SAN FRANCISCO – The
California 9th Circuit Court of Appeals recently ruled that employers can no longer enforce
class-action waivers in arbitration agreements signed by their employees.
court ruled 2-14 on Aug. 22 in the case Morris v. Ernst & Young in the favor
of Stephen Young, a former employee of Ernest & Young, who filed a class-action lawsuit regarding allegedly unpaid overtime. This decision became one of many
decisions from California courts leading to a split circuit.
Nendel-Flores with the law firm Ogletree Deakins frequently represents employers in similar cases and wrote an opinion piece on
the ruling of this case.
underlining facts of the case aren’t critical to what was going on with this
decision,” Nendel-Flores told the Northern California Record.
The 9th Circuit Court looked to a similar case, Lewis v. Epic Systems, which was
decided in the 7th Circuit Court of Appeals. In this case, the court ruled
employers cannot require employees to be held to arbitration agreements because
those agreements violate Section 7 of the National Labor Relations Act (NLRA), which states: “Employees shall have the right to self-organization, to form,
join, or assist labor organizations, to bargain collectively through
representatives of their own choosing, and to engage in other concerted
activities for the purpose of collective bargaining or other mutual aid or
Nendel-Flores believes the court
would have ruled differently if employers allowed their employees to opt-out of
the arbitration agreements rather than requiring them to sign.
the Supreme Court of California ruled in favor of employers in the case
Iskanian v. CLS Transportation meaning although the 9th Circuit made its
decision, California state courts do not have to follow this decision.
the state courts deciding on the side of employers and federal courts filing on
the side of employees, plaintiffs on either side are attempting to strategically
shop the court that will hear their case.
will start happening is that there will be some court shopping,” Nendel-Flores
said. “Most of the time employers would rather have their cases heard in the
federal court but now, they’d rather be in the state court.”
opposite is true of employees hoping to have their cases heard by the federal
split circuit has caused a limbo for cases involving arbitration agreements.
Nendel-Flores predicts the U.S. Supreme Court will weigh in within the
suspect that there’s going to be a closely divided decision by the Supreme
Court,” Nendel-Flores said.
court were to expedite this case, there could likely be a 4-4 split because of
the vacancy on the court. Nendel-Flores believes the outcome of the presidential
election will decide who will fill the vacancy and how the court would rule on
“The big benefit of arbitration
agreements to employers is that employees can only bring individual cases,”
Nendel-Flores said. “If class-action
waivers are deemed unlawful, employers will reevaluate the value of having