JPMorgan Appeals Arbitration Denial in Overtime Class Action Lawsuit

JPMorgan Appeals Arbitration Denial in Overtime Class Action Lawsuit

By John Curran

Financial services firm JPMorgan Chase is appealing a decision by a lower court judge to deny arbitration in an overtime dispute involving California appraisers. If successful, Chase appraisers would have to resolve claims of overtime pay violations on an individual basis rather than pursue legal remedy as a group.

The appeal was filed on Nov. 27 with the Ninth Circuit Court of Appeals, and while the company did not have to explain why it did so, the facts reviewed by U.S. District Court Judge Josephine L. Staton in their motion to compel arbitration on an individual basis may offer some clues. In her decision to deny the motion, she noted that JPMorgan Chase had cited Stolt-Nielsen S.A. v. AnimalFeeds International Corp., a decision which she decided “concerns only how to decide [emphasis original] whether an arbitration agreement authorizes class arbitration[.]”

She found an earlier case more compelling, noting that in Green Tree Financial Corp v. Bazzle, the U.S. Supreme Court had decided that decisions on classwide arbitration “properly lay in the first instance with an arbitrator[.]” Although the justices heard a number of cases regarding arbitration and class action lawsuits including Oxford Health Plans LLC v. Sutter, the Court did not decide whether choosing between classwide and individual arbitration was a question for the courts or the arbitrators.

In that case, Staton found Bazzle was compelling given the lack of more recent precedent regarding these questions of how proceedings should continue, and those do not reflect judicial procedures or statutes at the state or federal level. Considering the extensive powers already assigned to arbitrators as well as the binding nature of their decisions in other aspects of contract disputes, the judge decided that whether or not to handle these cases on an individual or group basis should naturally rest with those who already handle significant questions of fact.

The decision to deny arbitration in the Chase overtime class action lawsuit also cited a decision by the Third Circuit Court of Appeals that similarly used Bazzle, even after the Stolt-Nielsen case had been settled, with that ruling noting that the “contested waiver provision solely affects the type of procedural arbitration mechanism [emphasis original] applicable to this dispute.”

The lack of clarity from the Supreme Court about who is responsible for determining the resolution of disputes has led to problems in various lower venues, although in the majority of instances, judges have moved toward arbitration where possible. The Ninth Circuit Court of Appeals will decide whether or not to hear the appeal of the employment arbitration lawsuit in the next several weeks.

The JPMorgan Chase Overtime Class Action Lawsuit is Kenneth J. Lee, et al. v. JPMorgan Chase & Co., et al., Case No. 13-cv-511, U.S. District Court, Central District of California.

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