. . . What are they and what’s the current state of the law? CLASS-ACTION WAIVERS . . . What are they and what’s the current state of the law?

What are class action-waivers? Clause in an arbitration provision that prevents signatory from proceeding in a class, collective, or representative basis in litigation or arbitration

Typical Class-Action Waiver Parties must bring claims in “individual capacity, and not as a plaintiff or class member in any purported class or representative proceeding.”

Why Employers Generally Like Class-Action Waivers… Dissuade meritless claims susceptible to class treatment Cost-efficient mechanism to limit expensive litigation Easy to implement in employment agreements, offer letters, or employee handbooks

Criticisms of class-action waivers Insulates companies from liability to large sums of plaintiffs where relatively small amounts of money are involved Dissuades individual lawsuits for small amounts of money Allows big business to overpower the little guy

National Labor Relations Board (NLRB) What is its role in the class-waiver issue? Champion against class action waivers NLRB’s position

Class-waivers are unenforceable because . . . Violates Section 7 of the National Labor Relations Act Employees have the right to engage in concerted activities for the purpose of collective bargaining or other mutual aid or protection FAA does not mandate enforcement of waiver because the waiver violates the NLRA FAA exempts from enforcement agreements that are subject to general contract defenses such as illegality

Holdings that uphold class-action waivers… interpreted consistently with ordinary rules of contract interpretation and cannot be subject to special considerations due to concerns invoked by waiver of class rights class waivers don’t deny a plaintiff any substantive right simply because individual claims would more effectively proceed on a class basis They are enforceable, not unconscionable

Split Among Circuits Class Waivers Enforceable? YES NO SILENT 2nd- NY, CT, VT 5th- TX, LA, MI 8th- ND, SD, NE, MN, IA, MO, AR 11th- AL, GA, FL 7th- IN, IL, WI 9th- CA, NV, OR, WA, AZ, ID, MT, HI, AK 1st- ME, NH, MA, RI 3rd- PA, NJ, DE 4th- WV, VA, NC, SC, MD 6th- MI, OH, KY, TN 10th- UT, WY, CO, NM

Surprising Development Richards v. Ernst & Young, LLP U.S. Supreme Court punts Issue still up in the air