For the second time in about a week, the Second Circuit relied on the Supreme Court’s American Express ruling to end a collective action for overtime wages through the enforcement of an individual arbitration agreement. See Raniere v. Citigroup, No. 11–5213–cv (2d Cir. Aug. 12, 2013). This case was filed as a collective action for overtime wages under the FLSA, and the employees had signed arbitration agreements containing class action waivers. This case involved the same fact pattern as another recent Second Circuit case issued a few days ago, Sutherland v. Ernst & Young, No. 12–304–cv (2d Cir. Aug. 9, 2013) (Click here to see my prior blog post on the Sutherland case).
The district court in Raniere had refused to compel arbitration because it found that waivers of collective actions under the FLSA were unenforceable. However, the Second Circuit reversed the district court’s decision. The Second Circuit observed that both its recent Sutherland ruling and the Supreme Court’s American Express ruling require reversal of the district court’s decision. The Second Circuit found that waivers of collective actions under the FLSA are appropriate and enforceable. The Second Circuit also recognized that the effective vindication doctrine (under which a court may refuse to compel arbitration if a party cannot effectively vindicate his or her statutory rights in arbitration) was narrowly construed in the Supreme Court’s recent American Express case. Under the American Express ruling, the high cost of proving a claim in an individual arbitration proceeding does not trigger the effective vindication doctrine.