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.
The battle between the NLRB and the Fifth Circuit rages on, as the Fifth Circuit again ruled that employers do not violate the National Labor Relations Act when they require employees to sign arbitration agreements containing class/collective action waivers.
Earlier this month, the New Jersey Appellate Division ruled that employee arbitration agreements, to be enforceable, must contain a “clear and unmistakable” waiver of an employee’s right to a trial in court. In Milloul v. Knight Capital Group, the court, finding no distinction between an employee arbitration agreement and a consumer arbitration agreement, extended an earlier 2014 New Jersey Supreme Court decision requiring express right-to-sue waivers in consumer arbitration agreements.
We have frequently written about the increasing likelihood that courts will enforce arbitration agreements to resolve a broad range of issues arising out of the employment relationship. (See here, for example.) Recently, a federal court provided another example it compelled the arbitration of three nurses’ False Claims Act (FCA) retaliation claims against the hospital that employed them. But, the court went a step further by also requiring that the nurses arbitrate their underlying claim that the hospital had defrauded Medicare, thereby providing an important precedent for healthcare companies, government contractors and other employers who do business with the federal government and, therefore, can be targets of FCA claims. Continue Reading Court Enforces Arbitration Agreement, Requiring Employees to Arbitrate Whistleblower Claims
Two Massachusetts decisions—including one from the state’s highest court—applied the same standard regarding enforcement of an agreement to arbitrate. In each case, plaintiffs signed arbitration agreements with another party. Others that were not a party to and did not therefore sign those agreements sought the protections of the arbitration provision, and the courts required the plaintiffs in both instances to arbitrate their claims even against the non-signatory defendants. We briefly discuss these cases and the takeaways below.