9th Circuit: Arbitration class action waiver is unenforceable

[A]n employer violates the National Labor Relations Act by requiring employees to sign an agreement precluding them from bringing, in any forum, a concerted legal claim regarding wages, hours, and terms and conditions of employment.
Concerted activity—the right of employees to act together—is the essential, substantive right established by the NLRA. 29 U.S.C. § 157. Ernst & Young interfered with that right by requiring its employees to resolve all of their legal claims in “separate proceedings.” Accordingly, the concerted action waiver violates the NLRA and cannot be enforced.

With these statements, the 9th Circuit created a 2:3 Circuit split, joining the 7th Circuit. The 2nd, 5th and 8th Circuits disagree. Morris v. Ernst & Young (9th Cir 08/22/2016) [Opinion Full Text]. The 9th Circuit panel split 2:1, which raises the probability of a future en banc rehearing.

The court said it owed deference to the NLRB's decision in D.R. Horton, 357 NLRB No. 184 (2012), enf. denied 737 F.3d 344 (5th Cir. 2013), but it was clear that the 9th Circuit would have reached the same result without giving the NLRB any deference.

The court also saw nothing in the Federal Arbitration Act that would dictate a contrary result.

Judge Ikuta dissented because she believed that the majority’s opinion violated the Federal Arbitration Act’s command to enforce arbitration agreements according to their terms, was directly contrary to Supreme Court precedent, and was on the wrong side of a circuit split. Judge Ikuta concluded that § 7 of the National Labor Relations Act did not prevent the collective action waiver at issue here, and would hold that the employee’s contract must be enforced according to its terms.