March 14 (Reuters) - Whether employees waive their
rights to bring class actions when they enter into employment
agreements with arbitration clauses is an unsettled question.
But on Wednesday, the U.S. Court of Appeals for the 3rd
Circuit came down on the side of employers, upholding Tenet
Healthcare Corp's employment agreement that requires employees
to arbitrate their disputes with the company instead of
litigating them in court.
Janice Quilloin, a nurse at one of Tenet's 55 hospitals,
sued in 2009 on behalf of a class of hospital employees who
claim they were denied pay for work performed during their meal
Tenet asked the trial judge to force Quilloin to resolve the
dispute individually in arbitration, as required by the
company's "Fair Treatment Process," which Quilloin signed twice.
Quilloin argued that the agreement was grossly unfair, and that
she never knew she had to commit to arbitration to work at the
The trial judge denied the company's request, finding that
the agreement might be unconscionable. But the 3rd Circuit
disagreed, sending the parties to arbitration.
"Quilloin did not lack a meaningful choice. She had a
college degree, and chose to agree to the arbitration agreement
on more than one occasion," Judge Michael Fisher wrote for the
The Supreme Court injected uncertainty into employment class
actions with its landmark ruling in AT&T Mobility v. Concepcion,
which allowed companies to enforce arbitration clauses in
consumer contracts. The Supreme Court struck down a California
law that barred class action waivers in customer agreements,
finding that federal arbitration law trumped the conflicting
But Concepcion was not an employment case. What's more, it
involved state law rather than the federal labor law that gives
rise to most employment class actions, including Quilloin's.
Courts have been less sure about what to do when an employment
agreement pits two federal statutes - the Fair Labor Standards
Act and the Federal Arbitration Act - against each other.
In January, the National Labor Relations Board found a class
action waiver in an employment contract unenforceable because it
took away workers' rights under federal labor law.
The 3rd Circuit punted on the question of conflicting
federal laws, said Wendy Lazerson, an employment lawyer at
Bingham McCutchen who's not involved in the case.
"The court seemed determined to get to a certain result
without analyzing all the issues," Lazerson said.
The 3rd Circuit ignored the fact that some of the claims
were brought under the federal labor statute, instead focusing
on a Pennsylvania law that deems class action waivers
unconscionable. The Federal Arbitration Act trumps the
Pennsylvania law under Concepcion, the 3rd Circuit panel ruled.
Lawyers for Quilloin did not immediately respond to requests
Tenet did not immediately provide comment.
The case is Quilloin v. Tenet Healthsystem Philadelphia et
al, U.S. Court of Appeals for the 3rd Circuit, No. 11-1393.
For Quilloin: Gary Lynch of Carlson Lynch and Gerald Wells
of Faruqi & Faruqi.
For Tenet: James Boudreau of Greenberg Traurig.
(Reporting By Terry Baynes)
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