FORT LAUDERDALE BUSINESS LITIGATION: CLASS ACTION WAIVERS

Class actions are generally large lawsuits involving many plaintiffs bringing the same claims against the same defendant. These lawsuits can arise in a number of scenarios including employer/employee relationships. See Calderone v. Scott, 838 F.3d 1101 (11th Cir. 2016) (employees brought a class action lawsuit against their employer for violating Florida minimum wage laws). The Fort Lauderdale business litigation attorneys of the Mavrick Law Firm represent businesses and their owners in breach of contract litigation and related claims of fraud, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, employment litigation, and other legal disputes in federal and state courts and in arbitration.

The plaintiffs in a class are joined together (whether they know it or not) to collectively seek relief against the defendant. To sustain a class action lawsuit, the members of a class must be so numerous that separate joinder of each member is impracticable, the claim raises questions of law or fact common to each member of the class, the claim of the representative party is typical of the claim of each member of the class, and the class member bringing the lawsuit on behalf of the other class members can fairly and adequately protect and represent the interests of the other class member. Rollins, Inc. v. Butland, 951 So. 2d 860 (Fla. 2d DCA 2006). These requirements are commonly referred to as the numerosity, commonality, typicality, and adequacy of representation elements needed for class certification. Marco Island Civic Ass’n v. Mazzini, 805 So. 2d 928 (Fla. 2d DCA 2001).

Class action lawsuits can be difficult to defend because they are usually large lawsuits requiring a large amount of financial resources. Many litigants do not have sufficient resources to mount a defense. Therefore, potential defendants susceptible to class action proceedings may want to consider utilizing a class action waiver to prevent them. These waivers are usually embedded in a mandatory arbitration provision. See AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011). The reason is simple. The United States Supreme Court has held that class actions “interfere[ ] with fundamental attributes of arbitration.” Therefore, mandating arbitration while simultaneity disallowing class actions is lawful.

Class action waivers conjoined with mandatory arbitration provisions have been tested several times. Each time, the waiver prevails. In Epic Sys. Corp. v. Lewis, 584 U.S. 497 (2018), a group of potential class employees sued their employer under the Fair Labor Standards Act. The employees argued they should be allowed to bring a class action lawsuit against their employer despite the existence of mandatory arbitration provisions and class waivers in their employment agreements because the National Labor Relations Act guaranteed the employees collective rights. However, the United States Supreme Court rejected the employees’ argument because the National Labor Relations Act does not reflect a clear expressed and manifest congressional intention to displace the Federal Arbitration Act. To the contrary, Congress instructed federal courts to enforce arbitration agreements under the Federal Arbitration Act according to their terms including terms providing for individualized proceedings.

Potential litigants susceptible to class actions could try using class action waivers without requiring arbitration. These provisions are more commonly known as naked class action waivers. However, naked waivers have not been fully tested because the United States Supreme Court has not yet ruled on their enforceability. Some states have signaled that naked waivers would be enforced like in Utah. Other states indicated hostility towards naked waivers like New Jersey and Rhode Island. Therefore, it is best to implement a class waiver with an arbitration clause to ensure it is enforceable.

The Fort Lauderdale business litigation attorneys of the Mavrick Law Firm represent businesses and their owners in breach of contract litigation and related claims of fraud, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, employment litigation, and other legal disputes in federal and state courts and in arbitration.