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8th Cir.: NLRB’s Holding in D.R. Horton Does Not Preclude Enforcement of FLSA Class/Collective Action Waiver
Owen v. Bristol Care, Inc.
While district courts that have considered the issue since the NLRB handed down its decision in D.R. Horton last year have reached divergent opinions on its effect regarding the enforceability of class waivers, the first circuit to consider the issue has rejected D.R. Horton’s applicability in the FLSA context. By way of background, last year the NLRB held that the existence of a collective action waiver in an employment agreement constituted an unfair labor practice, because it improperly restricted the “concerted activity” of employees who are subject to same. Following the decision, courts have reached different conclusions as to whether the NLRB’s decision necessarily rendered such waivers unenforceable in the context of FLSA collective action waivers. In this case, the district court held that the parties arbitration agreement was unenforceable, because it contained such a waiver. However, on appeal, the Eight Circuit reversed, holding that the NLRB’s decision in D.R. Horton did not render the arbitration agreement at issue unenforceable.
Discussing this issue, the Eight Circuit opined that it was not obligated to defer to the National Labor Relations Board’s interpretation of Supreme Court precedent, under Chevron or any other principle:
Finally, in arguing that there is an inherent conflict between the FLSA and the FAA, Owen relies on the NLRB’s recent decision in D.R. Horton, which held a class waiver unenforceable in a similar FLSA challenge based on the NLRB’s conclusion that such a waiver conflicted with the rights protected by Section 7 of the NLRA. 2012 WL 36274, at *2. The NLRB stated that Section 7’s protections of employees’ right to pursue workplace grievances through concerted action includes the right to proceed as a class. Id. However, D.R. Horton carries little persuasive authority in the circumstances presented here. First, the NLRB limited its holding to arbitration agreements barring all protected concerted action. Id. at *16. In contrast, the MAA does not preclude an employee from filing a complaint with an administrative agency such as the Department of Labor (which has jurisdiction over FLSA claims, see 29 U.S.C. § 204), the Equal Employment Opportunity Commission, the NLRB, or any similar administrative body. Cf. Gilmer, 500 U.S. at 28, 111 S.Ct. 1647 (upholding an arbitration agreement that allowed Age Discrimination in Employment Act claimants to pursue their claims before the Equal Employment Opportunity Commission). Further, nothing in the MAA precludes any of these agencies from investigating and, if necessary, filing suit on behalf of a class of employees. Second, even if D.R. Horton addressed the more limited type of class waiver present here, we still would owe no deference to its reasoning. Delock v. Securitas Sec. Servs. USA, –––F.Supp.2d ––––, ––––, No. 4:11–CV–520–DPM, 2012 WL 3150391 (E.D.Ark. Aug. 1, 2012), at *3 (“The Board’s construction of the [NLRA] ‘is entitled to considerable deference and must be upheld if it is reasonable and consistent with the policies of the Act,’ … the Board has no special competence or experience in interpreting the Federal Arbitration Act.” (quoting St. John’s Mercy Health Sys. v. NLRB, 436 F.3d 843, 846 (8th Cir.2006))). The NLRB also attempted to distinguish its conclusion from pro-arbitration Supreme Court decisions such as Concepcion. D.R. Horton, 2012 WL 36274, at *16. This court, however, is “not obligated to defer to [the Board’s] interpretation of Supreme Court precedent under Chevron or any other principle.” Delock, –––F.Supp.2d at ––––, 2012 WL 3150391, at *3 (quoting N.Y. N.Y. LLC v. NLRB, 313 F.3d 585, 590 (D.C.Cir.2002)). Additionally, although no court of appeals has addressed D.R. Horton, nearly all of the district courts to consider the decision have declined to follow it.
The court also opined that there is nothing inherently wrong with a collective action waiver in employment agreements.
Click Owen v. Bristol Care, Inc. to read the entire Opinion.
Dernovish v. AT&T Operations, Inc.
This case involved a collective action brought under the Fair Labor Standards Act (“FLSA”). Plaintiffs, call center employees, alleged that Defendant failed to pay them for some time spent working, while they were in the process of logging in to Defendant’s computer system, prior to their scheduled shift. The issue before the Court was what proper scope of discovery should be granted to Defendant, with respect to the over 1,000 members of the opt-in class. While the Defendant maintained that all opt-ins were parties and thus, they were entitled to full discovery from each and every class member, the Plaintiffs disagreed. The Court held that the opt-ins need only produce limited discovery responses, because they were akin to class members in a Rule 23 class.
Discussing the issue, the Court said:
“The Court holds Plaintiffs’ view is more appropriate. Normally, a class action governed by Rule 23(b)(3) would permit those defined by the class definition to opt out of the suit. The FLSA effectively changes the normal situation in two ways: it creates its own class action device that replaces the one created in Rule 23 and requires individuals defined by the class definition to opt in, not opt out. See Hoffmann-La Roche Inc. v. Sperling, 493 U.S. 165, 170 (1989) (describing section 216(b) as permitting “employees to proceed on behalf of those similarly situated”); Anderson v. Unisys Corp., 47 F.3d 302, 305 n. 6 (8th Cir.1995) (declaring that “Certification of ADEA class actions is governed by 29 U.S.C. § 216(b) rather than Fed.R.Civ.P. 23.”); Kelley v. Alamo, 964 F.2d 747, 749 (8th Cir.1992) (“the FLSA provides for a form of ‘class action’ suit under” section 216(b)); Kloos v. Carter-Day Co., 799 F.2d 397, 399-400 (8th Cir.1986) (describing section 216(b) as creating a “type of statutory class action”). Other courts have reached the same conclusion. E.g., Alvarez v. City of Chicago, No. 09-2020, slip op. at —- (7th Cir. May 21, 2010) (“A collective action is similar to, but distinct from the typical class action…. The principle difference is that plaintiffs who wish to be included in a collective action must affirmatively opt-in to the suit….”); Thompson v. Weyerhaeuser Co., 582 F.3d 1125, 1127 (10th Cir.2009) (“the opt-in class mechanism of the [FLSA] authorizes class actions when the complaining parties are ‘similarly situated.’ ”); Smith v. T-Mobile USA Inc., 570 F.3d 1119, 1122 (9th Cir.2009) (“A plaintiff seeking FLSA collective action certification does not have a procedural right to represent a class in the absence of any opt-in plaintiffs.”); Ruehl v. Viacom, Inc., 500 F.3d 375, 379 & n. 3-4 (3d Cir.2007). This characterization suggests the permissible scope of discovery for the class members is not necessarily intended to be as great as it is for the actual parties to the case.
Another factor affecting the scope of discovery is the measure of damages, which consists of “the payment of wages lost and an additional equal amount as liquidated damages.” 29 U.S.C. § 216(b). This determination is based on a formula, not subjective testimony; there is no recovery for pain and suffering or emotional distress. Defendant’s policies provide the commonality that binds the class together. If it is determined that employees were required to login before the start of their shift, damages will be calculated by multiplying the applicable wage by the amount of time necessary to login, multiplied again by the number of days the employee worked. There is also no great need to rely on the employees’ memory to ascertain damages-the superior, more reliable evidence resides in Defendant’s records.”
The Court was careful to note that the Defendant was entitled to some individualized discovery:
“Nothing the Court has said, however, means that Defendant is not entitled to any information about the individuals who opt in. Even in a traditional class action under Rule 23, class members may be required to supply a certain amount of information. However, allowing the “full” range of discovery defeats the purpose of permitting a collective/class action by denying the efficiencies such a procedure is intended to produce. The nature and extent of the discovery effort is subject to the trial court’s discretion and depends on the nature of the case and the purported need for the information. Manual for Complex Litigation (Fourth) at 256.
With these principles in mind, the Court has reviewed Defendant’s discovery requests. The Court concludes it is appropriate and proper for those who opt-in to the case to answer Interrogatory Number Two. This interrogatory asks the individual to identify job titles, supervisors, and locations worked for Defendant. The remaining interrogatories ask for information that is more readily (and conclusively) found in Defendant’s records (such as Interrogatories 3 and 5), carries a significant burden that can be obviated by seeking discovery from the named Plaintiffs (such as Interrogatories 1 and 4), or ask for information that is of dubious importance in the case (such as Interrogatories 6, 7, 8, and 9).
The Request for Production of Documents presents an additional problem: Defendant has posed “contention”-type requests. For instance, Defendant asks the class members to produce “[a]ll documents regarding your assertion that AT & T ‘required these call center employees to be ready to work at the beginning of their scheduled shift.’ “ The undersigned generally finds such interrogatories to be unnecessary at best and inappropriate at worst . Here, requiring the class members to supply the documents will result in significant duplication and inefficiencies that are not warranted in the circumstances of this case. The class members will be required to produce any documents they may have responsive to requests 2 and 3, and submit any such documents along with their answer to Interrogatory Number Two. The remaining requests for documents need not be answered by the class members.”