A recent Second Circuit decision has resulted in a major victory for employers who seek to eliminate class actions and resolve employment disputes through arbitration. In Southerland v. Ernst & Young LLP, Case No. 12-304 (August 9, 2013), the court held that nothing in the Fair Labor Standards Act of 1938 (FLSA), 29 U.S.C. § 201, et seq. prohibits an employer from including a class action waiver provision in an arbitration agreement. Under this holding, an employee cannot avoid a class-action waiver provision in an arbitration agreement by claiming that the waiver removes the financial incentive for her to pursue a claim under the FLSA. However, the Second Circuit did note that such a provision can be invalidated if it seeks to waive or prohibit the employee’s legal rights.
Articles Discussing Employment Law Class Actions
An employee may be compelled to arbitrate claims under the Fair Labor Standards Act (FLSA) on an individual basis, the U.S. Court of Appeals for the Second Circuit concluded on Friday. In Sutherland v. Ernst & Young LLP, the Second Circuit reversed the decision of the U.S. District Court for the Southern District of New York denying Ernst & Young’s motion to compel arbitration against a former employee. The court held that: 1) the FLSA does not include a contrary congressional command that prevents a class action waiver provision in an arbitration agreement from being enforced according to its terms; and 2) the U.S. Supreme Court’s recent decision in American Express Co. v. Italian Colors Restaurant (Italian Colors) precludes the application of the judge-made “effective vindication doctrine” to invalidate an arbitration agreement where a plaintiff argues that proceeding individually in arbitration on an FLSA claim would be “prohibitively expensive.”
Eight days prior to the release of the U.S. Supreme Court’s June 20, 2013 decision in American Express Co. v. Italian Colors Restaurant (“Amex”), the Massachusetts Supreme Judicial Court (“SJC”), in Feeney v. Dell, Inc., invalidated an arbitration agreement containing a class action waiver. The court found the plaintiffs had demonstrated they could not pursue their claims in individual arbitration given the high costs that would be required and relatively small damages that each individual plaintiff could recover. In arriving at its decision, the SJC relied on similar rationale used by the Second Circuit in In re American Express Merchants’ Litigation, which at the time was pending before the U.S. Supreme Court. The SJC expressed its belief that AT&T Mobility LLC v. Concepcion allowed the invalidation of a class-action waiver that “operate[s] in practice to deny a willing plaintiff any and all practical means of pursuing a claim against a defendant.”
Some good news for employers. In a recent 5-4 opinion, the U.S. Supreme Court held that collective-action claims brought under the Fair Labor Standards Act (FLSA) are moot when the named plaintiff has no continuing personal interest in the outcome of the lawsuit and no motion for conditional certification has been filed. Genesis Healthcare Corp. v. Symczyk, Case No. 11-1059.
Executive Summary: On April 16, 2013, the Supreme Court issued a decision that makes it easier for employers to limit the scope of wage and hour “collective actions.” In Genesis Healthcare Corp. v. Symczyk (Apr. 16, 2013), the Court held that an employer can obtain dismissal of an FLSA collective action by mooting the named plaintiff’s claims before the trial court rules on a motion for conditional certification.
The Seventh Circuit recently applied the Supreme Courtâ€™s Wal-Mart Stores, Inc. v. Dukes decision to class certification in a wage and hour action, and affirmed the certification of two classes. Ross v. RBS Citizens N.A. d/b/a Charter One. The Seventh Circuit held that the district court did not abuse its discretion in certifying two classes of bank employees and that this certification met the commonality requirement clarified in Dukes.
By now most of you who follow developments in employment law have likely heard about and possibly read the U.S. Supreme Court’s decision in Wal-Mart v. Dukes, overturning certification of a class action sex discrimination case brought on behalf of 1.5 million current and former female Wal-Mart employees. (If not, our recent FR Alert on this case will get you up to speed.) While Dukes is a sex discrimination case, it is likely to have a major impact upon class actions in other areas of the law, including wage and hour lawsuits.