The Supreme Court to Consider Employees' Right to Seek Class-wide Relief

On Friday, January 13, 2017, the Supreme Court granted certiorari to consider the consolidated appeals of Epic Systems Corp. v. Lewis, Ernst & Young v. Morris, and NLRB v. Murphy Oil. The Court will consider a circuit split regarding whether arbitration agreements containing class action waivers are enforceable under the Federal Arbitration Act in the employment context. In Murphy Oil, the Fifth Circuit held that a corporate defendant did not commit unfair labor practices by requiring employees to sign its arbitration agreement, which contained a class action waiver. In Epic and Ernst & Young, the Seventh and Ninth Circuits held otherwise -- that class waivers in arbitration agreements signed by employees violated the National Labor Relations Act because the waivers restricted the workers' right to concerted action. Bryan Schwartz Law blogged about the appellate decisions here and here.

These cases do not dispute that employees may waive their right to proceed with claims against their employer in any forum other than arbitration. Rather, the Seventh and Ninth Circuits have held that employees cannot waive their right to proceed as a class in any forum. These circuits, as well as the current National Labor Relations Board, agree that the National Labor Relations Act of 1935 protects private sector employees' right to concerted action in workplace disputes.

This long-enshrined federally-granted right to concerted action has come under attack since the Supreme Court decided AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011). Concepcion broadly interpreted the Federal Arbitration Act of 1925 to preempt state laws that prohibit contracts from disallowing class-wide arbitration. While Concepcion was a consumer case, many courts, including the Fifth Circuit, have applied its holding to force employees to proceed with their claims against employers in arbitration, and to do so individually, rather than on a class-wide basis.

The Supreme Court should restore order in the lower courts by clarifying that the National Labor Relations Act protects workers' right to concerted action, that this right is not preempted by the Federal Arbitration Act, and that courts must stop applying Concepcion and its progeny to deny workers the right to proceed as a class in any forum.