The Iowa fast food worker’s pay lawsuit remains in effect in the US Supreme Court

Last week, the US Supreme Court awarded a small, but potentially significant, victory to a fast-food worker from Iowa.

The court did not address the basic premise of Robin Morgan’s lawsuit – that the Taco Bell I worked at violated wage and hour laws. However, the court addressed a procedural issue that could have significant repercussions for American workers whose employers insist on arbitration to settle disputes that would otherwise have been heard in court.

At some point in about 2015, Morgan worked as an hourly employee at Taco Bell in Osceola, which was owned by a franchise called Sundance. Upon applying for the job, Morgan signed an agreement to arbitrate any employment dispute.

In 2018, it filed a nationwide class action lawsuit — a procedure for litigating a multi-plaintiff pay dispute, similar in nature to a class action lawsuit — against Sundance. It alleged that the company violated federal laws regarding overtime by moving some workers’ hours to other pay periods as a way to prevent employees from being paid more than 40 hours in any given week.

Sundance initially defended its actions in court, as if there was no arbitration agreement in effect. But after eight months of litigation, Sundance has filed an application to compel arbitration in the matter.

Morgan’s lawyers disputed the proposal, saying that Sundance had waived its right to arbitrate through litigation for an extended period. The District Court judge agreed and rejected Sundance’s request. The company appealed, and the Eighth U.S. Court of Appeals overturned the district court’s ruling in a split decision.

The Court of Appeal ruled that a party waives its right to arbitrate only after three criteria are met: the party’s knowledge of the right; Then he acted inconsistently with this right; It then harms the opposing party through these inconsistent actions.

This third element, which requires the opposing party to be biased or be at a disadvantage, is not written into law, but nine circuits have previously found that the Federal Arbitration Act spells out a “strong federal policy in favor of arbitration” that would require such an offer to substantiate a waiver. on the right to arbitration.

The Eighth Circuit Court of Appeals was essentially saying that because Morgan failed to show that her claim was biased or aggrieved by Sundance waiting so long to cite the arbitration agreement as a defense, Sundance did not waive its right to insist on arbitration.

On Monday, the US Supreme Court ruled otherwise. Writing for a majority, Justice Elena Kagan stated that there is no such requirement to show bias to prove a waiver of the right to arbitrate.

Referring to “waivers” understood to be actions directed at the “willful renunciation or relinquishment of a known right,” Kagan noted that in other contexts, courts have rarely considered the adverse effects of those actions on the opposing party.

“When this type of proof is required before a waiver of the right to arbitrate is found, the Eighth Circuit applies a rule that does not exist anywhere else,” the opinion read. “Federal Arbitration Law policy favoring arbitration does not permit federal courts to devise special procedural rules that favor arbitration…Federal policy is about treating arbitration contracts like all other contracts, not about promoting arbitration.”

The effect of the court ruling is that the Eighth Circuit Court of Appeals must address, once again, the question of whether Sundance has willfully relinquished its right to arbitrate the case.

But this time, the court will only consider whether Sundance did so by acting inconsistently with that right, not whether it did harm to the plaintiff by acting inconsistently.

Morgan’s attorney, Carla Gilbride of the public justice law firm, praised the court for its decision on Monday.

“We are pleased that the Supreme Court today declared in no uncertain terms that the Federal Arbitration Act does not support procedural rules established by judges in favor of arbitration over litigation or preference for arbitration agreements over other types of contracts,” the statement said.

“All Robyn Morgan wants in this case is for her to be paid fairly by her former employer and for the courts to treat her legal arguments fairly, without blunting the scales because these arguments involve arbitration. We hope today’s decision brings Ms. Morgan a step closer. to a fair outcome in its dispute with Sundance, and hopefully also sends a message to all companies that include arbitration provisions in their contracts with workers and consumers that these arbitration provisions will be treated just like any other clause in their contract — no worse, but no better.”

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