An Illinois state appeals panel has delivered another win for employers of unionized workers who use federal labor law to defeat potentially massive class action lawsuits brought by their workers under Illinois’ biometrics privacy law.
On July 27, a three-justice panel of the Illinois Second District Appellate Court ruled a group of unionized workers who are attempting to press a class action claim against their employer over allegedly illegal punch clock fingerprint scans can’t sidestep the employer’s right under federal law to first take those claims to arbitration, even if the employer waited to advance those rights to win dismissal.
The ruling came in a lawsuit from DuPage County Circuit Court against Parsec Inc., a trucking and intermodal rail logistics company, with a regional office in west suburban Willowbrook.
The lawsuit was similar to thousands of others filed in Cook County court and other courts in Illinois under the Illinois Biometric Information Privacy Act. The lawsuit accused Parsec of improperly requiring its employees to scan their fingerprints to verify their identities when punching the clock to begin and end work shifts.
The lawsuit asserted the fingerprint scans were required, even though the company had allegedly not first obtained written consent from the workers, and the company had not allegedly first provided workers with certain notices required by the BIPA law concerning how the company would use, store and eventually destroy the scanned prints.
Under the law, plaintiffs can ask the court to order the company to pay damages of $1,000-$5,000 per violation. Courts are currently weighing arguments over how to define individual violations under the BIPA law.
But to this point, defendants have asserted the law could be read to define individual violations as each time a worker scans their fingerprints. When multiplied over entire workforces, scanning fingerprints multiple times per day, such damages could quickly balloon into the millions of dollars, or more, leaving employers potentially on the hook for what has been described in court briefs as “crippling” damage awards, should the cases advance to trial.
To date, no such BIPA claims have advanced to trial, however. The courts continue to grapple with various attempts by employers to dismiss the lawsuits. But a growing number of employers and other businesses targeted by BIPA class actions have opted to settle, with settlements ranging from the hundreds of thousands of dollars to as much as $650 million, in the widely publicized BIPA action against Facebook.
The largest BIPA class action settlement from an employer, to date, clocked in at about $50 million.
While employers have largely found little success in defeating BIPA claims to this point, some employers whose workers are covered by collective bargaining agreements have won dismissal by citing federal labor laws, which govern the administration of grievances for violations of those CBAs.
In February, the U.S. Seventh Circuit Court of Appeals ruled the federal Labor Management Relations Act will pre-empt BIPA claims brought by unionized workers against their employer over punch clock scans.
In the case against Parsec, the company pointed to that decision and other similar decisions to argue the LMRA requires its workers to first take their BIPA-related claims to arbitration, before they can file any lawsuits.
A DuPage County judge backed Parsec’s position, and dismissed the lawsuit. In that decision, the DuPage judge determined the state court lacked jurisdiction over the BIPA claims against Parsec altogether, because the federal law pre-empted the class action claims.
On appeal, the plaintiffs did not dispute that federal law might control in their dispute. However, they argued Parsec had waived their right to advance the pre-emption argument, because the company had first advanced other defenses, making their pre-emption defense too late.
The Second District appellate panel, however, said Parsec’s argument was correct.
They concluded the DuPage court had wrongly dismissed for lack of jurisdiction. But they said the dismissal was still proper, because the employer’s right to arbitration under the LRMA was too strong for the plaintiffs’ case to overcome.
Citing the U.S. Supreme Court’s 1985 decision in Allis-Chalmers Corp. v Lueck, the Second District justices said the case against Parsec is “substantially dependent upon analysis of the terms of an agreement made between the parties in a labor contract.”
So, because the workers are represented by unions under CBAs, Parsec is free to seek to dismiss the case under Section 301 of the LRMA, the appellate panel ruled.
The appellate panel further determined Parsec did not raise that defense too late, and plaintiffs could not use Illinois procedural law to question the company’s decision to raise preemption under the LRMA.
“States may not, under the guise of setting neutral procedural rules, place conditions on the vindication of a federal right,” the appellate panel wrote.
“… Plaintiffs would have to show that defendant waived its right to arbitration under federal law,” the justices wrote. “They attempt no such showing.
“Thus, we conclude that, although the trial erred in dismissing the complaint for want of subject-matter jurisdiction, the dismissal must be affirmed because defendant properly raised the defense that the Privacy Act claims were preempted by section 301 (of the LRMA.)”
The decision was authored by Justice Susan F. Hutchinson. Justices George Bridges and Robert D. McLaren concurred.
The plaintiffs are represented in the action by attorneys David J. Fish and Mara Baltabols, of firm of Fish Potter Bolaños, of Naperville.
Parsec has been represented by attorneys Jody Kahn Mason, Jason A. Selvey, and Jonathan B. Cifonelli, of Jackson Lewis P.C., of Chicago.