In a decision filed on May 18, 2012, Oliveira v. Citicorp North America, Inc. and Citigroup, Inc., Case No. 8:12-cv-251-T-26TGW (M.D. Fla. 2012), Judge Richard A. Lazzara of the Middle District of Florida held that a complete waiver of class and collective actions in either a judicial or arbitration forum was enforceable. This decision directly conflicts with the National Labor Relations Board’s (“NLRB”) holding in In re D.R.Horton, Inc., 357 NLRB No. 184 (2012), that such agreements violate employees’ right to engage in protected concerted activity under the National Labor Relations Act.
Plaintiffs brought FLSA overtime claims, alleging that they were improperly categorized as exempt. Defendants moved to compel arbitration on the basis of handbook acknowledgements, which both required employees to bring all claims in arbitration and waived any right to collective or class arbitration. While the parties agreed that FLSA claims are subject to arbitration, plaintiffs, relying on D.R. Horton, argued that the collective action waiver was unenforceable. Judge Lazzara disagreed, reasoning that the Eleventh Circuit has enforced waivers of FLSA collective actions in mandatory arbitration agreements. Caley v. Gulfstream Aerospace Corporation, 428 F.3d 1359 (11th Cir. 2005). The court noted that district courts outside of the Eleventh Circuit are split as to whether to follow D.R. Horton, but determined that it was bound to apply the Eleventh Circuit precedent of Caley.
As previously reported, the NLRB continues to apply D.R. Horton and has brought unfair labor practice proceedings to enjoin enforcement of such arbitration agreements. Given the divergent authority, employers are cautioned to review their arbitration agreements and to carefully consider whether to amend them. Until further notice, courts in the Eleventh Circuit will likely enforce such waivers in employment-related lawsuits, but this will not prevent the NLRB from bringing unfair labor practice charges against employers who have such agreements. It is expected that the Eleventh Circuit will soon be asked to consider the continued vitality of Caley and this issue may wind up in front of the Supreme Court. We will continue to provide updates as new developments occur.