A major issue of recent vintage in wage hour litigation is whether workers must arbitrate their claims individually, as opposed to pursuing class actions, whether in an arbitration forum or in court. The doctrine favoring arbitration was just given another boost, as Robert Half International Inc. has won a motion to keep worker overtime claims in individual arbitration proceedings, rather than proceeding as a class action. The case is entitled Opalinski et al. v. Robert Half International Inc. and was filed in federal court in the District of New Jersey.
The employees (in March 2015) had lost their attempt to have the U.S. Supreme Court review the matter. The Company had fought through the courts to overturn an arbitrator's decision that the Company's agreements with former staffing managers allowed them to proceed as a class in arbitration to pursue their overtime claims. Now, with this decision, the only things to be litigated are the former employees’ individual arbitration claims.
U.S. District Judge Madeline Cox Arleo held that the Company's legal theory was well founded on appellate and Supreme Court precedent; the Company had argued that the Federal Arbitration Act did not allow an arbitrator to conduct class arbitrations unless the parties agreed to participate, and the absence of any reference to class arbitration in an agreement meant that it was not agreed upon, as the Third Circuit held in July 2014 when looking at the case.
Judge Arleo stated that "Third Circuit law weighs against finding implicit consent if there is no explicit mention of class-wide arbitration whatsoever." She added that "inferring agreement to arbitrate on a class-wide basis is disfavored where the arbitration agreement is silent on the point."
The Company had tried to compel arbitration on an individual employee basis and (in October 2011) a federal court partially granted the Company's motion, but it held that the issue of class arbitration was for the arbitrator to decide. In May 2012, the arbitrator held that class arbitration was permitted, which impelled the company to request that the district court vacate that decision. In December 2012, the district court denied that motion, finding that the arbitrator had not exceeded her powers by holding that the agreements allowed class arbitration. In July 2014, the Third Circuit reversed, finding that if class arbitration was not specified in the employment contract, a court, not an arbitrator, should decide whether arbitration could proceed on a class-wide basis.
The Takeaway
Arbitration agreements are coming into vogue more and more, especially those with class action waivers. Although the Court agreed that the failure to mention class arbitration meant that an arbitrator could not read such a provision into the agreement. The "problem," however, might be fixed by drafting and specifying that class action arbitrations are not allowed.
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