Page 1
Ninth Circuit:
Order Limiting Communications With Employees Stands
By a MetNews Staff Writer
An employer’s trickery and coercion justified a district court’s order imposing a prior restraint on any communications with employees on the matter of overtime pay except in writing, subject to court approval of the messages, the Ninth U.S. Circuit Court of Appeals held yesterday.
Seventh Circuit Judge David F. Hamilton, sitting by designation, authored the majority opinion, in which Ninth Circuit Judge Milan D. Smith Jr. joined. Ninth Circuit Judge Daniel P. Collins wrote a concurring and dissenting opinion in which he expressed the view that District Court Judge Josephine L. Staton of the Central District of California had not examined the evidence with care and should consider her order anew.
Appealing from Staton’s May 17, 2022 order is Better Mortgage Corporation which was sued in a putative class action by Lorenzo Dominguez, an underwriter it employed, for an alleged failure to provide overtime pay, in violation of the Fair Labor Standards Act (“FLSA”).
Virtual Meeting
Better Mortgage responded to the suit by conducting a virtual meeting with its underwriters, offering them each $5,000 for speedily executing an agreement waiving non-FLSA claims and requiring them to each sign new employment agreement with an arbitration clause, not disclosing that the clause would preclude them from pursuing any FLSA claim through a class action. Staton declared the agreements that had been signed to be invalid, barred Better Mortgage from requiring a return of $5,000 payments, and imposed the order forbidding communications concerning overtime except in writing and with her approval of the wording.
Hamilton declared that there is appellate jurisdiction over the prior-restraint order, though interlocutory, under 28 U.S.C. §1292(a)(1), because it is injunctive in nature but that no jurisdiction exists, at this stage, over the order invalidating the new employment agreements. Addressing the order in issue, he wrote:
“Under the court’s restriction on communication, Better Mortgage remains free to communicate about the lawsuit and issues central to it. But it needs to communicate in writing, and it needs prior court approval, which is reasonable here. Given Better Mortgage’s record in this lawsuit, including both the misleading and coercive communications in October 2020, and its desire to continue communicating with potential class members to help build its defense in this lawsuit, the district court tailored its order appropriately and did not abuse its discretion.”
‘Careful Analysis’
The visiting jurist also said:
“The district court carefully parsed Better Mortgage’s communications and determined that they were misleading. The district court’s detailed order shows a careful analysis of the prior communications and how those communications affected the employees’ understanding of their options in this pending lawsuit. The misleading and coercive nature of these efforts was clear. For example, the court noted that employees had to sign the new employment agreement to continue working for Better Mortgage.”
He continued:
“Compounding this pressure was the fact that the arbitration clause in that agreement would prevent collective pursuit of claims in this suit. This coercive tactic—telling employees they would be fired if they did not agree to have claims already being asserted on their behalf in a pending lawsuit channeled out of that collective and class action in a federal court into individual arbitrations—smacks of retaliation and interference with both federal and state statutory rights.”
Collins’s Opinion
Collins said in his partial dissent:
“Given that only a few of the points identified by the district court had any validity, I would vacate the prior restraint order and remand to the district court for it to re-evaluate the propriety of imposing such an onerous restriction….Because the district court misapprehended the scope of the ‘potential abuses,’…it should be required to re-examine the matter and to determine whether a more narrowly drawn limitation would be more appropriate. Indeed, the sweeping breadth of the prior restraint imposed here—which pointedly does extend to discussing “wage and hour matters” with current employees—seems excessive.”
The case is Dominguez v. Better Mortgage Corporation, 22-55731.
Copyright 2023, Metropolitan News Company