Continue Reading

Tenth Circuit Finds Massage Therapy Students to Be Just That – Students

Once thought to be the next wave of wage-and-hour cases, suits involving interns and students have tended to founder because most training programs are intended to train rather than to provide employment. We’ve blogged about issues like this on several occasions in the past [May 12, 2013; July 6, 2015; Sept. 24, 2015; Dec. 12, 2017], but they still arise in the hopes of finding the “next big thing.” Most recently, in Nesbitt v. FCNH, Inc., Case No. 17-1084 (10th Cir. Nov. 9, 2018), the plaintiff was a former massage therapy student who received vocational training at a for-profit vocational school. She asserted that while designated a student, she and other students were actually employees receiving minimal instruction and, accordingly, they sought to be paid the minimum wage for their time. The district court granted summary judgment for the school, and the plaintiff appealed.

Continue Reading

Another bill aimed at employee arbitration agreements – this time to nullify Epic Systems

On Oct. 30, 2018, Rep. Jerrold Nadler, D-N.Y., and Rep. Bobby Scott, D-Va., together with 58 Democratic cosponsors, introduced the Restoring Justice for Workers Act, H.R. 7109. Unlike some earlier bills, this proposed legislation would prohibit all pre-dispute arbitration agreements covering employment claims, forbid retaliation against employees for refusing to arbitrate those disputes and amend the National Labor Relations Act (NLRA) to forbid agreements that restrict employees’ right to collectively litigate employment claims.

The new bill also gives protections to ensure that post-dispute arbitration agreements are not coerced and that the voluntary consent of employees has been given. A similar bill is expected to be introduced in the Senate by Sen. Patty Murray, D-Wash.

Continue Reading

Tenth Circuit Refers Au Pairs’ Class Claims to Arbitration

“Well, They Gave Me the Agreement in My Own Language, but I Still Didn’t Understand the English Version” doesn’t work.

The Federal Arbitration Act will turn 100 in the next few years, but despite more than nine decades of litigation, some opinions can be explained only by the “judicial hostility” to arbitration that caused the statute to be enacted in the first place.

Case in point. In Beltran v. AupaireCare, Inc., Case No. 17-1359 (10th Cir. Oct. 30, 2018), a group of au pairs brought suit against several au pair agencies, asserting claims for antitrust and under the Racketeer Influenced and Corrupt Organization Act (RICO), among others. The crux of the claim was that the agencies allegedly used the United States’ J-1 Visa program to tap foreign nationals as a source of cheap child care labor, with resulting low pay rates. Among other rulings, the district court certified a class of more than 90,000 au pairs, a questionable decision that likely deserves its own blog, but the key issue for this posting is the court’s refusal to enforce certain of the au pairs’ arbitration agreements. The district court concluded that the agreements were both procedurally and substantively unconscionable. In a nutshell, it relied on the fact that the plaintiffs were foreigners, English was not their first language and they did not understand the word “arbitration.” As to substantive unconscionability, the court found several clauses offensive, including a forum selection clause and one giving the defendants control over the selection of the arbitrator. While the number of offending clauses was small, the court then refused to sever them on the grounds that the provisions were “permeated” by unconscionable terms and “buried” toward the end of the contract.

Continue Reading

Do Daubert standards apply at the certification stage? Ninth Circuit splits with itself

It is fitting that the day after Halloween the Ninth Circuit issued its denial of rehearing en banc in Sali v. Corona Regional Medical Center, Case No. 15-56460, because the issue it raises, like Michael Myers in the Halloween movie series, should have been dead long ago.

We’ve blogged the issue of whether Daubert standards should apply at the certification stage on multiple occasions (Aug. 3, 2011; May 7, 2014; May 8, 2018; and June 5, 2018). The overwhelming view of the courts is that they do – and for good reason. Certification is often THE issue in class litigation, and a certification decision puts overwhelming (and often definitive) pressure on the defendant to settle. It is not too much to ask that the facts supporting that decision be of evidentiary quality.

Continue Reading

Yet Another Opinion Addresses the Availability of Class or Collective Arbitration and Whether It Is a ‘Gateway Issue’ for the Court – Herrington v. Waterstone Mortgage Corp.

We didn’t expect to be discussing class or collective arbitration issues so soon, but we have repeatedly underestimated the resilience of these aggregate arbitration questions. (See our Nov. 11, 2013, March 12, 2015, Sept. 9, 2015, March 23, 2016, May 3, 2017, and May 2, 2018, blog articles dealing with “gateway issues” and the availability of class arbitration.)

Hopefully, the upcoming Lamps Plus, Inc. opinion will shed some light on what language in an arbitration agreement can properly authorize class arbitration. See Lamps Plus, Inc. v. Varela, No. 17-988, oral argument scheduled Oct. 29, 2018.

Continue Reading

Court Reduces Proposed Attorney Fee Award by More Than 90 Percent

It’s OK. The Attorneys Still Get More Than $1,000 Per Hour

One of the drivers of the increased number of wage and hour cases is the prospect of handsome attorney fee awards. But while percentage fee awards may indeed result in large payoffs, courts are increasingly looking at whether such large amounts are reasonable under the circumstances. We’ve seen this trend in courts questioning attorney fee awards in addition to other settlement terms, particularly in states such as California, Florida and New York. But a recent case suggests a thoughtful look at the concept of percentage awards to reduce a windfall in a large wage and hour class matter.

Continue Reading

California Court of Appeals Affirms Employer Class Action Wage and Hour Win at Trial

Employer Performance-Based Rate Scheme for Automobile Repair Upheld Under California Law

With many of the easy targets for wage and hour matters gone (e.g., misclassification of assistant managers), plaintiffs’ counsel have increasingly turned to technical overtime or minimum wage violations as a vehicle to bring class or collective action litigation. As a recent claim reflects, that doesn’t always work, particularly where the challenged practices actually help the employees.

Continue Reading

O’Connor v. Uber: The Ninth Circuit Unravels the Class Certification Orders in Appeals From Four Related Actions

In O’Connor v. Uber Technologies, Inc., a Ninth Circuit panel, in four related appeals from District Judge Edward Chen’s rulings, reversed the denial of Uber Technologies Inc.’s motions to compel arbitration, also reversed the district court’s class certification orders and found the Rule 23(d) orders entered by the district court were moot. The opinion impacts claims of hundreds of thousands of present and former Uber drivers who attempted to proceed as classes in these actions.

Writing for the majority, Judge Richard R. Clifton began the Sept. 25, 2018, opinion by acknowledging that in Mohamed v. Uber, 848 F.3d 1201, 1206 (9th Cir. 2016), the same panel (judges Richard Tallman, Clifton and Sandra Ikuta) reversed the district court’s orders denying Uber’s motion to compel arbitration. Then, in the O’Connor appeals, the plaintiffs made additional arguments supporting their position that the arbitration agreements were unenforceable, but they were again rejected as “unpersuasive” in the new opinion. And because class certification was based on the unenforceability of the arbitration agreements, those orders and related Rule 23(d) rulings had to be reversed as well.

Continue Reading