A few months ago, the US Supreme Court issued the landmark decision in ATT Mobility LLC v. Concepcion in which the Court held that the Federal Arbitration Act preempted state law that forces class arbitration on parties that have not consented to it. The Court ruled that a California rule that found class action waivers on consumer arbitration agreements unconscionable was preempted by the FAA. Now, a New Jersey federal judge has applied Concepcion to dismiss a FLSA class action and has sent the case to be arbitrated instead. The case is entitled Opalinski et al. v. Robert Half International Incorporated and was filed in federal court in the District of New Jersey.
District Judge Faith S. Hochberg granted the motion to compel arbitration and dismiss the case, relying on Concepcion and held that its tenets were applicable to FLSA actions. Judge Hochberg did not accept the plaintiffs’ contention that the defendant had waived its right to go to arbitration, because the Company had waited more than fourteen months before moving to compel arbitration.
Judge Hochberg wrote that “after determining that the arbitration clauses in both Opalinski’s and McCabe’s employment agreements require them to arbitrate their FLSA claim and that [Robert Half] has not waived its right to compel arbitration, this court sees no reason to permit plaintiffs to continue to litigate this action in this forum.”
The Company contended that its ostensible delay in moving to compel arbitration was allowable because the Concepcion case had “dramatically changed the legal landscape” in class actions where arbitration clauses existed and were potentially applicable to a given case. The Judge held that the motion to compel arbitration satisfied all of the requirements established by the Third Circuit for granting , including finding that the Company had a reasonable basis for the delay, i.e. the issuance of the Concepcion decision, which had changed the law.
I predict this is but the first of many cases that will follow the same pattern. Also, more employers will be inserting class action waiver language into their arbitration agreements with employees (which are often included in Employee Handbooks) and this tactic may well significantly hamper the ability of plaintiff attorneys to file FLSA class/collective actions. On the other hand, employers may be unhappy by getting what they “wished for,” because one possible outcome is that the employer may have to arbitrate dozens, if not hundreds, of arbitrations where the facts and law are the same.