Supreme Court case involving class actions could affect waitresses' suit against Hooters

By Amanda Becker
Monday, November 8, 2010

When Kianna Hawkins applied to work at the Hooters restaurant on Seventh Street in downtown Washington, she didn't think to read the fine print.

But a notice tacked onto the end of her application required the Howard University graduate to take any employment dispute to arbitration instead of the courts -- a provision that is now complicating her efforts to build a class action case against Hooters over alleged labor law violations.

An arbitrator ruled that Hawkins cannot seek class action status because the fine print did not expressly permit it.

Hawkins has asked a federal court to review that ruling, and the outcome could rest on a separate case now before the Supreme Court, involving a cellphone customer who sought class action status in a dispute with AT&T Mobility. The Supreme Court is scheduled to hear arguments in AT&T Mobility v. Concepcion on Tuesday (Nov. 9).

"It seems somewhat technical, but it's so important because it's dealing with class actions, arbitration and consumer rights," said Catholic University law professor Suzette Malveaux. "Businesses all over the country and consumers are all watching this very carefully."

Hawkins and 16 other current and former waitresses at Hooters locations in the District, Laurel and South Carolina claim the company violated the Fair Labor Standards Act by requiring them to purchase expensive uniforms, arrive hours before shifts without pay and give portions of their tip money to other employees. In a recent meeting, Hawkins and fellow plaintiffs Camille Barnette and Jewels Blount estimated that on a slow day, over a seven-hour daytime shift, they could at times take home as little as $20 to $30.

"I've never had to come into a job with money up front, but you think when you're working for a company that has hundreds of stores across the nation that they know what they're doing," Hawkins said.

Hawkins said as the situation worsened, she began to question whether the restaurant's policies were aboveboard. After consulting with an attorney, she approached several co-workers and word began to spread that the waitresses were building a case against their employer. The group filed suit in August 2009, sending the matter into arbitration.

Hooters defended its practices.

"We continue to be confident that all of our employment practices, including how we provide uniforms to employees, are both fair and legal," said Mike McNeil, vice president of marketing at Hooters of America. "We also maintain that any suggestion that Hooters girls make less than minimum wage is completely ridiculous."

Had the dispute remained in court, the Hooters waitresses would likely have notified hundreds of other workers that they could sue the restaurant as a class. But an arbitrator ruled the women had waived that right, basing his decision in part on an antitrust case before the Supreme Court last term called Stolt-Nielson v. Animal Feeds.

In that case, the justices found that a group of customers accusing four shipping companies of price fixing could not proceed as a class because the contract did not explicitly allow them to do so. In such a "silent" contract, the majority reasoned, the parties had not consented to class arbitration.

Despite its application to the Hooters case, some legal experts contend the justices intended Stolt-Nielson to be a narrow ruling that applied to the business contracts in that specific case, not employment disputes or the type of consumer complaint brought by Vincent and Liza Concepcion, who claimed AT&T acted fraudulently by offering free phones and then charging taxes. In Stolt-Nielson, all parties had the benefit of legal counsel in drafting the contract; the waitresses, like the Concepcions, did not.

The legal question in Concepcion is whether a California appellate court ran roughshod over the Federal Arbitration Act when it invalidated the AT&T Mobility contract, ruling that requiring consumers to waive their right to collective action was an "unconscionable" violation of state contract law. In contract law, ambiguous terms are typically interpreted in favor of the party that did not draft the contract.

Critics of that ruling say allowing state courts to invalidate arbitration agreements in this way chips away at federal arbitration law, which allows companies to enforce their own contracts.

As the high court considers the Concepcion case, the arbitration between Hawkins and Hooters will proceed. After the arbitrator determined the silent contract barred the women from notifying others, the company agreed that the 17 existing plaintiffs could move forward as a group. Despite that small victory, Cyrus Mehri of Mehri & Skalet, which represents Hawkins and the other Hooters employees, said he hope the justices will use Concepcion as an opportunity to say arbitration contracts cannot be used as a tool to wipe out class action.

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