On May 28, 2013, in Dixon v. NBCUniversal Media, Inc., the U.S. District Court for the Southern District of New York found that an employee had agreed to arbitrate her FLSA claim and enforced the class action waiver in the arbitration agreement.

As to whether the plaintiff had agreed to arbitrate her claims, the court found the following facts: The plaintiff had been notified by an email that she would be covered by the company’s alternative dispute resolution (“ADR”) program, which covered “all claims that arise out of or are related to an employee’s employment,” and the communication included as an example “[c]laims relating to compensation.” The email contained a link to a PowerPoint training course, which in turn contained a link to the employee manual containing the ADR provisions. The plaintiff also attended an ADR training course that explicitly described the binding nature of the ADR program and its application to wage hour claims, and expressly stated that no class or collective actions would be permitted. The training course also informed the plaintiff that by choosing to continue to work for the company after July 1, 2009, she was agreeing to be covered by the ADR program after that date. The district court found these circumstances sufficient to establish that the plaintiff’s continued employment constituted acceptance of the arbitration agreement provisions. The district court rejected the plaintiff’s argument that she had never assented to a later version of the ADR program which was the basis of the employer’s motion to compel arbitration. The plaintiff had received an email informing her that employees who had been previously covered by the ADR program would continue to be covered by the procedures and attaching a document explaining the few minor changes made to the program she had agreed to be bound by. The court found that it was sufficient for the employer to expressly remind the plaintiff that, despite minor changes made to the ADR program, employees previously covered by the program would continue to be covered.

Next, the district court rejected the plaintiff’s argument that the waiver of the right to proceed in a collective action was unenforceable per se. First, the court noted that the plaintiff did not argue that the arbitration agreement was unenforceable because it effectively precluded her from vindicating federal statutory rights by making it financially impossible to pursue her claim, an issue currently pending before the Supreme Court in American Express Co. v. Italian Colors Restaurant. Rather, the plaintiff conceded that her claim was sufficiently large to pursue effectively as an individual claim, thus making American Express inapplicable.

Second, noting that the Second Circuit has not yet addressed whether an employee’s right to proceed collectively under the FLSA can be waived in an arbitration agreement, the district court emphasized that all six federal courts of appeals, and all but one federal district court in the Second Circuit, that have addressed the issue found “nothing in the text of the FLSA, its legislative history, or any inherent conflict between arbitration and the FLSA’s purpose, that would indicate congressional intent to preclude waiver of FLSA collective action claims.” In following the “vast majority” of courts enforcing waiver of the right to proceed collectively in an FLSA action, the district court found that Raniere v. Citigroup, Inc., the one Second Circuit district court decision refusing to enforce such a waiver, was contrary to recent Supreme Court precedent holding that “plaintiffs may be held to an agreement to arbitrate their substantive claims, even where certain procedural rights such as the ability to proceed collectively or as a class are unavailable in arbitration.” Raniere was appealed to the Second Circuit and oral argument in the case was held on March 20, 2013. Stay tuned for updates.

Finally, the district court refused to give any deference to the National Labor Relations Board’s finding in D.R. Horton that any waiver of the right to pursue an FLSA collective action violates the National Labor Relations Act. The court also noted that the Board may not have had a proper quorum and that courts, by an overwhelming majority, have rejected the reasoning in D.R. Horton.

In addition to its favorable ruling on the enforceability of FLSA collective action waivers in arbitration agreements, this case also serves as a reminder of the importance of ensuring adequate documentation of the agreement to be bound by an ADR program.

Photo credit: Logan Simmons