Thursday, June 20, 2013

U.S. Supreme Court Ruling in American Express Case Upholds Class Action Arbitration Waivers

4United States Supreme Court 112904Today, we have a guest post from Lise Gelernter (Buffalo) on the United States Supreme Court's latest decision on arbitration in American Express v. Italian Colors Restaurant.  The decision can be found  on the Supreme Court website here under the name of the case.

Here's Lise's overview of the decision:

The Court, four in the majority (Justice Scalia writing the decision), one in concurrence (Justice Thomas) and three in the dissent (Justice Kagan writing the opinion with Breyer and Ginsburg joining her – Justice Sotomayor took no part, presumably because she was on the 2d Cir. when it decided the case that the Supreme Court reviewed), said that the Federal Arbitration Act prohibited a court from invalidating an arbitration agreement that barred class actions, even if the practical effect was that the plaintiffs would find it impossible to vindicate their antitrust claim. 

An economic analysis had shown that the cost of an expert witness to show that American Express had used improper monopolistic power to impose fees on the plaintiffs would far exceed the economic recovery that any one individual plaintiff could hope to have.  As the dissent pointed out, the pluarlity and concurrence basically responded by answering that that was just “too darn bad.”
 
The impact in the labor and employment context is that unrepresented employees can not only be required to waive access to a court to vindicate statutory rights, but can also be required to waive their right to class actions.   Thus, minimum wage, employment discrimination and other types of employment actions will have to be pursued on an individual basis if that waiver exists in a pre-hire agreement. 

On the collective bargaining side of things, it will be interesting to see if an employer tries to compel individual arbitration of a contract grievance that was brought on behalf of a whole bargaining unit (e.g., a violation of a contractual provision on overtime scheduling).  I don’t know that it would make much of a difference in the long run in terms of the practical effect of an arbitration award, which probably means it is not worth it for an employer to pursue that kind of argument.

Great commentary, Lise, and looking forward to others' comments on this important new arbitration law case.

PS

http://lawprofessors.typepad.com/laborprof_blog/2013/06/us-supreme-court-ruling-in-american-express-case-upholds-class-action-arbitration-waivers.html

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Comments

I don't understand this portion of the comment (perhaps someone can clarify the argument the employer would make and the scenario envisioned):

"On the collective bargaining side of things, it will be interesting to see if an employer tries to compel individual arbitration of a contract grievance that was brought on behalf of a whole bargaining unit (e.g., a violation of a contractual provision on overtime scheduling). I don’t know that it would make much of a difference in the long run in terms of the practical effect of an arbitration award, which probably means it is not worth it for an employer to pursue that kind of argument."

I haven't read the decision but I thought it pertained to a non-union setting. If so, I don't see how it would apply to a union context. Is the commentator talking about a scenario where individual employees sign class waivers and the employer is subsequently unionized, there is an arguable contract violation, the union purses a group grievance, and the employer tries to enforce the pre-certification unbargained waivers? In that scenario the individual waivers would almost certainly, I would think, have no authority in relation to the CBA, and possibly even be completely invalid (there would be an argument I would think that an individual waiver would be invalid even in the statutory context post-bargaining--wouldn't the employer have an obligation to propose waivers once the union is in if it wants them to apply to unit employees re whtc employment?). I guess the only other scenario I see is if the workplace is already union and employees are asked to sign these waiver pre-hire into the bargaining unit. I would assume that would bad faith bargaining and the agreements would be invalid the second the employee entered the bargaining unit, if not before. Lastly, since the ability to pursue a group grievance is well-established in labor relations (I always consider it an implied term), I would think the onus would be on the employer to propose some limitation. Absent that, I don't see an arbitrator refusing to hear a group grievance regardless of any individual
"waiver." As a procedural matter, I always thought you could file a grievance with the union as the listed grievant (one party) and list the remedy as making whole the impacted employees, which would seem to avoid the issue--though that would depend on the specific grievance language. I agree with that final point. An employer has little incentive to litigate each grievance individually--the first arbitration award will determine what the contract means.) Would be interested to hear any thoughts and get some clarification on the issues.

Posted by: John | Jun 21, 2013 6:30:15 PM

John -- Sorry, but I didn't see your inquiry until today. I was speculating about what would happen if an employer tried to use the reasoning of the Amex v. Italian Colors case in a union setting, since the Supreme Court seems to think there is less and less of a difference between labor arbitration and other kinds of arbitration. So if a CBA waived a bargaining unit member's right to go to court for any dispute arising under the CBA (typical), AND was found to implicitly or explicitly bar class actions AND an employer argued that any grievance pursued to arbitration brought on behalf of the union was equivalent to a class action arbitration, would a court follow Amex v. Italian Colors and stay the "class" arbitration? All this speculation is based on a lot of presumptions, so it will probably never be a real case, especially, as you point out, because there is no incentive to litigate each grievance individually. But I was just wondering if there was factual scenario out there in the labor context that would fit the structure of the Amex v. Italian Colors case.

Lise

Posted by: Lise Gelernter | Jun 25, 2013 8:21:37 AM

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