Eastern And Southern District Courts Compel Plaintiffs To Arbitrate Their FLSA Collective Action Claims On An Individualized Basis

Article by Eric Raphan, Rebecca Hirschklau and Rachel Tischler*

In February, two New York Federal District Court decisions joined other recent federal cases in enforcing arbitration agreements that preclude employees from bringing their Fair Labor Standards Act ("FLSA") claims on a collective basis and required the employees to individually pursue their claims in arbitration. See Torres v. United Healthcare Servs., Inc., No. 12 Civ. 923 (DRH)(ARL) (E.D.N.Y. Feb. 1, 2013); Ryan v. JPMorgan Chase & Co., No. 12 CV 4844 (VB) (S.D.N.Y. Feb. 22, 2013). Both of these decisions are discussed below.

Torres v. United Healthcare Services, Inc.

In Torres, the plaintiffs, who were former sales representatives of defendant United Healthcare Services, Inc. ("United Healthcare"), asserted collective action claims against United Healthcare for alleged violations of the FLSA and the New York Labor Law. United Healthcare moved to dismiss the complaint and to compel the plaintiffs to individually arbitrate their claims pursuant to the Federal Arbitration Act ("FAA"), 9 U.S.C. § 4 (2000). United Healthcare based their motion upon the fact that the plaintiffs signed arbitration agreements at the commencement of their employment in which they agreed "to resolve most employment-related disputes . . . that are based on a legal claim through final and binding arbitration" including claims "under any federal, state or local statute . . . relating to employment discrimination, terms and conditions of employment, or termination of employment including . . . the Fair Labor Standards Act." The arbitration agreements also contained a class and collective action waiver that stated:

Any dispute covered by this Policy will be arbitrated on an individual basis. No dispute between an employee and UnitedHealth Group may be consolidated or joined with a dispute between any other employee and UnitedHealth Group, nor may an individual employee seek to bring his/her dispute on behalf of other employees as a class or collective action.

The plaintiffs opposed United Healthcare's motion by arguing, among other things, that the arbitration agreements could not be enforced because the FLSA expressly provides them with the right to proceed as a collective action, and requiring plaintiffs to individually arbitrate their claims would prevent them from vindicating their statutory rights under the FLSA. The Honorable Denis R. Hurley rejected the plaintiffs' argument for several reasons.

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