Herrington v. Waterstone Mortgage Corp.

In  this  proposed  collective  action,  the plaintiff sought to pursue a collective action on behalf of defendant’s loan officers, seeking unpaid overtime wages under the FLSA.  As discussed here, the defendant moved to to dismiss or stay the case on the ground that plaintiff’s claims were subject to an arbitration agreement.  Significantly, while the court enforced the arbitration agreement and remanded the case to arbitration, it struck the purported class waiver portion of the arbitration agreement in light of the recent holding in In  re D.R. Horton, Inc.

The specific language at issue was the following language from the parties’ agreement to arbitrate:

“[A]ny  dispute  between  the  parties  concerning  the  wages,  hours,  working conditions,  terms,  rights,  responsibilities  or  obligations  between  them  or arising out of their employment relationship shall be  resolved  through binding arbitration  in  accordance  with  the  rules  of  the  American  Arbitration Association applicable to employment claims.  Such arbitration may not be joined with or  join or  include any claims by any persons not party to  this Agreement.  Except as otherwise set forth herein, the parties will share equally in the cost of arbitration.”

After discussing a litany of cases from the NLRB holding that claims for unpaid wages by workers represent concerted activity, the court discussed the ramifications of the recent D.R. Horton case and held that the class action waiver here was unenforceable. In so doing the court addressed and rejected defendant’s arguments as to why D.R. Horton should not be applied to the case. Specifically, the court rejected defendant’s arguments that: (1) D.R. Horton (and the NLRA) only protect “employees,” and not “former employees” such as plaintiff; (2) an employee can bring about the same changes in the workplace pursuing an individual claim as he or she can pursuing a claim collectively with other employees; and (3) D.R. Horton impermissibly conflicts with AT&T Mobility  LLC  v. Concepcion.

However, because the court held that the class waiver provision was severable from the arbitration agreement, the court severed the waiver and remanded the case to arbitration, potentially as a collective action.

Click Herrington v. Waterstone Mortgage Corp. to read the entire Opinion and Order.

Thanks to Dan Getman for the heads up on this recent decision.