When you're facing a class action lawsuit, don't initiate—just arbitrate

Some 151 individuals in a Fair Labor Standards Act (FLSA) collective action against Francesca's Holdings Corp. must arbitrate their wage and hour claims, the U.S. District Court for the District of New Jersey recently ruled.

Facts

The individuals in the FLSA collective action entered into arbitration agreements at varying points in time:

• Some signed the agreements before the litigation began;
• Others were presented with and signed the agreements during the pendency of the litigation; and
• Moreover, after the litigation started, Francesca's presented all new hires with an arbitration agreement covering wage and hour claims.

No improper contact with class members found

The district court ruled the arbitration agreements were enforceable in all three circumstances. With respect to the agreements presented to Francesca's existing employees after the litigation began, the court rejected their arguments that the outreach amounted to improper contact with putative (or likely or supposed) class members.

The court concluded employers may present arbitration agreements to existing employees, even if a wage and hour case has commenced, as long as the communications aren't "abusive" or don't "undermine or contradict the court's own notice to prospective plaintiffs." Because Francesca's presented the arbitration agreements to the employees before conditional class certification was granted, the court found the communications to be permissible.