In Chan v. Fresh & Easy (In re Fresh & Easy), Adv. No. 15-51897 (BLS) (D. Bankr. Del. Oct. 11), appeal pending, U.S. Bankruptcy Judge Brendan Shannon of the District of Delaware decided two issues of first impression in this circuit: first, a class-action waiver provision in an arbitration agreement between an employer and an employee violates the National Labor Relations Act (NLRA), and second, an opt-out provision in an arbitration agreement containing a provision that violates the NLRA does not save the arbitration agreement. Both issues arose in the context of a complaint in an adversary proceeding brought on behalf of a purported class of former employees alleging violations of the Worker Adjustment and Retraining Notification Act (WARN Act) by the debtor and others.
The plaintiff was a former employee at one of the debtor’s distribution centers. She alleged she and other similarly situated employees were not given at least 60 days advance notice of their termination in violation of the WARN Act and its state law counterpart. The debtor moved to compel arbitration under the Federal Arbitration Act (FAA) based on an agreement with the plaintiff that required the parties to resolve all employment-related disputes through arbitration. The class-action waiver provided that each party could bring an action against the other only in an individual capacity and not as a plaintiff or class member in any purported class, representative or collective action. The agreement also provided that the employee could revoke the agreement if, within 30 days of signing it, she notified the debtor of the revocation in a signed writing delivered to the debtor’s human resources department. The plaintiff did not, however, opt-out of the arbitration agreement.
