Nibbling Away at Concepcion


In AT&T Mobility v. Concepcion, 563 U.S. __, 131 S. Ct. 1740 (2011), the Supreme Court upheld a waiver of class arbitration in a consumer contract.  Four recent moves have begun the process of responding to and exploring the boundaries of the Court's decision.

First, in D.R. Horton, Inc., 357 NLRB No. 184 (Jan. 6, 2011), the National Labor Relations Board held that a nonunion employer's mandatory arbitration agreement, which precluded any class claims, violated Section 7 of the National Labor Relations Act.  You can see our full commentary on the decision here.  Second, FINRA has proposed a rule to affirm its current practice of excluding collective action claims from its arbitration procedures.

The other two decisions of interest are two Southern District of New York decisions that explore the effect of Concepcion on claims under the FLSA.  In Raniere v. Citigroup, Inc., No. 11-2448 [pdf], Judge Sweet, applying pre-Concepcion precedent even though it was decided in November, months after Concepcion, has held that the Supreme Court's decision does not impinge on the Second Circuit's earlier AMEX decisions holding that waivers of FLSA collective action rights were unenforceable.  But in LaVoice v. UBS Financial Services, No. 11-2308 [pdf], Judge Jones expressly refused to follow Raniere and D.R. Horton, holding that Concepcion precludes any argument that the FLSA's collective action provisions must trump the FAA.  Judge Jones ordered an FLSA claim to arbitration and enforced the collective action waiver.  But the court was swayed by the relatively high alleged value of LaVoice's individual overtime claim -- between $127,000 and $132,000, plaintiff claimed -- and the provision in the arbitration agreement that permitted recovery of attorneys' fees.

The Supreme Court may have to weigh in on these issues again before we have any clear picture.  The D.R. Horton case is the most interesting of these, since it poses the broadest threat to the Concepcion decision in the employment context.

Update: Another decision in the Southern District of New York (Sutherland v. Ernst & Young, issued January 17), has denied arbitration of FLSA claims despite Concepcion


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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