The Ninth Circuit Holds that Arbitration Class Action Waivers Can Be Valid under the Federal Arbitration Act

The Ninth Circuit has joined the growing list of circuits that have declined to follow the NLRB’s D.R. Horton decision, following their own decision that Ernst & Young LLP could enforce their arbitration agreement.  The opinion can be found here.

Ernst & Young’s former financial managing associate had led a wage and hour class action against the accounting company.  Richards argued and a California district court agreed that Ernst & Young had waived its right to arbitrate when it did not raise the issue as a defense in Richards’ action.  In its appeal, Ernst & Young argued that it did not move to compel arbitration until the U.S. Supreme Court made its ruling in favor of arbitration class waivers in AT&T Mobility v. Concepcion, since Ninth Circuit precedent had held class action waivers in employee arbitration agreements to be unconscionable.

The Ninth Circuit upheld Ernst & Young’s arbitration class waiver after finding that they did not deliberately delay their defense.  The court also ruled that they would not follow D.R. HortonD.R. Horton had found that it was a violation of federal labor law for an employer to require as a condition of employment that employees waive their rights to bring a class action claim.  The Ninth Circuit joins a majority of courts finding D.R. Horton to conflict with the Federal Arbitration Act.  The Ninth Circuit found that the district court erred by not compelling arbitration.  The Ninth Circuit also vacated the district court’s class certification since the arbitration clause would supersede the class action.

Richards has filed a petition for rehearing.

St. Louis Employment Law Attorneys and Arbitration Agreements

It is vital that employers stay aware of the federal and state law cases related to the enforceability of arbitration clauses in the employment law context.  McMahon Berger’s employment and labor law attorneys are available to assist you with respect to questions you may about arbitration agreements in the employment law context.

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