On January 30, 2017, a panel of Third Circuit Court of Appeals joined the Fifth, Sixth, Seventh, Eighth and Ninth Circuits in declaring that class actions are not available where the arbitration agreement is silent in that regard. However, this disposition is not an opinion of the full court and does not constitute binding precedent per the court’s rules.
In Opalinski/McCabe v. Robert Half International Inc., No. 15-4001, the plaintiffs challenged the district court’s dismissal of their collective action complaint brought pursuant to the Fair Labor Standards Act (FLSA). The Third Circuit panel agreed with the district court’s finding that Plaintiffs’ employment agreements did not provide for class arbitration, and, therefore, affirmed the dismissal.
The two employment agreements at issue had the following relevant language:
“Any dispute or claim arising out of or relating to Employee’s employment, termination of employment or any provision of this Agreement, whether based on contract or tort or otherwise (except for any dispute involving alleged breach of the obligations contained in Sections 8, 9, 10, 11, or 13 hereof) shall be submitted to arbitration pursuant to the commercial arbitration rules of the American Arbitration Association.”
“Employer and Employee agree that, to the fullest extent permitted by law, any dispute or claim arising out of or relating to Employee’s employment, termination of employment or any provision of this Agreement, whether based on contract or tort or otherwise (except for any dispute involving alleged breach of the obligations contained in Sections 8, 9, 10, 11 or 13 hereof) shall be submitted to arbitration pursuant to the commercial arbitration rules of the American Arbitration Association. Claims subject to arbitration shall include contract claims, tort claims, or claims related to compensation, as well as claims based on any federal, state or local law, statute, or regulation, including but not limited to claims arising under the Age Discrimination in Employment Act, Title VII of the Civil Rights Act of 1964, The Americans with Disabilities Act, the California Fair Employment and Housing Act (for California Employees), and comparable equal opportunity statutes for employees in other states. However, claims for unemployment compensation, workers’ compensation, and claims under the National Labor Relations Act shall not be subject to arbitration.”
The Supreme Court has made clear that a party may not be compelled to submit to class arbitration, unless there is a contractual basis for concluding that the party agreed to do so.” In Stolt-Nielsen S.A. v. Animal Feeds Int’l Corp., 559 U.S. 662, 684 (2010), the parties did not dispute that the employment agreements at issue were silent as to class arbitration. Instead, the parties’ dispute centered on whether, notwithstanding this silence, the arbitration clauses can still be read to agree to class arbitration. Several Circuit courts have held that silence in an agreement generally indicates that class arbitration is not authorized by the agreement, including the Fifth, Sixth, Seventh, Eighth, and Ninth Circuit Courts of Appeal.
The Third Circuit panel agreed with the above Circuit courts and affirmed the district court finding. The panel also found that the plaintiff’s claim that class action waivers are illegal or void was waived since the argument was not previously made.
Circuit courts continue to follow Stolt-Nielsen in finding no right to a class arbitration where the arbitration agreement is silent. The Third Circuit panel decision, while not precedential, is instructive in that regard. Employers should continue to use class action waivers and refrain from using any language in an arbitration agreement that can be construed to allowing class arbitrations.
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