Judge Amul Thapar testifies in 2017 before the Senate Judiciary Committee during his confirmation hearing for the U.S. Court of Appeals for the Sixth Circuit. Credit: Diego M. Radzinschi / ALM

A federal appeals court Wednesday broadened the reach of a recent U.S. Supreme Court ruling that strengthened the ability of companies to squash employee class actions through mandatory arbitration agreements.

The U.S. Court of Appeals for the Sixth Circuit panel, led by Amul Thapar, who'd made President Donald Trump's Supreme Court short-list, said the justices' decision in Epic Systems v. Lewis should extend to the federal Fair Labor Standards Act and disputes that involve overtime pay and minimum wage. The Epic Systems decision only confronted the National Labor Relations Act, which governs union-related activity.

“The Supreme Court recently held that the National Labor Relations Act does not invalidate individual arbitration agreements. That holding answers half of this case,” Thapar, appointed last year to the appeals court, wrote for the unanimous panel. “The other half, in which the plaintiffs seek to carve out a separate destiny for the Fair Labor Standards Act, meets a similar end.”

Thapar was joined in the ruling by two George W. Bush-appointed judges, Julia Smith Gibbons and Deborah Cook. Their decision in the case, Gaffers v. Kelly Services, overturned a trial judge in Michigan who had permitted the collective claims to proceed against the company, which provides outsourcing and consulting services.

The appeals court said the Fair Labor Standards Act, or FLSA, does not “displace” a separate provision under the Federal Arbitration Act that requires judges to enforce arbitration agreements as they are written.

“Whether modern arbitration practice is consistent with Congress's goals for the FLSA is a question that only Congress can answer,” Thapar wrote. “Our role is to interpret and analyze the statute's text—not what Gaffers thinks Congress meant to say.”

A lawyer for the employees, Jason Thompson, senior shareholder at Sommers Schwartz, did not respond immediately to a request for comment. Seyfarth Shaw partner Gerald Maatman Jr. argued for Kelly Services. He did not immediately comment on the ruling.

The dispute was anchored in claims by a former Kelly Services employee who alleged the company underpaid him and his fellow employees who worked remotely. More than 1,600 employees joined the action seeking back pay and damages. Nearly half of the employees signed an arbitration agreement that required disputes to be settled outside of court.

The appeals panel found that neither the National Labor Relations Act nor the Fair Labor Standards Act were “an obstacle to the arbitration agreements in this case.” The Supreme Court in Epic Systems had only looked at the labor relations act. The high court determined the Federal Arbitration Act, or FAA, trumped the labor law.

The Sixth Circuit, following the Supreme Court's ruling, asked each side to discuss the reach of the justices' decision.

Maatman argued that the Supreme Court “has never found a federal statute to override the FAA, and every circuit court to consider the issue has rejected the notion that the FLSA does so.” Maatman's brief argued the Supreme Court's decision reaffirmed “the principle that the FAA establishes a broad, liberal federal policy favoring arbitration.”

Thompson, in his supplemental brief, argued that the Epic Systems ruling did not apply to the Fair Labor Standards Act, and he further said the decision “strongly cautions against applying the holding” in such disputes. In adopting the Fair Labor Standards Act, Thompson wrote, “Congress specifically and expressly provided for collective action rights.” He added: “There is no leap of logic required nor any grammatical gamesmanship permitted, as was the case in Epic.”

Read the ruling in Gaffers v. Kelly Services:

 

Read more:

Justice Ginsburg: 'The Returns Aren't In. This Was One Term'

Sen. Whitehouse Pens First SCOTUS Brief, Attacking Arbitration

Arbitration Agreements Don't Get Rubber Stamp, Even After 'Epic Systems'

Plaintiffs Plot 'Way Around' Supreme Court's Ruling Against Worker Class Actions

Gorsuch Renounces Ginsburg's 'Apocalyptic' Warnings in Landmark Labor Case

 

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