Chipotle claims 'immediate harm' caused by arbitration proceedings

Dive Brief:

A federal judge has denied a motion to enter judgment submitted by Chipotle in an ongoing series of arbitration suits brought by several of the restaurant chain's employees, according to court documents surfaced by HuffPost.
In August, Judge John L. Kane of the U.S. District Court for the District of Colorado granted a motion by Chipotle to dismiss 2,814 opt-in plaintiffs from a class action suit, Turner et. al v. Chipotle Mexican Grill, ruling that those plaintiffs were bound by the company's mandatory arbitration agreement and would have to arbitrate their wage and hour claims with the company individually. Notably, Kane cited the U.S. Supreme Court's decision in Epic Systems Corporation v. Lewis as having compelled him to find that Chipotle's class and collective action waiver did not violate the National Labor Relations Act.
Chipotle appealed Kane's ruling, however, because the judge denied an additional request by Chipotle to disqualify one of the attorneys representing the dismissed workers from representing the workers in future arbitration proceedings. On Sept. 4, the court granted Chipotle's request to prohibit workers from entering arbitration until after its appellate proceedings ended. But the court soon lifted the Sept. 4 order, allowing 50 to proceed. Chipotle claimed that the arbitration proceedings caused it "immediate harm" and threatened its appellate rights, asking Kane to grant another stay of arbitration cases. Kane denied two motions from Chipotle, saying in his ruling that the company's attempts to "delay and obfuscate" arbitration claims were "unseemly."

Dive Insight:

The series of cases demonstrates the complex nature of mandatory arbitration in the employment context, and is perhaps an example of why requiring employees to arbitrate claims individually isn't always less costly to the employer than class and/or collective actions.

Employment lawyers have made similar observations in the wake of broader employer efforts to implement mandatory arbitration clauses following an increase in class action suits, largely involving harassment allegations. Megan Walker, an associate with Fisher Phillips LLP, previously told HR Dive that the cost of arbitrative fees and the loss of appeal rights could be a reason against opting for mandatory arbitration following the Supreme Court's supposedly employer-friendly ruling in Epic Systems.

It's not the first time that arbitration fees have led to an apparent hold up in proceedings either. Gizmodo reported earlier this month that ride-hailing service Uber, facing 12,501 individual arbitration demands, had only paid initiating filing fees for 296 of those cases. A petition filed by the individuals seeking arbitration with Uber claimed the company's arbitration service, JAMS, had notified Uber that it would be unable to proceed without receiving filing fees, Gizmodo said.

Employers may need to carefully consider mandatory arbitration agreements and consult with counsel on the most efficient remedy.