PER CURIAM:
The question presented in this appeal is whether an employee can invalidate a class-action waiver provision in an arbitration agreement when that waiver removes the financial incentive for her to pursue a claim under the Fair Labor Standards Act of 1938 ("FLSA"), 29 U.S.C. § 201, et seq. In light of the supervening decision of the Supreme Court in American Express Co. v. Italian Colors Restaurant, ___ U.S. ___, 133 S.Ct. 2304, 186 L.Ed.2d 417 (2013), we answer that question in the negative, and reverse the contrary decision of the United States District Court for the Southern District of New York (Kimba M. Wood, Judge).
Defendant-appellant Ernst & Young ("E & Y") appeals from an order of the District Court denying its Rule 12(b)(1) motion to dismiss or stay the proceedings, and to compel arbitration pursuant to the Federal Arbitration Act, 9 U.S.C. § 1, et seq. E & Y seeks to dismiss or stay this putative class action brought by its former employee, Stephanie Sutherland, on behalf of herself and others similarly situated to recover "overtime" wages pursuant to the FLSA, and the New York Department of Labor's Minimum Wage Order, N.Y. Comp.Codes R. & Regs. tit. 12, § 142-2.2, promulgated pursuant to the New York Labor Law ("NYLL") § 650, et seq.
The District Court denied E & Y's motion to compel arbitration because it found that the underlying class-action waiver provision in the arbitration agreement between E & Y and Sutherland was unenforceable pursuant to our decision in In re American Express Merchants' Litigation, 554 F.3d 300 (2d Cir.2009) ("Amex I"). In that case, we invalidated a class-action waiver provision in an arbitration agreement because (1) the plaintiffs had shown that "they would incur prohibitive costs if compelled to arbitrate under the class action waiver," and (2) enforcing the arbitration agreement would "deprive them of substantive rights under the federal antitrust statutes." Id. at 315-16. But Amex I and the subsequent decisions that followed in our Circuit are no longer good
Because Italian Colors abrogated the District Court's basis for invaliding the class-action waiver provision in this case, we conclude that the District Court erred in denying E & Y's motion to compel arbitration. Accordingly, we reverse the District Court's March 3, 2011 order and remand the cause for further proceedings consistent with this opinion.
Sutherland was employed by E & Y from September 2008 through December 2009. During her tenure at E & Y, she worked as a "Staff 1" and later as a "Staff 2" audit employee. Most of her responsibilities involved "pre-professional training" and "low level clerical work." Joint App'x 23. Sutherland was compensated by E & Y on a "salary only" basis, which meant that she was paid a fixed salary of $55,000 per year, regardless of how many hours she worked. As relevant here, because Sutherland was a "salary only" employee, she did not receive any additional compensation for working "overtime" — i.e., more than 40 hours per week. Id. at 234. Sutherland alleges that she "regularly worked in excess of 40 hours in a work week, often 45 to 50 hours in one week." Id. at 23.
When Sutherland accepted her offer of employment with E & Y, she signed a so-called offer letter. That offer letter stated, inter alia, that "if an employment related dispute arises between you and the firm, it will be subject to mandatory mediation/arbitration under the terms of the firm's alternative dispute resolution program, known as the Common Ground Program, a copy of which is attached." Id. at
Id. at 44.
As noted, a copy of the E & Y Common Ground Dispute Resolution Program ("Arbitration Agreement") was attached to the offer letter and the confidentiality agreement. As relevant here, the Arbitration Agreement specifically states that "[c]laims based on federal statutes such as... the Fair Labor Standards Act," "[c]laims based on state statutes and local ordinances, including state and local anti-discrimination laws," and "[c]laims concerning wages, salary, and incentive compensation programs" are subject to the terms of the Arbitration Agreement. Id. at 47. The terms of the Arbitration Agreement also include the following two relevant provisions: (1) "Neither the Firm nor an Employee will be able to sue in court in connection with a Covered Dispute," id. (emphasis omitted); and (2) "Covered Disputes pertaining to different [e]mployees will be heard in separate proceedings," id. at 59.
Despite the terms of the Arbitration Agreement, which the parties agree bars both civil lawsuits and "any class or collective proceedings in the arbitration," Sutherland's Br. 11, Sutherland filed this putative class action against E & Y to recover, inter alia, 151.5 hours of unpaid overtime wages, amounting to $1,867.02. In particular, Sutherland claimed that E & Y had wrongfully classified her as "exempt" from the overtime requirements of the FLSA and the NYLL.
After Sutherland filed her putative class action, E & Y filed a motion to dismiss, or stay the proceedings, and to compel arbitration of Sutherland's claims on an individual basis in accordance with the terms of the Arbitration Agreement. Sutherland responded by arguing that the entire provision requiring individual arbitration was unenforceable because the requirement that she arbitrate her claims individually, rather than collectively, prevented her from "effectively vindicating" her rights under the FLSA and the NYLL. In particular, she argued that the costs and fees associated with prosecuting her claims on an individual basis would dwarf her potential recovery of less than $2,000.
The District Court was persuaded by Sutherland's arguments and, on March 3, 2011, denied E & Y's motion to dismiss, or stay the proceedings, and to compel arbitration on an individual basis. In doing so, the District Court relied in large part on our analysis in Amex I, 554 F.3d 300, which invalidated a provision barring class actions in the antitrust context where plaintiffs demonstrated that they would be unable to vindicate their statutory rights if that provision was enforced. See Sutherland v. Ernst & Young LLP, 768 F.Supp.2d 547, 549 (S.D.N.Y.2011). Specifically, the District Court stated that "[e]nforcement of the class waiver provision in this case would effectively ban all proceedings by Sutherland against E & Y," id. at 554, because of the nature of her "low-value, high-cost claim," id. at 552.
On March 31, 2011, E & Y moved for reconsideration of the District Court's March 3, 2011 order in light of the Supreme Court's subsequent decision in AT & T Mobility LLC v. Concepcion, ___ U.S. ___, 131 S.Ct. 1740, 179 L.Ed.2d 742 (2011). The District Court denied that motion on January 17, 2012, concluding, inter alia, that "Sutherland, unlike the [plaintiffs in Concepcion], is not able to vindicate her rights absent a collective action." Sutherland v. Ernst & Young LLP, 847 F.Supp.2d 528, 535 (S.D.N.Y.2012).
This appeal now presents the following question: May an employee invalidate a class-action waiver provision in an arbitration agreement when that waiver removes the financial incentive for her to pursue her FLSA claim?
We have jurisdiction over this appeal because the Federal Arbitration Act ("FAA") authorizes interlocutory appeals from denials of motions to compel arbitration. See 9 U.S.C. § 16(a)(1)(A)-(B). "We review de novo a district court's refusal to compel arbitration." Parisi v. Goldman, Sachs & Co., 710 F.3d 483, 486 (2d Cir.2013).
The FAA, which was "enacted in 1925 in response to judicial hostility to arbitration agreements," Concepcion, 131 S.Ct. at 1745, provides that:
9 U.S.C. § 2. In analyzing this provision of the FAA, the Supreme Court has remarked on several occasions that it establishes "`a liberal federal policy favoring arbitration agreements,'" CompuCredit Corp. v. Greenwood, ___ U.S. ___, 132 S.Ct. 665, 669, 181 L.Ed.2d 586 (2012) (quoting Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983)), and that arbitration agreements should be enforced according to their terms "unless the FAA's mandate has been `overridden by a contrary congressional command,'" id. (quoting Shearson/American Express Inc. v.
Consistent with the Supreme Court's recent analysis in Italian Colors, we first consider whether the FLSA contains a "contrary congressional command" barring waivers of class arbitration. Because no "contrary congressional command" exists, we then proceed to analyze Sutherland's argument that she cannot "effectively vindicate" her rights in an individual arbitration, inasmuch as such a proceeding would be "prohibitively expensive."
As in the antitrust context, "[n]o contrary congressional command requires us to reject the waiver of class arbitration" in the FLSA context. Id. Although we have not directly or specifically addressed whether an employee's ability to proceed collectively under the FLSA can be waived in an arbitration agreement, every Court of Appeals to have considered this issue has concluded that the FLSA does not preclude the waiver of collective action claims. See Owen v. Bristol Care, Inc., 702 F.3d 1050, 1055 (8th Cir.2013); Carter v. Countrywide Credit Indus., Inc., 362 F.3d 294, 298 (5th Cir.2004); Adkins v. Labor Ready, Inc., 303 F.3d 496, 503 (4th Cir.2002).
First, the text of the FLSA does not "`envinc[e] an intention to preclude a waiver' of class-action procedure." Italian Colors, 133 S.Ct. at 2309 (quoting Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 628, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985) (alteration in original)). Sutherland argues to the contrary, asserting that Section 16(b) of the FLSA creates a "right" to bring a collective action because the statute provides that "[a]n action to recover the liability ... may be maintained against any employer... in any Federal or State Court of competent jurisdiction by any one or more employees for and in behalf of himself or themselves or other employees similarly situated," 29 U.S.C. § 216(b) (emphasis supplied). See Sutherland Br. 43. But Sutherland's argument neglects the fact that § 216(b) also requires an employee with a FLSA claim to affirmatively opt-in to any collective action. 29 U.S.C. § 216(b) ("No employee shall be a party plaintiff to any such action unless he gives his consent in writing to become such a party and such consent is filed in the court
Second, Supreme Court precedents inexorably lead to the conclusion that the waiver of collective action claims is permissible in the FLSA context. In Concepcion, the Court held that the FAA preempted a California judicial rule regarding the unconscionability of class arbitration waivers in consumer contracts because "[r]equiring the availability of classwide arbitration [would] interfere[] with fundamental attributes of arbitration and thus create[] a scheme inconsistent with the FAA." 131 S.Ct. at 1748. Moreover, in Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 111 S.Ct. 1647, 114 L.Ed.2d 26 (1991), the Court upheld the waiver of a collective action provision in the Age Discrimination in Employment Act ("ADEA"), 29 U.S.C. § 621 et seq. Gilmer, 500 U.S. at 32, 111 S.Ct. 1647. In doing so, the Court noted that "even if the arbitration could not go forward as a class action or class relief could not be granted by the arbitrator, the fact that the [ADEA] provides for the possibility of bringing a collective action does not mean that individual attempts at conciliation were intended to be barred." Id. (internal quotation marks omitted; alteration in original).
For these reasons, the FLSA does not include a "contrary congressional command" that prevents the underlying arbitration agreement from being enforced by its terms.
"Our finding of no `contrary congressional command' does not end the case" because Sutherland invokes the "judge-made" exception to the FAA which "allow[s] courts to invalidate agreements that prevent the `effective vindication' of a federal statutory right."
Despite the obstacles facing the vindication of Sutherland's claims, the Supreme Court's recent decision in Italian Colors, which reversed our decision in In re American Express Merchants' Litigation, 667 F.3d 204 (2d Cir.2012) ("Amex III"), see note 2, ante, compels the conclusion that Sutherland's class-action waiver is not rendered invalid by virtue of the fact that her claim is not economically worth pursuing individually.
Although the "effective vindication doctrine" could be used to invalidate "a provision in an arbitration agreement forbidding the assertion of certain statutory rights.... [and] would perhaps cover filing and administrative fees attached to arbitration that are so high as to make access to the forum impractical," Italian Colors, 133 S.Ct. at 2310-11 (relying on Green Tree Fin. Corp.-Ala. v. Randolph, 531 U.S. 79, 90, 121 S.Ct. 513, 148 L.Ed.2d 373 (2000)), plaintiffs cannot use the doctrine to invalidate class-action waiver provisions by showing that "they ha[d] no economic incentive to pursue their [FLSA] claims individually in arbitration," id. at 2310. In other words, "the fact that it is not worth the expense involved in proving a statutory remedy does not constitute the elimination of the right to pursue that remedy."
Accordingly, in light of the Supreme Court's holding that the "effective vindication doctrine" cannot be used to invalidate class-action waiver provisions in circumstances where the recovery sought is exceeded by the costs of individual arbitration, we are bound to conclude that Sutherland's arguments are insufficient to
To summarize, we hold that:
For these reasons, we
Upon a panel rehearing of Amex II, we held that Concepcion did not alter our analysis and again adhered to our Amex I decision. In re Am. Express Merchants' Litig., 667 F.3d 204 (2d Cir.2012) ("Amex III"). We declined to review Amex III en banc on May 29, 2012. See In re Am. Express Merchants' Litig., 681 F.3d 139 (2d Cir.2012) (order denying en banc review). On November 9, 2012, the Supreme Court granted certiorari to review Amex III, see Am. Express Co. v. Italian Colors Rest., ___ U.S. ___, 133 S.Ct. 594, 184 L.Ed.2d 390 (2012) (Mem.), and on June 20, 2013, the Court reversed our decision in Amex III, see Am. Express Co. v. Italian Colors Rest., ___ U.S. ___, 133 S.Ct. 2304, 2312, 186 L.Ed.2d 417 (2013). That final decision of the Supreme Court dictates the outcome here.
Italian Colors, 133 S.Ct. at 2311.