Posts tagged Arbitration Agreements
A Viking River Cruises Retrospective: New Challenges to the Use of Arbitration Agreements to Manage PAGA Risks

Wage and hour claims asserted under the Private Attorneys General Act of 2004 (“PAGA”) are often compared to class actions, but without the same gatekeeping principles. Under PAGA, a single employee can potentially represent hundreds or thousands of other employees for a garden variety of wage and hour allegations, even if the representative did not experience the same violations—and even if the representative only ever experienced one violation. PAGA’s lack of standards, combined with the persnickety character of the Labor Code, are a recipe for “sue first, ask questions later” lawsuits and difficult decisions to fight or fold.

Categories: Labor/Employment
Supreme Court Lowers the Bar for Plaintiffs to Establish Waiver of Right to Arbitrate Due to Employer’s Delayed Motion to Compel Arbitration 

On May 23, 2022, the U.S. Supreme Court issued a unanimous decision in the case of Morgan v. Sundance, Inc., which held a party’s waiver of the right to arbitrate a dispute by virtue of a delay in seeking enforcement of the arbitration agreement, no longer requires a showing of prejudice to the party opposing enforcement of the arbitration agreement. Prior to this, the circuit courts followed the rule of determining whether prejudice existed prior to finding waiver. After the Morgan decisionthe analysis reverts to the standard contract waiver analysis “focus[ing] on the actions of the person who held the right; ... [rather than] the effects of those actions on the opposing party.” This new rule applies whenever a party seeks to stay litigation and enforce an arbitration agreement under the Federal Arbitration Act (“FAA”).

Employer’s Delay is Fatal to Enforcement of Arbitration Agreement

On January 4, 2021, a California appellate court held an employer waived its right to enforce an arbitration agreement against a truck driver who filed a wage and hour class action against it, by waiting almost twenty months after the case was filed to make an arbitration demand.  The court held that the delay was unjustified because the employer’s conduct in defending the case in court for that period of time was inconsistent with its right to arbitrate and because such delay prejudiced the employee’s ability to use the benefits and efficiencies of arbitration. Garcia v. Haralambos Beverage Co., No. B296923, 2021 WL 22015 (Cal. Ct. App. Jan. 4, 2021).

Ninth Circuit Requires Individual Arbitration of Uber Drivers' Claims

On September 25, 2018, the U.S. Ninth Circuit Court of Appeals held that the claims of potentially hundreds of thousands of Uber drivers for misclassification as independent contractors cannot proceed as a class action.  (O’Connor v. Uber Technologies, Ninth Circuit Case No. 16-15595.)  In this case, the drivers signed arbitration agreements containing class action waivers, which the Ninth Circuit initially refused to enforce based on the state of the law at the time.  However, in light of the U.S. Supreme Court’s decision in Epic Systems (Epic Systems Corp. v. Lewis, ––– U.S. ––––, 138 S.Ct. 1612, 200 L.Ed.2d 889 (2018)) which issued in June, the appellate court held that the waivers must be enforced and that the case cannot proceed as a class action.  The court ordered that the arbitration agreements be enforced so that the arbitrations proceed on an individual basis. 

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