Regulations

Empire CLS Prevails In Chauffeur Wage Class-Action Lawsuit

Posted on June 29, 2011

LOS ANGELES — In a precedent-setting victory for chauffeured transportation operators nationwide, a judge dismissed a class-action wage lawsuit this month filed against Empire CLS Worldwide Chauffeured Services, LCT has learned.

The case, which lasted almost five years, absolves Norwood, N.J.-based Empire CLS from having to pay any back compensation for hundreds of chauffeurs. Iskanian v. CLS Transportation Los Angeles LLC was heard in Los Angeles County Superior Court and dismissed on Monday, June 13.

The number of wage- and overtime-related legal actions against operators has increased in the last five years due to several factors, most notably: 1) The aggressive tactics of trial lawyers trolling for alleged labor violations linked to class actions; 2) Federal and government regulators acting upon stricter labor/wage laws to pursue businesses that use independent contractors.  

After the verdict, LCT interviewed Rod Rave, the Los-Angeles-based executive vice president of global operations for Empire CLS. Here are his answers to online questions submitted ahead of time:

When was the lawsuit filed?  
On August 4, 2006. The plaintiff filed a class action alleging that Empire/CLS violated various wage and hour laws.  

How many chauffeurs were represented?
The individual plaintiff sought to represent a class of about 400 employees; three years later, the class was certified with about 200 chauffeurs.

What compensation/damages were being sought?

The class was potentially seeking millions of dollars for alleged violation of meal and rest periods, among other things.

What was the judge’s final ruling and reasoning?

On June 13, 2011, the judge dismissed the class claims and compelled the named plaintiff to arbitrate his individual claims on the grounds that the named plaintiff had waived his right to file a class action when, during his employment with Empire/CLS, he signed an arbitration agreement containing a class action waiver. The judge relied on the recent California Supreme Court decision in AT&T Mobility v. Conception, which held that class action waivers in arbitration agreements are enforceable.

What are some of the big lessons in wage compensation and structure for operators from this lawsuit?

The takeaway is that class action waivers in employment arbitration agreements are enforceable under the AT&T case.
 
How does this victory help the chauffeured transportation industry?
Limousine and transportation companies need to implement and enforce arbitration agreements containing class action waivers to protect themselves from costly wage and hour litigation in state and federal courts. The arbitration policy can be a stand-alone policy, or a policy within a company's employee handbook. The employee, however, must sign an acknowledgment form acknowledging that he or she agrees to arbitrate all claims (and waives the right to file a representative or class action) arising out of the course of his or her employment.

—   Martin Romjue, LCT editor

Legal Background On Class Action Dismissal of EmpireCLS Case:
Empire/CLS was represented by lawyers David Faustman and Yesenia Gallegos of Fox Rothschild, who argued that a recent Supreme Court case dictated that the lawsuit against Empire/CLS be dismissed.  

In AT&T Mobility v. Concepcion, the U.S. Supreme Court held that a class action waiver in an arbitration agreement is enforceable in the consumer context, and ruled that, as a matter of pre-emptive federal law, arbitration agreements must be enforced “according to their terms.” The case overruled a case decided by the California state Supreme Court, Discover Bank v. Superior Court (2005), which held that a similar arbitration provision was “unconscionable” and unenforceable. Other California cases that relied on Discover Bank have likely also been overruled.

In another case, Gentry v. Superior Court (2007), the California Supreme Court effectively held that class action waivers in the employment context were not enforceable based on the Discover Bank case. The Court in Gentry held that agreements that prohibited class wide arbitration are “unconscionable under California law.” But now, the U.S. Supreme Court has overruled Discover Bank, on which Gentry explicitly relied. Gentry has therefore been implicitly reversed. Given the decision in the AT&T Mobility case, a court will now be hard pressed to deny the enforceability of class action waivers in the employment context. The Judge in Iskanian v. Empire/CLS agreed with this argument and dismissed the class action.

Source: Rod Rave, Empire CLS

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