The end of wage-and-hour class actions

Lexology.com
Venable LLP
Daniel B. Chammas, Richard J. Frey, Rebecca M. Aragon and Robert A. Friedman
USA
April 29 2011

In a decisive victory for employers, the United States Supreme Court held that, under the Federal Arbitration Act, an arbitration agreement can prohibit an individual from commencing or participating in a class action. The California Supreme Court had established a rule that an employment arbitration agreement was not enforceable if it waived an individual’s right to file a class action. The U.S. Supreme Court, in a 5-4 decision, held that state laws cannot interfere with an arbitration agreement’s elimination of the class action mechanism to resolve disputes. Employers can use this ruling to essentially eliminate one of the biggest litigation threats facing their business – the wage-and-hour class action.
What the Supreme Court Did
In ATT Mobility LLC v. Concepcion, individuals entered into a cellular phone contract with AT&T. That agreement "provided for arbitration of all disputes between the parties, but required that claims be brought in the parties’ ‘individual capacity, and not as a plaintiff or class member in any purported class or representative proceeding.’” Consumers of AT&T filed a class action in court, alleging false advertising and fraud by charging sales tax on phones it advertised as free.
When AT&T attempted to compel arbitration of the individual plaintiff's claims, the district court struck down the agreement as unconscionable because it barred class actions. The trial court cited a long line of California precedent that squarely held such arbitration agreements to be unconscionable, and hence unenforceable, even under the Federal Arbitration Act ("FAA"). The Ninth Circuit affirmed.

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Employment-related opinions issued by the Supreme Court

Lexology.com
Employment-related opinions issued by the Supreme Court

Stinson Morrison Hecker LLP
Cicely I. Lubben USA July 6 2010
Following up on our article last month summarizing the status of various Supreme Court cases, the Court has issued decisions in the two employment-related cases that were pending.
Texting Privacy: On June 17, 2010, the Supreme Court in City of Ontario v. Quon, held that a public employer's work-related search of a police officer's personal text messages on a government issued pager did not violate Fourth Amendment privacy rights. Although the employer had a written no-privacy policy, the officer's supervisor had verbally informed employees that they would be allowed to use their pagers for personal reasons outside the scope of the no-privacy policy if the employees paid for any excess usage charges. When the officer and others in his department subsequently exceeded the usage limits on their pagers for several months running, the employer sought to determine whether the existing usage limit was too low to accommodate all work-related text messages. In reviewing transcripts of the officer's text messages, the employer discovered that many were not work-related, and some were sexually explicit. As a result, the employer disciplined the officer.
The Court concluded that the employer's search of the officer's personal text messages did not violate his Fourth Amendment privacy rights because the search was reasonable.

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Legal Alert: Federal Defense Contractors Cannot Require Arbitration of Discrimination Claims

Ford & Harrison LLP
1/5/2010
Wade Ballard, L. Close

The Department of Defense Appropriations Act of 2010 (the "Act"), enacted on December 19, 2009, does more than dole out funds to the Department of Defense (DOD). Of particular note to federal contractors, the Act restricts DOD contractors with qualifying contracts from requiring their employees, as a condition of employment, to arbitrate claims brought under Title VII of the Civil Rights Act of 1964 and torts "related to or arising out of sexual assault or harassment."
The so-called "Franken Amendment," after its co-sponsor and driving force, Senator Al Franken (D-Minn.), prevents any money appropriated in the Act from being paid to a federal contractor with a DOD contract worth more than $1,000,000 and awarded more than 60 days after the Act's effective date, unless that contractor agrees not to: (1) enter into agreements as a condition of employment with its employees or independent contractors requiring arbitration of Title VII claims and any sexual assault or harassment-related tort; or (2) enforce any existing agreement with an employee or independent contractor requiring arbitration of Title VII claims and any sexual assault or harassment-related torts. The Act specifically lists sexual assault and harassment-related torts to include assault and battery, intentional infliction of emotional distress, false imprisonment, and negligent hiring, supervision, or retention.

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Agreements Can Force Discrimination Arbitration, High Court Rules

Workforce Management
April 2, 2009
Agreements Can Force Discrimination Arbitration, High Court Rules

In a decision that could curb the growth of employment discrimination litigation, the Supreme Court has ruled that employees cannot take their claims to court if a collective bargaining agreement mandates that they go through arbitration.
The court overturned a decision by the 2nd Circuit Court of Appeals in New York that would have allowed workers for a real estate security contractor to file age discrimination charges against their employer after their union declined to pursue arbitration.
“We hold that a collective-bargaining agreement that clearly and unmistakably requires union members to arbitrate [age discrimination] claims is enforceable as a matter of federal law,” wrote Justice Clarence Thomas for the 5-4 majority on Wednesday, April 1.
The case involves employees of Temco Services Industries, a contractor that works in New York City buildings owned by the Pennsylvania Building Co. and 14 Penn Plaza LLC.
They were covered by the collective bargaining agreement between the Service Employees International Union and the multiemployer association of the New York City real estate industry that requires arbitration for discrimination claims.
Several of the Temco workers allege their jobs as night watchmen were taken away and they were reassigned to less desirable positions in August 2003 when Temco contracted with Spartan Security. They said that they were the only people on staff above the age of 50 and filed an age discrimination grievance.
A district court and the appeals court denied the employer’s motion to compel arbitration. The Supreme Court overruled and sent the case back to the lower court...

The case is 14 Penn Plaza LLC, et. al. v. Pyett, et. al., Docket No. 07-581.
Full Story: http://www.workforce.com/section/00/article/26/28/84.php

Court Weighs Contract Versus Right to Discrimination Trial

Workforce Management

Justices weighed the right of individual workers to file age discrimination suits against the certainty a contract provides employers and unions that the cases will be settled in arbitration.
December 1, 2008

In a case presented Monday, December 1, the Supreme Court considered whether employees can pursue discrimination cases in court even if a collective bargaining agreement mandates that they go to arbitration.
The justices weighed the right of individual workers to file age discrimination suits against the certainty a contract provides employers and unions that the cases will be settled in arbitration, which is considered faster and less costly than court proceedings.
The case revolves around workers employed by Temco Services Industries, a contractor that works in buildings owned by the Pennsylvania Building Co. and 14 Penn Plaza LLC. They were covered by the collective bargaining agreement between the Service Employees International Union and the multi-employer association of the New York City real estate industry.
Several of the Temco workers allege their jobs as night watchmen were taken away and they were reassigned to less desirable positions in August 2003 when Temco contracted with Spartan Security. They said that they were the only people on staff over the age of 50 and filed an age discrimination grievance.
But their union did pursue the wrongful transfer or age discrimination complaints in arbitration. Under the collective bargaining pact, arbitration was mandatory for discrimination claims.
In May 2004, the workers filed discrimination charges with the Equal Employment Opportunity Commission, asserting that their rights had been violated under the Age Discrimination in Employment Act.

Full Story: http://www.workforce.com/section/00/article/26/00/31.php