Hunton Employment & Labor Perspectives

The class action under the Fair Labor Standards Act arguably is the employer’s most dreaded legal claim.  In April 2011, the United States Supreme Court provided a potential escape hatch for employers.  In AT&T Mobility v. Concepcion, the Supreme Court seemed to signal -- “seemed” being the operative word -- that employers need only enter into arbitration agreements in which employees disclaim their ability to file an FLSA class action (or, as it’s actually called in the FLSA, a “collective” action).

Could this be true?  After all, Concepcion wasn’t an FLSA or even an employment case.  Two consumers had attempted to bring a class action against a company for fraud and false advertising stemming from the purchase of phone services.  The Supreme Court had snuffed out the consumers’ class claims because they had signed arbitration agreements binding them to bringing actions only in their “individual capacity.”

Now, thanks to a pair of strippers and an operation called Cousin Vinnie’s Back Room, a result has arrived from the first test case since Concepcion of an employer using the class waiver in an arbitration agreement to defend against an FLSA collective action.  The news is good for employers.  In D’Antuono v. Service Road Corp., the federal district court in Connecticut halted a proposed FLSA collective action two months ago because the strippers had signed arbitration agreements containing class waivers.

It wasn’t a knockout blow for employers.  First, the court did not rely on the Concepcion reasoning, per se, to cut short the FLSA collective action.  Concepcion instead served as an influential alternative to the primary reasons.  (The primary reasons were that (a) Connecticut does not have a law rendering class waivers “unconscionable,” and (b) nothing about the class waiver prevented the strippers from vindicating their FLSA rights.)  Second, the court in June 2011 permitted an immediate appeal to the United States Court of Appeals for the Second Circuit (covering Connecticut, New York, and Vermont), so that court will have the final say for the strippers.

But the district court’s opinion is heartening.  The judge, Mark R. Kravtiz, is one of the nation’s most highly regarded, and his 56-page opinion is intellectually robust.  His language strongly suggests that deference to arbitration agreements -- as set forth in the Federal Arbitration Act and discussed in Concepcion -- preempts any argument that that class waivers should be unenforceable.  Among other nuggets, Judge Kravitz wrote:

[T]his Court reads the AT&T Mobility [v. Concepcion] decision as casting significant doubt on virtually any “device or formula” which might be a vehicle for “judicial hostility toward arbitration.”

Tough fights lay ahead as courts throughout the country will grapple with whether Concepcion means employers can exempt themselves from FLSA collective actions (and state wage-hour actions) through an arbitration agreement.  With the help of exotic dancers seeking more than the greenbacks in their garters, the first court to weigh in has come close to saying “yes.”