The Sutherland v. Ernst & Young case raised a now familiar question and the Second Circuit gave an answer in keeping up with recent U.S. Supreme Court precedent. The question was whether an employee could invalidate a class action waiver in an arbitration agreement if the "waiver removes the financial incentive . . . to pursue a claim under the Fair Labor Standards Act . . . ("FLSA")." The Second Circuit responded "in the negative", clarifying a number of related issues along the way.
Introduction
Stephanie Sutherland, a former Ernst & Young ("E&Y") employee, filed a putative class action against the company under the FLSA and New York law. She claimed that lower-level audit employees did not receive additional compensation for working more than 40 hours per week.
E&Y filed a motion to dismiss or stay the proceedings, and to compel arbitration in accordance with the Federal Arbitration Act ("FAA"). Ultimately, District Judge Kimba Wood, denied E&Y's motion because the class action waiver provision was not enforceable under the Second Circuit's 2009 decision in In re American Express Merchant's Litigation ("AMEX I"). The AMEX litigation was discussed extensively here in a March 5, 2013 blog article. Judge...
