In January we blogged about the NLRB’s decision in D.R. Horton, Inc., which said that requiring employees, as a condition of employment, to sign an arbitration agreement barring collective or class actions for employment-related claims violated the law (see NLRB Says Not To Requiring Employees To Sign Arbitration Agreements Prohibiting Group of Class Action). In the face of the D.R. Horton, Inc. decision, two federal district courts have recently found that this prohibition does not apply.
In a tentative ruling issued on January 26, 2012, the federal court in Central California, said that the D.R. Horton, Inc. decision did not preclude enforcement of a class action waiver signed not as a condition of employment (Johnmohammadi v. Bloomingdales, Inc.). The employee, Fatemah Johnmohammadi, sued Bloomingdale’s on behalf of at least 200 nonexempt employees for its alleged failure to factor commissions and incentives into the regular rate of pay used to calculate overtime wages in violation of California law. Johnmohammadi had 30 days from her hire date to opt out of an arbitration agreement, which included a class action waiver. Johnmohammadi failed to opt out of the arbitration agreement.
The court said that it would likely compel arbitration citing to the Supreme Court’s decision in AT&T Mobility, LLC v. Concepcion (2011), which held that a waiver of representative actions in arbitration agreements is valid and enforceable. The court distinguished Johnmohammadi’s voluntary waiver from the waiver in D.R. Horton, Inc., which was required to be signed by the employee as a condition of employment. The court said that it would withhold its final ruling on Bloomingdale’s motion to compel arbitration until such time that the parties provided additional information about Johnmohammadi’s pending claim with the NLRB also centering on the enforceability of the arbitration agreement.
In early January, the federal court in the Southern District of New York held that an arbitration agreement requiring individual arbitration was enforceable (LaVoice v. UBS Financial Services, Inc.). Larry LaVoice, a former financial advisor for UBS Financial Services (“UBS”), brought class and collective action claims against UBS alleging violations of the Fair Labor Standards Act and New York law. UBS moved to compel arbitration on the ground that LaVoice had signed an arbitration agreement agreeing to individually arbitrate employment-related claims. The court, relying on AT&T Mobility v. Concepcion, said that it “must read AT&T Mobility as standing against any argument that an absolute right to collective action is consistent with the [Federal Aribtriation Act’s] ‘overarching purpose’ of ‘ensur[ing] the enforcement of arbitration agreements according to their terms so as to facilitate proceedings.’” The court, without explanation, rejected D.R. Horton as authority to support a conflicting reading of AT&T Mobility v. Concepcion.