On July 24, 2017, the Second Circuit Court of Appeals rejected a federal district court’s approval for a class of roughly 69,000 women claiming that Sterling Jewelers, Inc. (“Sterling”) discriminated against them based on sex. The decision overturned a district court ruling that affirmed an arbitrator’s decision to let the women proceed to trial as a class in an arbitration.
Plaintiffs initially filed a class action lawsuit in March 2008, alleging that Sterling’s practices and policies led to women being deliberately passed over for promotions and paid them less than their male cohorts. The case was sent to arbitration several months later under Sterling’s arbitration clause.
In 2009, an arbitrator ruled that Sterling’s dispute resolution program did not specifically bar class actions and allowed claimants to seek class status. From there, the case took a number of twists and turns, which we reported on more fully at the time here.
In June 2013, the employees moved for class certification. In February 2015, the arbitrator ruled that that the employees could proceed as a class in the arbitration. In November 2015, the district court affirmed the arbitrator’s decision concluding that the arbitrator did not exceed her authority by certifying a class that included absent class members i.e., employees other than the named plaintiffs and those who have opted into the class. Sterling appealed. READ MORE
We have previously written about how Dodd-Frank retaliation cases are a mixed bag for employers and about the Supreme Court’s expansion of Sarbanes-Oxley (“SOX”) Whistleblower protections. A new decision from the Wisconsin District Court is another mixed win for employers who want to enforce arbitration agreements in Dodd-Frank and SOX retaliation cases. In a case of first impression in the Seventh Circuit, Wussow v. Bruker Corporation., No. 16-cv-444-wmc, 2017 WL 2805016 (W.D. Wis. June 25, 2017), the district court held that while arbitration of SOX whistleblower retaliation claims cannot be compelled, a similar cause of action for whistleblower retaliation under Dodd-Frank can be. READ MORE
In January, we reported that the Supreme Court granted review of three conflicting Court of Appeal decisions to settle the question of whether an agreement requiring that employees resolve employment-related disputes through individual arbitration violates the National Labor Relations Act (“NLRA”).
Last week, the Supreme Court set oral argument for October 2, 2017 to resolve the circuit split on whether mandatory class action waivers violate the NLRA. The Fifth, Second and Eight Circuits rejected the National Labor Relations Board’s (“NLRB”) position that class action waivers unlawfully interfere with employees’ NLRA rights to engage in concerted activity. See Murphy Oil USA, Inc. v. NLRB, 808 F.3d. 1013 (5th Cir. 2015); Cellular Sales of Missouri, LLC v. NLRB, 824 F.3d 772 (8th Cir. 2016); Patterson v. Raymours Furniture Co., Inc., 2016 WL 4598542 (2d Cir. Sept. 2, 2016). The Ninth and Seventh Circuits however, held that an arbitration agreement precluding class actions violates the NLRA and is not preempted by the Federal Arbitration Act (“FAA”). See Morris v. Ernst & Young, 834 F. 3d 975 (9th Cit. 2016) Epic Systems Corp. v. Lewis, 823 F.3d 1147 (7th Cir. 2016). The Ninth Circuit’s opinion distinguishes mandatory class action waivers from those agreements that permit employees to opt-out.
In June, Ernst & Young, Murphy Oil and Epic Systems filed their opening briefs with the Supreme Court, requesting that the Court affirm the Fifth Circuit’s decision and reject the Seventh Circuit’s decision. The companies argued that the FAA requires enforcement of class action waivers because it requires enforcement of agreements to arbitrate according to their terms and the NLRA’s provisions protecting employees’ right to act in concert do not override the FAA. The U.S. Department of Justice filed one of 17 amicus curiae briefs last month in support of the enforceability of class action waivers. The Department of Justice’s argument that the NLRB’s position contradicts the FAA is especially significant given its previous contrary position under the Obama administration.
On Friday, June 16, 2017, the United States Department of Justice (DOJ) filed an amicus brief reflecting a change of heart when it comes to the enforceability of class waivers in arbitration agreements. In an unprecedented move, President Trump’s acting solicitor general, Jeffrey B. Wall, said his office had “reconsidered the issue and has reached the opposite conclusion” as the Obama administration in a set of consolidated cases currently before the U.S. Supreme Court, NLRB v. Murphy Oil USA Inc. (Docket Nos. 16-285, 16-300, and 16-307).
Last month, the Ninth Circuit issued a notable opinion addressing the enforceability of arbitration agreements in Poublon v. C.H. Robinson Co., 846 F.3d 1251 (9th Cir. 2017), mandate issued (Feb. 24, 2017). In Poublon, the employee filed a class action even though she signed a dispute resolution agreement that prohibited representative actions and required her to mediate and arbitrate all other claims. The court evaluated the agreement to determine if it was unconscionable under California law, which looks at both procedural and substantive unconscionability on a sliding scale. Although the court held that a few provisions were substantively unconscionable, the court severed and reformed the offending provisions and largely upheld the dispute resolution agreement. READ MORE
Companies operating in the “on-demand” or “gig economy” have enjoyed tremendous success in recent years, as emerging technologies and shifts in consumer tastes have buoyed their growth. These companies span a cross-section of industries (transportation, food delivery, lodging) but have one thing in common: each aims to deliver traditional services more efficiently by connecting consumers directly with service providers.
But as we all know by now, success often begets legal challenges. Take Uber, for example. The company has faced a thicket of litigation in recent years, most notably related to the question of whether its drivers are employees or independent contractors.
Like many companies in today’s economy, Uber has implemented an arbitration policy as a way to efficiently resolve disputes. Below we recap some of the developments in this area and preview some legal issues that companies will want to monitor in the months ahead. READ MORE
In August of 2016, we reported that the Ninth Circuit created a deeper circuit-split on whether class action waivers in arbitration agreements violate the National Labor Relations Act (“NLRA”) with its decision in Morris v. Ernst & Young LLP.
As expected, the Supreme Court granted review today of three of the conflicting Court of Appeals decisions. It granted review of the Fifth Circuit’s decision in Murphy Oil USA, Inc. v. NLRB, 808 F.3d 1013 (5th Cir. 2015). The Fifth Circuit rejected the National Labor Relations Board’s (“NLRB”) position that class action waivers unlawfully interfere with employees’ NLRA rights to engage in concerted activity, agreeing with the Second and Eighth Circuits. The Ninth and Seventh Circuits, on the other hand, adopted the NLRB’s position that class action waivers violate the NLRA.
The Supreme Court also granted review in Morris v. Ernst & Young, 834 F.3d 975 (9th Cir. 2016) and Epic Systems Corp. v. Lewis, 823 F.3d 1147 (7th Cir. 2016). The Seventh Circuit held that an arbitration agreement precluding collective arbitration or collective action violates section 7 of the NLRA and is unenforceable under the FAA. The Ninth Circuit agreed and concluded that compulsory class action waivers violate sections 7 and 8 of the NLRA by limiting workers’ rights to act collectively, noting in footnote 4 that agreements containing an “opt-out” clause for pursuing class claims do not violate the NLRA.
All three cases have been consolidated and will be argued together.
Can employers still require employees to sign arbitration agreements with class action waivers as a condition of employment? Last week, the Ninth Circuit became the second appellate court to adopt the National Labor Relations Board’s (“NLRB”) position that class action waivers violate the National Labor Relations Act (“NLRA”) in Morris v. Ernst & Young LLP.
The federal government released the final regulations implementing the Fair Pay and Safe Workplaces Executive Order (“EO” hereafter) this week. The regulatory package contains two parts: amendments to the Federal Acquisition Regulations and guidance from the Department of Labor for implementing the regulations. The regulatory package is a central part of the Administration’s aggressive regulatory agenda we have previously discussed and reflects continuing burdens on federal contractors.
California’s resistance to the longstanding federal policy favoring arbitration frequently results in public expressions of frustration by the justices of the U.S. Supreme Court. In over five years since the Supreme Court’s broad directives in AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011), recent California decisions, including our recent coverage of the California Supreme Court’s holding in Sandquist v. Lebo, Case No. S220812, 2016 WL 4045008 (Cal. July 28, 2016), suggest that the state’s stubbornness may be waning, at least for the time being. The following summarizes key decisions that diverge from California’s traditional resistance to arbitration and which every employer should have in their arsenal of tools.