Mintz Levin continues to be at the forefront of issues related to contractual arbitration provisions, helping clients optimize their dispute resolution and risk mitigation processes. Check out our sister blog’s latest post, which pieces together a top-10 list of issues in-house counsel should consider when crafting these provisions.
California’s PAGA Saga continues with a pair of recently issued appellate decisions impacting these legally created class action-like lawsuits.
In a recent series of articles, we asked whether “class arbitration” — meaning the utilization of a Fed. R. Civ. P. 23 class action protocol in an arbitration proceeding — is ultimately viable. Given the nature of arbitration, we suggested that it arguably is not. We noted that the United States Supreme Court and various Courts of Appeal had examined several related procedural questions, but that they had not gotten to the core issues that would ultimately determine the viability of a class arbitration award.
The Supreme Court is set to hear oral argument in October on whether class and collective action waivers are enforceable. While employers await the Supreme Court’s decision, other courts continue to weigh in on the matter. Just last week, a New York State appellate court in Gold v. New York Life Ins. Co., 2017 NY Slip Op 05695 (App. Div. 1st Dep’t, July 18, 2017), found itself aligned with those federal circuit courts of appeal invalidating these waivers. Given the continuing disagreement among courts across the nation – both federal and state – as to whether the Federal Arbitration Act’s policy favoring arbitration should trump the National Labor Relations Act’s prohibition on contracts that restrict the rights of employees to engage in collective action, the need for clarity from the Supreme Court is more urgent than ever. Employment Matters will of course continue monitoring these important developments, so please check back in for regular updates.
Our colleagues at the ADR blog have published the first of a series of posts discussing the dilemmas inherent in attempting to resolve class claims through arbitration. In Is ‘Class Arbitration’ an Oxymoron? Mintz Member Gil Samberg considers the challenges of adjudicating class claims, which are based on the rules of civil procedure, through the purely contractual mechanism of commercial arbitration, and notes that the Supreme Court has yet to definitively approve of this approach. For an insightful look at the current state of the law as well as the broader implications of class arbitrations, you can find the post here.
UPDATE: On February 8, 2017, the Supreme Court announced that it would delay until its October 2017 term oral arguments in the consolidated cases concerning the enforceability of class arbitration waivers in employment agreements. (This updates our Blogpost dated Jan. 31, 2017.)
Many anticipate that Judge Gorsuch will have been confirmed by the Senate by then, which likely explains the Supreme Court’s decision to delay oral argument. Because the Court granted certiorari based upon a Circuit split, it presumably hopes to avoid a possible 4-4 vote by the current Justices, which would permit the various Circuit Court rulings to stand, leaving the matter unresolved nationally.
While we expect that Justice Gorsuch, a reputed strict constructionist, will in effect be a pro arbitration judge, his questions during oral argument will offer a glimpse of how he might decide the particular issues presented here concerning employment class arbitration.
With the 9th Circuit’s late summer anti-class action waiver decision, the circuit split widened over the issue of whether employers can require employees, through an arbitration agreement, to waive their rights to bring class or collective actions against their employer. This issue will almost certainly reach the Supreme Court given the deepening divide and the Court’s previous apparent interest in addressing issues surrounding class action waivers and arbitration agreements.
By Michael Arnold, Brent Douglas and Audrey Nguyen
Beginning next year, employers may no longer force their California employees to resolve their employment-related disputes outside of California or use non-California law when doing so. With limited exceptions, the new law, codified at Labor Code Section 925, will be applicable to all employment agreements entered into, modified, or extended on or after January 1, 2017. The new law is yet another attempt by California policymakers to provide added protections to employees working in their state.
The Seventh Circuit recently became the first federal appellate court to say that employers can’t prevent class/collective actions through waivers in mandatory arbitration agreements, holding that such waivers interfere with employees’ rights to engage in concerted activity in violation of the National Labor Relations Act. The court’s holding in Lewis v. Epic Systems Corp., No. 15-2997 (7th Cir. May 26, 2016), creates a circuit split on this issue and calls into question the effectiveness of such waivers for employers with employees working in states covered by the Seventh Circuit (Wisconsin, Illinois and Indiana).
Last month, a federal court in Maryland denied an employer’s motion to compel arbitration even though the plaintiff executed an arbitration agreement the employer had included in the plaintiff’s employment application. The court found the agreement unenforceable because the parties did not have a “meeting of the minds” at the time the employer asked the plaintiff to complete the employment application. This decision serves as an important reminder to employers to examine not just the content of the agreement itself, but also the context around which the contract is executed.