On Tuesday Manhattan federal district court judge Kimba Wood once again refused to force a former Ernst & Young accountant to arbitrate her wage and hour claims against the firm and allowed her to move forward with her purported class action. The accounting firm’s lawyers at Akin Gump Strauss Hauer & Feld had argued that language in plaintiff Stephanie Sutherland’s employment agreement mandated individual arbitration of workplace disputes, citing Concepcion. But Judge Wood found that the facts of this case did not compel her to apply that ruling and force arbitration.
Judge Wood’s 18-page opinion, which is dated January 13 but was filed Tuesday, is a must-read for labor and employment lawyers tracking the impact of Concepcion. As we reported last week, the labor and employment bar was set abuzz by the National Labor Relations Board’s decision rejecting an arbitration agreement that required employees of homebuilder D.R. Horton to waive their class action rights. Judge Wood’s decision is likely to create a similar stir.
Sutherland sued E&Y in April 2010, seeking less than $1,900 for 151.5 hours of unpaid overtime and class certification. She argued that the cost of pursuing her claims on an individual basis would be prohibitive. Last March, Judge Wood denied E&Y’s motion to compel arbitration under the Federal Arbitration Act, finding the arbitration agreement was unenforceable because it prevents Sutherland from vindicating her statutory rights.
After the Supreme Court handed down its April decision in Concepcion, E&Y’s lawyers at Akin Gump asked the judge to reconsider in this filing. In Tuesday’s decision, Judge Wood found that the cost of discovery would prevent Sutherland from pursuing her claims individually. “The facts before this Court establish that the agreement at issue in this case would operate as a waiver of Sutherland?s right to pursue her statutory remedies pursuant to [the Fair Labor Standards Act],” Judge Wood wrote. “The court therefore finds the doctrine articulated by the Supreme Court in Concepcion inapplicable to the different facts Sutherland faces.”
Sutherland’s lawyer, solo practitioner Leon Greenberg, told us that Judge Wood’s decision was consistent with prior case law. “In order to vindicate your statuary rights you can’t have an arbitration framework that makes your right to proceed impracticable,” Greenberg said. The plaintiff is also represented by Max Folkenflik of Folkenflik & McGerity.
We reached out to E&Y’s counsel, Gregory Knopp at Akin Gump, for comment but did not hear back.