Monday, August 12, 2013
Hot on the heels of Genesis Healthcare Corp. v. Symczyk, 133 S. Ct. 1523 (2013), comes a new Second Circuit decision heralding the slow strangulation of Fair Labor Standards Act cases: Sutherland v. Ernst & Young LLP, No. 12-304-cv (2d Cir. Aug. 9, 2013).
Plaintiff, a former employee of Ernst & Young, brought a class action on behalf of herself and other similarly situated to recover overtime wages under the FLSA and the New York Department of Labor's Minimum Wage Order. Plaintiff's employment contract, naturally, contained a mandatory arbitration clause that specifically applied to the FLSA and state wage laws, as well as a provision that "disputes pertaining to different employees will be heard in separate proceedings."
Plaintiff's individual alleged unpaid overtime wages were $1,867.02. The district court denied Ernst & Young's motion to dismiss, stay the proceedings, or compel arbitration on an individual bases. The district court reasoned that "[e]nforcement of the class waiver provision in this case would effectively ban all proceeings by [plaintiff] against E&Y."
The Second Circuit reversed. Citing American Express Co. v. Italian Colors Restaurant, 133 S. Ct. 2304 (2013), the court held that the "effective vindication doctrine" (which might allow invalidation of a class-action waiver) was not satisfied even if the cost of proceeding individually in arbitration would exceed the potential recovery. Further, the court held that FLSA "does not include a 'contrary congressional command' that prevents a class-action waiver provision in an arbitration agreement from being enforced by its terms."