SCOTUS Will Not Reconsider Fate Of Delaware’s Business Arbirations; NLRB’s Class Action Arbitration Decision Loses Again
SCOTUS announced today that it would not review the Third Circuit’s decision in Strine v. Delaware Coalition for Open Government, Inc, holding that Delaware’s Chancery Court could not offer its judges’ services as neutral arbitrators in its courtrooms, unless those arbitrations were open to the public. Therefore, that decision is final and Delaware will now have to decide whether it wants to stop offering arbitrations by its state court judges, or whether it will proceed with the arbitrations in public. The amici curiae supporting a review of the decision (and thereby supporting keeping the arbitrations secret) included expected groups like the Chamber of Commerce and Business Roundtable, along with groups that don’t appear as often as amici like NASDAQ and NYSE (offering their FINRA arbitration experience), and a group called TechNet, made up of the CEOs of “leading technology companies.” Oh well. If those entities really want private arbitration, I am sure JAMS or the AAA will be happy to offer their services…
In other arbitration news, the Eleventh Circuit just became the fifth federal circuit court to reject the NLRB’s interpretation of whether federal labor laws prohibit class action waivers in arbitration clauses. In Walthour v. Chipio Windshield Repair, LLC, __ F.3d__, 2014 WL 1099286 (11th Cir. March 21, 2014), employees brought a putative class action alleging their employer violated the Fair Labor Standards Act (FLSA). The employees had entered into arbitration agreements with the employer stating “employee and employer are each giving up his/her/its right… to participate in a class action . . . Employee and employer agree that each may bring claims against the other only in his/her/its individual capacity and not as a plaintiff or class member in any purported class or representative proceeding.” (I love that the clause also gives up the employer’s right to bring class actions against the employee. As if that were possible.) In response, the employer moved to compel individual arbitration. The district court granted the motion and the Eleventh Circuit affirmed.
The plaintiffs argued that the arbitration agreement was unenforceable because the FLSA makes collective action a substantive right and overrides the FAA mandate to enforce arbitration clauses. The Eleventh Circuit noted that the Second, Eighth, Fifth, and Fourth Circuits have already rejected that argument. The court reasoned that under Supreme Court precedent, the text of the FLSA itself would have to clearly indicate that Congress intended that statute to override the FAA. However, the language of the FLSA did not have any such clear indication, and neither did the legislative history. Most interesting to me, though, is what was missing from the analysis– any mention of the NLRB’s analysis to the contrary.