High Court Approval of Class Action Waivers in Landmark Case Seen as Victory for Companies
“It's a significant victory for employers in that those that have arbitration agreements that contain class and collective action waivers are now able to enforce them without any question,” said one of the attorneys who argued for Epic Systems before the U.S. Supreme Court.
May 23, 2018 at 12:25 PM
4 minute read
On Monday, the U.S. Supreme Court held that companies have the right to compel employees to sign waivers that prevent them from bringing class action lawsuits against their employers.
The high court's ruling to uphold class action waivers, which often are found in employee arbitration agreements, is being viewed as a victory from the corporate perspective and a green light for employers to use these tools—though some employment attorneys are unhappy about the development.
Noah Finkel, a partner at Seyfarth Shaw who was lead counsel for Verona, Wisconsin-based Epic Systems Corp. in Epic Systems v. Lewis in lower courts and co-counsel for the company at the Supreme Court, said this is a big step forward.
“It's a significant victory for employers in that those that have arbitration agreements that contain class and collective action waivers are now able to enforce them without any question,” Finkel said.
Finkel said that companies that don't use arbitration agreements with class action waivers already can now strongly consider having one.
Brian Cousin, a partner at Dentons who represents companies in employment cases, agreed this ruling may be the push needed for companies to enact such policies.
Attorneys representing employers said there are pros for companies that prohibit employment class actions and require arbitration, including privacy and speed. Cousin said, that claims go oftentimes through arbitration much more quickly than they go through the courts. He added that, because arbitration is generally private, resolving claims this way can save the company's reputation.
Finkel acknowledged that this confidentiality can spur objections.
“Because arbitration usually contains rules maintaining confidentiality, there is a potential objection consistent with the Me Too movement that this is something that would keep harassment and other employee claims confidential,” Finkel said.
He said an arbitration agreement should suit the company's needs.
“There may be ways to limit the scope of an arbitration program that limits a class waiver,” Finkel explained. “For example it might be the employer does not want to cover harassment claims in its arbitration so that those are publicly litigated in court, while other claims are subject to arbitration on an individual basis. That might be one way to have the best of both worlds.”
As for how this will affect other companies facing cases over class action waivers and forced arbitration, Jim Evans Jr., a partner at Alston & Bird in Los Angeles who works on employment matters, pointed to a high-profile class action in California federal court against Uber Technologies Inc.
He said the Epic Systems opinion is “likely to doom completely the class claims in the O'Connor v. Uber litigation.”
In O'Connor, the plaintiffs are seeking tip repayment and reimbursement for expenses such as gas and the cost of maintenance from Uber, which has countered that claims in this class action are invalid due to arbitration agreements with class action waivers signed by drivers.
The Ninth Circuit Court of Appeals delayed its consideration of O'Connor, knowing the high court would soon be ruling on forced arbitration of class action claims.
Evans said he takes issue with the idea that the Supreme Court's opinion is taking away the rights of employees.
“In my experience, arbitration provides a meaningful means of employees vindicating their rights in an expeditious way, [for] which the costs are all borne by the employer,” Evans said. “I don't think this crushes the rights of employees to any extent.”
Though the Epic Systems ruling has been deemed a big win for companies, plenty of attorneys are not thrilled with the outcome.
Cliff Palefsky, a partner at the Law Offices of McGuinn, Hillsman & Palefsky in San Francisco, who represents plaintiffs in employment cases, called the high court's decision “demoralizing” and an “assault on civil rights and labor laws.”
“It was a political, predetermined decision, essentially. It was far removed from the law,” Palefsky said.
He said the employment relationship is different from other commercial relationships and that the privacy provided by arbitration does not allow for positive change to occur around issues such as workplace harassment.
“There will be no deterrent effect,” Palefsky said. “The goal is not to have a jury trial; the goal is to prevent harassment. And the way to do that is if you have a public lawsuit, like Gretchen Carlson's [against the late Roger Ailes of Fox News], it does more to change conduct than 100 separate arbitrations.”
This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.
To view this content, please continue to their sites.
Not a Lexis Subscriber?
Subscribe Now
Not a Bloomberg Law Subscriber?
Subscribe Now
NOT FOR REPRINT
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
You Might Like
View AllA Blueprint for Targeted Enhancements to Corporate Compliance Programs
7 minute readThree Legal Technology Trends That Can Maximize Legal Team Efficiency and Productivity
Corporate Confidentiality Unlocked: Leveraging Common Interest Privilege for Effective Collaboration
11 minute readTrending Stories
Who Got The Work
Michael G. Bongiorno, Andrew Scott Dulberg and Elizabeth E. Driscoll from Wilmer Cutler Pickering Hale and Dorr have stepped in to represent Symbotic Inc., an A.I.-enabled technology platform that focuses on increasing supply chain efficiency, and other defendants in a pending shareholder derivative lawsuit. The case, filed Oct. 2 in Massachusetts District Court by the Brown Law Firm on behalf of Stephen Austen, accuses certain officers and directors of misleading investors in regard to Symbotic's potential for margin growth by failing to disclose that the company was not equipped to timely deploy its systems or manage expenses through project delays. The case, assigned to U.S. District Judge Nathaniel M. Gorton, is 1:24-cv-12522, Austen v. Cohen et al.
Who Got The Work
Edmund Polubinski and Marie Killmond of Davis Polk & Wardwell have entered appearances for data platform software development company MongoDB and other defendants in a pending shareholder derivative lawsuit. The action, filed Oct. 7 in New York Southern District Court by the Brown Law Firm, accuses the company's directors and/or officers of falsely expressing confidence in the company’s restructuring of its sales incentive plan and downplaying the severity of decreases in its upfront commitments. The case is 1:24-cv-07594, Roy v. Ittycheria et al.
Who Got The Work
Amy O. Bruchs and Kurt F. Ellison of Michael Best & Friedrich have entered appearances for Epic Systems Corp. in a pending employment discrimination lawsuit. The suit was filed Sept. 7 in Wisconsin Western District Court by Levine Eisberner LLC and Siri & Glimstad on behalf of a project manager who claims that he was wrongfully terminated after applying for a religious exemption to the defendant's COVID-19 vaccine mandate. The case, assigned to U.S. Magistrate Judge Anita Marie Boor, is 3:24-cv-00630, Secker, Nathan v. Epic Systems Corporation.
Who Got The Work
David X. Sullivan, Thomas J. Finn and Gregory A. Hall from McCarter & English have entered appearances for Sunrun Installation Services in a pending civil rights lawsuit. The complaint was filed Sept. 4 in Connecticut District Court by attorney Robert M. Berke on behalf of former employee George Edward Steins, who was arrested and charged with employing an unregistered home improvement salesperson. The complaint alleges that had Sunrun informed the Connecticut Department of Consumer Protection that the plaintiff's employment had ended in 2017 and that he no longer held Sunrun's home improvement contractor license, he would not have been hit with charges, which were dismissed in May 2024. The case, assigned to U.S. District Judge Jeffrey A. Meyer, is 3:24-cv-01423, Steins v. Sunrun, Inc. et al.
Who Got The Work
Greenberg Traurig shareholder Joshua L. Raskin has entered an appearance for boohoo.com UK Ltd. in a pending patent infringement lawsuit. The suit, filed Sept. 3 in Texas Eastern District Court by Rozier Hardt McDonough on behalf of Alto Dynamics, asserts five patents related to an online shopping platform. The case, assigned to U.S. District Judge Rodney Gilstrap, is 2:24-cv-00719, Alto Dynamics, LLC v. boohoo.com UK Limited.
Featured Firms
Law Offices of Gary Martin Hays & Associates, P.C.
(470) 294-1674
Law Offices of Mark E. Salomone
(857) 444-6468
Smith & Hassler
(713) 739-1250