Ever since the U.S. Supreme Court ruled two years ago in AT&T Mobility v. Concepcion, 09-893, that companies can enforce class action waivers in consumer contracts, defendants have been trying to use Concepcion as a class action killer in the employment context as well. Those efforts haven’t been particularly successful so far, but there are signs the tide may be turning.
On Feb. 22, Southern District Judge Vincent Briccetti (See Profile) dismissed a purported overtime class action against JPMorgan Chase, citing a mandatory arbitration and class-action waiver clause in a former employee’s contract.
Briccetti ruled that binding arbitration agreements are permitted under Concepcion, and that the Federal Arbitration Act was enacted to encourage arbitration as an alternative to costly and time-consuming litigation.
In Ryan v. JPMorgan Chase, 12-cv-4844, the judge also rejected the notion that he should defer to the National Labor Relations Board’s January 2012 decision in In re D.R. Horton, 357 NLRB No. 184, where the NLRB held that binding arbitration agreements in employment contracts violate the National Labor Relations Act.
Lawyers for plaintiff Tiffany Ryan at Outten & Golden and Sapir & Frumkin had argued that arbitration clauses like the one Ryan signed are unenforceable under the Fair Labor Standards Act, because the statutory rights available to her would be limited in an arbitration setting, and because pressing her claims individually would be too expensive.
"Defendants ask the Court to give them the advantage of an unfair deal," the plaintiffs lawyers wrote in their opposition to JPMorgan’s motion to dismiss. "Ms. Ryan had no choice but to yield to an agreement that eliminates her federal rights and grants Defendants de facto immunity from liability."
Briccetti didn’t buy those arguments. Siding with JPMorgan’s lawyers at Morgan, Lewis & Bockius, he concluded that the arbitration clauses should be enforced, and he ruled that the NLRB’s D.R. Horton ruling was both non-persuasive and non-binding.
"At bottom, the Court finds the class action waiver is fair, permits plaintiff to vindicate her statutory rights under the FLSA, does not hinder her ability to recover attorney’s fees or costs, and comports with public policy favoring arbitration and honoring private contracts," wrote Briccetti.
The NLRB’s D.R. Horton decision, meanwhile, is facing an existential threat at the U.S. Court of Appeals for the Fifth Circuit.
Citing a ruling last month by the U.S. Court of Appeals for the D.C. Circuit invaliding President Barack Obama’s January 2012 recess appointments of three members of the NLRB, D.R. Horton’s lawyers at Ogletree Deakins have argued at the Fifth Circuit that the NLRB did not have a legal quorum when it ruled against D.R. Horton last year. The Fifth Circuit hasn’t yet ruled in the case.
JPMorgan’s attorney, Thomas Linthorst of Morgan Lewis, did not respond to a request for comment. Neither did Adam Klein of Outten & Golden, who represents Ryan.
@|Victor Li, a reporter at The Litigation Daily, an affiliate, can be contacted at firstname.lastname@example.org.