Opposition Brief — Long John John Silver's Inc. Inc. v. Cole (No. 07-1370)

No. 07-1370

gun the

Supreme Court of the Anited States

LONG JOHN SILVER'S, INC.,

Petitioner,

Vv.

ERIN COLE, ET AL.,

Respondents.

On Petition for Writ of Certiorari to the United

States Court of Appeals for the Fourth Circuit

BRIEF IN OPPOSITION

M. Rerp Estes

Counsel of Record

DARRELL L. WEsT

Stewart, Estes & DONNELL, PLC

FiFTH THIRD CENTER, SUITE 1401

424 CHURCH STREET

NASHVILLE, TN 37219

(615) 244-6538

Attorneys for Respondents

August 27, 2008

Becker Gallagher - Cincinnati, OH - Washington, D.C. - 800.890.5001

i

QUESTION PRESENTED

The question presented in this case is whether the

Court should adopt a new, heightened standard of

judicial review under the Federal Arbitration Act,

applicable only to the arbitration of federal statutory

claims.

TABLE OF CONTENTS

RUPP LEQIN PRRSMIN IED 206 et eee ee i

I PT PEPER UET ED 6 te ete enone ii

Meee IP BUT EIORAIIISD . www ce cic eee iv

SA a ae 1

STATEMENT OF THE CASE ................ 4

REASONS FOR DENYING THE PETITION .... 7

I. The Petitioner Did Not Raise the Issue

Presented in the Petition in Either the District

Court or tne Pourtn Circuit. ............06: 7

II. The Fourth Circuit’s Decision Declining to

Upset the Arbitrator’s Class Determination

Award Does Not Conflict with any Decision of

this Court, including McMahon and Gilmer. . 11

A. Nothing in This Court’s McMahon or

Gilmer Decisions, or in Any More Recent

Pronouncements, Suggests the Need for

More Stringent Review of Arbitration

Award. Involving Federal Statutory

NE hat ka Ses. Nig 5c w Sco. a 10 RM Os 11

B. Petitioner’s Claim That the Fourth Circuit

Failed to Consider McMahon or Gilmer is

Not True, as the Decision Below Plainly

ee aig ae eS Wy ain eho ewe 18

ili

Il This Case Does Not Implicate any Genuine

ek rls eee et me eas 20

A. The Circuit Split Asserted by Petitioner

EP TUG GS iis o'e hee we de ee eee 20

B. Semantic Differences in Particular Courts’

Descriptions of Manifest Disregard Do Not

Establish a Certworthy Circuit Split. .... 26

IV. Even Assuming the Question Presented Were

Certworthy, This Would Not be an Appropriate

Case for Consideration of the Question. ..... 28

A. The Arbitrator’s Award and the Lower

Courts’ Decisions Not to Disturb that Award

are Fact- and Document-Specific. ....... 28

B. The Linchpin of LJS’s Petition — Its Claim

that the FLSA’s Written Consent

Requirement Constitutes a Substantive

Statutory Right Within the Meaning of

McMahon and Gilmer — Lacks any Legal

C. &venif Substantive Rights are Implicated by

the Section 16(b) Written Consent

Requirement, LJS has Adduced No Evidence

that Such Rights Were Not Effectively

Vindicated by the Opt-Out Class Procedures

Used in this Arbitration. .............. 36

CTP Sri vn ore os Ce ee ale wae eels 5 38

iv

TABLE OF AUTHORITIES

CASES

Anderson v. Montgomery Ward & Co.,

852 F.2d 1008 (7th Cir. 1988) .............

Atkins v. Labor Ready, Inc.,

303 F.3d 496 (ith Cir. Z00Z) .. 1.2 ce eee

Carter v. Countrywide Credit Indus., Inc.,

362 F.3d 294 (5th Cir. 2004) ........... 25, 34

Cole v. Burns Int'l Sec. Servs.,

105 F.3d 1465 (D.C. Cir. 1997) ... 21, 22, 24, 26

DiRussa v. Dean Witter Reynolds, Inc.,

Zi F Sa SIG (SG Gary TGS) oes 23

Gilmer v. Interstate/ Johnson Lane Corp.,

CAE Be AE i vie bas ee wes passim

Hall Street Assocs., L.L.C. v. Mattel, Inc.,

AZO &. CR. BOG I) ooo ais eee eee vs passim

Johnson v. Long John Silver’s Rests., Inc., —

320 F. Supp. 2d 656 (M.D. Tenn. 2005), affd on

appeal, 414 F.3d 583 (6th Cir. 2005) ...... 5, 30

Kergosien v. Ocean Energy, Inc.,

390 F.3d 346 (Sth Cir. 2004) ........... 25, 26

Kurke v. Oscar Gruss and Son, Inc.,

454 F.3d 350 (D.C. Cir. 2006) .......... 23, 24

Vv

LaPrade v. Kidder, Peabody & Co.,

246 F.3d 702 (D.C. Cir. 2001) .......... 22, 23

Long John Silver’s Rest., Inc.'v. Cole et al.,

409 F. Supp. 2d 682 (D.S.C. 2006) .......... 7

Long John Silver’s Rests., Inc. v. Cole, et al.,

514 F.3d 345 (4th Cir. 2008). 2... ee eee 7

Lorrilard v. Pons, 434 U.S. 575 (1978) ......... 33

Mitsubishi Motors Corp. v. Soler Chrysler-

Plymouth, Inc.,

473 US. 614 (1985) ............ 13, 14, 19, 37

Mountaineer Gas Co. v. Oil, Chem. & Atomic

Workers Iat’l Union, .

76 Fe Gare ete Cit. 1996) ..... 2s. oe ee. 9

Remmey v. Paine-Webber, Inc.,

Saw ee Bho Cee CAP. £904) . 2. ec wes 8

Shearson/American Express, Inc. v. McMahon,

ee ey AE os ok cae de ee webs passim

Sperling v. Hoffman-LaRoche, Inc.,

862 F.2d 439 (3d Cir. 1988), affd 493 U.S. 165

re re Vy aaa yi ca a gk 33

Wilko v. Swann,

We NP EMD nie ee ek a eee ba 27

Williams v. Cigna Fin. Advisors, Inc.,

197 F.3d 752 (5th Cir. 1999) ..... 21, 24, 25, 26

vi

Youcakim v. Miller,

IUD fc occ cc oes tleeen eeu

STATUTES

RI iS air ic hal a lig cy Seip ghey Gia de ow hone: dines 2

Federal Arbitration Act (FAA), Section 10,

NARA Oe eae oe wet passim

RS oS a NS ee a aw ange 16

Fair Labor Standards Act (FLSA), Section 16(b),

RE Do hia he be Hives oe owe passim

RULES

MR is os Fas) o's oo een wee mes 26

Os Oe OS 5 4.4 9 04:4, ie bio bw eee Pere hae 3

1

INTRODUCTION

Petitioner Long John Silver’s, Inc. (“LJS”) asks this

Court to grant certiorari to consider whether to adopt

an entirely new standard of review applicable to

arbitration awards rendered in cases involving federal

statutory claims, even though LJS asked neither the

district court nor the Fourth Circuit to utilize any

standard of review other than the one that has

prevailed in the Fourth Circuit for decades.

This Court recently reaffirmed its long-standing

commitment to the strong federal policy favoring

arbitration, and to the limited judicial review that is a

hallmark of that policy, in Hall Street Associates,

L.L.C. v. Mattel, Inc., 128 S. Ct. 1396 (2008). Despite

this Court’s restatement of the traditionally narrow

scope of judicial review of arbitration awards, LJS

petitions the Court to move in the directly opposite

direction by authorizing merits-based judicial review

of arbitration awards, in cases involving federal

statutory claims.

LJS claims that this Court’s decisions in

Shearson/American Express, Inc. v. McMahon, 482

U.S. 220 (1987) and Gilmer v. Interstate / Johnson Lane

Corp., 500 U.S. 20 (1991) justify the about-face, saying

that the two cases left questions unanswered

concerning the scope of judicial review the Court

intended to be applicable to arbitrations involving

federal statutory causes of action. Curiously, and in

virtually the same breath, LJS also asserts that

despite the alleged “absence of guidance by the

2

Court,” McMahon and Gilmer nevertheless gave “clear

instruction” and “admonition” to the federal trial and

appellate courts to employ a heightened standard of

review of awards involving statutory claims, up to and

including review for mere legal error, and that the

Fourth Circuit’s decision in this case ignored and

violated that purported mandate.

However, nothing in the McMahon or Gilmer

opinions supports a grant of certiorari to review the

Fourth Circuit’s decision in this case. McMahon and

Gilmer were “front-end” cases deciding whether

particular federal statutory claimants could be

compelled, pursuant to Section 3 of the Federal

Arbitration Act (“FAA”), 9 U.S.C. § 3, to resolve their

claims in arbitration pursuant to mandatory pre-

dispute arbitration agreements. In both cases, the

Court rejected the claimants’ challenges to the

adequacy of the arbitral forum, including challenges

based on the alleged insufficiency of judicial review of

arbitration awards. This Court held in both cases that

while the accepted scope of judicial review “necessarily

is limited, such review is sufficient to ensure that

arbitrators comply with the requirements of the

statute’ at issue.” Gilmer, 500 US. at 32, n. 4 (quoting

from McMahon, 484 U.S. at 232) (emphasis added).

The Fourth Circuit and the district court considered,

and carefully adhered to, the lessons of McMahon and

Gilmer.

' LJS Petition for Certiorari (“Pet.”), at 19.

2 Id. at 20.

3 Id. at 25.

3

LJS also attempts to conjure up a split among the

federal circuits concerning the appropriate standard of

review of arbitration awards concerning statutory

claims. The threshold fallacy in LJS's claim of a circuit

split is that, when the decisions of the Fifth and

District of Columbia Circuits relied on by LJS as

evidence of the circuit split are considered in light of

later decisions of those same circuits, the purported

conflict disappears. Moreover, language differences

urged by LJS as evidence of a circuit split do not really

appear in the various circuits’ articulations of the

governing scope of review, with respect to which there

is very little, if any, genuine disagreement. Instead,

those language differences emerge in the appellate

courts’ attempts to explain what constitutes “manifest

disregard of the law.”

Not only is the purported schism not real; it is also

not germane to any “important matter” within the

meaning of Supreme Court Rule 10(a) and related

jurisprudence, especially in view of the Court’s recent

Hall Street v. Mattel decision. The significance of the

historical language differences in articulating what

constitutes manifest disregard of the law has been

substantially minimized — and rendered much less

suitable for present certiorari review — by the Court’s

decision in Hall Street, including the Court’s express

holding that the Section 10 grounds are the exclusive

grounds for vacating an award under the FAA, and the

Court’s related suggestion that manifest disregard of

the law may not be a separate or additional ground for

vacating an award at all.

Finally, even if the issue presented were

certworthy, this case is not an appropriate one in

4

which to undertake such review. The decisions below

correctly recognized that the challenged arbitration

award was based primarily on the unique facts and

documents presented to the arbitrator, and that there

is serious doubt concerning the very existence of the

purported “substantive statutory right” that LJS

claims was violated by the arbitrator.

STATEMENT OF THE CASE

The arbitration giving rise to LJS’s most recent

round of judicial review was commenced in December

2003. The Respondents formerly worked as restaurant

general managers and/or assistant managers for LJS.

They initiated arbitration on behalf of themselves and

all similarly-situated LJS managers (the “Class”) to

recover overtime compensation the Class members

were owed, but were not paid, over a period of several

years during which Respondents claim LJS

misclassified the class members as exempt from the

overtime provisions of the Fair Labor Standards Act

(“FLSA”).

For forty-six of the fifty-two months that the

arbitration has been pending, the Class has been

embroiled in federal court actions — and a few

collateral state court actions — initiated by LJS to

vacate two_procedural awards rendered by the

arbitrator. LJS has either lost or abandoned every

round of such review with respect to both awards, but

persists even yet in its efforts to undo one aspect of the

second of the two challenged awards.

The substantive claims now asserted against LJS

in arbitration were first asserted in federal court. In

5

2001, Kevin Johnson filed a “collective action” lawsuit

pursuant to § 16(b) of the FLSA, 29 U.S.C. § 216(b), in

the United States District Court for the Middle

District of Tennessee, on behalf of himself and all

others similarly situated. Johnson’s lawsuit claims

were identical to the Respondents’ claims in

arbitration, except that Johnson sought certification of

an “opt-in” class described in FLSA Section 16(b).

LJS vigorously opposed certification of an opt-in

class, arguing that Mr. Johnson was required to

submit his lawsuit claims to arbitration pursuant toa

pre-dispute arbitration agreement that he, the

Respondents, and all members of the Class had signed

as a condition of employment by LJS. That agreement

required covered claims to be arbitrated in the AAA,

and further provided that the arbitration would be

conducted pursuant to the AAA’s rules. See LJS Real

Resolution Program Booklet, page 10; Ct. App. Joint

App. at JA084.

LJS succeeded in having Mr. Johnson’s lawsuit

claims dismissed by the district court in Tennessee,

which concluded that the claims were subject to

mandatory arbitration before the AAA. Johnson uv.

Long John Silver’s Rests., Inc., 320 F. Supp. 2d 656

(M.D. Tenn. 2005). That decision was affirmed on

appeal. 414 F.3d 583 (6th Cir. 2005).

The AAA Rules applicable to class arbitrations

provide that the arbitrator will render two “partial

final awards” before addressing the merits. The first of

these is called a “Clause Construction Award,” in

which the arbitrator “determine[s] as a threshold

matter ... whether the applicable arbitration clause

6

permits the arbitration to proceed on behalf of or

against a class.” AAA Supplementary Rules for Class

Arbitrations (“AAA Class Rules”), Rule 3; Pet. App. at

52a-53a. If the arbitrator answers that question in the

affirmative, he or she then proceeds to the “class

determination” phase, during which the arbitrator

decides whether, in fact, to certify a class in the

particular case, pursuant to factors delineated in AAA

Class Rule 4, Pet. App. at 53a-54a. The product of the

class determination phase is a “Class Determination

Award.” AAA Class Rule 5, Pet. App. at 54a-55a.

In this case, the arbitrator issued a Clause

Construction Award on June 15, 2004, in which he

ruled that the parties’ arbitration agreement permits

class arbitration. LJS filed a Motion to Vacate the

Clause Construction Award in the United States

District Court for the District of South Carolina. On

September 15, 2005, the district court dismissed that

motion for lack of subject matter jurisdiction. LJS

appealed that dismissal to the Fourth Circuit; after the

appeal was fully briefed, LJS voluntarily dismissed its

appeal.

One of the issues LJS specifically asked the

arbitrator to decide during the class determination

phase was whether tc utilize an opt-out class pursuant

to the AAA Class Rules or an opt-in class described in

FLSA Section 16(b). The arbitrator issued his Class

Determination Award on September 19, 2005, in which

he decided to certify the case as a class action on

behalf of a class of present and former LJS restaurant

general managers and assistant restaurant general

managers employed during a specified time period. In

response to LJS’s request that he choose whether to

7

utilize an opt-out or opt-in class, the arbitrator decided

to utilize the opt-out provisions of the AAA Class

Rules.

LJS filed a Motion to Vacate the Class

Determination Award in the district court, in which it

challenged four separate aspects of that award,

including the arbitrator’s decision to use an opt-out

class. The district court denied the Motion to Vacate

on its merits, on all four points. Long John Silver’s

Rest., Inc. v. Cole et al., 409 F. Supp. 2d 682 (D.S.C.

2006), which is reproduced as Pet. App. B. LJS

appealed to the Fourth Circuit, but limited its appeal

to the single opt-out vs. opt-in issue. The Fourth

Circuit affirmed the district court on the opt-out vs.

opt-in issue in a published opinion, Long John Silver’s

Restaurants, Inc. v. Cole, et al., 514 F.3d 345 (4th Cir.

2008), reproduced as Pet. App. A.

REASONS FOR DENYING THE PETITION

I. The Petitioner Did Not Raise the Issue

Presented in the Petition in Either the

District Court or the Fourth Circuit.

In its Petition LJS asks the Court to adopt and

apply a new, more rigorous standard of review to the

Class Determination Award challenged by LJS, relief

it did not seek in either of the courts below. A party’s

failure to seek resolution in the lower courts of an

issue raised in a petition for certiorari normally dooms

the petition in this Court. “Ordinarily, this Court does

not decide questions not raised or resolved in the lower

court.” Youakim v. Miller, 425 U.S. 231, 234 (1976).

8

LJS claims in the Petition that it requested

“heightened” review in both of the courts below, and

intimates that those requests were equivalent to the

relief it seeks in this Court. Pec. at 8, 9, 10, 11, 13, 20.

Not so. LJS never requested that either court utilize a

new or different standard of review specific to

arbitration awards involving statutory claims.

LJS was content to couch all of its arguments below

in terms of the traditional and long-standing Fourth

Circuit standards for reviewing arbitration awards,

and never suggested that those recognized standards

were inadequate to provide sufficient review of the

subject award. Indeed, LJS’s assault on the arbitration

award in both lower courts repeatedly and consistently

relied upon the Fourth Circuit’s decision in Remmey v.

Paine-Webber, Inc., 32 F.3d 143 (4th Cir. 1994),* a

decision it now criticizes as a source of the Fourth

Circuit’s allegedly too-narrow and legally insufficient

standard of review. Pet. at 10.

To be sure, LJS sometimes quoted to both the

district court and the Fourth Circuit the oft-cited

language from McMahon and Gilmer that by agreeing

to arbitrate a statutory claim a party does not forego

the substantive rights afforded by the statute, and

that the judicial scrutiny of arbitration awards, though

* See Petitioner’s 4th Cir. Brief, avail. at 2006 WIL 2726265 *25,

35; Petitoner’s 4th Cir. Reply Brief, avail. at 2006 WL 2623026 *7;

Petitioner’s Dist. Ct. Mem. in Supp. of Motion to Vacate Class

Determination Award at 8, 10 [Joint Appendix Filed with the

Court of Appeals (“JA”) 24, 26]; Petitioner’s Dist. Ct. Reply in

Supp. of Motion to Vacate, at 13 [JA182].

<

>

ar

a.

ee

9

necessarily limited, is sufficient to ensure that

arbitrators comply with the requirements of the

statute. But LJS’s mere incantation of that language

from McMahon and Gilmer is not tantamount to a

request that the lower courts utilize a different, and

broader, scope of review, which is the relief requested

and issue presented in the Petition.

LJS suggests in its Petition that the district court

specifically considered and rejected its purported

request that the court apply the same “heightened”

standard of review it requests this Court to adopt. Pet.

at 10. As support for this claim, LJS quotes the

following language from the district court’s opinion:

“The Court finds no basis in the law for Movants’

suggestion that the Court review the arbitrator’s

award under a more rigorous standard, and the Court

declines to undertake such a review here.” See Dist.

Ct. Memorandum Opinion and Order, at 3; Pet. App.

B at 19a. While the district court did reject a request

from LJS to employ an unprecedented, and more

rigorous, standard of review, it was not the standard

for which LJS advocates in this Court.

In its opening brief to the district court, LJS cited

the Fourth Circuit’s decision in Mountaineer Gas Co.

v. Oil, Chemical & Atomic Workers Int'l Union, 76 F.3d

606, 608 (4th Cir. 1996), as authority for the

proposition that “[w)hether an arbitrator exceeded the

bounds of his authority is a question of law, and

therefore is reviewed de novo.” See LJS’s Dist. Ct.

Memorandum In Support of Motion to Vacate

Arbitrator’s Class Determination Award, at 19; JA at

JA035. However, Mountaineer Gas did not so hold; the

cited portions of that decision address the standard of

10

review employed when the Court of Appeals reviews a

district court’s decision whether to vacate an award,

not the standard of review employed by the trial court

in the first instance.

Respondents initially failed to correct that clear

misstatement of the law, prompting LJS not only to

repeat the same argument in a later brief, but to stress

that Respondents had failed to point out the error,° as

if Respondents’ failure to point out an obvious

misstatement of the law somehow effected a change in

the law.

This request by LJS for de novo review was the

“more rigorous standard” the district court rejected in

the footnote cited by LJS in the Petition. As stated

above, LJS never requested that the district court

apply the heightened standard of review it asks this

Court to adopt for statutory claim arbitration.

Thus, LJS did not raise in either the district court

or the Fourth Circuit the issue it attempts to raise

here. Hence, LJS faiied to preserve that issue for

review here.

> LJS Reply in Support of Petitioners’ Motion to Vacate Class

Determination Award, at 4, n. 9; JA at J/.173.

11

II. The Fourth Circuit’s Decision Declining to

Upset the Arbitrator’s Class Determination

Award Does Not Conflict with any Decision of

this Court, including McMahon and Gilmer.

LJS complains that the decision below was flawed

because it contravened this Court’s decisions in

Shearson/American Express, Inc. v. McMahon, 482

U.S. 220 (1987) and Gilmer v. Interstate/ Johnson Lane

Corp., 500 U.S. 20 (1991). No such conflict exists;

indeed, the Fourth Circuit’s decision was both

informed by, and in full accord with, those two cases.

LJS’s additional claim that the Fourth Circuit’s

opinion “made no mention of” and did not “attempt to

reconcile” McMahon and Gilmer, Pet. at 13, is

demonstrably false.

A. Nothing in This Court’s McMahon or

Gilmer Decisions, or in Any More Recent

Pronouncements, Suggests the Need for

More Stringent Review of Arbitration

Awards [Involving Federal Statutory

Claims.

LJS’s argument that the Fourth Circuit opinion in

this case conflicts with McMahon and Gilmer is based

entirely on the suggestion that these two cases

presaged, and even mandated, a “heightened”

standard of review of arbitration awards in cases

involving federal statutory cle ns. While LJS poses

the question presented simply as “what degree of

‘judicial scrutiny .. . is sufficient to ensure that

arbitrators comply with the requirements of the

statute,” Pet. at i, that open-ended statement of the

issue does not mask exactly what level of scrutiny LJS

12

is asking the Court to adopt. The Petition makes

abundantly clear that the new and heightened

standard LJS would have the Court declare would

require the judiciary to scrutinize awards for

erroneous interpretation and application of the federal

statutes, act to ensure broad “compliance” with

statutes (presumably, every provision of a statute),

and review arbitration awards for mere “legal error.”

Pet. at 3, 10, 13, 14, 17, 25.

The threshold problem with LJS’s argument that

the Fourth Circuit violated McMahon and Gilmer is

that neither opinion actually calls for the application

of a new or different standard of review in statutory

claim arbitration. Both cases involved the arbitration

of federal statutory claims, and both cases were

decided after decades of jurisprudence in which both

this Court and the courts of appeals had articulated

the traditional, limited scope of judicial review of

arbitration awards. The two cases state svecifically

that while the accepted scope of judicial review is

“necessarily is limited, such review is sufficient to

ensure that arbitrators comply with the requirements

of the statute’ at issue.” Gilmer, 500 U.S. at 32, n. 4

(quoting from McMahon, 484 U.S. at 232) (emphasis

added). They neither state nor imply, as LJS suggests,

that judicial review “must be” sufficient, implying that

something more than the existing scope of review was

contemplated or required.

Thus, far from creating unanswered questions

concerning the necessary scope of review of arbitral

awards related to statutory claims, the Court in

McMahon and Gilmer, which were decided following

decades of appellate jurisprudence establishing and

13

defining the applicable standard of review of which the

Court was undoubtedly mindful, expressed confidence

that the established standard of judicial scrutiny of

arbitral awards “is sufficient” for purposes of the

statutory claims the Court permitted to go to

arbitration. Those cases certainly conveyed the

message that particular arbitral forums must include

sufficient safeguards to ensure that the substantive

statutory rights of claimants could be effectively

vindicated in those forums, but the Court clearly

stated that the then-existing and acknowledged scope

of review was sufficient to satisfy that requirement.

Nothing in the opinions suggests that a separate or

heightened level of judicial review should or would be

required in the arbitration of statutory causes of

action.

Nor does either McMahon or Gilmer suggest that

all statutory requirements must be followed to the

letter in arbitration, to the same extent as they would

be in court; any such rule would effectively preclude

the arbitration of statutory claims. Instead, the cases

uphold the use of an arbitration forum and agreed-

upon arbitral procedures “so long as the prospective

litigant effectively may vindicate {his or her] statutory

cause of action in the arbitral forum.” Gilmer, 500

U.S. at 28; Mitsubishi Motors Corp. v. Soler Chrysler-

Plymouth, Inc., 473 U.S. 614, 637 (1985). McMahon

and Gilmer never state or imply that wholesale

incorporation of statutory procedures and other

requirements are essential to the effective vindication

of the statutory rights of claimants, or to ensure that

“(bly agreeing to arbitrate a statutory claim, a party

does not forgo the substantive rights afforded by the

14

statute.” Gilmer, 500 U.S. at 26; McMahon, 482 U.S.

at 229; Mitsubishi, 473 U.S. at 628.

There is no inconsistency between this Court’s

insistence that an arbitral forum adequately protect

substantive statutory rights, and its present-tense

expression in McMahon and Gilmer of confidence that

the then-existing scope of judicial review was adequate

in statutory claim arbitration, especially when the two

messages are considered in the context of the

adjudicative bargain made by parties to arbitration

agreements. As the Court observed in Mitsubish: and

Gilmer, “by agreeing to arbitrate, a party ‘trades the

procedures and opportunity for review of the

courtroom for the simplicity, informality, and

expedition of arbitration.” Gilmer, 500 U.S. at 31,

quoting from Mitsubishi, 473 U.S. at 628.

Hence, the Court has already held that even in the

context of statutory claim arbitration, limited judicial

review is an inherent, and wholly acceptable, trade off

made by the parties in exchange for a simpler, quicker

and less formal resolution of their disputes. Gilmer

itself considered the sufficiency of established judicial

review in the section of the opinion® in which the Court

disposes of Gilmer’s “host of challenges to the

adequacy of arbitration procedures.” 500 U.S. at 30.

The Court evaluated Gilmer’s challenge to the

sufficiency of established judicial review the same way

it evaluated his challenges to the fairness of

arbitration panels, limitations on discovery in

* Section B of the opinion, commencing 500 U.S. at 30.

15

arbitration, and arbitrators’ frequent failure to issue

written opinions.’

The Court determined that none of the various

procedural limitations inherent in arbitration —

including limited judicial review — made the process

fundamentally unfair, or rendered the arbitral forum

incapable of effectively vindicating substantive

statutory rights. Curiously, LJS suggests that the

Court’s approval of one such procedural limitation —

limited judicial review — somehow impliedly mandated

a going-forward change in or elimination of the

approved limitation.

This Court’s recent decision in Hall Street

Associates, L.L.C. v. Mattel, Inc., 128 S. Ct. 1396

(2008), confirms the view that the limited review of

statutory claim arbitration remains sufficient to

satisfy all requirements of the Gilmer case. Hall Street

states that the three sections of the FAA dealing with.

post-award enforcement — Sections 9, 10 and 11 — are

properly read “as substantiating a national policy

favoring arbitration with just the limited review

’ Of special significance to this case is the Court’s inclusion, in its

discussion of the alleged inadequacy of “arbitration procedure,” of

Gilmer’s contention that arbitration forums might not permit

class actions. Clearly, the Court considered the availability vel

non of class actions in arbitration to be an issue involving

arbitration procedure, rather than as one implicating substantive

statutory rights. The Gilmer court undoubtedly would have

reached the same conclusion with respect to the opt-out vs. opt-in

issue decided by the arbitrator in this case, which is a subsidiary

class action issue.

Se Da a a ater sa aS a bs eae SR VLE a EN ee ae Th FEN OY St Re a OMA, PS Gere ee 8

16

needed to maintain arbitration’s essential virtue of

resolving disputes straightaway.” Id. at 1405.

Respondents are well aware that Hall Street did

not involve the arbitration of federal statutory claims.

Nevertheless, Hall Street is a powerful reminder that

the strong federal policy favoring arbitration — a policy

that underlay the Gilmer court’s determination that

limited judiciai review was acceptable in statutory

claim arbitration — is as strong today as in 1991.

Hall Street’s express holding that the grounds for

vacating arbitration awards contained in FAA Section

10 are the exclusive grounds authorized by that Act

- suggests that the Court would be loath to consider

necessary any expansion of the historically applicable

standard of review — especially an expansion of the

magnitude proposed by LJS in the Petition. This is

even clearer because of the majority’s emphasis that

the FAA Sections 10 and 11, 9 U.S.C. §§ 10, 11,

grounds for vacating arbitration awards all involve

serious arbitrator misconduct.

Sections 10 and 11, after all, address egregious

departures from the parties’ agreed-upon

arbitration: “corruption,” “fraud,” “evident

partiality,” “misconduct,” “misbehavior,”

“exceed[ing] powers,” “evident material

miscalculation,” “evident material mistake,”

“award (s] upon a matter not submitted; the only

ground with any softer focus is

“imperfectfions},” and a cour. may correct those

only if they go to “[a] matter of form not

affecting the merits.”

17

128 S. Ct. at 1404. Because of the egregious nature of

conduct necessary to permit vacatur of an award, the

Court rejected the petitioner’s attempt to “expand the

stated grounds to the point of evidentiary and —

review generally.” Id.

The majority in Hall Street also decried the

petitioner’s attempt to imply non-fault based grounds

into the governing language of the FAA, or a more

rigorous level of judicial review than the language of

the FAA permits:

Instead of fighting the text, it makes more sense

to see the three provisions, §§ 9-11, as

substantiating a national policy favoring

arbitration with just the limited review needed

to maintain arbitration’s essential virtue of

resolving disputes straightaway. Any other

reading opens the door to the full-bore legal and

evidentiary appeals that can “render informal

arbitration merely a prelude to a more

cumbersome and time consuming judicial

review process,” (citations omitted) and bring

arbitration theory to grief in post-arbitration

process.

128 S. Ct. at 1405.

LJS may say that the foregoing words, evidencing

a continuing conviction in this Court that limited

judicial review is necessary to advance the national

pro-arbitration policy, were not uttered in a statutory

arbitration case. The problem with that argument is

that the just quoted words strongly echo the

declaration in Gilmer that limited judicial review in

18

statutory claim arbitration is an acceptable — indeed

necessary — trade off for “the simplicity, informality

and expedition of arbitration.” 500 U.S. at 31. There

is simply no reason to believe that there has been any

erosion since the 1991 Gilmer decision of the Court’s

conviction as to the propriety of historically limited

judicial review of arbitration awards rendered in

statutory claim arbitration.

B. Petitioner’s Claim That the Fourth Circuit

Failed to Consider McMahon or Gilmer is

Not True, as the Decision Below Plainly

Reveals.

LJS introduces its “Reasons for Granting the Writ”

with the following statement: “[T]he court of appeals

made no mention of this Court’s statements in

McMahon and Gilmer, nor did it attempt to reconcile

them with its own explicit refusal to decide whether

the arbitrator had properly interpreted and applied

the FLSA.” Pet. at 13. Both clauses of the quoted

statement are untrue.

Three pages of the Fourth Circuit’s opinion are

devoted to a discussion and analysis of Gilmer. See

Pet. App. A at 9Ya-lla. Although McMahon is not

mentioned by name, the Fourth Circuit cites to Gilmer

text that in turn quotes McMahon, and more

importantly, the court thoughtfully analyzes the test

announced and employed in both McMahon and

Gilmer for determining what alleged rights constitute

“substantive statutory rights” that must be effectively

vindicated in arbitration.

19

According to McMahon and Gilmer a party will be

deemed to have submitted purported statutory rights

to resolution according to arbitral procedures “unless

Congress itself has evinced an intention to preclude a

waiver of judicial remedies for the statutory rights at

issue,” Gilmer, 500 U.S. at 27 (citing Mitsubishi

Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473

U.S. 614, 628 (1985). Such preclusion must be

“discoverable in the text of the [statute], its legislative

history, or an ‘inherent conflict’ between arbitration

and the [statute’s] underlying purposes.” Id., citing

McMahon, 422 U.S. at 227.

The Fourth Circuit concluded, as did the district

court, that LJS failed to carry its burden of satisfying

the McMahon/Gilmer test for establishing that the

opt-in provision of FLSA Section 16(b) was a

substantive statutory right that could not be waived by

the parties’ agreement to use the opt-out procedure

contained in the AAA’s class arbitration rules. The

Fourth Circuit said: “Put simply, it is far from clear

that the ‘opt-in’ aspect of the § 16(b) provision is such

a nonwaivable substantive right.”

LJS may disagree with the Fourth Circuit’s

conclusion. But it cannot in good faith claim that the

Fourth Circuit failed to consider the lessons of

McMahon and Gilmer in reaching that conclusion.

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20

IIL This Case Does Not Implicate any Genuine

Circuit Split.

A. The Circuit Split Asserted by Petitioner

Does Not Exist.

LJS’s claim that “the circuits have fundamentally

split over the appropriate standard of review” of

arbitral awards involving federal statutory claims is

based on a contention that the Fifth and District of

Columbia Circuits apply a different standard of review

than the Fourth, Second and Eleventh Circuits, and

that this Court must enter the breach to resolve that

conflict. The purported discord is the product, says

LJS, of “absence of guidance by the Court,” as a result

of which “the lower courts have fashioned their own

diverse — and inconsistent — doctrines.” Pet. at 19.

LJS claims that the standard of review in the

Fourth, Second and Eleventh Circuits is so deferential

that those courts only permit arbitration awards to be

set aside on “manifest disregard” grounds when there

is a showing that the arbitrator willfully declined to

follow law that the arbitrator acknowledged to be

controlling. LJS also complains that those courts

accord equal deference to awards entered with respect

to federal statutory claims as they do in other types of

arbitration.

According to LJS, the Fifth and District of

Columbia Circuits operate differently, employing a

“heightened” standard of review in cases involving

statutory claims than in other types of arbitration.

That heightened standard of review ostensibly flows

from perceived mandates issued by this Court in

21

McMahon and Gilmer that reviewing courts in

statutory claim arbitration must apply more stringent

review than in other types of arbitration, to insure

“arbitral compliance with statutory requirements.”

Pet. at 22.°

A closer examination of the cases which LJS holds

up as establishing the circuit split reveals that there is

no meaningful disagreement among the circuits

concerning the standard of review to be applied to

arbitral awards involving statutory claims. The

differences arise in how the various courts define what

constitutes a particular ground for vacating awards,

that ground being manifest disregard of the law.

Indeed, an examination of the very cases upon

which LJS builds its claim that the circuits are in

conflict shows that the distinction between them and

other circuits was not the standard of review itself, but

only with respect to what constituted a manifest

disregard of the law in the context of statutory claim

arbitration. LJS cites Cole v. Burns International

Security Services, 105 F.3d 1465 (D.C. Cir. 1997) and

Williams v. Cigna Financial Advisors, Inc., 197 F.3d

752 (5th Cir. 1999) as the primary cases from the

District of Columbia and Fifth Circuits’ that

purportedly exemplify those circuits’ split from the

Fourth, Second and Eleventh Circuits.

® As shown in Section II supra, this premise is erroneous, because

McMahon and Gilmer actually only require arb‘tral forums to

afford “effective vindication” of “substantive statutory rights” (not

literal or identical compliance with all statutory requirements,

substantive or otherwise).

22

Cole was a “front-end case” — deciding whether the

court would enforce pre-dispute mandatory arbitration

agreements required to be executed by employees as a

condition of employment. The D.C. Circuit analyzed a

number of objections lodged by the plaintiff to having

to resolve his Title VII claims in such an arbitration,

including several challenges to various aspects of the

arbitration process. In addressing the plaintiffs’

arguments concerning the level of judicial review of

arbitration awards, the court acknowledged the FAA

Section 10 grounds for vacating an award, but

pronounced them “not exclusive,” 105 F.3d at 1486,

and identified manifest disregard of the law as an

additional ground. The court went on to say that the

“assumptions” of the Gilmer court are only valid if

“judicial review under the ‘manifest disregard of the

law’ standard is sufficiently rigorous to ensure that

arbitrators have properly interpreted and applied

statutory law.” 105 F.3d at 1487 (emphasis added).

Cole was decided more than eleven years ago, and

any notion that the D.C. Circuit, on the strength of

Cole, applies a wholly different standard of review in

statutory claim arbitration has been eliminated by

later decisions of the same court. In at least two cases,

both of which involved the arbitration of statutory

claims, the D.C. Circuit described the requirements for

proving manifest disregard of the law in the same

terms traditionaily employed in the Fourth, Second

and Eleventh Circuits.

In LaPrade v. Kidder, Peabody & Co., 246 F.3d 702

(D.C. C'r. 2001), the plaintiff asserted several claims

against ner former employer, including violations of

Title VII and ui. Federal Equal Pay Act. The plaintiff

23

had been compelled to arbitrate her claims, and she

went to court to try to vacate a portion of the resulting

award, alleging manifest disregard of the law. In

evaluating her challenge to the award, the court stated

as follows:

Manifest disregard of the law ‘means more than

error or misunderstanding with respect to the

law.’ (citations omitted) Consequently, to

modify or vacate an award on this ground, a

court must find that (1) the arbitrators knew of

a governing legal principle yet refused to apply

it or ignored it altogether and (2) the law

ignored by the arbitrators was well defined,

explicit, and clearly applicable to the case.

246 F.3d at 706. The authorities cited by the D.C.

Circuit in support of the foregoing qucted language

included a Second Circuit case, DiRussa v. Dean Witter

Reynolds, inc., 121 F.3d 81° (2d Cir. 1997).

Similarly, in the more recent case of Kurke v. Oscar

Gruss and Son, Inc., 454 F.3d 350 (D.C. Cir. 2006),

which involved an arbitration of claims that included

alleged violations of the Securities Exchange Act, the

court said:

“Manifest disregard,” however, is an extremely

narrow standard of review. It “means much

more than failure to apply the correct law.”

(citation omitted) Rather, to vacate an award

under that standard, we “must find that (1) the

arbitrators knew of a governing legal principle

yet refused to apply it or ignored it altogetherl,]

and (2) the law ignored by the arbitrators was

24

well defined, explicit, and clearly applicable to

the case.”

454 F.3d at 354 (citing La Prade and DiRussa).

Hence, LJS’s claim that Cole v. Burns International

Security Services puts the District of Columbia Circuit

at odds with any other circuits, including the Fourth

Circuit in this case, is groundless. As the later D.C.

Circuit cases make clear, that court’s rules concerning

the proper scope of review, as well as its articulation of

the requirements for proving manifest disregard, are

wholly in line with those of the circuits LJS claims to

conflict with the D.C. Circuit, even as regards the

review of awards rendered in statutory claim

arbitration. Indeed, the D.C. Circuit has specifically

embraced the one aspect of Fourth, Second and

Eleventh Circuit jurisprudence which LJS most

vehemently opposes — the requirement that an

arbitrator must know of the allegedly “disregarded”

law and of its application to the arbitration under

review, before a court can vacate for manifest

disregard.

The Fifth Circuit case relied upon by LJS is

Williams v. Cigna Financial Advisors, Inc., 197 F.3d

752 (5th Cir. 1999). The actual holding of Williams,

insofar as the review of arbitration awards was

implicated, was both narrow and unremarkable; the

case held that in arbitration cases involving alleged

violations of federal statutes, awards should be

reviewed for manifest disregard of the law, and that

the presence or absence of manifest disregard should

be determined “in light of the bases underlying [this]

Court’s Gilmer-type cases.” 197 F.3d at 762. The

25

Williams opinion does not state that a particular

standard or level of review should apply, merely

suggesting that reviewing courts be informed by

Gilmer’s concern that the forum permit the effective

vindication of substautive statutory rights.

Contrary to the suggestion of LJS, Williams did not

announce, or purport to require, any different

standard of review than that which obtained in any

other circuit. A later Fifth Circuit case, involving the

arbitration of ERISA claims, describes the applicable

standard of review in traditionally limited fashion,

noting that reviewing courts were to take an

“extreviuely deferential” view of an arbitrator’s award,

and vhat such review is “extraordinarily narrow.”

Kergosien v. Ocean Energy, Inc., 390 F.3d 346, 352 (5th

Cir. 2004).° The court added:

[Mjanifest disregard for the law “meats more

than mere error or misunderstanding with

respect to the law. The error must have been

obvious and capable of being readily and

instantly perceived by the average person

qualified to serve as an arbitrator. Moreover,

the term ‘disregard’ implies that the arbitrator

appreciates the existence of a clearly governing

® Kergosien was also decided after the other Fifth Circuit case

relied on by LJS as putting the Fifth Circuit in conflict with the

Fourth, Second and Eleventh Circuits, Carter v. Countrywide

Credit Industries, Inc. , 362 F.3d 294 (5th Cir. 2004).

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26

principle but decides to ignore or pay no

attention to it.”

390 F.2d at 355 (citation omitted).

Accordingly, any circuit conflict previously

suggested by Cole or Williams has been eliminated by

subsequent decisions of the District of Columbia and

Fifth Circuits. No real conflict in the circuits has been

shown by Petitioner.

B. Semantic Differences in Particular Courts’

Descriptions of Manifest Disregard Do Not

Establish a Certworthy Circuit Split.

It is clear from the foregoing discussion that the

language differences among the circuits do not

evidence a “split” with respect to the standard of

review applicable to statutory awards. They are, at

most, minor variations in defining what constitutes

manifest disregard of the law. Such miniscule

differences do not constitute a legitimate basis for

granting certiorari, which “will only be granted for

compelling reasons.””°

Stated differently, all of the cases discussed by LJS

— on both sides of the purported circuit conflict —

recognized that manifest disregard was a ground for

vacating arbitration awards of statutory claims, and

merely differed somewhat as to the definition of

manifest disregard. If one side or the other of such a

“conflict” is thought to be wrong, then nothing more

*° Supreme Court Rule 10.

27

has been shown than a “misapplication of a properly

stated rule of law” by the erroneous side, which is

historically, and by rule of court,’ rarely a sufficient |

basis for exercise of the Court’s certiorari jurisdiction.

As the Court is well aware, the circuits for decades

have employed divergent language to explain what

constitutes “manifest disregard of the law” within the

meaning of the Court’s dictum in Wilko v. Swann, 346

U.S. 427 (1953), but those varying articuiations have

always been more about semantic differences than

substantive disagreement among the circuits. The

Court has not seen fit be’.:e now to reconcile those

semantic differences, and the instant case provides no

additional. or better justification for doing so. Indeed,

in light of the Court’s recent decision in Hall Street

Associates, L.L.C. v. Mattel, Inc., 128 S. Ct. 1396

(2008), there is likely less reason for the Court to

undertake that mission now than ever before.

The Court’s express holding in Hall Street that the

Section 10 grounds are the exclusive grounds for

vacating an award under the FAA, and the Court’s

related suggestion that manifest disregard of the law

may not be a separate or additional ground for

vacating an award at all, call into question the current

importance of any circuit split thought to exist. With

the status of manifest disregard “up in the air,” there

is even less reason for this Court to undertake a

reconciliation of conflicting definitions of what

constitutes manifest disregard.

ie.

28

IV. Even Assuming the Question Presented Were

Certworthy, This Would Not be an

Appropriate Case for Consideration of the

Question.

As demonstrated above, this case does not implicate

any conflict with the decisions of this Court or among

the circuits. But even if the question did implicate a

certworthy conflict, this case would be an

inappropriate vehicle for exploring the question

presented.

A. The Arbitrator’s Award and the Lower

Courts’ Decisions Not to Disturb that

Award are Fact- and Document-Specific.

The decision of the Fourth Circuit, like the district

court’s ruling and the arbitrator’s award that preceded

Fourth Circuit review, are primarily the products of

the unique facts and circumstances of this case, the

combination of which is unlikely to present itself in

future federal court review proceedings. LJS presents

an abstract issue for review in its Petition, but the

disposition of this matter at every prior level turned on

the particular facts, relevant documents, and

procedural history of this case.

LJS attempts to skirt that problem by claiming the

arbitrator’s “refusal to apply” the opt-in requirement

of FLSA Section 16(b) was “based solely on the fact

that the parties had agreed to arbitrate.” Pet. at 12.

Not so. A host of factors prompted the arbitrator's

decision to employ the opt-out procedure required by

the Rules of American Arbitration Association (“AAA”),

29

rather than the opt-in provision contained in Section

16(b).

The award and the cases below were based

substantially on the language of the parties’

arbitration agreement. It is undisputed that the pre-

dispute arbitration agreement that LJS required job

applicants to sign specifically provided that

arbitrations would be conducted pursuant to the AAA’s

rules. See LJS Real Resolution Program Booklet, page

10; JA at JA084. At the time the subject arbitration

was commenced, the AAA Rules included its

“Supplementary Rules for Class Arbitrations,” which

are reproduced in Appendix D to the Petition. The

first sentence of those Supplementary Rules states as

follows: “These Supplementary Rules for Class

Arbitrations (“Supplementary Rules”) shall apply to

any dispute arising out of an agreement that provides

for arbitration pursuant to any of the rules of the

American Arbitration Association (“AAA”) where a

party submits a dispute to arbitration on behalf of or

against a class or purported class, and_ shail

supplement any other applicable AAA rules.” Pet. App.

D at 51a (emphasis added).

Thus, the very rules that the parties chose to

govern their future arbitrations provided that class

claims or purported class claims would be governed by

the Supplementary Class Rules. It is also undisputed

that the AAA’s Supplementary Class Rules specifically

call for the use of opt-out class procedures, similar to

those contained in Fed. R. Civ. P. 23. See, eg.,

Supplementary Rules 5(c) and 6(b)(5) (Pet. App. D at

55a-56a).

30

The arbitrator in this case did not, as LJS suggests,

choose to utilize the AAA’s opt-out procedure simply

because the parties had “agreed to arbitrate.” Instead,

the arbitrator construed the arbitration agreement and

specifically (and correctly) found that the parties’

contractual choice to arbitrate by AAA’s Rules included

an agreement to utilize the Supplementary Class

Rules, including their opt-out procedures.

The arbitrator also based his decision on the

procedural history of the arbitration itself, and of the

Johnson case” in which the Class claims asserted in

the arbitration were initially pursued. The arbitrator

stated that LJS’s prior rejection of the FLSA opt-in

procedures in Johnson was an additional factor

favoring utilization of the AAA out-out procedures.

Class Determination Award, Pet. App. C at 33a-34a.

The arbitrator also observed as follows:

Had this case been permitted to proceed as a

collective action in Johnson, these issues [opt-in

vs. opt-out] would not have arisen. By invoking

their contractual rights, the parties have

submitted to the procedural requirements of the

contract. Critically [LJS’s] pretrial

maneuverings in Johnson and this arbitration

have resulted in protracted delays which would

now create a fundamental unfairness by the

opt-in procedure which, as noted, would

significantly reduce the class population in

derogation of fundamental objectives.

'? See discussion at 4-5, supra.

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31

[I]t -has been the endless _ procedural

machinations first in Johnson and now in this

arbitration which have acted to jeopardize

numerous potentially legitimate claims. To

some extent, it is the very procedural history of

this case which has rendered ineffective the opt-

in procedures of the FLSA. Equity is better

served by preserving the rights of potential

claimants who have been “sidelined” during the

progress of this case.

Id. at 35a-36a.

Hence, the arbitrator’s decision to utilize the opt-

out provisions of the AAA Rules was based not only on

his finding that the parties’ centract called for the use

of those rules; it was substantially driven by equitable

considerations relating to LJS’s prior litigation

conduct, and the potential adverse impact that conduct

would have on Class members’ claims. Both the

district court, Dist. Ct. Mem. Opinion and Order, Pet.

App. B at 26a-27a, and the Fourth Circuit found that

the arbitrator’s consideration of equitable factors was

entirely proper and appropriate. The Fourth Circuit

said: “In this regard, we agree with the district court

that LJS’s assertion [that the arbitrator was simply

advancing his own “personal notions of right and

wrong” is contradicted by the fact that the arbitrator

relied on settled principles in support of his reliance on

equity,’* and by the provision of the arbitration

agreement empowering the arbitrator to ‘award any

'3 Gilmer itself held that arbitrators “have the power to fashion

equitable relief.” 500 U.S. at 32.

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32

relief which a court could award.’ Fourth Circuit

Opinion, Pet. App. A. at 15a-16a, n. 9 (quoting from

Dist. Ct. Opinion, Pet. App. B at 27a) (emphasis

added).

B. The Linchpin of L.JS’s Petition — Its Claim

that the FLSA’s Written Consent

Requirement Constitutes a Substantive

Statutory Right Within the Meaning of

McMahon and Gilmer — Lacks any Legal

Support.

An additional reason why this case is an

inappropriate vehicle for decision of the issue

presented by LJS is that, as the Petition itself

acknowledges, the “heightened” standard of review for

which it argues would only apply to awards that are

alleged to impinge on substantive statutory rights.

LJS’s argument that this Court should grant certiorari

depends entirely on LJS first establishing that the

“written consent” or “opt-in” provision contained in

FLSA Section 16(b) constitutes a substantive statutory

right within the meaning of McMahon and Gilmer

because it is only such rights that are required to be

effectively vindicated pursuant to those two cases.

There is no governing authority to establish that

sine qua non to LJS’s entitlement to certiorari review.

When the arbitrator rendered his Class Determination

Award, no court, adjudicative board, or administrative

agency (including the Department of Labor) had ever

held, opined, or even argued (to the knowledge of

Respondents) that the “opt-in” requirement contained

in FLSA Section 16(b) constituted a substantive

statutory right.

33

On its face, the written consent or opt-in,

requirement appears to be purely a procedural

limitation on participation in litigation. Case law

prior to issuance of the Class Determination Award

confirmed this status. A clear indication of whether

the opt-in requirement is procedural or substantive

can be found in how Congress has chosen to utilize it.

Whereas the substantive provisions of the FLSA are

unique, extending protections to employees different

from rights accorded under other federal civil rights

acts such as the Age Discrimination in Employment

Act, Title VIJ, and the Equal Pay Act, Congress has

imported the FLSA’s opt-in mechanism into

substantively different acts such as the ADEA and the

EPA. As this Court observed in Lorrilard v. Pons, 434

U.S. 575, 584-85 (1978), “rather than adopting the

procedures of Title VII for ADEA actions, Congress

rejected that course in favor of incorporating the FLSA

procedures.”

Several courts of appeals have _ specifically

described the entire FLSA collective action

mechanism, of which the opt-in provision is but a part,

to be procedural. “Among the FLSA procedures

incorporated into the ADEA is that which permits

bringing a collective action.” Sperling v. Hoffman-

LaRoche, Inc., 862 F.2d 439, 444 (3d Cir. 1988), affd

493 U.S. 165 (1989). See, also Anderson v. Montgomery

Ward & Co., 852 F.2d 1008, 1016 (7th Cir. 1988)

(referring to the “FLSA-baSed litigation process” and

the “opt-in’ provision of the FLSA” as “litigation

procedure”).

Gilmer itself specifically held that the entire

collective action process of FLSA Section 16(b) was

cares

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34

non-substantive and waivable in favor of contrary

arbitration procedures. 500 U.S. at 32. The Fourth

Circuit so held prior to the arbitrator’s Class

Determination Award and the district court decision

denying LJS’s motion to vacate. Atkins v. Labor

Ready, Inc., 303 F.3d 496, 503 (4th Cir. 2002)."

As the Fourth Circuit said in this case, “[i]f the

right to initiate a collective action can be waived, as

the Claimants assert, it may be inferred that an ‘opt-

in’ procedure relating to any such right (here, the

FLSA § 16(b) provision) can also be waived.” Ct. App.

Opinion, Pet. App. A at lla. Both the district court

and the Fourth Circuit recognized that LJS had not

provided the arbitrator with any authority requiring

the use of FLSA Section 16(b)’s opt-in requirement

even though the parties had agreed in their arbitration

clause to utilize an arbitral forum’s rules that

specifically direct the use of an opt-out class.

Both courts below expressed serious doubt that the

opt-in requirement constitutes a substantive right.’® If

'* Indeed, in one of the cases urged by LJS as evidence of a circuit

split, the Fifth Circuit expressly rejected the FLSA plaintiffs’

“claim that their inability to proceed collectively [in arbitration]

deprives them of substantive rights available under the FLSA.”

Carter v. Countrywide Credit Indus., Inc. , 362 F.3d 294, 298 (5th

Cir. 2004). The Carter court distinguished the collective action

right from the Plaintiffs’ right to recover attorneys’ fees, which it

impliedly found to constitute a substantive statutory right. Jd. at

299, n.1.

*® Court. of Appeals Opinion, Pet. App. A at lla, n.8. Dist. Ct.

Memorandum Opinion and Order, Pet. App. B at 22a. For the

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35

the Court were inclined to take up the question

presented in LJS’s Petition, it should be taken up ina

case where substantive statutory rights are clearly

implicated, and the Couri’s resolution of the issue

would be outcome determinative. This is not that case.

LJS attempts to bolster its unpersuasive argument

that the written consent requirement is substantive by

arguing that it is “impossible to apply the FLSA

statute of limitations without the written consent

requirement.” Pet. at 30. In most cases, there is

certainly a connection between the running of the

statute of limitations and the date of a suit plaintiff

files his or her written consent to join the action.

In arguing that this case is an appropriate vehicle

for deciding the question presented in the Petition,

LJS states: “The arbitrator in this case apparently

assumed that the statute of limitations for absent class

members of the ‘opt out’ class he certified would cease

to run at the time the original arbitration proceeding

was filed. That assumption is contradicted by the

unambiguous language of 29 U.S.C. § 256.” Id.

LJS knows there was no such “assumption” by the

arbitrator in this case. LJS knows that in December

2001, LJS entered into a Stipulation for Stay and

Tolling Agreement in the Johnson litigation which the

record, Respondents do not even consider that issue a close call,

for the reasons set forth above in Section IV.B.

36

arbitrator expressly (and correctly)’ determined to

apply to the arbitral claims of the Respondents and the

claims of the arbitral Class. Arbitrator’s Class

Determination Partial Final Award, Pet. App. C at

36a-39a. Because there is no issue in this case

concerning the impact of the FLSA’s written consent

requirement on the statute of limitations, this case is

an even more inappropriate vehicle for consideration

of the question presented in the Petition, even if it

were otherwise deemed certworthy.

C. Even if Substantive Rights are Implicated

by the Section 16(b) Written Consent

Requirement, LJS has Adduced No

Evidence that Such Rights Were Not

Effectively Vindicated by the Opt-Out

Class Procedures Used in tl*s Arbitration.

Although LJS has failed to establish the status of

the opt-in or written consent requirement as a

substantive federal statutory right, it would not be

enough for LJS to do so, as LJS seems to contend.

Gilmer makes clear that arbitrators and arbitral

forums do not have to enforce such rights in precisely

the same way they are enforced in court.

‘© LJS unsuccessfully challenged this aspect of the Class

Determination Award in its district court Motion to Vacate. See

District Court Memorandum Opinion and Order, Pet. App. B at

27a, n.3. No issue was raised in the Fourth Circuit concerning

applicable of the tolling agreement, so this issue has been

conclusively resolved against L.JS. In this case, the statute of

limitations applicable to the Respondents’ and Class claims has

been tolled since December 2001.

37

Instead, Gilmer requires only that substantive

statutory rights be ‘:ffectively vindicated” in the

arbitral forum. 500 J.S. at 28. Mitsubishi Motors,

Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614,

637 (1991). The record in this case is devoid of any

evidence showing, or even suggesting, that the opt-out

procedure employed in the arbitration failed to

“effectively vindicate” any alleged substantive right

not to participate in the arbitration without giving

one’s written consent.

Indeed, at no time during the course of the lengthy

judicial review undertaken by LJS has it ever

suggested or argued why the extensive class

protections built into the AAA Class Rules fail to

effectively vindicate the asserted right. Those rules

include the following requirements: that the arbitrator

“direct that class members be provided the best notice

practicable under the circumstances”; that such notice

“be given to all members who can be identified through

reasonable effort”; that the nature of the arbitration

and the arbitral claims be explained to the class

members; that class members have the right to enter

an appearance through their own counsel if desired;

that class members be informed how to elect to be

excluded from the class, and that any class member

requesting exclusion will be excluded; and that the

binding effect of a class judgment be explained to class

members. AAA Class Arbitration Rule 6; Pet. App. D

at 56a-57a.

This Court exercises its certiorari jurisdiction to

decide important issues, but it reserves the exercise of

that jurisdiction for cases in which the issues decided

will be relevant and outcome-determinative in the

38

underlying case or controversy. There is no proof — nor

indeed any argument — that the class protections

provided for under the AAA Class Rules and utilized in

this arbitration failed to vindicate the purported opt-in

“right” for which LJS argues. In the absence of such

proof, this case is an inappropriate vehicle for deciding

the question: presented in the Petition.

CONCLUSION

For the foregoing reasons, the Petition for Writ of

Certiorari should be denied.

Respectfully submitted,

M. REID ESTES

Counsel of Record

DARRELL L. WEST

STEWART, ESTES &

DONNELL, PLC

FIFTH THIRD CENTER

- SUITE 1401

- 424 CHURCH STREET

NASHVILLE, TN 37219

(615) 244-6538

_ Attorneys for Respondents

Date: August 27,:2008