2nd Circuit: Arbitration Clause Can’t Waive Class Action Rights
On March 8, in In re Am. Express Merchs. Litig., the 2nd Circuit reaffirmed its decision that an American Express credit card agreement containing a pre-dispute arbitration agreement with a provision that required consumers to waive their right to pursue class action claims was unenforceable.
In 2009, the 2nd Circuit ruled that the arbitration clauses of the American Express agreement were unenforceable because of the Supreme Court’s 2000 decision in Green Tree Financial Corp.-Alabama v. Randolph, which stated that if a party proves that the high cost of arbitrating a federal statutory claim would prevent the exercise of statutory rights, a mandatory arbitration clause is unenforceable. American Express cardholders deserved the right to pursue class action claims because, under federal antitrust laws, individual arbitrations would be cost prohibitive, the court found.
In 2010, in light of the Supreme Court’s decision regarding class arbitration in Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., American Express petitioned for a writ of certiorari, which the high court granted. It vacated the 2nd Circuit’s decision, remanding the case for reconsideration. On remand, a three-judge panel again refused to enforce the arbitration clause, citing the same reasons as in 2009 for its conclusion.
4th Circuit: Employer Can Be At Fault for Third-Party Harassment
An employer can be held responsible for third-party harassment if the employer knew or should have known of the harassment and didn’t take the proper steps to address it, the 4th Circuit decided March 3 in EEOC v. Cromer Food Services, Inc.
Cromer Food Services (CFS) employee Homer Ray Howard claimed he was harassed by employees at a hospital where he stocked vending machines. He alleged that the men made graphic, unwanted sexual comments daily. Howard complained to multiple CFS supervisors but was repeatedly told that the men were just joking. After months of complaining, Howard was offered a less desirable shift, which he turned down. He was then fired.
The EEOC filed a Title VII claim on Howard’s behalf. The district court granted summary judgment for CFS, but the 4th Circuit vacated the ruling, finding, as other circuits have, that an employer has a responsibility to investigate and attempt to combat third-party harassment of which it is aware.
5th Circuit: Oil Price-Fixing Complaints Dismissed
On Feb. 8, the 5th Circuit upheld the dismissal of five consolidated lawsuits alleging price-fixing by foreign oil production companies in Spectrum Stores, Inc. et al. v. Citgo Petroleum et al.
In 2006, five companies filed an antitrust class action lawsuit alleging a price-fixing conspiracy involving Citgo Petroleum Corp. The companies sought to represent all U.S. businesses that had purchased gasoline from Citgo since 2002. Similar lawsuits were filed elsewhere, with a total of five civil actions in four judicial districts all naming Citgo and various nonsovereign sellers of petroleum and crude oil as defendants. In 2007, the United States Judicial Panel on Multidistrict Litigation consolidated the cases for the purposes of pretrial proceedings.
The district court granted the defendants’ motion for dismissal under the act of state doctrine and political question doctrine, finding that the complaints involved decisions of the Organization of the Petroleum Exporting Countries (OPEC) and the defendants’ involvement in such decision making. The plaintiffs appealed, but the 5th Circuit upheld the district court’s ruling, concluding that the alleged conspiracy hinged on agreements by OPEC members to limit the production of crude oil and that the plaintiffs failed to allege an independent conspiracy outside of these agreements.
DC Circuit: ABA Challenge to FTC “Red Flags” Rule Moot
The American Bar Association’s lawsuit challenging identity theft regulations that would have affected lawyers is moot thanks to legislation that exempts attorneys from the rules, the D.C. Circuit ruled March 4 in American Bar Association v. Federal Trade Commission.
The American Bar Association (ABA) filed suit in 2009 when the Federal Trade Commission (FTC) argued that lawyers should be treated as creditors under the Fair and Accurate Credit Transactions Act because they bill for legal work after it is done, thus extending credit. If considered creditors, lawyers would be subject to the “red flags” rule, which aims to protect consumers from identity theft by requiring creditors to develop programs to identify, detect and respond to the warning signs.
In October 2009, a district court ruled that the red flags rule did not apply to lawyers. In March 2011, the D.C. Circuit ruled that the point was moot and remanded the case to the district court for dismissal, saying that the legislative history “confirms Congress’ intention to bar the regulation of lawyers based solely on deferred billing practices.”