Fifth Circuit: Arbitrator Properly Interpreted Arbitration Agreement to Allow for Collective Claims
Consistent with the terms of the arbitration agreement at issue, an hourly fuel tech and driver is entitled to arbitrate collective claims alleging that his employer violated the Fair Labor Standards Act (FLSA), the federal appeals court in New Orleans has ruled. Sun Coast Resources Inc. v. Roy Conrad, No. 19-20058 (5th Cir. Apr. 16, 2020). This decision highlights the critical need for employers to ensure careful drafting of arbitration agreements.
In this case, pursuant to an arbitration agreement, the plaintiff brought his FLSA overtime claim in arbitration on behalf of a class of similarly situated employees. In a clause construction award, the arbitrator determined “the agreement . . . clearly provides for collective actions.” Sun Coast asked the district court to vacate the award. The district court declined to vacate the award, determining that the arbitrator had not exceeded his powers in interpreting the agreement.
On appeal to the Fifth Circuit, the Court determined that in this instance, the breadth of the agreement and the authorization of “all remedies which might be available in court,” paired with the fact that the employer failed to “carve out” class proceedings suggested that class arbitration was appropriate. The Court said the arbitrator also noted that the parties agreed the American Arbitration Association (AAA) rules for employment disputes would govern arbitration, which permit class proceedings.
The employer’s principal argument was that the arbitration agreement’s terms did not expressly provide for collective proceedings. As a result, there could be no class arbitration. The Court noted that Sun Coast did not dispute the arbitrator’s authority to decide class arbitrability at any time during the arbitration proceedings. To the contrary, the company stated in its arbitration briefing that the only issue was whether the parties “agreed to authorize” collective arbitration in the first place. Additionally, this authority was not timely challenged before the district court. The Fifth Circuit affirmed the district court’s determination.