As part of the terms of his employment, former Citicorp Credit Services, Inc. employee Keith Russell had agreed to arbitrate "all employment-related disputes" with the company. Although he was bound by the arbitration terms in his employment contract during his tenure from 2004 to 2009, the proscription applied only to individual claims and not class actions.
The 2012 Class Action
In January 2012, Russell filed a class action against the company citing alleged non-payment for time spent logging-in and logging-off computers during the workday, and Citicorp did not move to remand to arbitration in light of the class action status.
Bygones Be Bygones?
Oddly, during the pendency of the arbitration, Russell applied for his old Citicorp job in late 2012 and in January 2013 signed a new employment contract. Citicorp's new arbitration provision was extended to class actions. In pertinent part, that provision states:
This Policy applies to both you and to Citi, and makes arbitration the required and exclusive forum for the resolution of all employment-related disputes (other than disputes which by statute are not subject to arbitration) which are based on legally protected rights (i.e., statutory, regulatory, contractual, or common-law rights) and arise between you and Citi, its predecessors, successors and assigns, its current and former parents, subsidiaries, and affiliates, and its and their current and former officers, directors, employees, and agents . . .
Claims covered under this Policy must be brought on an individual basis. Neither Citi nor any employee may submit a class, collective, or representative action for resolution under this Policy. To the maximum extent permitted by law, and except where expressly prohibited by law, arbitration on an individual basis pursuant to this Policy is the exclusive remedy for any employment-related claims which might otherwise be brought on a class, collective or representative action basis. Accordingly, you may not participate as a class or collective action representative or as a member of any class,collective, or representative action, and will not be entitled to any recovery from a class, collective or representative action in any forum. . .
You Did What?
Incredibly, Russell did not consult with his lawyers before signing the new contract; and, further, Citicorp's lawyers were unaware that he had applied and been accepted for employment.
What Do We Got To Lose?
On top of the odd circumstance of rehiring a litigant former employee, Citicorp's legal team got the idea to compel Russell to arbitrate the pending class action based upon the fact that he was compelled to arbitrate class actions in the employment contract he signed in January 2013.
Not surprisingly to this lawyer, the federal court for the Eastern District of Kentucky denied Citicorp's motion to compel arbitration finding that the new arbitration agreement did not cover lawsuits commenced before the agreement was signed. Citicorp appealed to the 6th Circuit.
In affirming the District Court, the Circuit court noted that:
[R]ussell for one says that he expected the contract to apply only to future lawsuits. Citicorp does not question his state of mind, and in any event the circumstances corroborate it. Russell's behavior-signing the contract without consulting counsel and carrying on with the lawsuit as before-would make little sense if Russell understood the contract to cover the case at hand.
As for Citicorp, it seems doubly improbable that the company expected the contract to govern pending lawsuits. In the first place, the company entered into this contract-binding itself to arbitrate its disputes with Russell-without first consulting its lawyers in this case. Would a sophisticated company allow a supervisor at a local call center to sign away rights in a pending case without first speaking to the lawyers representing it in that case? Not likely.
In the second place, the company sent the contract to Russell rather than to his lawyer. One party's lawyer may not communicate about a pending case with an opposing litigant he knows has legal representation. Ky. Sup. Ct. R. 3.130; see also Model Rules of Professional Conduct R. 4.2 (1983). If Citicorp's in-house counsel prepared a contract, expecting it to be given to a represented litigant but also expecting it to govern existing cases, they might find themselves near the edge of this rule. It makes no difference who handed Russell the arbitration agreement, whether a member of the legal department or a supervisor at the call center. The canons preclude a lawyer not only from communicating with a represented adversary but also (for the most part) from helping his client do so. See Restatement (Third) of the Law Governing Lawyers § 99, cmt. k (2000). And it makes no difference who prompted the dialogue, whether Russell or Citicorp. The lawyer's obligations remain in place either way. See Ky. Sup. Ct. R. 3.130, cmt. (3).
To be sure, we do not mean to suggest that Citicorp's in-house counsel violated the rules of ethics. Perhaps they did not participate in the drafting of this contract. Or perhaps they did not know that the company planned to give the contract to represented employees. But we do mean to ask: Did Citicorp expect the contract to bear a meaning that would even raise these questions? Again, not likely. . .
Page 4 of the Opinion
Bill Singer's Comment
A fascinating fact pattern and a concise, beautifully written Opinion.
READ the FULL-TEXT Opinion: Keith Russell v. Citigroup, Inc. and Citicorp Credit Services, Inc. (6th Circuit, No. 13-5994,12-cv-00016, April 4, 2014)