Authored by Robert S. Whitman
Rejecting the views of the National Labor Relations Board and one of her colleagues on the bench, Judge Barbara Jones of the Southern District of New York has ruled that employees subject to arbitration agreements may be required to arbitrate FLSA claims, even though the agreements do not permit the claims to be pursued on a collective basis.
In LaVoice v. UBS Financial Services, Inc., Judge Jones granted the employer’s motion to compel individual arbitration of a former Financial Advisor’s claims for unpaid overtime. Although the plaintiff argued that he must be permitted to assert his claims collectively, the court held otherwise, finding the argument precluded by the Supreme Court’s 2011 decision in AT&T Mobility v. Concepcion.
As we previously reported, Judge Robert Sweet, also of the Southern District of New York, concluded in Rainere v. Citigroup, Inc., that the right to pursue FLSA claims by means of a collective action is a substantive right that cannot be waived in an arbitration agreement, notwithstanding Concepcion. The LaVoice decision takes the directly opposite position on that issue.
LaVoice was a UBS Financial Advisor from 2002-2010. In response to his lawsuit, brought as a putative class and collective action under the FLSA and New York law, UBS filed a motion to compel arbitration based on various documents LaVoice signed or received during his employment. Those documents contained provisions stating that LaVoice “waive[d] any right to commence, be a party to or an actual or putative class member of any class or collective action arising out of or relating to [his] employment with UBS.” UBS sought to enforce this provision and require LaVoice to arbitrate solely on his own behalf and not as part of a class or collective.
LaVoice opposed UBS’s motion. He argued in part that, notwithstanding Concepcion, in which the Supreme Court held that the Federal Arbitration Act preempts a rule of state law under which class action waivers in arbitration agreement were deemed unconscionable, he could not be compelled to arbitrate solely for himself because he had the right under federal law (the FLSA) to pursue his claims on behalf of a collective.
Judge Jones disagreed. She said that LaVoice’s argument was precluded by Concepcion, which “stand[s] against any argument that an absolute right to collective action is consistent with the FAA’s ‘overreaching purpose’ or ‘ensur[ing] the enforcement of arbitration agreements according to their terms so as to facilitate streamlined proceedings.’”
In reaching this holding, Judge Jones acknowledged, but refused to follow, Judge Sweet’s decision in Rainere as well as the NLRB’s January 3, 2012 ruling in D.R.Horton, Inc. In D.R. Horton, the NLRB held that arbitration agreements with class or collective action waivers are unenforceable under the National Labor Relations Act because, in the Board’s view, class or collective actions constitute “protected concerted activity” within the meaning of Section 7 of the Act.
Turning to LaVoice’s specific circumstances, Judge Jones went on to hold that his claims for unpaid overtime, which he valued at $127,000 to $132,000, were sufficiently valuable, standing on their own, that he did not need the vehicle of a class or collective action to vindicate his rights. By so holding, she distinguished the Second Circuit’s holding in In Re American Express Merchants’ Litigation, in which the court held (before Concepcion) that a class action waiver may be unenforceable if the value of the class members’ individual claims was too small to pursue individually. (The continuing validity of American Express remains in doubt in light of Concepcion.)
Judge Jones was particularly unimpressed by the argument advanced by LaVoice and his counsel that, notwithstanding the value of his individual claim, they would be disinclined to pursue them on an individual basis, and so should be permitted to do so collectively. In no uncertain terms, she said: “LaVoice has cited to no authority to support any argument that the Court should give consideration to his and counsel’s unwillingness to pursue his claims in the absence of a class, and particularly given the real damages at issue, the Court cannot help but find LaVoice and counsel’s statements to be self-serving and irrelevant.”
As noted, the Rainere decision is pending before the Second Circuit. LaVoice adds fuel to the arguments sure to be advanced by the appellant there: that agreements providing for individual arbitration of FLSA claims, and barring claimants from proceeding on a class or collective basis, are permissible in light of Concepcion. We will continue to track developments in these cases and will report further with any updates.