18th Annual Workplace Class Action Report - 2022 Edition

218 Annual Workplace Class Action Litigation Report: 2022 Edition injunctive relief and a declaratory judgment that SB 707 was preempted by the Federal Arbitration Act (“FAA”) and violated the United States and California Constitutions’ contracts clauses. The Court rejected Defendant’s argument that SB 707 was preempted by the FAA because SB 707 did not invalidate arbitration agreements, and there was no conflict with § 2 of the FAA. Likewise, the Court concluded that SB 707 did not violate the United States and California Constitutions’ contracts clauses. The Court concluded that the legislation did not substantially impair contractual relationships and merely imposed additional remedies that fostered compliance with arbitration agreements. As to Plaintiffs’ motion to compel, the Court found that a valid arbitration agreement existed between most of the drivers and covered the dispute at issue such that the Court was required to compel arbitration in accordance with the terms of the agreement. In its ruling, the Court rejected Defendant’s argument that the drivers’ request to compel arbitration was not legitimate. However, the Court declined to make Defendant arbitrate with the 233 drivers for whom there were factual disputes as to the existence of a valid agreement. As to the remaining Plaintiffs, the Court ordered Defendant to arbitrate and pay the attorneys’ fees and costs related to the arbitration proceedings. Reeves, et al. v. Enterprise Products Partners, 2021 U.S. App. LEXIS 33245 (10th Cir. Nov. 9, 2021). Plaintiffs, a group of energy company workers employed through third-party staffing companies, filed a collective action alleging that Defendant, an energy company, failed to pay overtime compensation in violation of the FLSA. Defendant filed a motion to compel arbitration pursuant to an arbitration agreement that Plaintiffs and their respective staffing companies entered into whereby they agreed to resolve any employment related claims in arbitration. Plaintiffs argued that as a non-signatory to the arbitration agreements, Defendant could not compel arbitration. The District Court denied Defendant’s motion to compel. On appeal, the Tenth Circuit reversed the District Court’s ruling. Relying on an equitable estoppel theory under Oklahoma law, which governed the arbitration agreements, the Tenth Circuit held that Defendant could compel arbitration, despite being a non-signatory to the agreements. The Tenth Circuit explained that equitable estoppel allowed a non- signatory to enforce an arbitration agreement where a complaint raises allegations of “substantially interdependent and concerned misconduct by both the non-signatory and the signatory to the contract.” Id . at *9. The Tenth Circuit noted that the staffing companies were the ones who paid Plaintiffs, and therefore their allegations necessarily implicated the staffing companies’ conduct, making them “in essence” parties. Id . at *10. The Tenth Circuit found that the doctrine of equitable estoppel precluded Plaintiffs from “simply pleading around” their arbitration agreements, which covered “any concern arising” out of Plaintiffs’ employment, and that a claim against a customer concerning payment was one such “concern.” Id . at *12. As a result, the Tenth Circuit held that the customer was entitled to enforce the arbitration agreements under Oklahoma law. Rivas, et al. v. Coverall North America , 2021 U.S. Dist. LEXIS 1688 (9th Cir. Jan. 7, 2021). Plaintiff filed a class action bringing claims against Defendant pursuant to California’s Private Attorney General Act (“PAGA”). Defendant filed a motion to compel individual arbitration of Plaintiff’s claims pursuant to an agreement signed at the commencement of employment. The District Court denied the motion to compel. On appeal, the Ninth Circuit affirmed the District Court’s ruling. The Ninth Circuit explained that the PAGA is a California law that "authorizes an employee to bring an action for civil penalties on behalf of the state against his or her employer for Labor Code violations committed against the employee and fellow employees, with most of the proceeds of that litigation going to the state." Id . at *2. The Ninth Circuit held that insofar as the agreement barred Plaintiff from arbitrating his PAGA claim in full, it was unenforceable under California law. Accordingly, the Ninth Circuit ruled that the District Court properly denied Defendant’s motion to compel individual arbitration. Robbins, et al. v. Playhouse Lounge, 2021 U.S. Dist. LEXIS 114883 (D.N.J. June 21, 2021). Plaintiff, an exotic dancer at an adult club, filed a class and collective action alleging that Defendant misclassified dancers as independent contractors and thereby failed to pay them overtime compensation and minimum wages in violation of the FLSA and state wage & hour laws. Defendant filed a motion to compel arbitration of Plaintiff’s claims pursuant to a contract signed when she began working at Defendant’s club. The Court denied the motion without prejudice pending limited discovery on the question of the validity and enforceability of the contract and its arbitration clause. Plaintiff raised several concerns regarding the contract’s procedural and substantive unconscionability. The Court agreed that the contract contained concerning sections that could lead to a finding of unconscionability. The Court explained that the arbitration clause provided that "the costs of arbitration shall be borne equally by the entertainer and the club,” and required that "any ruling arising out of a claim between