One of the few “get out of arbitration free” cards that the U.S. Supreme Court offers litigants is this: Find another federal statute with a “contrary congressional command” that clearly entitles plaintiff(s) to a court trial. In a recent Eighth Circuit case, that court carefully considered, and then rejected, the argument that the Age Discrimination in Employment Act (ADEA) constituted that type of “get out of arbitration free” statute.
The most recent Supreme Court decision on this topic is from 2012. It found that language in the Credit Repair Organizations Act (CROA) giving consumers a “right to sue” does not preclude the arbitration of consumer suits alleging violations of that act. CompuCredit Corp. v. Greenwood, 132 S. Ct. 665 (2012). The majority opinion held out as a model of “clarity” a statute (7 U.S.C. §26(n)(2)) that provides “no predispute arbitration agreement shall be valid or enforceable, if the agreement requires arbitration of a dispute arising under this section.” In her concurring opinion, however, Justice Sotomayor writes “I do not understand the majority opinion to hold that Congress must speak so explicitly in order to convey its intent to preclude arbitration of statutory claims.” In the dissent, Justice Ginsburg reminds her colleagues that under current precedent, Congress “need not employ ‘magic words'” to override the Federal Arbitration Act.
It is against that backdrop that the Eighth Circuit recently addressed language in the ADEA, as amended by the Older Workers Benefit Protection Act. The claims in McLeod v. General Mills, Inc., 2017 WL 1363797 (8th Cir. Apr. 14, 2017), stem from a 2012 reduction in force at General Mills. In exchange for severance packages, terminated employees released the company from claims relating to their termination, and agreed to individual arbitration of future disputes. In McLeod, 33 of those employees sued the company alleging violations of the ADEA, and seeking a declaratory judgment that their releases were not “knowing and voluntary” (and therefore ineffective under the ADEA). In response, the company moved to compel arbitration on an individual basis.
The chief judge of the District of Minnesota denied General Mills’ motion. He found that the plain language of the statute at issue “requires General Mills to defend the validity of the plaintiffs’ release agreements in court, not in an arbitral forum.” The statute reads: “any dispute that may arise over whether any of the requirements, conditions, and circumstances set forth in [section 626(f)(1) ] have been met, the party asserting the validity of a waiver shall have the burden of proving in a court of competent jurisdiction that a waiver was knowing and voluntary.” 29 U.S.C. § 626(f)(3) (emphasis added).
On appeal, the Eighth Circuit reversed. It found that the statute relied on by the district court was not applicable, because General Mills was not asserting the validity of a waiver within the meaning of that statute. The appellate court distinguished between a waiver of substantive ADEA rights, referred to in the statute, from a waiver of a jury trial on those claims, which it found was not addressed in the statute. Further, the Eighth Circuit concluded that the ADEA does not grant employees the substantive right to a jury trial or to a class action, but only provides procedural rights that can be waived.
Liz Kramer is a partner with Stinson Leonard Street in Minneapolis Minnesota.