FLSA Collective Action in Arbitration

Plain Text or Arbitration Clause Allows FLSA Collective Action in Arbitration

In DirecTV v. Arndt, 2013 WL 5718384 (Oct. 23,2013), the 11th Circuit, applying Oxford Health Plans v. Sutter, 133 S.Ct. 2064 (2013), upheld an arbitrator’s decision interpreting a AAA clause—which did not explicitly mention class arbitration or class actions—as permitting employees to bring a FLSA collective action in arbitration. The plaintiffs, technicians who worked for DirecTV, were subject to a broad arbitration clause that required that “all claims or controversies … past, present or future, arising out of an employee’s employment or termination” be submitted to binding arbitration, including “claims for wages or other compensation due … and claims for violation of any federal, state, or other governmental law, statute, regulation, or ordinance.” The clause also boldly promised that “the Agreement provides for an adequate and equal opportunity for the vindication of claims and complaints through this arbitration process.”

The technicians filed a FLSA collective action in arbitration. Relying on the above language, the AAA arbitrator found that the plain language of the agreement permitted the technicians to assert their rights on a collective basis. DirecTV filed a motion in the district court to vacate the award, and the court (based only on the Supreme Court’s decision in Stolt-Nielsen v. AnimalFeeds – Sutter had not been decided yet) granted the motion, holding that the arbitrator had exceeded her powers under the FAA.

The Court of Appeals reversed, holding that, under Sutter, the arbitrator had “arguably interpreted the parties’ agreements,” and thus that the district court should have ended its inquiry and denied DirecTV’s motion to vacate. The court’s explanation for why DirecTV’s reliance on Stolt-Nielsen was misplaced shows what is often determinative in these cases:

“The parties in this case did not enter a stipulation agreeing that they had reached no consensus in the agreements regarding collective arbitration, as did the parties in Stolt-Nielsen. Consequently, the agreements in this case could plausibly afford a basis for divining the parties’ intent, and the arbitrator did not abandon her interpretive role in finding consent to collective arbitration based on the text of the agreements.”