In Tiffany Ryan v. JPMorgan Chase & Co., et al. (Case No. 12 CV 4844 (VB)), Southern District Judge Vincent Briccetti held, like many judges before him, that arbitration agreements may preclude a FLSA collective action.
When Ryan was hired , she signed an arbitration agreement containing the following language:
CLASS ACTION/COLLECTIVE ACTION WAIVER: All Covered Claims under this Agreement must be submitted on an individual basis. No claims may be arbitrated on a class or collective basis. Covered Parties expressly waive any right with respect to any Covered Claims to submit, initiate, or participate in a representative capacity or as a plaintiff, claimant or member in a class action, collective action, or other representative or joint action, regardless of whether the action is filed in arbitration or in court. Furthermore, if a court orders that a class, collective, or other representative or joint action should proceed, in no event will such action proceed in the arbitration forum. Claims may not be joined or consolidated in arbitration with disputes brought by other individual(s), unless agreed to in writing by all parties.
Ryan filed a FLSA collective action and JPMorgan Chase moved to dismiss the action, or in the alternative stay it, and to compel arbitration of Ryan's claim on an individual basis. After mentioning in a footnote that the Court of Appeals for the District of Columbia Circuit recently vacated D.R. Horton, 357 N.L.R.B. No. 184, 2012 WL 36274 (holding that arbitration agreements cannot prevent employees from filing class/collective actions) because it was decided by an unconstitutionally constituted panel of the NLRB, the court made the following findings:
One, "collective action waivers are not per se unenforceable due to the "FAA's 'overarching purpose' of 'ensur[ing] the enforcement of arbitration agreements according to their terms so as to facilitate streamlined proceedings.'"
Two, although Ryan asserted the arbitration agreement prevented her from vindicating her FLSA rights, the class action waiver "is fair, permits plaintiff to vindicate her statutory rights under the FLSA, does not hinder her ability to recover attorney's fees or costs, and comports with public policy favoring arbitration and honoring private contracts" (also, Ryan could not prove that arbitration would be prohibitively expensive).
And three, "this Court joins numerous other courts in finding the NLRA (in D.R. Horton) does not determine whether a plaintiff has a right to bring a collective action under the FLSA.
The order can be found here.
Bottom line, a well-written arbitration agreement may preclude class or collective actions (employers, however, most likely will be responsible for paying the hourly rate of the chosen arbitrator), and the D.R. Horton board decision is not receiving much support from judges around the country.
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