Supreme Court Approves Class-Action Arbitration Waiver, Rejects Argument that Individuals Will Not Have Financial Incentive and Capacity to Prove Claims

June 21, 2013 by Hinshaw & Culbertson LLP

In a significant victory for businesses and employers, the U.S. Supreme Court ruled on June 20, 2013, that a class-action waiver in an arbitration agreement is valid and enforceable under the Federal Arbitration Act (FAA) even if the costs of prosecuting the claim on an individual basis are financially impracticable. The majority based its ruling on two findings: first, that the federal statute at issue did not expressly override the FAA’s preference for enforcing private arbitration agreements as written and, second, that the financial burdens imposed on individual claimants did not require application of the “effective vindication” rule, which permits courts to invalidate arbitration agreements that prevent a party from effectively pursuing a remedy provided by federal law. More ›

California Court: Arbitration Agreement does not Override Statutory PAGA Rights

June 10, 2013 by Hinshaw & Culbertson LLP

Non-exempt hourly auto workers filed a class action lawsuit alleging violations of various wage and hour laws, and sought penalties under California’s Private Attorneys General Act (PAGA). The employees had, however, executed the employer’s Employee Dispute Resolution Plan, which provides that all employment-related disputes must be submitted to mediation and arbitration. Employees waived any right they had to pursue, file, participate in, or be represented in disputes filed on a class basis or as a collective or representative action, and the agreement prohibited mediation or arbitration of disputes on a class basis or as a collective or representative action. More ›

Private Employee has no Right to Pursue Pattern or Practice Claim; Thus, no Entitlement to Class Action Procedural Mechanism

March 21, 2013 by Hinshaw & Culbertson LLP

The Second Circuit Court of Appeals issued its ruling today in the matter of Parisi v. Goldman, Sachs & Co. et al., No. 11-5229-cv (2nd Cir., Mar. 21, 2013). More ›

Arbitration Agreement Containing Class Waiver Enforceable in FLSA Case

January 9, 2013 by Hinshaw & Culbertson LLP

A residential care facility administrator entered into an arbitration agreement at the time she was hired which provided that she would submit any and all claims relating to her employment to arbitration. The agreement also contained a class waiver. Despite the foregoing, the administrator filed an action on behalf of herself and other current and former employees claiming that they were misclassified as “exempt” employees, but should have been entitled to overtime pay under the Fair Labor Standards Act (FLSA) because they regularly worked over forty hours per week. More ›

U.S. Supreme Court: State Court Should not have Ruled on Validity of Noncompete Clause; Issue Was for Arbitrator

November 27, 2012 by Hinshaw & Culbertson LLP

The U.S. Supreme Court held that the Oklahoma Supreme Court erroneously struck down a noncompete agreement, declaring it invalid under state law. The problem with the state court's decision, however, was that there was an arbitration agreement in the employer's employment agreements; thus, the U.S. Supreme Court found that the state court should have allowed an arbitrator to determine whether the non-compete was valid or not.   More ›

California Court Compels Arbitration and Dismissal of Class Claims, Invalidating Gentry Based on AT&T Mobility v. Concepcion

June 4, 2012 by Hinshaw & Culbertson LLP

For many years, pursuant to Gentry v. Superior Court (2007) 42 Cal.4th 443, California courts have held that class waiver provisions in arbitration agreements should not be enforced if class arbitration would be a significantly more effective way of redressing the rights of affected employees. But that was before the U.S. Supreme Court issued its April 2011 ruling in AT&T Mobility LLC v. Concepcion, holding that the principal purpose of the Federal Arbitration Act is to ensure that arbitration agreements are enforced pursuant to their terms. Further, the Supreme Court held that “requiring the availability of classwide arbitration interferes with fundamental attributes of arbitration and thus creates a scheme consistent with the FAA.” More ›

CA Court Finds Arbitration Agreement with Modification Provisions to be Illusory

April 23, 2012 by Hinshaw & Culbertson LLP

The California Court of Appeals recently found an employer's arbitration agreement to be "illusory" because it contained a modification provision which stated that the employer had the right to amend, modify, or revoke the arbitration contract on 30 days' written notice, and at the end of the 30-day period, a contract change applies to any claim that has not been filed with the American Arbitration Association. More ›

Another California Court Strikes down yet Another Arbitration Agreement

March 13, 2012 by David Ian Dalby

The employee sued his former employer alleging several claims under the California Fair Employment and Housing Act (“FEHA”). The employer filed a petition to compel arbitration based upon an agreement to submit employment-related claims to final binding arbitration as provided in  signed employment application, employment agreement and acknowledgment of receipt of the employee handbook. The trial court refused to compel arbitration because the arbitration agreement stated that the arbitration would occur pursuant to the applicable rules of the American Arbitration Association (“AAA”) in the state where employee was employed or was last employed. The trial court found that the employee was not provided with a copy of the controlling AAA rules, and was not advised how he could find or review them and provisions failed to identify which set of rules promulgated by AAA would apply. Significantly, the arbitration agreement further stated that the arbitrator shall be entitled to award reasonable attorney's fees and costs to the prevailing party. The Court of Appeal affirmed the trial court's refusal to compel arbitration holding the agreement did not pass the applicable test for unconscionability, because the AAA rules were not provided with the arbitration agreement and a prevailing party attorney's fees provision exposed the employee to a greater risk of being liable to the employer for attorney's fees than he would have been had he pursued his FEHA claims in court. Generally, FEHA claims only allow a prevailing employee to recover attorneys fees. Employers must be cognizant that only a well- drafted arbitration provision in an employment agreement be enforced in California. Arbitration provisions that are incomplete, appear to impair valuable employee rights and/or create a risk of loss to the employee are likely to fail.

California Court Finds Employment Arbitration Provision Unconscionable

March 5, 2012 by Hinshaw & Culbertson LLP

Employment arbitration agreements are generally enforceable in California. However, great care is required in both the drafting and the implementation. For example, California's First District Court of Appeal (San Francisco) recently underscored this through the unconscionablity doctrine in Ajamian v. Cantor CO2e, No. A13125 (Cal.Ct. App. Feb. 16, 2012). The Court affirmed denial of an employer's petition to compel arbitration under a provision in an employment contract. More ›

NLRB Finds Arbitration Provision Violative of NLRA

February 2, 2012 by Hinshaw & Culbertson LLP

D.R. Horton, a homebuilder with operations in more than 20 states, began to require each new and current employee to execute a "Mutual Arbitration Agreement" (MAA) as a condition of employment, requiring arbitration of all claims on a individual basis, precluding them from filing joint, class or collective claims addressing their wages, hours, or other working conditions against the employer in any forum.  More ›

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