Iowa fast food worker’s lawsuit filed in U.S. Supreme Court

Clark Kaufman

The U.S. Supreme Court on Monday awarded a small but potentially significant victory to an Iowa fast food worker.

The court did not consider the main premise of Robin Morgan’s lawsuit – that the restaurant Taco Bell, where she worked, violated pay laws. The court, however, has resolved a procedural issue that could have serious consequences for American workers whose employers insist on arbitration to resolve disputes that would otherwise be considered in court.

Beginning around 2015, Morgan worked as a part-time employee at Taco Bell’s restaurant in Osceola, which owned a franchise called Sundance. By applying for the job, Morgan signed an agreement to arbitrate any labor disputes.

In 2018, she filed a nationwide class action lawsuit – a wage dispute procedure between several plaintiffs similar in nature to a class action lawsuit – against Sundance. She claimed the company violated federal laws regarding overtime by shifting some working hours to other pay periods to prevent employees from paying more than 40 hours in any week.

Initially, Sundance defended its actions in court as if there was no arbitration agreement. But after eight months of litigation, Sundance filed a motion to compel arbitration on the matter.

Morgan’s lawyers opposed the motion, arguing that Sundance waived his right to arbitration while continuing the trial. The district court judge agreed and rejected Sundance’s motion. The company filed an appeal, and eight district appellate courts overturned the district court’s decision by separate decision.

The Court of Appeal ruled that a party waives its right to arbitration only after fulfilling three criteria: the party was aware of its right; then acted inconsistently with that right; and then harmed the enemy through these inconsistent actions.

This third element, which requires the opposing party to be biased or disadvantaged, is not enshrined in law, but nine districts have previously found that the Federal Arbitration Act demonstrates a “strong federal policy in favor of arbitration” that requires such damages. to prove that the right to arbitration was denied.

The eighth U.S. District Court of Appeals, in effect, argued that because Morgan could not show that her lawsuit was damaged or damaged Sundance, who had waited so long to invoke the arbitration agreement as a defense, Sundance did not waive her right to insist on arbitration.

The U.S. Supreme Court ruled otherwise on Monday. Writing from the majority, Judge Elena Kagan said there was no such requirement to show bias to prove that the right to arbitration had been denied.

Noting that “waivers” meant actions aimed at “deliberate waiver or waiver of a known right,” Kagan noted that in other contexts, courts have rarely considered the harmful effects of such actions on the other side.

“Requiring this kind of evidence before recognizing the waiver of arbitration, the eighth district applies a rule that is nowhere to be found,” the opinion said. “The federal arbitration law policy that facilitates arbitration does not allow federal courts to invent special procedural rules that favor arbitration … Federal policy is to treat arbitration contracts like everyone else, not to facilitate arbitration.”

The effect of the court ruling is that the Eighth District Court of Appeal must again decide whether Sundance knowingly waived his right to arbitration.

This time, however, the court will consider only whether Sundance acted in violation of that right, not whether he harmed the plaintiff by acting inconsistently.

Morgan’s lawyer, Carl Gilbride of Public Justice, praised the court for his decision on Monday.

“We are pleased that the Supreme Court today in vague statements has declared that the Federal Arbitration Act does not support procedural rules established by judges who prefer arbitration to litigation or prefer arbitration agreements to other types of contracts,” the statement said.

“All Robin Morgan wants in this case is a fair salary from her former employer and a fair trial of her legal arguments in court, without a thumb on the scales, because those arguments involve arbitration. We hope that today’s decision will bring Ms. Morgan one step closer to a fair outcome in her dispute with Sundance, and we also hope that this will send a message to all corporations that include arbitration provisions in their contracts with workers and consumers that these arbitration provisions will to be treated in the same way as any other term in their contract – not worse, but not better.

Clark Kaufman is the deputy editor of Iowa Capital Dispatch, the home site of Pennsylvania Capital-Star, where the story first appeared.