Sutherland v. Ernst & Young LLP
726 F.3d 290
| 2d Cir. | 2013Background
- Sutherland, EY employee Sept 2008–Dec 2009, salaried exempt, alleges unpaid overtime under FLSA and NYLL.
- Offer letter and confidentiality agreement attached an Arbitration Agreement via EY's Common Ground Dispute Resolution Program.
- Arbitration Agreement bars class or collective actions and requires individual arbitration for covered disputes, including FLSA claims.
- Sutherland filed a putative class action seeking roughly $1,867.02 for 151.5 hours of overtime.
- District Court denied EY’s motion to compel arbitration, finding the class waiver unenforceable under Amex I.
- Supreme Court later decided Italian Colors, abrogating Amex I’s basis and upholding enforceability of class waivers.
- This appeal asks whether a class-action waiver can be invalidated where it defeats vindication of federal rights; Second Circuit reverses and remands.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| May a class-action waiver in arbitration be enforced in FLSA cases? | Sutherland: waiver defeats vindication of rights; should be invalid. | EY: FAA enforces class waiver; no contrary command in FLSA. | Waiver enforceable; class waiver upheld. |
| Does FLSA contain a contrary congressional command to bar class waivers? | FLSA text implies collective action rights. | No explicit prohibition on waivers in FLSA. | No contrary congressional command; waiver permitted. |
| Can the plaintiff effectively vindicate rights via individual arbitration given costs? | Costs would be prohibitive ($200k+) relative to small recovery. | Italian Colors prevents invalidating waivers based on vindication expense. | Vindication cannot invalidate the waiver; costs not dispositive. |
Key Cases Cited
- Am. Express Merchants' Litig. v. Nat’l Bank, 554 F.3d 300 (2d Cir. 2009) (earlier invalidation of class waivers in Amex I (rejected post-Italian Colors))
- American Express Co. v. Italian Colors Rest., 133 S. Ct. 2304 (S. Ct. 2013) (rejected 'effective vindication' for invalidating class waivers)
- AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740 (S. Ct. 2011) (FAA preemption of unconscionable class-action waiver rule)
- Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (U.S. 1991) (upheld collective action waiver under arbitration when statute permits)
- Concepcion, 131 S. Ct. 1740 (S. Ct. 2011) (FAA policy favors enforcing arbitration terms as written)
- Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (U.S. 1985) (supports enforcing arbitration clauses in statutory contexts)
- In re Am. Express Merchants’ Litig., Amex II, 634 F.3d 187 (2d Cir. 2012) (procedural history leading to Amex III)
- Amex III, 667 F.3d 204 (2d Cir. 2012) ( Second Circuit adheres to Amex I on class waiver’ validity before Italian Colors)