In this employment case, a former employee filed a Fair Labor Standards Act (FLSA) collective action against a pizza chain for an allegedly unlawful tip pooling arrangement. Conners v. Gusano’s Chicago Style Pizzeria, No. 14-1829 (8th Cir. Mar. 9, 2015) (click here for a copy of the decision). About one month after the lawsuit was filed, the pizza restaurants implemented an arbitration clause for its current employees. (This fact pattern supports one of the core conclusions from the recent Consumer Financial Protection Bureau study – corporations tend to use arbitration to avoid class liability.)
Shortly after the implementation of the arbitration clause for current employees, the initial plaintiff and the other plaintiffs who had joined in the collective action – who were all former employees up to that point– asked the district court to invalidate the arbitration clause and to prohibit the employer from communicating with putative class members regarding the lawsuit. The district court then issued a brief order enjoining enforcement of the arbitration clause with respect to the current employees.
On appeal, the Eighth Circuit held that the former employee plaintiffs lacked standing to challenge the enforceability of the arbitration clauses involving the current employees. The former employees claimed they suffered harm from the implementation of the arbitration clauses because the former employees would bear an increased part of the litigation expenses as a result of the arbitration clauses. The Eighth Circuit found that such harm was too conjectural to satisfy constitutional standing requirements.
If the current employees eventually choose to challenge the arbitration clauses, there is a similar case from about one year ago issued by the Eleventh Circuit. In Billingsley v. Citi Trends, Inc., No. 13-12561 (11th Cir. March 25, 2014) (click here), the Eleventh Circuit held that arbitration clauses implemented immediately after the filing of a collective action under the FLSA were not enforceable because the implementation was an improper attempt to thwart the right of employees to make an informed choice about participating in the FLSA action.