Friday, June 21, 2013

SCOTUS: Arbitration Clause Prevails Over Class Actions (Shocker) - COTW #148

Well, the Supreme Court was extremely disappointing yesterday . . . they didn't decide a single case on my watch list. Since next week will likely be the last week of the term, things should get crazy around here with a number of important decisions.

The Supreme Court did, however, issue an opinion with employment law implications: American Express v. Italian Colors (opinion here). The case involved the enforceability of an arbitration clause, which is pretty much all you need to know to guess how this case turned out. SCOTUS LOVES ARBITRATION (at least a majority does).

So, what was the actual holding? I like the way Mike Gottlieb describes it on SCOTUSblog:
[A]n arbitration agreement that precludes arbitration brought by a class of plaintiffs is enforceable under the Federal Arbitration Act (FAA) even if the proposed class of plaintiffs proves that it would be economically infeasible for individuals to pursue arbitration on their own.
The case involved a credit card company against a potential class of merchants . . . so, what does this have to do with employment law?

Well, just maybe, employers want to include clauses in employment contracts that prohibit their employees from combining to file class action lawsuits . . . or say, FLSA collective actions. Thomas Kaufman has a nice rundown of arbitration decisions, noting:
[A]ny argument that FLSA collective actions are immune from class/collective action waivers because the FLSA (like the ADEA in Gilmer) itself provides for collective actions is also dead.
Michael Fox also has some "jottings" on the employment law implications of this case.

Bottom line: Class action waivers in arbitration clauses are starting to look pretty darned good . . . and enforceable.

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