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N.D.Ala.: Arbitration Agreements Obtained From Current Employees After Putative Collective Commenced Might Be Unenforceable
Billingsley v. Citi Trends, Inc.
This case was before the court on the plaintiffs’ motion for conditional certification as well as the plaintiffs’ motion for corrective action regarding meetings the defendant acknowledged having with putative class members after learning of the lawsuit. The court had previously denied the plaintiffs’ motion to strike declarations obtained from such putative class members, but deferred on the motion for corrective action. As discussed here, after the plaintiffs had commenced their putative collective action, but prior to the time they filed their motion for conditional certification, the defendant required putative class members to attend meetings with its management where it had putative class members sign blank declarations and a mandatory arbitration agreement. The court held that the documents may not be enforceable, and that class members who felt they signed same under duress would not be bound by the documents they previously signed.
Discussing the issue the court explained:
The court deferred ruling on the plaintiffs’ request for a corrective letter or court supervised notice that was embedded in the motion to strike. (Doc. 51, at 10–11). After the parties’ May 31, 2012 Status Conference and before the Plaintiffs’ deadline for filing their Motion for Conditional Certification and Notice, Citi Trends initiated company-wide in-person meetings between two corporate representatives and its SMs, who are potential collective class members in this case. At these meetings, with only a few exceptions, every SM completed a fillin-the-blank declaration about their job duties (doc. 40–7 and following) and signed an arbitration agreement that bound every SMs to arbitrate any claims he or she had against Citi Trends (doc. 47–6). The Human Resources Representative also presented every SM with a disclosure about this lawsuit and the effect of the arbitration agreement on his or her rights in the lawsuit. (Doc. 47–2).
As the court expressed in its memorandum opinion on the motion to strike, the individualized meetings that occurred between SMs and Citi Trends Human Resources Representatives are cause for concern. At these meetings, SMs waived their rights to bring any claims against Citi Trends in court, including participation in this litigation.
Especially when the employer-employee relationship is in play, the possibility of abuse is ripe in these type of unilateral communications. The Eleventh Circuit recognized the potential for coercion in such situations and held that the court had authority in Rule 23 class actions to invalidate opt-outs when they were procured through fraud, duress, or other improper conduct. Kleiner v. First Nat. Bank of Atl., 751 F.2d 1193, 1212 (11th Cir.1985). In cases such as this where Citi Trends has an obvious interest in diminishing the size of the potential class, a risk exists that these types of unsupervised communications will sabotage the employee’s independent decision-making regarding their involvement in the action. See id. at 1206. The court takes seriously its responsibility to see that an employer not engage in coercion or duress to decrease the size of a collective class and defeat the purpose of the collective action mechanism of the FLSA. Because of these concerns as more fully stated on the record, the court will GRANT IN PART AND DENY IN PART the Plaintiffs’ motion for court-supervised notice. Any potential plaintiffs who felt they signed the mandatory arbitration agreement under duress will still be allowed to opt-in to this collective action; the language of the notice will reflect that right.
S.D.Ala.: Court Strikes 245 Declarations From Potential Class Members Obtained By Defendant Pre-Certification By Ruse
Longcrier v. HL-A Co., Inc.
Knowing that this lawsuit was pending and that it was styled as a 216(b) opt-in proceeding, Defendant called each of its hourly workers into a one-on-one meeting during work hours with its attorney(s), creating an inherently coercive and intimidating environment for interviews and execution of paperwork concerning pay practices, under the guise of conducting a “survey.” Defendant’s attorneys asked general questions about pay practices and placed a largely form document in front of each employee to be signed. “While that inherently coercive setting is not itself grounds for relief, Defendant’s misleading statements to these potential plaintiffs about the reasons for the interview and declaration process, and their suppression of the truth, were obviously designed to lull prospective plaintiffs into a false sense of security and to effectuate their complete cooperation with minimal resistance.” Such manipulation of unrepresented parties to secure Declarations that HL-A now uses for the purpose of preventing the very people it misled from being able to litigate their FLSA rights herein is improper.
Therefore, the Court determined that the appropriate remedy was to strike the 245 declarations improperly obtained by Defendant, which would have made it difficult for the potential class members to pursue claims in the instant case.