A significant recent Seventh Circuit decision, written by noted Judge Richard Posner, affirmed decertification of an FLSA collective action, essentially on the ground that the collective action could not satisfy the predominance standard under Fed. R. Civ. P. 23(b)(3). You read that correctly. In Espenscheid v. DirectSAT USA LLC, No. 12-1943 (7th Cir. Feb. 4, 2013), Judge Posner opines that the only material distinction between FLSA collective actions and Rule 23 class actions is that the former requires opt-in participation by class members, whereas the latter provides for automatic class member participation, subject to the right to opt out of classes seeking money damages. In all other respects that collective actions and class actions serve the same purposes – efficient resolution of disputes of the claims of similarly-situated plaintiffs. Therefore, Judge Posner reasons, there is no reason why the standard for certification of FLSA collective actions seeking money damages should differ from the standard for certification of a class to seek money damages under Rule 23(b)(3). Judge Posner finds that common issues of fact and law do not predominate for the Espenscheid class because entitlement to overtime compensation or failure to be paid minimum wage could not be established through proof common to the class as a whole. Accordingly, Judge Posner rules that the district court appropriately decertified the collective action to pursue FLSA claims.
NLRB Says Employers - Even Those With Non-Unionized Workforces - Cannot Require Non-Management Employees to Waive Their Rights to Proceed with Class, Collective, or Other Joint Claims Addressing Wages, Hours or Working Conditions
In yet another controversial move, the National Labor Relations Board (NLRB) has ruled that employers violate the National Labor Relations Act (NLRA) when they require non-management employees, as condition of employment, to waive their rights to pursue class, collective or other joint claims regarding their wages, hours and working conditions in court and before an arbitrator.
Southern District of New York Judge Holds that Fair Labor Standard Act Collective Action Waivers in Arbitration Agreements Are Unenforceable As a Matter of Law
Employers should take notice of a recent case out of the Southern District of New York, Raniere v. Citigroup, Inc., 11 Civ. 2448, 2011 WL 5881926 (S.D.N.Y. Nov. 22, 2011) (Sweet, J.), in which the court concluded that a Fair Labor Standards Act collective action waiver included in an arbitration agreement is unenforceable as a matter of law. (As discussed in a previous blog entry, collective actions are distinct from the more-commonly discussed class actions.)
Arbitrator, Not Court, Should Determine Whether Employment Agreements Permit Collective Arbitration, Says New York Appellate Court
New York’s First Department – an intermediate appeals court – recently affirmed a New York County trial court decision holding that an arbitrator, not a court, should decide whether certain employment agreements at issue allowed for collective arbitration. In reaching its decision, the First Department left open the possibility that the arbitrator could conclude that collective (not class) arbitration was available despite the fact that the agreements at issue were silent regarding its availability.