SDNY.jpgAuthored by Patrick Bannon

Can an arbitration agreement preclude an FLSA collective action?  To the chagrin of many plaintiffs’ lawyers — and the National Labor Relations Board — a growing consensus says, “Yes.”  Last week, a President Obama-appointed federal judge in New York joined the chorus in Ryan v. JPMorgan Chase & Co., et al.

Tiffany Ryan, a former assistant branch manager of JPMorgan Chase Bank, sued the bank for $9,000 in overtime pay under the FLSA.  She attempted to pursue the case as a collective action:  a case on her own behalf and “on behalf of all others similarly situated.” 

When she was hired, however, Ryan had agreed to submit all claims against the bank — specifically including FLSA claims — to arbitration.  She had further agreed, in unmistakably clear language, that the arbitration would be on an individual basis only and not on a class or collective basis. 

The bank asked Judge Vincent Briccetti to enforce Ryan’s arbitration agreement by dismissing the lawsuit and ordering Ryan to arbitrate her claim on an individual basis.  

Ryan raised three objections — each unsuccessful. 

First, Ryan argued that her right to pursue an FLSA collective action is unwaivable.  Relying on higher court decisions that the right to pursue a class action can be waived, Judge Briccetti held that the right to proceed collectively under the FLSA was not per se unwaivable.

Second, Ryan argued that the arbitration agreement could not be enforced because if she were forced to arbitrate on an individual basis, she would be unable as a practical matter to vindicate her FLSA rights.  Judge Briccetti disagreed, noting that Ryan had not proven that individual arbitration would be unworkable given the amount of her claims, the bank’s agreement to pay all arbitration costs and the provision in the FLSA allowing Ryan to recover her attorneys’ fees if she won.

Finally, Ryan contended that enforcing her arbitration agreement would violate federal labor law.  The National Labor Relations Board endorsed this argument in 2012 in its lengthy and controversial D.R. Horton decision.  Judge Briccetti dismissed the reasoning of D.R. Horton in a sentence, noting that in doing so he was joining numerous other courts.  (He also questioned the validity of D.R Horton following the Court of Appeals for the D.C. Circuit’s ruling in Noel Canning that the appointments of certain NLRB members were unconstitutional.  D.R. Horton, itself, is pending decision by the Court of Appeals for the Fifth Circuit.) 

For employers who wish to resolve disputes with their employees through individual arbitration, the sky continues to brighten:  the analysis of D.R. Horton seems to be on life support while support for agreements to arbitrate FLSA claims on an individual basis and to waive FLSA collective actions continues to grow.