Continuing on our recent theme of conflicting rules on class issues, Judge Kimba Wood of the Southern District of New York ruled March 3 (PDF) that Ernst & Young could not enforce a provision in its employment contracts with its accountants that waived class claims and required claims against E&Y, including overtime claims, to be arbitrated.  Judge Wood held that wage and hour claims can’t, as a practical matter, be litigated except on a class basis, because the amount of any individual’s claim is too small to interest a plaintiff’s attorney, and the expenditure on fees would not be justified.  Since the FLSA permits recovery of attorneys’ fees, that argument would not seem to carry much weight, but E&Y’s arbitration agreement made fee awards and their amount discretionary with the arbitrator, imposing more of a burden on the plaintiff.

In any event, Judge Wood’s decision comes on the heels of the Third Circuit’s February 9 decision (HTML) in Vilches v. Travelers Companies (labeled “not precedential” but still of interest), in which the Court of Appeals rejected an argument that class arbitration waivers are unconscionable in the unemployment context.  The Third Circuit focused its analysis on distinguishing waivers in employment situations from waivers in consumer cases, so its reasoning and Judge Wood’s do not really confront each other.  But it is interesting that the Third Circuit relied on the Supreme Court’s Stolt-Nielsen decision from last term, while Judge Wood went to some lengths to distinguish it.  Perhaps the Supremes’ decision in AT&T v. Concepcion, on the docket this Term, will bring some clarity.

Until then, though, employers who favor arbitration and class waivers will have to draft them carefully or find that their enforceability varies from jurisdiction to jurisdiction.

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Photo of Mark W. Batten Mark W. Batten

Mark W. Batten is a partner in the Labor & Employment Law Department and co-head of the Class & Collective Actions Group.

Mark represents employers nationwide at all stages of complex employment litigation, including class and collective actions on wage and hour matters…

Mark W. Batten is a partner in the Labor & Employment Law Department and co-head of the Class & Collective Actions Group.

Mark represents employers nationwide at all stages of complex employment litigation, including class and collective actions on wage and hour matters and discrimination claims. Ranked by Chambers USA, Mark is hailed as “a fabulous lawyer, handling interesting and complex cases.” Clients “highly recommend him to anyone seeking litigation counsel in the Boston area,” as well as note “he is responsive, pragmatic and team-oriented, and offers excellent legal advice.”

He assists clients with all aspects of employment policies and practices, including hiring, termination, leaves, accommodation of disabilities, and other matters. Mark also handles diverse civil litigation, including litigation of noncompetition agreements, ERISA matters, discrimination and wrongful termination litigation in federal and state courts; proceedings before the Massachusetts Commission Against Discrimination; wage and hour matters; and labor arbitrations. He is also an experienced appellate attorney both in employment cases and other civil litigation, handling appeals at all levels in the state courts and in the United States Courts of Appeals.

Mark also has substantial experience with traditional labor matters. He regularly represents employers in a variety of industries, including a number of newspaper and media companies, in collective bargaining, practice before the NLRB, labor arbitrations, union organizing campaigns, and day-to-day advice on administration of collective bargaining agreements. He regularly advises clients in both union and non-union settings on diligence matters in corporate acquisitions and financings. He also has experience on behalf of securities firms in arbitrations before the NASD and NYSE of customer and employee complaints.

Mark also practices on behalf of newspapers and other media in newsroom litigation, including libel defense and representation of reporters under subpoena, and has substantial experience in litigation involving access to sealed records and judicial proceedings on behalf of media companies.

Before joining Proskauer, Mark was a trial attorney in the Civil Division of the U.S. Department of Justice in Washington, where he was lead counsel in major litigation for over two dozen federal agencies, ranging from the U.S. Air Force, the CIA, and the U.S. Secret Service to the Department of Housing and Urban Development and the National Endowment for the Arts.

Mark regularly writes and lectures on employment-related matters, including, for instance, MCLE’s Representing Clients Before the Massachusetts Commission Against Discrimination.

In his spare time, Mark is an experienced computer programmer, conversant in C, C++, and other languages. He has ported software between computer operating systems and has published several commercial computer games.