NEWS The U.S. Supreme Court’s Recent Concepcion Decision Regarding Class Action Waivers, and What it Means for Employers. The AT & T Mobility, LLC v. Concepcion Decision On April 27, 2011, the U. S. Supreme Court held, in a 5-4 decision written by Justice Anton Scalia, that a consumer arbitration agreement that precluded class action arbitrations was enforceable. The arbitration provision that the Court addressed was set forth in a cell phone contract between the Concepcions and AT & T. The provision provided for arbitration of all disputes, and prohibited classwide arbitration. The Concepcions brought a class action against AT & T based on their contention that AT & T advertised free cell phones but then charged Concepcions and others sales tax on the phones. As part of its response, AT & T sought to force the Concepcions to arbitrate only their claim and to prevent the class arbitration from proceeding. AT & T lost its argument in California state courts and at the Ninth Circuit Court of Appeals, which ruled that the provision prohibiting class arbitrations was unenforceable pursuant to the California Supreme Court’s 2005 ruling in Discover Bank v. Superior Court. The “Discover Bank rule” provided that under California law, arbitration provisions prohibiting class actions are generally “unconscionable and shall not be enforced.” But the U.S. Supreme Court reversed the Ninth Circuit and found that the provision in the cell phone contract was enforceable pursuant to the Federal Arbitration Act (“FAA”). The Court noted that the FAA’s purpose is to “ensure that private arbitration agreements are enforced according to their terms,” and ruled that because the Discover Bank rule “stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress, [it] is preempted by the FAA.” The Court held that the arbitration provision prohibiting classwide arbitration was therefore enforceable, and that AT & T was able to require Concepcions to pursue only their individual claims and not those of the class. The Eighth Circuit Applies Concepcion to Minnesota Law On September 6, 2011, the Eighth Circuit Court of Appeals followed Concepcion and held that a class action waiver in an arbitration provision in a franchise agreement was enforceable. In Green v. SuperShuttle International, Inc., Green had brought a class action and argued that he and the other plaintiff drivers, who had signed franchise agreements with SuperShuttle, were actually misclassified employees rather than franchisees. Green argued that as employees, he and the other drivers were entitled to wages and damages under Minnesota’s Fair Labor Standards Act (“MFLSA”). The franchise agreement between Green and SuperShuttle contained an arbitration provision with a class action waiver. Green argued that the class action waiver in the franchise agreement was unconscionable and therefore unenforceable under Minnesota law. The Eighth Circuit rejected that argument and affirmed the district court’s grant of SuperShuttle’s motion to compel arbitration and its enforcement of the class action waiver. The court specifically found that Green’s argument that the class action waiver violated Minnesota law “suffers from the same flaw as the state-law-based challenge in Concepcion – it is preempted by the FAA.” What Concepcion Means for Employers Although Concepcion dealt with an arbitration provision in a consumer contract, Green applied Concepcion to a provision in a franchise agreement where the underlying claims were employment-related – plaintiffs had asserted a wage claim under the MFLSA. Green also held that any challenges to the class action waivers could not be based on Minnesota law because the FAA preempts Minnesota law on that issue. Accordingly, the Concepcion holding and rationale appears equally applicable to class action waivers in arbitration provisions in employment contracts. Concepcion could therefore allow employers to effectively prevent future class actions from proceeding against them by including arbitration provisions with class and collective action waivers in their employment contracts (employees could still pursue their individual claims). For employers that already have arbitration provisions in their employment agreements, they should ask an attorney to review the arbitration provisions and determine if and how to add the class action waivers. For employers that don’t have arbitration provisions in their employment contracts, they should explore with an attorney whether arbitration provisions with the waivers should be added. In every instance, employers should consult with an employment attorney to discuss the options made available to them by these recent decisions. Steven Weintraut provides employment counsel and advice on issues relating to employment agreements, non-compete agreements, severance agreements, leave and wage issues, discrimination and harassment, hiring practices and decisions, and disciplinary actions and terminations. He also handles employment litigation involving those issues and other employment-related matters, and regularly defends employers against allegations by current and former employees set forth in demands for severance, administrative charges of discrimination, arbitration proceedings, and lawsuits. Steven can be reached at 612-337-6124 or stevenweintraut@siegelbrill.com. Siegel Brill attorneys Obtain favorable ruling from the Minnesota Supreme Court for their developer client Siegel Brill attorneys Tony Gleekel and Wm. Christopher Penwell represented Wensmann Realty, Inc. and Rahn Family Limited Partnership in a case in which the Minnesota Supreme Court recently issued a decision favorable to Wensmann and Rahn.  The Minnesota Supreme Court ruled that if a landowner is denied any reasonable use of a property by a City’s denial of a requested amendment to the City’s Comprehensive Plan, that the landowner is entitled to just compensation for that taking of the property.  The Supreme Court decision allows Wensmann and Rahn to continue to pursue their claim against the City of Eagan for just compensation for the Carriage Hills golf course property in Eagan, MN. Rahn owned and operated Carriage Hills golf course in Eagan, MN, from 1996 to 2004. Due to substantial operating losses for the golf course in its last several years, Rahn agreed to sell the property to Wensmann, an Eagan-based residential developer. The purchase agreement was contingent on the City of Eagan’s approval of a change in the City’s Comprehensive Plan to allow low density residential development of the property. When the City denied Wensmann’s and Rahn’s requested amendment based on neighborhood opposition and a desire to preserve the property as a golf course, Siegel Brill commenced the action against the City on behalf of Wensmann and Rahn, and asserted a takings claim. In its July 12, 2007 decision, the Minnesota Supreme Court reversed the Minnesota Court of Appeals, and held that if the golf course is no longer an economically viable use of a property and if there is no other reasonable use of the property, the City’s refusal to change the comprehensive plan is a regulatory taking for which the property owner is entitled to just compensation. Lead trial counsel Wm. Christopher Penwell noted the importance of the decision for Wensmann, Rahn, and other property owners. “This is a very important decision for property owners whose long-standing use of their property has lost its economic viability,” Penwell said. “This decision gives notice to cities in Minnesota and around the country that the cost of preserving open space cannot be placed on the back of a single property owner without providing the property owner just compensation ” For further information, contact Wm. Christopher Penwell or Tony Gleekel