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Effectiveness of Arbitration Agreements with Class Action Waivers... Are Class Actions a Thing of the Past? December 9, 2015 Presented by: Ron Chapman, Jr.* Ogletree, Deakins, Nash, Smoak & Stewart, PC *Board Certified – Labor and Employment Law Texas Board of Legal Specialization Richard Patti Senior Vice President & Associate General Counsel Live Nation Entertainment

Overview Pros and Cons of Arbitration Agreements FAA and Class Action Waivers Arbitration Agreements in California Practical Drafting Tips to Counter Potential Drawbacks

Benefits of Arbitration Arbitrators with subject matter expertise Control over arbitrator selection No runaway jury awards Confidentiality/no publicity

Benefits of Arbitration cont’d Less stringent procedural rules and more flexible deadlines Easier access to the arbitrator Quicker rulings Lower discovery costs (?)

Benefits of Arbitration cont’d Likely bar to class and collective actions Verification code: CLS4

Drawbacks of Arbitration Satellite/pre-arbitration litigation Arbitrator’s fees Arbitration entity’s fees Much lower chance of summary judgment

Drawbacks of Arbitration cont’d Risk of compromise awards Weak cases/inflated values Constant arbitrator contact as a plaintiff’s weapon The nightmare arbitrator

Drawbacks of Arbitration cont’d Too little procedure Everything gets in Everyone gets in Limited appellate rights

Drawbacks of Arbitration cont’d If the class action waiver is stricken from the agreement, you may be forced to arbitrate on a class-wide basis.

Class and Collective Action Waivers in the Employment Context NLRB’s D.R. Horton decision 5 th Circuit’s Reversal/NLRB’s Rehearing Petition Courts have rejected NLRB’s D.R. Horton analysis

Class and Collective Action Waivers NLRB’s position: –Will continue to apply D.R. Horton until U.S. Supreme Court says no –NLRB continues to find class waivers violate the NLRA

What About California? PAGA claims Current state of U.S. Supreme Court review

Drafting Tips to Counter Potential Drawbacks Three Time Rule –Employment application –Handbook acknowledgment –Stand-alone agreement

Drafting Tips cont’d Include employee opt-out Avoid one sided carve-outs Preserve employee’s right to file administrative charges Include agents within scope

Drafting Tips cont’d Don’t limit remedies or statute of limitations Consider imposing FRCP or AAA rules Consider incorporating Offer of Judgment rule Include right to file dispositive motions

Drafting Tips cont’d Who interprets class action waiver? Who interprets everything else? Include stay of any claims not subject to arbitration

Caution if Class Cases are Pending Use caution when rolling out arbitration agreement while class action is pending Courts may invalidate agreement on that basis alone Consider carving out pending class actions Verification code: ARB8

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