Seventh Circuit Ducks Hard Question on Class Arbitrability
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The Seventh Circuit issued an opinion last week that sounded like it would be a big deal. The case, Herrington v. Waterstone Mortgage Corp., 2018 WL 5116905 (7th Cir. Oct. 22, 2018), dealt with the fallout from SCOTUS’s Epic Systems, and addressed a class arbitrability issue of first impression, which meant it could have been epic indeed. But instead, the decision is a fizzle that punts all the truly exciting issues back to the district court.
Herrington began in court as a collective action for minimum wages and overtime pay under the Fair Labor Standards Act. The named plaintiff had an arbitration clause which included this statement “Such arbitration may not be joined with or join or include any claims by any persons not party to this Agreement.” So, the defendant moved to compel individual arbitration. But, based on the 7th Circuit’s precedent finding that class waivers in employment agreements violated federal labor laws (the NRLA), the court sent the parties to arbitration with an order instructing the arbitrator to allow the plaintiff “to join other employees to her case.”
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