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4th Circuit applies Concepcion in FLSA case

The appeals court overturned a district court decision that invalidated an arbitration agreement because it contained a class action waiver

Concepcion strikes again, this time dooming a shuttle driver’s contention that he should be able to sue his employer for Fair Labor Standards Act (FLSA) violations, despite a class action waiver in his employment agreement.

Samuel Muriithi, an employee of the airport shuttle service Shuttle Express Inc., claimed that the company misclassified him and other drivers as independent contractors under the FLSA, thus depriving them of minimum wage and overtime pay.

Muriithi initially prevailed in the case when a district judge ruled in March 2011 that Shuttle Express’s arbitration agreement was unenforceable because it contained a class action waiver. At the time of his ruling—which he issued before the Supreme Court’s decision in AT&T Mobility v. Concepcion—Judge Alexander Williams also found that the agreement would have imposed “prohibitive costs” on employees because it required that each party to the arbitration pay half the cost of the arbitrator.

The next month, however, the Supreme Court issued its ruling in Concepcion, in which it found that the Federal Arbitration Act preempted a California state law invalidating class action waivers in arbitration agreements. 

On appeal, the 4th Circuit called the district court’s ruling “directly at odds” with the Supreme Court’s decision, despite Muriithi’s argument that Concepcion did not apply to FLSA collective claims.

Writing for the unanimous three-judge panel, Judge Barbara Milano Keenan said that Concepcion applied more broadly than Muriithi had argued. “Contrary to Muriithi’s contention, the Supreme Court’s holding was not merely an assertion of federal preemption, but also plainly prohibited application of the general contract defense of unconscionability to invalidate an otherwise valid arbitration agreement under these circumstances,” Keenan wrote.

Read more about arbitration on InsideCounsel:

Which costs less: Arbitration or litigation?

Contractual class action waiver valid despite NLRB ruling

Supreme Court class arbitration case could have big implications for employers

Litigation: 20 things to consider when negotiating arbitration provisions

Supreme Court seems likely to support individual arbitration in AmEx antitrust class action

Alanna Byrne

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