Commercial Litigation Update

Many employers rely on arbitration agreements with class action waivers, provisions that prevent employees from filing or joining collective lawsuits, to manage wage and hour litigation risk. That strategy works reliably in states like California where courts typically uphold arbitration agreements with class action waivers. In Washington, however, courts disfavor class action waivers and arbitration agreements generally, and will invalidate such agreements when employees lacked a meaningful opportunity to review and agree to their terms. This refusal to enforce arbitration agreements or class action waivers creates a gap exposing employers to potential class action risk .[1]

[1] See Burnett v. Pagliacci Pizza, Inc., 196 Wash. 2d 38 (2020) (refusing to enforce arbitration clause in employee handbook when employer failed to provide separate, conspicuous notice).

Litigants and attorneys often assume—wrongly—that arbitration proceedings are completely confidential. In fact, there are many ways that private arbitration proceedings can become subject to public scrutiny.

Nearly a decade ago, the New Jersey Supreme Court in Atalese v. U.S. Legal Services Group, L.P., held that for an arbitration agreement to be enforceable, it had to contain an explicit waiver of the parties’ right to seek access to court. According to a recent New Jersey Appellate Division opinion, that long-standing rule has been qualified to reflect the relative sophistication of the parties involved in the dispute. In County of Passaic v. Horizon Healthcare Services, Inc. d/b/a Horizon Blue Cross Blue Shield of New Jersey, the Appellate Division considered a contract between the County and the entity that managed the County’s self-funded benefits plan. Following the County’s institution of a breach of contract lawsuit, Horizon successfully moved to compel arbitration based upon a clause in the parties’ agreement that required “[i]n the event of any dispute between the parties to this Agreement arising under its terms, the parties shall submit the dispute to binding arbitration under the commercial rules of the American Arbitration Association.” The clause in question contained no explicit waiver of court access. Consequently, the County appealed the decision, arguing for that very reason, the arbitration clause was unenforceable.

Medical providers preparing to engage in arbitration with payors pursuant to the just-announced No Surprises Act dispute rules should be prepared to counter some tough tactics from payors. For health care providers, the first Interim Final Rule represents a reasonable solution against arbitrary rates for out-of-network services, but raises concerns that certain policies may result in a financial windfall for insurers at the expense of providers and consumers.

On July 1, 2021, the Departments of Treasury, Labor, and Health and Human Services issued “Requirements Related to ...

Our colleague Stuart Gerson of Epstein Becker Green has a new post on SCOTUS Today that will be of interest to our readers: Court Refuses to Take Another Look at Case Questioning Whether Judge or Arbitrator Should Decide Scope of Arbitration Agreement

The following is an excerpt:

The overall quiet at the Court on Monday was only lightly interrupted with its per curiam decision in Henry Schein, Inc. v. Archer & White Sales, Inc., dismissing the petition for certiorari to the Fifth Circuit as improvidently granted. I mention it because the dismissal leaves open the questions that ...

On July 8, 2020, the California Court of Appeals held that when an employee fails to initial a specific part of an arbitration agreement, but still signs it, the agreement is still enforceable.

Plaintiff Joseph Martinez brought a series of employment claims against his former employer, BaronHR, Inc., which moved to compel arbitration. Martinez opposed the motion to compel arbitration on the ground that he did not initial the provision outlining his agreement to waive his right to a trial by jury. Martinez argued that the absence of his initials expressed an intent not to arbitrate ...

On June 19, 2019, the New York State Senate and Assembly passed legislation that would, if signed into law, broaden the scope of last year’s ban on clauses requiring employees to arbitrate sexual harassment claims so as to prohibit such clauses with respect to all types of discrimination claims. As reported on this blog, this ban on mandatory arbitration clauses was deemed invalid, as contrary to federal law, by the June 26, 2019 decision of the U.S. District Court for the Southern District of New York in Latif v. Morgan Stanley & Co. LLC, et al. (S.D.N.Y. No. 18-11528). It is too early ...