On Monday, the Roberts Court took another significant step in its
ongoing project to hobble class actions and impose barriers to employees
seeking redress against their employers by holding that class action waivers
within arbitration agreements do not violate the National Labor Relations Act
(“NLRA”). The employees, seeking to recover unpaid wages on behalf of
themselves and other employees under the Fair Labor Standards Act (“FLSA”), had
argued that the NLRA’s Section 7, which guarantees employees’ “right to
self-organization, to form, join, or assist labor organizations, to bargain collectively
. . . , and to engage in other concerted activities for the purpose of
collective bargaining or other mutual aid or protection,” prohibits employers
from requiring that employees agree to individual, binding arbitration as a
condition of continued employment.
The case, Epic Systems Corp. v. Lewis,
comes on the heels of series of Roberts Court cases expanding the ability of
companies to impose individual arbitration on their employees and customers,
thus preventing employees and consumers from filing lawsuits in open court or
filing class actions anywhere. Bryan Schwartz Law has written extensively about
the Court’s decisions expanding the Federal Arbitration Act (“FAA”) at the
expense of the rights of employees and consumers: here, here, here,
here, here, and here. In 2001, the Rehnquist
Court ruled in Circuit City Stores, Inc.
v. Adams that the FAA’s express exclusion of “the contracts of employment
of seamen, railroad employees, or any
other class of workers engaged in foreign or interstate commerce,” meant to
remove only the employment disputes of transportation workers from binding
arbitration, notwithstanding the broad “any other class of workers” language in
the Act. Then, in 2011, the Roberts Court approved of class action waivers in
consumer arbitration contracts in AT&T
Mobility v. Concepcion.
The Court’s opinion in Epic Systems, while hardly a surprise given this Court’s expressed
disregard for the rights of workers and consumers in its recent arbitration
jurisprudence, is notable for the sheer level of its intellectual dishonesty. Justice
Gorsuch, writing for the five-Justice majority, feigns confusion as to why the National
Labor Relations Board did not address the apparent conflict between the NLRA (enacted
1935) and the FAA (enacted 1925) until 2012, when the obvious answer is that no
one thought that the FAA had anything to do with employment disputes in the
late 1930s when Congress passed both the NLRA and the FLSA, which permits
employees to bring “collective actions” to recover unpaid wages.
Gorsuch counsels judicial restraint in admonishing the
employees for asserting a conflict between the FAA and NLRA – “This Court is
not free to substitute its preferred economic policies for those chosen by the
people’s representatives” – but fails to mention that the current regime making
compulsory, pre-dispute arbitration a ubiquitous requirement for employees and
consumers is a recent, judicial
invention. Given the low value of most individual employment and consumer claims,
the right-wing innovation is tantamount to a get-out-of-jail-free card (or out-of-liability-free
card, at least) for companies engaging in wage theft and other insidious
business practices, undermining fair competition with companies that play by the
rules.
Completely
absent from Court’s opinion is any discussion or concern as to how forced
individual arbitration undermines the substantive rights enshrined in laws like
the FLSA and Title VII of the Civil Rights Act of 1964 (prohibiting employment
discrimination). The success of these Acts has depended greatly on the ability
to bring group actions challenging policies and practices that injure large
numbers of workers. For instance, the landmark 1971 discrimination case Griggs v. Duke Power Co. involved a
class of African-American employees who successfully challenged high school
diploma and IQ-testing requirements that were unrelated to their jobs, but had
the effect of keeping African-Americans out of the most desirable positions. In
Gorsuch’s world, these sorts of fundamental statutory protections must give way
to the Roberts Court’s arbitration regime, under which its expansive reading of
the FAA trumps all.
Justice Ginsburg penned a fiery and forceful dissent,
joined by Justices Breyer, Sotomayor, and Kagan, in which she blasts the
majority opinion for trampling on the ability of employees to exercise their
statutory rights. Ginsburg traces the history of the Court’s labor
jurisprudence, noting that New Deal legislation like the NLRA and the FLSA
arose from an understanding that individual employees lacked the bargaining
power to demand fair working conditions, and that only through acting
collectively could employees “match their employers’ clout in setting the terms
and conditions of employment.” In that sense, the majority’s opinion, premised
on the fanciful notion that most employees have any ability to negotiate when
their employers demand they sign an arbitration agreement, reflects a return to
the pre-New Deal Lochner era, when
the Court routinely struck down worker protections as violating the supposed freedom
to contract.
Ginsburg further notes that the result of Epic Systems “will be the
underenforcement of federal and state statutes designed to advance the
well-being of vulnerable workers.” Low-wage employees, especially, may be
reluctant to take on their employers alone for fear of retaliation, since the
costs and risks of proceeding individually often dwarf the potential
recoveries. Of course, this is not an accidental outgrowth of the Roberts
Court’s arbitration jurisprudence, but its central design: to insulate
companies from liability for harm to their employees and customers.
After Epic Systems,
employees, consumers, and those who advocate on their behalf have an
increasingly limited toolbox to confront corporate abuse on a class-wide basis,
so long as employers can demand individual arbitration. At this point, the only
comprehensive solution is likely a legislative one, highlighting the importance
of who Americans elect to the next Congress. When most Americans know victims
of corporate overreaching – a day we fear is coming soon – the tide will turn,
and the Roberts Court will be seen in its true light, on the wrong side of
history.
