Taco Bell is Now Tangled Up In a Supreme Court Case
Taco Bell, home of the Burrito Supreme, is now involved in a Supreme Court hearing. A major franchisee for the chain is on the hook for unpaid overtime in a class action lawsuit which the Supreme Court recently agreed to hear.
The case in question is Morgan v. Sundance Inc., in which an Iowa Taco Bell employee, Robyn Morgan, claims that she and other "similarly situated" Taco Bell employees are owed unpaid wages and overtime by Sundance Inc., a Taco Bell operator with more than 180 stores located throughout Iowa, Illinois, Indiana, Michigan, Ohio, Wisconsin, and Canada.
Morgan's case has already been tried twice, first in 2019 in the U.S. District Court for the Southern District of Iowa, and then again in 2021, in the U.S. Court of Appeals for the Eighth Circuit. In both cases Sundance sought to compel Morgan to settle via arbitration—and it was granted this outcome in 2021 by the appeals court.
At stake in the forthcoming Supreme Court hearing is the opportunity to set a clear legal precedent for the use and waiver of "arbitration" rights—a common provision in corporate employee contracts that allows corporations to settle employee lawsuits out of court.
In Morgan's case, Sundance Inc. invoked its right to arbitration late in the legal proceedings—about eight months after Morgan had filed her suit in District Court. It also appeared to waive its right to arbitration when it invited Morgan to reclassify her 2018 filing as an individual, rather than a class-action lawsuit.
However, the Eighth Circuit Appeals Court ruled that Sundance's behavior had not in any way "prejudiced" Morgan and that the company was therefore within its rights to compel arbitration.
Morgan, in her petition to the Supreme Court, filed this August, is not only claiming that Sundance did implicitly waive its right to arbitration by its "inconsistent litigation conduct," but that she, as the plaintiff, is not required to "prove prejudice" for those rights to be waived.
The lawsuit gets at the heart of what Morgan's defense team calls "a longstanding circuit split"—the standard of evidence required to prove that arbitration rights have been waived. For better or for worse, the pending Supreme Court hearing may finally set that standard.
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