Attorneys for FLSA class-action defendant Gawker are opposing plaintiffs’ request to expand potential avenues of class notification via social media. Former interns of the blog site Gawker, a website that promotes itself as a “one-stop guide to media and pop culture,” filed a Fair Labor Standards Act class action against the company in June of
In a widely publicized case, the EEOC obtained a $1.45 million settlement on behalf of female mortgage consultants in Columbus, Ohio who it alleges were subjected to a hostile work environment and denied lucrative sales leads and training opportunities. Employers can learn two lessons from the case: (1) the method of distributing sales leads, customers,…
In Russell v. Citigroup, Inc. the Sixth Circuit held that an agreement to arbitrate “all employment-related disputes” with the company does not include cases already pending in court when the employee signed the arbitration agreement.
From 2004 to 2009, Keith Russell worked at Citicorp’s call center in Florence, Kentucky. As a condition of employment,…
One of the most significant risks to business in recent years has been the proliferation of class action employment-related lawsuits. Class action claims have been especially popular with plaintiff’s lawyers pursuing federal Fair Labor Standards Act wage claims. A class action lawsuit can mean huge costs for defense and damages. Some employers have attempted to manage the risk by having employees sign agreements requiring that they pursue employment law claims against the company in arbitration, rather than in court. Sometimes employers include in the arbitration agreement a specific waiver of the right to pursue class action claims in court or in arbitration.…
Continue Reading Fifth Circuit Court of Appeals Knocks Down NLRB Decision: And, in Doing So, Supports Employer Effort to Avoid Class Action Claims
On November 5, 2013, the Sixth Circuit Court of Appeals and Ohio Supreme Court handed down a pair of class action decisions that are major wins for companies and employers. The Sixth Circuit held that courts, not arbitrators, must decide whether an arbitration clause permits classwide arbitrations—and that an arbitration clause that is silent on the issue bars classwide arbitrations. The Ohio Supreme Court followed recent decisions from the United States Supreme Court and held that trial courts must conduct a rigorous analysis when ruling on class certification, including resolution of factual disputes, factual findings and an examination of the merits where necessary. Both decisions addressed issues that have been vigorously debated by parties and lower courts, and they unambiguously did so in favor of class action defendants.
The Sixth Circuit held that courts, not arbitrators, must decide the “gateway” issue of whether an arbitration clause permits classwide arbitration—and that clauses that are silent on the issue do not permit classwide arbitrations.
In Reed Elsevier, Inc. v. Crockett, No. 12-3574, (6th Cir. Nov. 5, 2013), the plaintiff was a Texas attorney who alleged that his firm was being charged steep fees for using research databases outside of its LexisNexis Subscription Plan without any displayed warning. The parties’ contract contained an arbitration clause that was silent on the issue of classwide arbitration. Crockett filed a classwide arbitration demand for $500 million on behalf of two putative classes, and LexisNexis asked a federal district court to declare that the arbitration clause did not authorize classwide arbitration. The district court awarded judgment to LexisNexis.…
Continue Reading The Sixth Circuit And Ohio Supreme Court Hand Two Major Class Action Wins To Defendants
A federal court has denied a defendant-employer’s request that plaintiffs sift through and turn over all their social media posts made during their work hours in an FLSA collective action in which the plaintiffs claim their employer failed to give them meal breaks. How did that happen? I thought you’d never ask.…
Continue Reading Court Denies Employer’s Access to Social Media Posts in FLSA Collective Action and Sends Warning: If You Want Access to Social Media, Come with Both Barrels Loaded … Leave the Water Gun at Home
In a 5-3 decision penned by Justice Antonin Scalia, the United States Supreme Court made class-action waivers contained in arbitration clauses even more iron-clad by holding that such waivers are enforceable even if the cost of individually arbitrating a federal statutory claim would dwarf the potential recovery.…
Continue Reading United States Supreme Court Adds Further Strength to Class-Action Waivers in Arbitration Clauses
In Oxford Health Plans, LLC v. Sutter, a case addressing an arbitration clause that was silent as to whether it permitted class-wide arbitration, the United States Supreme Court held that so long as an arbitrator’s decision construes the parties’ contract, the arbitrator has not "exceeded his powers" – which would permit a court to vacate the decision under §10(a)(4) of the Federal Arbitration Act (“FAA”) – and the arbitrator’s constructions should be upheld, “however good, bad, or ugly.”
Before we dig into Sutter, we have to go back a little to 2010 when the Supreme Court issued its decision in Stolt-Nielsen S.A. v. AnimalFeeds International Corp., and held that the FAA bars class arbitration unless the parties have specifically agreed to it. Many, including Oxford Health who relied on Stolt-Nielsen heavily in its briefing, read Stolt-Nielsen as the curtain closing on class-wide arbitrations, but Sutter (and AT&T Mobility LLC v. Concepcion) makes clear that class-wide arbitration was not eradicated by Stolt-Nielsen.
The Facts Are Not Complicated, But the Procedure Is a Little Muddled
Sutter, a pediatrician, provided medical services to Oxford Health Plans’ insureds under a fee-for-services contract that required binding arbitration of contractual disputes, though it did not specify whether it covered class claims. The arbitration clause more broadly provided in relevant part:
“No civil action concerning any dispute arising under this Agreement shall be instituted before any court, and all such disputes shall be submitted to final and binding arbitration.”
Nevertheless, Sutter filed a proposed class action claiming Oxford failed to properly pay him and others like him who had similar contracts with Oxford. Oxford moved to compel arbitration, and the parties agreed the arbitrator should decide whether the contract authorized class arbitration. The arbitrator found that it did, reasoning that the clause sent to arbitration “’the same universal class of disputes’ that it barred the parties from bringing ‘as civil actions’ in court: the ‘Intent of the clause’ was ‘to vest in the arbitration process everything that is prohibited from the court process.’” Oxford then filed a motion to vacate the arbitrator’s decision claiming the arbitrator “exceeded [his] powers” under the FAA. The trial court denied the motion, and the Third Circuit affirmed.
While Sutter proceeded to arbitration, the Supreme Court decided Stolt-Nielsen and held that an arbitrator may employ class procedures only if the parties have authorized him to do so. Oxford asked the arbitrator to reconsider his decision on the class arbitration in light of Stolt-Nielsen, and the arbitrator held that Stolt-Nielsen had no effect on Sutter because the agreement at issue authorized class arbitration. Oxford then renewed its motion to vacate the arbitrator’s decision on the same basis as before. Once again, the trial court denied the motion and the Third Circuit affirmed.
Now On to the Fun Stuff – The Supreme Court’s Decision and Analysis
The heavy burden required to overturn an arbitrator’s opinion was critical in the Supreme Court’s analysis. Oxford argued that the arbitrator’s decision should be vacated under §10(a)(4) of the FAA, i.e., that the arbitrator “exceeded [his] powers .” However, the Court stated, “’[i]t is not enough … to show that the [arbitrator] committed an error —or even a serious error….Because the parties ‘bargained for the arbitrator’s construction of their agreement,’ an arbitral decision ‘even arguably construing or applying the contract’ must stand, regardless of a court’s review of its (de)merits….Only if ‘the arbitrator act[s] outside the scope of his contractually delegated authority ‘—issuing an award that ‘simply reflect[s] [his] own notions of [economic] justice’ rather than ‘draw[ing] its essence from the contract] ‘—may a court overturn his determination.”
The Supreme Court looked at the arbitrator’s ruling, which recited the “question for construction” the parties had submitted to him: “whether [their] Agreement allows for class action arbitration.” The arbitrator concluded that the arbitration clause “on its face…expresses the parties’ intent that the class action arbitration can be maintained.”
In trying to undue the arbitrator’s decision, Oxford relied on Stolt-Nielsen and argued that §10(a)(4)’s heavy burden can be met when an arbitrator imposes class arbitration without a sufficient contractual basis and argued that a court can vacate an arbitrator’s decision for misconstruing a contract to approve class proceedings.
In Davis v. Cintas Corp., No. 10-1662 (6th Cir. May 30, 2013), the Sixth Circuit affirmed the denial of a class certification bid in a sexual discrimination hiring case à la Wal-Mart Stores, Inc. v. Dukes and dismissed the plaintiff’s individual disparate treatment claim where the plaintiff claimed she was at least as qualified (if not more so) than male candidates who were hired.…
Continue Reading No No No…Not In Our Court. Sixth Circuit Uses Dukes v. Wal-Mart To Block Class Certification and Extends It To Bar Hiring Discrimination Class Claims
The United States Supreme Court last week continued the trend, begun with its 2011 decision in Wal-Mart Stores v. Dukes, 131 S. Ct. 2541, of demanding heightened scrutiny of commonality issues prior to certification of class actions, this time holding that the plaintiffs’ failure to put forward a viable method for calculating class-wide damages was fatal to their efforts to obtain certification.…
Continue Reading United States Supreme Court Delivers Major Win for Employers – Once Again Raising the Bar for Certifying Class Actions