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An Arbitration With No Class: Henry v. JPMorgan Chase & Co.
Posted on Categories Court Decisions, Non-Securities ArbitrationTags , ,

Even if an arbitration provision requiring individual arbitration were deemed unenforceable as a curb on the employees' right under Section 7 of the NLRA, to engage in “concerted activities,” the express language of the arbitration provision still precludes a finding that the parties intended to arbitrate their claims on a class-wide basis.

Henry vs. JPMorgan Chase & Co., No. CV 15-3895 (C.D. Cal., 11/15/16).

Plaintiffs Demand Some Class

This legal challenge based on the Fair Labor Standards Act relates to the proper treatment for overtime purposes of tellers, managers and loan officers who work for or who formerly worked for Defendant banks. The action is styled as a collective action on behalf of that group and has been consolidated in the Central District of California. After filing, however, Plaintiffs filed individual arbitration with the AAA, evidently resigned to compliance with Defendants’ standard arbitration agreement for employees. With hearings set to proceed at AAA within the next six months or so, Plaintiffs return to court and move for an order compelling Defendants to engage in class-wide arbitration.

Class Dismissed

Plaintiffs reason that Section 7 of the National Labor Relations Act renders unenforceable any arbitration agreement that prohibits or thwarts employees from engaging in “concerted activities.” As the Ninth Circuit has so ruled in Morris v. Ernst & Young, LLP, 834 F.3d 975 (2016), Plaintiffs argue, the requirement for individual arbitration should be overridden. The flaw in Plaintiffs’ reasoning, the Court finds, lies in its assumption that the Court can order parties to arbitrate that which they have not agreed to arbitrate. In Stolt-Nielsen, SA v. Animal Feeds Intl. Corp., 559 U.S. 662 (2010), the U.S. Supreme Court ruled that no contractual basis exists to order class-wide arbitration, where the arbitration agreement is silent on the issue. In this case, the parties actually agreed in express language that the arbitration of class claims was not authorized. Even if that clause is unenforceable, the intent of the parties cannot be ignored. The Court rules: “Whether the waiver is valid or not, it precludes a finding that the parties agreed to arbitrate on a class-wide basis. Accordingly, the Court cannot compel the parties to submit to class-wide arbitration.”

(ed: *The unanswered question for us is why Plaintiffs did not ask the Court to return the case to court after Morris. The Court then would have been forced to decide Morris’ applicability. Perhaps, Plaintiffs decided that they had gone too far down the road to turn away from AAA arbitration altogether. **It appears that the seven Plaintiffs who made the instant application are not the only participating Plaintiffs in this collective. Thus, if the Henry group had succeeded in obtaining an order for class-wide arbitration, Defendants would have been fighting class-wide cases on two fronts.)

(SLC Ref. No. 2016-44-02)

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