Public Justice is working to defeat unconscionable arbitration clauses
In 2022, Bo Avery and his co-workers filed a class action for wage theft against their employer, TEKsystems, which had misclassified them as exempt from overtime wage and hour laws so that the company could underpay them.
After the workers’ lawsuit was well underway, TEKsystems imposed a new agreement on employees requiring them to give up their right to go to court. Instead, they would have to use a private arbitrator to resolve any job-related claims. And instead of joining together as a class, they would have to do it alone, one claim at a time. TEKsystems sent these terms near the end of 2023, and those who stayed employed on January 1 were considered to have accepted the arbitration agreement — meaning employees had no option to negotiate or decline the agreement and still keep their jobs.
Because courts generally frown upon an employer using its power over workers to take away their right to go to court in the middle of their lawsuit against the employer, TEKsystems also sent an email to the employees who were part of the overtime wage and hour class action suit, giving them a chance to opt out of the updated arbitration agreements for the limited purpose of remaining part of the pending case. But this was just an empty gesture of fairness because nearly all of them hadn’t heard about the class action and didn’t understand the immediate impacts of the choice. Almost none of them chose to opt-out, which TEKsystems had been counting on.
We convinced the court to regulate corporations’ misleading tactics
A district court initially allowed TEKsystems to retroactively use the fine print in the updated agreement to get the case out of court. Then Public Justice took on the workers’ case. The issue at the center of the appeal was whether the district court had the authority under the Federal Rules of Civil Procedure Rule 23(d) to refuse to enforce the individual arbitration agreements TEKsystems rolled out during the pending litigation.
Public Justice convinced the Ninth Circuit to find that district courts can — and in fact have a duty to — regulate corporations’ use of coercive and misleading tactics when they roll out arbitration agreements in the middle of cases in an attempt to block access to the courts and to justice. Prior to our win, the Ninth Circuit had never held that courts could invalidate arbitration agreements under Rule 23(d), and there were few, if any, examples of federal rules or statutes being used to invalidate arbitration agreements under the FAA’s savings clause.
Together, we will stop wage theft, hold corporations accountable, and ensure everyone has their day in court.