Federal Court Deals Setback to Bank Seeking to Kill Employees’ Class Action Claims with Arbitration

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Federal Court Deals Setback to Bank Seeking to Kill Employees’ Class Action Claims with Arbitration

Federal Court Deals Setback to Bank Seeking to Kill Employees’ Class Action Claims with Arbitration


Federal Court Deals Setback to Bank Seeking to Kill Employees’ Class Action Claims with Arbitration

November 14, 2013, Oakland – Today, a federal court in Orange County rejected JPMorgan Chase’s attempt to force employees with wage claims into individual arbitration. The decision by Hon. Josephine Staton of the United States District Court for the Central District of California is the latest round in a heated battle being fought in state and federal courts over the continued viability of statutory employment and consumer protections, in light of recent decisions by the United States Supreme Court undermining class actions in favor of arbitration.

In this case, Lee, et al. v. JPMorgan Chase & Co., et al. (No. 13-CV-511-JLS), the plaintiffs, Kenneth Lee and Mark Thompson, were a commercial real estate appraiser and review appraiser, respectively, who sued their ex-employer alleging that the banking giant misclassified them and others in their job titles as exempt from federal and state wage law requirements relating to payment of overtime. Chase responded with a motion to compel the plaintiffs to arbitrate individually, based upon agreements they signed when they were first hired by a Chase predecessor, Washington Mutual. The agreements in question did not state specifically whether or not class arbitration was permitted, but stated that “[a]ny and all disputes that involve or relate in any way to [the employee’s] employment” would be submitted to arbitration. The employees have argued that the statement was meant to encompass class action claims, so that arbitration should be permitted on a class-wide basis regarding the misclassification of their positions.

The Court’s decision, while not determining whether a class action will proceed, frustrated Chase’s hope that the class allegations would be stripped away at the outset, leaving the class action decision for the arbitrator. Last week, a federal appeals court in Ohio interpreted recent Supreme Court guidance to say that the courts – not arbitrators – must decide whether a signed arbitration agreement was intended to permit class litigation, and rejected class claims where they were not expressly permitted in an arbitration agreement. Judge Staton rejected the Ohio court’s guidance, relying instead on an older Supreme Court decision, Green Tree Financial Corp. v. Bazzle, 539 U.S. 444 (2003), which was decided by a plurality of the Supreme Court and is thus non-binding precedent, but which says that arbitrators decide the question of whether class claims are permitted. One recent Supreme Court decision, Oxford Health Plans LLC v. Sutter, 133 S.Ct. 2064 (2013), said the arbitrator’s interpretation of an agreement to permit class claims could not be reversed, as long as the arbitrator interpreted the parties’ contract.

“The Supreme Court, in recent decisions like Stolt-Nielsen SA v. AnimalFeeds International Corp., 130 S.Ct. 1758 (2010), AT&T Mobility v. Concepcion. 131 S.Ct. 1740 (2011), and American Express Co v. Italian Colors Restaurant, 133 S.Ct. 2304 (2013), has steadily built up arbitration agreements as a way for companies to eliminate the risk of class liability,” said the plaintiffs’ attorney, Bryan Schwartz. “Today’s decision makes Oxford Health a more robust precedent, and means that workers and consumers still have a fighting chance of a level playing field with class litigation, unless an arbitration agreement explicitly rules it out,” he explained. Bryan Schwartz Law, P.C. represents the plaintiffs, along with the firm of Goldstein, Borgen, Dardarian & Ho.

The Court’s order is available here.

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