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Supreme Court Holds Employees May Not Arbitrate Class Claims Unless Arbitration Agreement Unambiguously Provides for Class Arbitration

By Janet A. Hendrick
April 24, 2019

It’s been a big week in employment law at the Supreme Court.  Earlier this week, the Court agreed to hear three cases, Bostock v. Clayton County, Georgia, Altitude Express, Inc. v. Zarda, and R.G. & G.R. Harris Funeral Homes v. EEOC, to decide whether Title VII’s prohibition against discrimination “because of sex” protects LGBTQ employees.  Today, in Lamps Plus, Inc. v. Varela, the Court held that a party to an arbitration agreement may arbitrate only individual claims, rather than class claims, unless the arbitration agreement explicitly and unambiguously provides for class arbitration.

In a 5-4 vote, the Court overturned the Ninth Circuit Court of Appeals’ decision that the arbitration agreement between Lamps Plus and employee Frank Varela allowed him to bring class claims in arbitration even though the arbitration agreement was ambiguous on this point. Varela filed suit in a California federal court on behalf of a putative class of employees after approximately 1,300 employees’ tax information was disclosed as part of a phishing scam.  Because Varela had signed an arbitration agreement at the time of hire, Lamps Plus moved to compel arbitration.  The arbitration agreement was ambiguous on the issue of whether a party may pursue class claims in arbitration. The district court granted Lamps Plus’ motion and sent the case to arbitration, but allowed Varela to pursue his claims on a classwide basis in arbitration.  Lamps Plus appealed to the Ninth Circuit, which acknowledged the arbitration agreement was ambiguous, construed the ambiguity against Lamps Plus as the drafter of the agreement, and affirmed the district court’s decision.  Lamps Plus appealed to the Supreme Court.

Chief Justice Roberts wrote the opinion, joined by Justices Thomas, Alito, Gorsuch, and Kavanaugh.  The primary question before the Court was “whether, consistent with the [Federal Arbitration Act, which governed the arbitration agreement], an ambiguous agreement can provide the necessary ‘contractual basis’ for compelling class arbitration.”  The majority answered this question in the negative, pointing out that arbitration on a classwide basis “undermines the most important benefits of” traditional individualized arbitration.  In its 2010 decision in Stolt-Nielsen S.A. v. AnimalFeeds International Corp., the Court held that a court may not compel arbitration on a classwide basis when the arbitration agreement is silent on the availability of class arbitration.  In Lamps Plus, the majority held that “[l]ike silence, ambiguity does not provide a sufficient basis to conclude that parties to an arbitration agreement agreed to ‘sacrifice[] the principal advantage of arbitration,” which is the individualized form of arbitration envisioned by the Federal Arbitration Act.  After all, ultimately, “[a]rbitration is strictly a matter of consent” between the parties.

Today’s decision continues the pro-arbitration trend from the Supreme Court over the past few years and comes nearly a year after Epic Systems Corp. v. Lewis, in which the Court upheld the use of class action waivers in arbitration agreements between employers and employees.


Janet Hendrick Profile portrait

Janet A. Hendrick

If you have questions about this decision, contact Janet Hendrick, who represents and counsels employers on issues including proper classification, in the Dallas office of Phillips Murrah at (214) 615-6391 or at jahendrick@phillipsmurrah.com.

NewsOK Q&A: High court’s tie in assault affirms tribe’s self-determination right

From NewsOK / by Paula Burkes
Published: June 30, 2016
Click to see full story – High court’s tie in assault affirms tribe’s self-determination right

Click to see G. Calvin Sharpe’s attorney profile

G. Calvin Sharpe has 30 of years of experience in Oklahoma courtrooms, representing a diverse list of business clients in matters relating to medical malpractice, medical devices, products liability, insurance and commercial litigation.

Q: Generally speaking, what was the Dollar General case about, originally?

A: In the original case, there was a Dollar General store operating within the Reservation of the Mississippi Band of Choctaw Indians. A 13-year-old boy, a tribal member, was working at the store as a part of a youth opportunity program. In 2005, a suit was brought by the boy’s parents that alleged that the boy was sexually assaulted by the store’s nontribal manager in the summer of 2003. In the binding contract with the tribe to operate on tribal land, Dollar General agreed to tribal court civil jurisdiction, so the case went to a tribal court. The Choctaw courts denied a motion to dismiss the case due to lack of jurisdiction citing a 1981 Supreme Court Case, Montana v. United States, which held that a “tribe may regulate, through taxation, licensing, or other means, the activities of nonmembers who enter consensual relationships with the tribe or its members.” Dollar General subsequently sued in federal court to clarify the terminology, “other means.” (Dollar General Corp. v. Mississippi Band of Choctaw Indians)

Q: The Supreme Court decision was tied, 4-to-4, which means that the lower court decision of the U.S. Court of Appeals for the Fifth Circuit is upheld. What was that Fifth Circuit’s upheld decision?

A: At the heart of this decision is the question of whether tribal courts have the right to exercise civil authority over people who are operating within tribe’s jurisdiction, but who aren’t tribal members. In the federal case subsequent to the tribal rulings in Choctaw courts, Dollar General petitioned for certiorari, which means they asked a higher court to review the determination of a lower court. In the judgment of the U.S. Court of Appeals for the Fifth Circuit, Indian tribal courts have jurisdiction to adjudicate civil tort claims against nonmembers, including as a means of regulating the conduct of nonmembers who enter into consensual relationships with a tribe or its members.

Q: How has this Supreme Court ruling, essentially allowing the lower court decision to stay, changed the nature of tribal jurisdictional authority?

A: In the decision of the appeal to the Supreme Court of the United States of America, the high court was deadlocked, which allows the decision of the U.S. Court of the Appeals for the Fifth Circuit to stand. The judgment is affirmed by an equally divided court, (which) allows the case to proceed to resolution in tribal court without further appeals regarding authority. However, there’s the likelihood that, in a similar case, the Supreme Court would grant another certiorari when the Senate confirms a replacement for Justice Scalia.

Q: Why is this viewed as a success for tribal sovereignty and tribal governmental authority?

A: Thursday’s Supreme Court ruling served as a significant win in the fight for native tribal court authority. The Supreme Court tie affirms native groups’ right to self-determination. This allows federally recognized tribes to continue developing their own governmental bodies.

 

Roth: Justice Antonin Scalia and the Clean Power Plan

By Jim Roth, Director and Chair of the Firm’s Clean Energy Practice Group. This column was originally published in The Journal Record on February 22, 2016.


Jim Roth is a Director and Chair of the firm’s Clean Energy Practice.

Jim Roth is a Director and Chair of the firm’s Clean Energy Practice.

Justice Antonin Scalia and the Clean Power Plan

U.S. Supreme Court Justice Antonin Scalia’s sudden death at the age of 79 leaves a vacancy on our nation’s highest court larger than one single person. In fact, it probably leaves a vacancy the size of many people, as the justice’s 29-year tenure certainly suggests.

English philosopher John Stuart Mill, a political economist, feminist and civil servant in the 19th century, probably wouldn’t have agreed much with our late Justice Scalia, but one of his quotes seems a foreshadow of the impact of just such a man:

“One person with a belief is equal to a force of ninety-nine who have only interests.”

Justice Scalia certainly was a man of firm beliefs. He has long been described as the “intellectual anchor for the originalist and textualist position” of the U.S. Supreme Court’s conservative wing. It was Scalia’s consistent belief that the U.S. Constitution provided clear lines of separation among the three branches of government: legislative, executive and judicial.

This rigidity was evident in his approach to three decades of opinions, including those cases involving America’s energy and environmental issues.

Just this month, Scalia joined the majority in an unusual move to grant a judicial stay on the regulatory efforts of the U.S. Environmental Protection Agency and its Clean Power Plan, which prior to the stay seemed on its own path for review on the merits at the D.C. Circuit Court level, then likely headed to the Supreme Court for review.

However, the SCOTUS stay halts states’ implementation of the final rule requiring states to develop plans to limit carbon emissions from the power sector in the coming years, with a deadline of September.

Now the fate of the Clean Power Plan, albeit delayed in time, is likely going to land in the hands of a different Supreme Court in the coming years. The issues being debated in the Clean Power Plan case – EPA authority, congressional actions within the Clean Air Act, states’ rights, citizens’ health and environmental protections – will be an early test for a new, possibly rebalanced SCOTUS.

In most every opportunity, Scalia strongly opposed the idea of a living Constitution, the notion that the judiciary can revisit the meaning of constitutional provisions in applying the facts of modern times. He believed instead that those laws must be viewed in their historical context, as they would have been understood at the time they were drafted.

Only time will tell if his viewpoints, beliefs and work-product legacy will receive the same frozen-in-time approach, or whether his beliefs live beyond the life of the believer.

Jim Roth, a former Oklahoma corporation commissioner, is an attorney with Phillips Murrah PC in Oklahoma City, where his practice focuses on clean, green energy for Oklahoma.

Bankruptcy issues from the creditor perspective

Gavel to Gavel appears in The Journal Record. This column was originally published in The Journal Record on July 16, 2015.


Gretchen M. Latham’s practice focuses on representing creditors in foreclosure, bankruptcy, collection and replevin cases.

Gretchen M. Latham’s practice focuses on representing creditors in foreclosure, bankruptcy, collection and replevin cases.

By Phillips Murrah attorney, Gretchen Latham

During a bankruptcy case, we often hear about the debtor perspective. Whether due to unfavorable market conditions or poor planning, the result is financial hardship that inhibits a borrower from completing a loan agreement.

On the other side is the creditor, a lender that supplied funding and would like to recover as much of the investment as possible. Legal issues from the creditor perspective differ from that of the debtor. Some typical creditor-related issues include:

Standing to lift a stay

When a bankruptcy is filed, the debtor gets the benefit of an automatic stay preventing collections activities by the creditor. To enforce a security interest, the creditor can request to lift the stay.

More frequently, given recent rulings by the Oklahoma Supreme Court in foreclosure matters, debtors challenge the creditor’s right to even enforce the security interest. Thus, the result is the debtor seeks the stay to remain in place. Creative debtor attorneys are now making an attempt to use the state Supreme Court’s reasoning in bankruptcy court as well.

Timely execution of the statement of intention

There is some case law holding when debtors fail to timely perform their stated intent, the stay is lifted. When this happens, it is appropriate for a lender to file for relief from the stay and cite these cases as legal authority for the request.

Appropriate value for vehicles in a Chapter 13

A Chapter 13 “reorganizes” debt and allows the debtor to make one monthly payment to a trustee, who then disburses payment to the creditors. When a vehicle loan is involved, lenders are seeing frequent attempts to cram down the vehicle’s value in order to pay less. A savvy creditor will know how and when to object to this type of plan treatment.

Adequate protection payments in a Chapter 13

Often, it takes months for a Chapter 13 plan to confirm. For the creditor, this presents the problem of not receiving payment on their loan for a significant amount of time. The remedy is to seek an order of adequate protection, which will direct the trustee to make a pro rata payment to the creditor pending confirmation of the plan.

King v. Burwell: U.S. Supreme Court Decision Upholds ACA Tax Credits

By Mary Holloway Richard, JD, MPH

Mary Richard is recognized as one of pioneers in health care law in Oklahoma. She has represented institutional and non-institutional providers of health services, as well as patients and their families. She also has significant experience in representing providers in regulatory matters.

Mary Richard is recognized as one of pioneers in health care law in Oklahoma. She has represented institutional and non-institutional providers of health services, as well as patients and their families. She also has significant experience in representing providers in regulatory matters.

On Thursday, June 25, 2015, the United States Supreme Court issued its long-awaited opinion in King et al. v. Burwell, Secretary of Health and Human Services, et al. .[i]  The decision came the week before many of the nation’s foremost health care attorneys met in Washington, D.C. to share information, meet with regulators and network in the interests of their clients.  As you might imagine there was significant discussion about the impact of the decision both in the contexts of formal presentations and hallway conversations.

The decision in this case was considered by some attorneys and commentators to hold the key to the future of the Affordable Care Act (ACA).[ii]   In the King case the ACA’s premium tax credits, as applied to federally financed plans, were challenged.  The premium tax credits worked to reduce the premium amounts for nearly 90% of all persons who have purchased health insurance through the state health insurance marketplace, known as a “health insurance exchange,” which provides consumers the opportunity to compare prices and plans.

The Supreme Court’s 6-3 decision held that the premium tax credits at issue would continue to be available in the dozen or so state-sponsored exchanges as well as in the more than thirty states with federally sponsored exchanges operated by the federal government.  The Court applied familiar theories of statutory interpretation to interpret the both the meaning of the statute and the intent of Congress to make premium tax credits available to individuals enrolled in insurance plans through both state- and federally-operated exchanges.  The Court chose not to defer the interpretation to the federal agency responsible for enforcing the tax credit, the Internal Revenue Service.  This is significant because it effectively forecloses the opportunity for any future administration to alter the interpretation to restrict the premium tax credits to the state-operated exchanges.

The challengers to the ACA language argued that, read literally, the specific ACA language at issue limits premium tax credits to state-operated exchanges only.  Justice Scalia’s twenty-one page dissent was described as scathing by many of us who made presentations at AHLA last week.  Justice Scalia wrote that “[w]ords no longer have meaning if an Exchange that is not established by a State is ‘established by the State.’”[iii]  He also wrote in his dissent, “Perhaps sensing the dismal failure of its efforts to show that ’established by the State’ means ‘established by the State or the Federal Government,’ the Court tries to palm off the pertinent statutory phrase as ‘inartful drafting.’ This Court, however, has no free-floating power to ‘rescue Congress from its drafting errors.’”[iv]

Oklahoma is the site of a federal marketplace where, had the decision come down for the challengers, more than 87,000 persons would have been at risk for losing tax credits, and the state was at risk of losing over $18,000.00 in revenue, according to the Kaiser Family Foundation.[v]  The average tax credit per Oklahoma enrollee is $209.00, and, without the tax credit, there would have been an estimated 243% increase in the average premium.

At least while President Obama is still in office, the Court’s decision in King v. Burwell means that the threats to the ACA will mostly disappear.  The national uninsurance rate is likely to continue to fall because the ACA incentives—the ACA requires individuals to buy health insurance or face a penalty on their taxes and helps them afford health insurance through the premium tax credits. Fewer uninsured presumably also means health care providers will have less uncompensated care.

In the nation and in Oklahoma, we will continue, at least during this administration, generally to see a decreasing uninsured population and less uncompensated care for providers.  However, all of this is in the context of complex, increased regulation such as the proposed regulations for both Medicare and Medicaid that were indirectly and directly respectively spawned by the ACA.  The King decision, so long-awaited, appears to have deflated the opponents to the ACA for the time being.  The Court’s decision also means that the next Presidential and congressional elections may be critical to the fate of the ACA as changes now would only be placed in motion by Congress.



[i]
 576 U.S. ____  (2015), No. 14-114, slip op (June 25, 2015).

[ii] The Patient Protection and Affordable Care Act, 42 U.S.C. §18001 et seq. (2010).

[iii] 567 U.S. at ___-___ (principal opinion) (slip op. dissent, at 2.

[iv] Id. at 17.

[v] Kff.org/interactive/king-v-burwell-effects/

Tort reform shows how Oklahoma product liability law evolves

This Gavel to Gavel guest column, originally published in The Journal Record on June 4, 2015, contains insights by Phillips Murrah attorney Cody Cooper concerning Oklahoma Product Liability Law. Cody Cooper contributed to “An Overview of Oklahoma Product Liability Law,” co-authored by Phillips Murrah Directors Tom Wolfe and Lyndon Whitmire for the April 2015 edition of the Oklahoma Bar Journal.
View Cody Cooper’s attorney profile here.


Cody J. Cooper is an associate attorney with Phillips Murrah whose practice is concentrated in commercial litigation, product liability, and intellectual property.

Cody J. Cooper is an attorney with Phillips Murrah whose practice is concentrated in commercial litigation, product liability, and intellectual property.

Exploding gas cans, scolding-hot coffee, misfiring rifles, popping exercise balls and sticking gas pedals. What do these things have in common? Each of these products was the center of some of the most memorable product liability lawsuits.

Since Kirkland v. General Motors, the Oklahoma Supreme Court has recognized product liability claims and the law has continued to grow and evolve.

For simplicity’s sake, law develops primarily in two ways: the Oklahoma Legislature enacts statutes and case law is developed from courts’ opinions applying those statutes.

The Oklahoma Legislature creates the statutes by which claims and parties are governed and this has an obvious, direct impact in Oklahoma product liability actions.

Oklahoma courts then interpret these statutes and apply them in product liability lawsuits. The courts’ decisions provide guiding authority on issues and allow parties to understand how laws will be applied in the future.

Both play critical roles, but can lead to conflict over how the law will ultimately operate. Such is the case currently with tort reform. In the past few years, wide-ranging legislative changes have caused conflict and consternation at the Capitol and in the courtroom.

Tort reform statutes have had widespread implications in product liability lawsuits, including caps on potential recoverable damages, providing substantial protection for product sellers, requiring plaintiffs to provide medical records, and shielding manufacturers from claims regarding inherently unsafe products.

In 2009, the Oklahoma Legislature passed House Bill 2818 (the 2009 Act), followed by a 2011 statute amending many parts of the 2009 Act. In 2013, several individual cases held tort reform unconstitutional, which led to the Oklahoma Supreme Court striking the entire act as being unconstitutional for violation of the single-subject rule that requires that laws only address a single subject – to prevent logrolling. Later that year, the Oklahoma Legislature through a special session, modified and revived many of the laws struck down by the Oklahoma Supreme Court and enacted new ones.

The clash between legislators and Oklahoma courts make it difficult for parties to understand what the future holds for product liability law in Oklahoma. The only certainty is that the law will continue to evolve.