Owen v. Bristol Care: Interpreting Concepcion and Denying Motion to Compel Arbitration

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A Missouri district court judge has added to the increasing body of law holding that the U.S. Supreme Court’s Concepcion decision does not require the enforcement of arbitration clauses and class action waivers in all circumstances.  In Owen v. Bristol Care, the defendant moved to compel arbitration of a Fair Labor Standards Act (FLSA) action in which the plaintiff alleged that her employer had systematically misclassified her and other employees as exempt from overtime pay.  See Owen v. Bristol Care, No. 11-04258 (W.D. Mo. Feb. 28, 2012) (available here).  However, the court ruled that “in the employment context, Concepcion . . . is not controlling.”  Slip op. at 8.

The defendant’s motion to compel arbitration was based on the plaintiff having signed a standardized employment contract, which included a mandatory arbitration agreement and class action waiver.  Slip op. at 1-2.  Guided by Missouri’s “illusory contract” analysis, which is similar to California’s unconscionability doctrine, the Owen plaintiff argued that the arbitration clause should not be enforced because the employment agreement allowed the defendant to unilaterally modify or revoke the contract; the contract’s terms were one-sided, owing to the parties’ unequal bargaining power; and the arbitration provisions covered suits brought by employees but not claims typically brought by employers.  Slip op. at 2-3.

Judge Fernando J. Gaitan, Jr. of Missouri’s Western District agreed with the plaintiff, finding that the arbitration provision effectively prohibited the plaintiff from vindicating her federal statutory right to bring a collective action pursuant to the FLSA.  Slip op. at 3.  In finding Concepcion inapplicable to employment actions, Judge Gaitan distinguished the defendant’s citation to CompuCredit Corp v. Greenwood because “[t]he arbitration waiver in CompuCredit involved a consumer contract and not an employment contract.”  Slip op. at 8, n.3 (citing CompuCredit Corp v. Greenwood, 132 S.Ct. 665 (2012)).  The court concluded that “[i]n the employment context, waivers of class arbitration are not permissible.”  Id. (citing D.R. Horton, 357 NLRB No. 184, 2012 NLRB LEXIS 11 (Jan. 3, 2012) and Chen-Oster v. Goldman, Sachs & Co., No. 10-CV-06950, 2011 U.S. Dist. LEXIS 73200 (S.D.N.Y. Jul. 7, 2011)).

Judge Gaitan’s reliance on the D.R. Horton decision follows a recent ruling by Judge Kimba Wood, who also applied D.R. Horton outside the strict confines of the National Labor Relations Act.  See Sutherland v. Ernst & Young LLP, 2012 U.S. Dist. LEXIS 5024 at *23, n.5 (S.D.N.Y. Jan. 13, 2012) (“an arbitration agreement imposed upon individual employees as a condition of employment cannot be held to prohibit employees from pursuing an employment-related class, collective, or joint action in a Federal or State court.”) (quoting D.R. Horton, 2012 NLRB LEXIS 11 at *25).