Duane Morris Class Action Review - 2023 - Report - Page 379
before terminating their employment in a “mass layoff.” The plaintiffs asked the court to
certify the case as a class action under Rule 23. Tesla moved to compel the case to
arbitration based on the arbitration clauses in the plaintiffs’ employment agreements. In
opposing Tesla’s motion, the plaintiffs argued that the court should not enforce the
agreements because they were unconscionable under California law. The court granted
Tesla’s motion to compel arbitration, and its analysis began and ended with the
determination that the parties entered into a valid delegation clause. Specifically, the
plaintiffs agreed to an arbitration provision contained in their offer letters that expressly
incorporated the JAMS Rules (any dispute will be “conducted by the Judicial Arbitration
and Mediation Services/Endispute, Inc. (JAMS), or its successors, under the then
current rules of JAMS for employment disputes). JAMS Employment Arbitration Rule
11(b), in turn, contains a delegation clause granting the arbitrator the power to resolve
any dispute regarding arbitrability. The magistrate judge thus held that the express
adoption of this rule “presents clear and unmistakable evidence that the parties agreed
to arbitrate arbitrability.” Id. at *9.
Other 2022 decisions addressed the appropriate scope of discovery in WARN Act
litigation. In Chaney, et al. v. Vermont Bread Co., 2022 U.S. Dist. LEXIS 203240 (D. Vt.
Nov. 8, 2022), for instance, the court partially granted requests by the majority owner of
three bakeries and a company it formed to limit deposition topics in the midst of a
lawsuit by employees alleging violations of the WARN Act the three bakeries ceased
operations. Employees of the three bakeries alleged that shortly after purchasing 80%
of the stock of the three bakeries, American Industrial Acquisition Corp. (AIAC) ceased
operations of the bakeries. The employees further claimed that AIAC, and the two
entities AIAC formed to hold its stock interests, joined or succeeded the three bakeries
as the employees’ “single employer.” As a result of the bakeries ceasing operations,
over 400 people at two plants in Vermont and one plant in Connecticut lost their jobs.
Plaintiffs subsequently filed a class complaint against the three shuttered bakeries,
AIAC, and AIAC’s two holding entities in June 2021 alleging violations of the WARN Act.
Plaintiffs moved for class certification, which the defendants opposed. The defendants
argued that the court must first decide the question of whether there was a single
employer and decide it in their favor. They alleged that in addition to the defendants
being separate entities, two of the three bakeries could not be liable under the WARN
Act because they had fewer than 100 employees each. The defendants also argued
that they cannot be jointly liable for the layoffs, as they were not all involved in each
decision. The court agreed that the single employer question required discovery but
declined to delay class certification, agreeing with the plaintiffs that the question is
common to the entire class and did not need to be resolved first.
AIAC and one of its holding entities subsequently moved for a protective order limiting
the scope of their depositions. Granting the motion for a protective order in part, the
court opined that the movants’ argument regarding temporal relevance had merit. As a
result, the court limited questions to “events . . . that took place no more than two years
prior to the alleged WARN Act violations.” Turning to substantive relevance, the court
ruled that while the questions asked during the depositions “must be tailored to
ultimately support the plaintiffs’ ‘single employer’ claim as it pertains to this case.”
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Duane Morris Class Action Review – 2023
