A federal judge has given approval to a fourteen million dollar settlement in a case where technicians working for Roto-Rooter Services Company alleged they were not paid overtime properly. The settlement also resolves related/pending arbitration proceedings. The case is entitled Morangelli et al. v. Chemed Corporation and was filed in federal court in the Eastern District of New York.
The plaintiffs, paid on commissions, alleged that they were not paid the minimum wage or overtime and suffered illegal wage deductions. The arbitration proceedings were set in motion when the Court granted the Company’s motion to compel arbitration of the plaintiffs who had signed arbitration agreements.
In a tactical ping-pong game, the plaintiffs filed a lawsuit in 2010 and then, after the class was certified, the Company moved to compel arbitration of the plaintiffs’ claims. These plaintiffs had signed two different arbitration agreements. The judge concluded that one set of plaintiffs had to proceed in arbitration (based on the agreements) and another set could bring their cases in federal court.
While the parties brought summary judgment claims in court, an arbitrator ruled that the arbitration agreements did provide and allow class arbitration which could have meant parallel proceedings going forward, where the substantially same claims would be raised. The settlement now does away with these possibilities.
I see this kind of scenario playing out in the future perhaps with disturbing regularity as more and more employers use arbitration agreements to deal with employee wage/OT/class action claims. The specter of two (expensive) actions proceeding simultaneously is perhaps the “best” facilitator of settlements of such cases.