Federal claims in a proposed wage-and-hour class action filed against Hyundai may proceed, a federal judge in Pennsylvania has ruled, but claims under state law are pre-empted.
U.S. District Judge Ronald L. Buckwalter of the Eastern District of Pennsylvania ruled that the claims brought by hourly workers who allege that they were uniformly docked for a half-hour lunch break regardless of how much time they actually took are pre-empted by the Labor Management Relations Act because their claims that Hyundai violated the Pennsylvania Minimum Wage Act depend upon interpretation of the collective bargaining agreement.
However, Buckwalter held that the plaintiffs' claims under the federal Fair Labor Standards Act could proceed. He rejected Hyundai's argument that the plaintiffs hadn't exhausted their administrative remedies because he found that the grievance provision of the CBA is unconstitutional.
"To argue that an arbitration clause is not a prospective waiver of substantive statutory rights when it has not yet been enforced by the union is to misunderstand the word 'prospective' — the provision is unconstitutional because an employee is forced to waive the right to a federal forum before knowing whether the claim will even be heard in the first place," Buckwalter said.
The CBA requires workers to take any grievance first to the union and forbids them to bring any action without the express approval of the union, according to the opinion.
"The Supreme Court left open the issue of whether a CBA that allows a union to prevent a claim from being arbitrated in the first place would preclude an employee from 'effectively vindicating' their 'federal statutory rights in the arbitral forum,'" Buckwalter said, quoting from the high court's 2009 opinion in 14 Penn Plaza v. Pyett.
"In a dissent, Justice [David] Souter addressed the very issue presented here, noting that, 'The majority opinion may have little effect, for it explicitly reserves the question whether a CBA's waiver of a judicial forum is enforceable when the union controls access to and presentation of employees' claims in arbitration … which is "usually the case,"'" he said.
The judge agreed with the workers' argument that the union's control over whether or not employees can bring a claim, which could keep someone from having his or her claim heard in any forum, means that the grievance provision of the CBA is unconstitutional.
The plaintiffs cited two recent district court opinions for support — one from the District of Massachusetts in 2011 and the other from the Southern District of New York in 2010.
"Here, as in those cases, the language of the CBA states unequivocally that 'no individual employee may file a grievance without the express approval of the union,'" Buckwalter said. "The union thus acts as gatekeeper and can prevent the merits of an employee's federally protected statutory claim from ever being heard."
He then looked to the U.S. Supreme Court's reasoning in Pyett, saying that if the clause is a clear waiver of the right to bring a claim in federal court, then the worker's claim may never be addressed.
"Because we find the grievance provision in the CBA to be unconstitutional as a prospective waiver of a substantive statutory right, we find that plaintiffs have not failed to exhaust their administrative remedies," Buckwalter said.
He saved Hyundai's challenge to the adequacy of the proposed class for a later stage of the litigation, saying that it would be premature to address it at this point. Buckwalter said that Hyundai could bring that challenge at the class certification stage.
The proposed class includes, primarily, assembly line and production workers, but also covers some clerical and administrative workers who had limited job independence.
Joshua Boyette and Justin Swidler of Swartz Swidler in Cherry Hill, N.J., represented the plaintiffs.
"We're obviously pleased with the court's ruling," Swidler said, adding that they're happy that the plaintiffs will have a chance to be heard in federal court rather than private arbitration.
Christopher Moran of Pepper Hamilton represented Hyundai and couldn't be reached for comment.
(Copies of the 12-page opinion in Drake v. Hyundai, PICS No. 13-2547, are available from The Legal Intelligencer. Please call the Pennsylvania Instant Case Service at 800-276-PICS to order or for information.)