Melena v. Anheuser-Busch — Class Action Defense Issues

Employment Arbitration Agreement Under FAA (Federal Arbitration Act) Enforceable By Employer Illinois Supreme Court Holds

As discussed in a separate article, Circuit Courts of Appeal and state courts do not agree on the enforceability of arbitration agreements in employment contracts. This issue may be of critical importance in the defense of class actions, because a class action waiver in an employment arbitration agreement cannot possible be enforceable if the court would refuse to enforce the arbitral forum even without a class action restriction. On March 23, 2006, in an opinion that should have direct and positive impact in the defense of class action waivers in arbitration agreements in the state, the Illinois Supreme Court cast its vote on the issue, holding that under the FAA (Federal Arbitration Act, 9 U.S.C. § 1 et seq. (1994)), employment arbitration agreements are enforceable under “principles of fundamental contract law because we believe that approach is more faithful to the FAA.” Melena v. Anheuser-Busch, Inc., 847 N.E.2d 99, 107 (Ill. 2006).

In Melena, Anheuser-Busch hired plaintiff in February 1999. One year later, it mailed to employees a letter announcing a new “Dispute Resolution Program” that included a requirement for arbitration under the FAA. Employees were informed that “’by continuing or accepting an offer of employment’ with Anheuser-Busch, all employees to whom the policy was applicable ‘agree as a condition of employment to submit all covered claims to the dispute resolution program.’” 847 N.E.2d at 101. Plaintiff was injured in September 2002, and fired in March 2003. She filed suit against Anheuser-Busch in state court in May 2003. ANHEUSER-BUSCH moved to compel arbitration, but the trial court denied the motion without explanation. The appellate court affirmed, concluding that “’even if the plaintiff entered into the agreement knowingly, she did not do so voluntarily,’” and expressing doubt “about whether an agreement to arbitrate, offered as a condition of employment, ‘is ever voluntary.’” Id., at 102 (quoting appellate court opinion).

The Illinois Supreme Court reversed, holding: “In our view, the FAA’s plain language makes clear that arbitration agreements are enforceable except for state-law grounds for ordinary contract revocation.” 847 N.E.2d at 107 (italics added, citations omitted). Importantly, the Illinois Supreme Court did not make any distinction between arbitration agreements in an employment context or in a commercial setting, and did not suggest that a class action waiver provision would be interpreted under different contract principles.

Arbitration Class Action Court Decisions Class Actions In The News Employment Law Class Actions Uncategorized

Class Action Defense Cases–Buckeye Check Cashing v. Cardegna

Arbitration Agreements: Who Decides Legality of Arbitration Clause? On February 21, 2006, the United States Supreme Court addressed “whether a court or an arbitrator should consider the claim that a contract containing an arbitration provision is void for illegality.” Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. ___, 126 S.Ct. 1204, 1207 (2006). Plaintiffs filed a putative class action alleging that the interest rates in various deferred-payment transactions with Buckeye Check Cashing “in which they received cash in exchange for a personal check in the amount of the cash plus a finance charge” were usurious.

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California Class Action Cases–Supreme Court To Review Gentry v. Superior Court Which Enforced Class Action Waiver In Arbitration Clause

California Supreme Court Grants Review in Gentry Case In a prior article, we discussed the California appellate court opinion enforcing a pre-employment arbitration agreement containing a class action waiver. Gentry v. Superior Court, 135 Cal.App.4th944 (Cal.App. 2006). On April 26, 2006, the California Supreme Court granted review of Gentry. Under California law, the decision cannot be cited during the pendency of the appeal.

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California Class Action Defense Cases–Gentry v. Superior Court: Class Action Waiver In Employment Contract’s Arbitration Provision Held Enforceable

California Court Upholds Arbitration Clause With Class Action Waiver In Employment Agreement On January 19, 2006, the California Court of Appeal for the Second District, Division 5, addressed “the enforceability of a pre-employment arbitration agreement containing a class action waiver.” Gentry v. Superior Court, 135 Cal.App.4th944, 37 Cal.Rptr.3d 790, 791 (Cal.App. 2006). In 1995, while employed by Circuit City, Gentry received an “Associate Issue Resolution Package” and a copy of the company’s “Dispute Resolution Rules and Procedures” setting forth various procedures for resolving employment-related disputes.

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