Orange County Employment Lawyers Blog
Several months ago, the U.S. Supreme Court handed down a ruling specifying that federal courts could not make up procedural rules that favored arbitration by requiring plaintiffs to prove they were prejudiced (adversely impacted) by a defendant’s decision to compel arbitration after participating in litigation. In other words, as our Los Angeles employment lawyers can explain, companies being sued by a former worker for some employment-related wrongdoing cannot participate in litigation for several months and then turn around and try to move the case to arbitration. In the 9-0 ruling of Morgan v. Sundance, the SCOTUS held that an employer that delays the right to compel arbitration essentially forgoes it. 
Now, a California employment lawsuit will be the first test that in a federal appeals court – specifically, the U.S. Court of Appeals for the Ninth Circuit in Armstrong v. Michaels Stores.
In Morgan v. Sundance, the justices overturned a ruling allowing a fast food franchise owner to push an employee’s wage and hour lawsuit into arbitration, despite having participated in litigation for eight months. Now, in the case of Armstrong v. Michaels, the Ninth Circuit is slated to decide whether a federal judge in San Francisco erroneously sent a California wage and hour lawsuit against her craft store employer into arbitration after both parties had engaged in 10 months of litigation.
Our Los Angeles employment lawyers know this case is being carefully watched because it is the first federal appeals court to consider the extent to which the Sundance decision limits companies’ ability to move lawsuits out of open court and into the private arbitration process.
The plaintiff argues that the Sundance ruling substantially alters the legal landscape in cases like these, directly impacting the circumstances under which companies effectively waive their right to arbitrate. The company had the ability to force arbitration early on in the case, but chose not to. The company then participated for nearly a year in litigation before flipping the script and demanding arbitration. She said the company’s delay did prejudice her by causing her to incur costs she otherwise would not have. Further, sending the case to arbitration at this juncture, she said, would force her to relitigate several issues on which she’d already been successful in court. (This, she opined, may have been the main reason the company was pushing for arbitration only now.) Continue Reading ›