Justice Department v. NLRB

When Epic Systems Corp v. Lewis (consolidated with Ernst & Young v. Morris and NLRB v. Murphy Oil) goes to oral argument at the US Supreme Court on October 2, we will have the rare treat of watching the US Solicitor General arguing in favor of the employers and the NLRB's General Counsel arguing in favor of the NLRB and the employees. The Court granted motions for divided argument today [Order], so these two government lawyers will each be sharing one-half hour of argument time with lawyers representing other parties. So, lots of lawyers.

This odd happening comes about simply because the Justice Department switched sides after the presidential election. DOJ originally filed a petition for certiorari [Petition] on behalf of the NLRB, and then later filed an amicus brief [Brief] arguing against the NLRB. [Video: 2:09 minutes]

The cases raise these issues:

Whether it's an unfair labor practice for an employer to require employees to agree not to bring a class-action or collective-action case - either in litigation or in arbitration.

Whether the Federal Arbitration Act compels enforcement of an employment arbitration agreement that prohibits employees from bringing class-action or collective-action cases.

Another odd twist is that by the end of this week the NLRB will be back in the hands of the Republicans (due to the Senate's confirmation of Republican William Emanuel today), and the new Board clearly will not support the D.R. Horton (NLRB 2012) holding that requiring employees to sign class-action waivers interferes with employees' right to engage in concerted activities. Of course, current NLRB General Counsel Richard Francis Griffin Jr. is a Democrat, and he can keep the fight going in the court system - but only until he is replaced in November by Republican Peter Robb.

For more background, see this from SCOTUSblog: Argument preview: Reconciling class waivers and the National Labor Relations Act (UPDATED).

[For a list of current employment law cases, see Supreme Court Watch.]

Delayed arguments in class-action waiver case

Epic Systems Corp v. Lewis is the most important employment law case of the current session of the US Supreme Court, and the Court told the lawyers today that oral arguments will be put off until the next session which begins in October. This means a decision might not come out until early 2018.

The Court doesn't announce its reasons for when it schedules oral arguments, but I'll be bold enough to speculate. It's a combination of (1) this is an extremely important case that will have an impact on thousands of employers and millions of employees, (2) for a big case the Court likes to have a full boat of nine Justices, and Circuit Judge Neil Gorsuch - the President's nominee - should be confirmed before October. There's also the possibility that the Court already sees itself split 4-4, which would create a big problem because there are three consolidated cases with conflicting results and a 4-4 decision would affirm all of them.

Class action waivers – NLRA v. FAA: Ever since D.R. Horton (NLRB 2012), the NLRB has said that it's an unfair labor practice for an employer to require employees to agree that they will not bring a class-action or collective-action case, either in litigation or in arbitration. The NLRB's jurisdiction includes non-union workplaces in the private sector, so there's an impact on most private sector employees.

Meanwhile, the Federal Arbitration Act requires courts to enforce arbitration agreements as written.

As you might expect, federal circuit courts are split. Some say D.R. Horton is simply wrong. Some say the FAA compels enforcement of an employment arbitration agreement that prohibits employees from bringing a class-arbitration, notwithstanding D.R. Horton. Others won't enforce such agreements because they interfere with employees' right "to engage in … concerted activities for the purpose of … mutual aid or protection."

The Supreme Court has consolidated three cases that raise these issues.

One is Ernst & Young v. Morris [9th Circuit opinion] [Supreme Court briefs]  ("an 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 of conditions of employment.")

The others are NLRB v. Murphy Oil [5th Circuit opinion] [Supreme Court briefs] (refusing to enforce the NLRB's D.R. Horton rule) and Epic Systems Corp v. Lewis [7th Circuit opinion] [Supreme Court briefs] (class action waiver in arbitration agreement violates NLRA and is unenforceable under the FAA).

The Court neither granted nor denied one other petition in Patterson v. Raymours Furniture Co  [Cert petition] [2nd Circuit opinion] [Supreme Court briefs] (enforcing class action waiver in arbitration agreement).

The Court is delaying oral arguments until October at the earliest, so a decision might not come out until early 2018.

 

NLRA v. FAA – US Supreme Court will decide class-action waiver cases

Ever since D.R. Horton (NLRB 2012), the NLRB has said that it's an unfair labor practice for an employer to require employees to agree that they will not bring a class-action or collective-action case, either in litigation or in arbitration. The NLRB's jurisdiction includes non-union workplaces in the private sector, so there's an impact on over 90% of private sector employees.

Meanwhile, the Federal Arbitration Act requires courts to enforce arbitration agreements as written.

As you might expect, federal circuit courts are split. Some say D.R. Horton is simply wrong. Some say the FAA compels enforcement of an employment arbitration agreement that prohibits employees from bringing a class-arbitration, notwithstanding D.R. Horton. Others won't enforce such agreements because they interfere with employees' right "to engage in … concerted activities for the purpose of … mutual aid or protection."

The Supreme Court has agreed (on January 13) to hear three cases that raise these issues.

One is Ernst & Young v. Morris [Cert petition] [9th Circuit opinion] [Supreme Court briefs ("an 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 of conditions of employment.")

The others are NLRB v. Murphy Oil [Cert petition] [5th Circuit opinion] [Supreme Court briefs] (refusing to enforce the NLRB's D.R. Horton rule) and Epic Systems Corp v. Lewis [Cert petition] [7th Circuit opinion] [Supreme Court briefs(class action waiver in arbitration agreement violates NLRA and is unenforceable under the FAA).

The Court neither granted nor denied one other petition in Patterson v. Raymours Furniture Co  [Cert petition] [2nd Circuit opinion] [Supreme Court briefs(enforcing class action waiver in arbitration agreement).

Update: Oral arguments will be in October, with a decision expected early in 2018.

Am I the only one wondering whether the incoming administration will argue in favor of the NLRB's position in the NLRB v. Murphy Oil case? 

[For recent decisions and pending employment law cases, see Supreme Court Watch.]

 

Web site for Ross Runkel, Arbitrator & Mediator: https://www.rossrunkel.com/

Four SCOTUSblog "petitions of the day" probe legality of class-action waivers

What do two employers, one employee, and the NLRB have in common? They all want the US Supreme Court to decide on the legality of arbitration agreements that bar employees from pursuing work-related claims on a collective or class basis. Huge numbers of employers' and employees' rights are at stake, circuits courts are split, and more cases will be coming in from other circuits soon.

It all started with D.R. Horton, Inc., 357 NLRB No. 184 (2012), with the NLRB holding that it is an unfair labor practice for an employer to enforce agreements with individual employees that require them to use individual arbitration for all work-related disputes, because this interferes with the employees' right to engage in concerted activities. The 5th Circuit rejected this reasoning in D.R. Horton, Inc. v. NLRB, 737 F3d 344 (5th Cir 2013), saying that (1) the NLRA does not contain a “congressional command overriding” the Federal Arbitration Act (“FAA”); and (2) “use of class action procedures . . . is not a substantive right” under Section 7 of the NLRA.

NLRB v. Murphy Oil USA [Cert petition] [5th Circuit opinion] [Supreme Court briefs] is SCOTUSblog's petition of the day for November 2. The Murphy Oil case is essentially the same as D.R. Horton, and the 5th Circuit again ruled against the NLRB.

SCOTUSblog petitions of the day have included three other cases raising similar issues:

  1. Patterson v. Raymours Furniture Co. [Cert petition] [2nd Circuit opinion] [Supreme Court briefs
  2. Ernst & Young, LLP v. Morris [Cert petition] [9th Circuit opinion] [Supreme Court briefs
  3. Epic Systems Corporation v. Lewis [Cert petition] [7th Circuit opinion] [Supreme Court briefs

Taken as a whole, the petitions in the four cases raise these issues:

  • Does requiring employees to use individual arbitration for all work-related disputes interfere with the employees' right to engage in concerted activities under NLRA Section 7? 
  • Is the FAA’s rule that arbitration agreements be enforced “overridden by a contrary congressional command” in the NLRA? Shearson/Am. Express Inc. v. McMahon, 482 U. S. 220 (1987).
  • Is an arbitration agreement precluding class proceedings invalid because it operates as a "prospective waiver of a party’s right to pursue statutory remedies”? Am. Express Co. v. Italian Colors Rest., 133 S. Ct. 2304 (2013).
  • Is the rule in the NLRB's D.R. Horton case a proper application of the “savings clause” of FAA Section 2, which allows arbitration agreements to be denied effect based on generally applicable “grounds * * * at law or in equity for the revocation of any contract”?

The deadlines for filing responses are November 10 (Murphy Oil), November 14 (Epic Systems and Ernst & Young), and November 28 (Patterson). So we don't expect the Court to act on any of these petitions until their conferences on December 2 or 9.

[For recent decisions and pending employment law cases, see US Supreme Court Watch.]

 

 

Validity of Uber's arbitration agreement must be decided by an arbitrator, not a court

Is this arbitration agreement enforceable? The 9th Circuit has bolstered the position of employers who prefer to have an arbitrator (not a court) decide the initial question of whether an arbitration agreement itself is enforceable. Mohamed v. Uber Technologies (9th Cir 09/07/2016) [Opinion full text]

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