Jottings By An Employer's Lawyer

Thursday, June 20, 2013

Supreme Court Arbitration Jurisprudence - No Class Action If You Say So

Combining today's decision in American Express Co. v. Italian Colors Restaurant, (6.20.13) with its decision 10 days ago in Oxford Health Plans v. Sutter,  (S.Ct. 6.10.13) the Supreme Court's position now seems clear. If an employer wants to avoid class or collective actions, it can do so by having an arbitration agreement that precludes arbitration of claims on a class basis.  But to be sure that happens, you need to be explicit about it.

There is no doubt more nuance than that, and I  have no doubt that there will be new arguments why such bans will not work, and it may be that there will be some courts will go for it, but the Supreme Court position seems quite definitive.

The most logical way for it to be changed is legislative, and of course there has been legislation introduced for the past several Congresses that would ban requiring an arbitration agreement as a condition of employment. But at least for the foreseeable legislative future, that seems unlikely.

The net result of these decisions is a rather clunky way to solve a huge problem that is plaguing the employer community, the collective FLSA (and class claims under state equivalents) action.  The courts have been unwilling or unable to address that issue by establishing an appropriate standard for conditional certification.  And now, because arbitration appears it will be a solution, that means a large number of employers who have not implemented arbitration plans will be re-thinking the decision.

All of that will have impacts on the employment law world. It is unlikely that anyone can predict all of the ramifications with certainty. But that there will be a changed world now seems inevitable.

Just as a side note, what ever you may think of  the judicial view of Justice Kagan, who goes from writing for the Court in Sutter  to dissenting today, you have to enjoy her clear cut writing.
And here is the nutshell version of today’s opinion, admirably flaunted rather than camouflaged: Too darn bad.
And a second side note, which surely can and will be amplified by those who really are students of the Supreme Court. particularly if I am right, some of Scalia's references to Justice Kagan's dissent, seem much more respectful than he sometimes is. When she was appointed, some of the commentary was that she might be able to build some personal bridges with members of the Court in the conservative wing and this makes me wonder if there is some, very small to be sure, signs that could be so.

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