The On-Going Judicial Debate Over Class Arbitration Of Employment Claims

Since the U.S. Supreme Court's ruling last year in Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp., 130 S. Ct. 1758 (2010), the battle lines are being drawn in federal courts over the extent to which employers can use workplace arbitration agreements to stay out of court proceedings and/or class actions.

Sutherland v. Ernst & Young LLP, No. 10-CV-3332 (S.D.N.Y. Mar. 3, 2011), a recent decision out of the U.S. District Court for the Southern District of New York [link to ruling], is the latest example of the impact of class waiver provisions in employment agreements. In Sutherland, Plaintiff was a former accountant who alleged that Ernst & Young ("E&Y") misclassified her and other similarly-situated individuals as exempt from overtime under the Fair Labor Standards Act ("FLSA"). She brought a putative collective action under the Section 216 (b) of the FLSA and a Rule 23 class action under New York state law claiming that she and putative class members were unlawfully denied overtime compensation. Plaintiff had signed a dispute resolution agreement with E&Y, which called for binding arbitration on an individual, rather than class-wide, basis. E&Y moved to dismiss Plaintiff's complaint and compel arbitration of Plaintiff's claim on an individual basis. 

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