Collective & Class Actions

In 1974, the Supreme Court of the United States issued a decision in American Pipe & Constr. Co. v. Utah that allowed individuals to bring a claim after the statute of limitations ended if the court did not allow a class action complaint that encompassed them to go forward. Ultimately, the American Pipe holding tolled (paused), the statute of limitations on a claim brought by an individual while a court was deciding the appropriateness of the class action claim. However, on June 11, 2018, in a 9-0 decision, the Supreme Court limited the American Pipe tolling rule to individual claims, not successive class action suits.

In China Agritech, Inc. v. Resh, an employee, Michael Resh, filed a class action a year and a half after the statute of limitations for his claim expired. Prior to the statute of limitations expiring, the court had denied two class action claims. The employee argued that his claim was timely because the rejection of the two prior class actions tolled the statute of limitations. The Court rejected his argument and found his claim was untimely since it was filed after the statute of limitations expired. Importantly, the Court further held that the tolling rule established in American Pipe did not apply to successive class action claims, because it could result in an endless extension of the statute of limitations (the statute of limitations would be extended each time a class action was filed).

While the Court’s holding in China Agritech limits the ability of plaintiffs to bring class action claims, it also exposes employers to multiple individual claims if the court does not allow a class action suit to proceed.

 

It’s all over the internet, so it must be true!  Indeed, this time it is…on May 21, 2018, the U.S. Supreme Court held in Epic Systems Corp. v. Lewisthat employers may have arbitration clauses in employment contracts that prohibit class or collective actions (and it does not violate the National Labor Relations Act). Long story short, Epic Systems Corp. was a trio of consolidated cases, in which the employee in each case sought to litigate an employment dispute through a class or collective action in federal court. However, the employees had signed a contract providing for individual arbitration proceedings in the event of an employment dispute. In all three cases, the lower court or NLRB ruled in favor of the employees, holding that the individual agreements violated the employee’s right to concerted activities protected under the NLRA. The Supreme Court reversed the lower court decisions finding, “Congress has instructed that arbitration agreements like those before us must be enforced as written.” The Supreme Court decision in Epic Systems Corp reverts to the pre-2012 almost unanimous court and NLRB decisions upholding the legality of similar arbitration agreements. Accordingly, as long as the employee has consented to individuated proceedings for employment disputes, the employer may enforce such an agreement.

That being said…should employers do so? As with most things employment law, it depends on the employer and its specific facts and situation. For example, many employers may prefer to defend an alleged common wage violation in one litigation, versus multiple individual arbitration hearings. Further, arbitration is not necessarily going to save money because the employer typically must pay for the arbitrator(s) (unlike a judge). Thus, just because you can, doesn’t necessarily mean you should.