Supreme Court Hears Oral Argument in Epic System Corp. v. Lewis

Court Considering Whether Employee Arbitration Agreements with Class-Action Waivers Violate the National Labor Relations Act October 6, 2017
On Monday, October 3, 2017, the Supreme Court heard consolidated oral argument in Epic Systems Corp. v. Lewis, No. 16-285, Ernst & Young LLP v. Morris, No. 16-300, and NLRB v. Murphy Oil USA, Inc., No. 16-307, on whether arbitration agreements with class- and collective-action waivers violate the NLRA, which gives employees the right to “engage in concerted action for mutual aid or protection.” The Department of Justice joined the argument in support of the employers, and the NLRB argued in support of the employees. Previous posts on these cases include our July 18 post, New York Appellate Division, First Department, Holds That Class and Collective Action Waivers Are Unenforceable Under the National Labor Relations Act, Differing with the Second Circuit; and our June 20 post, U.S. Department of Justice Changes Its Position Before the Supreme Court in Epic System Corp. v. Lewis.

At argument, Chief Justice Roberts, Justice Kennedy, and Justice Alito appeared to agree with the employers’ and DOJ’s position that employment arbitration agreements with class waivers do not violate the NLRA. Justice Kennedy suggested that employees could still act “in concert” by hiring one attorney to represent them in individual arbitrations and sharing information with that attorney to use across the cases. Certain Justices were puzzled by the NLRB’s argument that employment agreements mandating dispute resolution in a particular forum, even if that forum did not permit class or collective actions, were distinguishable from agreements with mandatory waivers no matter the forum. Chief Justice Roberts said that he could not “understand how that is consistent with your position that” employers cannot require employees to waive the right to class or collective arbitration. Chief Justice Roberts also expressed concern that if the Court found these agreements to be unlawful, approximately 25 million employment agreements would be invalidated.

Justices Ginsburg, Breyer, Sotomayor, and Kagan appeared to favor the employees’ and NLRB’s position that employee arbitration agreements with class waivers violate the NLRA. Justice Ginsburg noted that, because many individual employment claims involve relatively modest amounts, employees may be unable to find an attorney willing to pursue their claims unless they can join their claims together in a class or collective proceeding. And Justice Kagan said that, under the NLRA, “employers can’t demand as conditions of employment the waivers of concerted rights.”

The outcome of these cases is likely to be closely divided. Neither Justice Thomas nor Justice Gorsuch—two of the Court’s more conservative members—asked any questions. If they align themselves with Chief Justice Roberts, Justice Kennedy, and Justice Alito, then the Court may hold that class and collective action waivers in employment arbitration agreements do not violate the NLRA. The Court will issue a decision by June 2018. You may read the argument transcript here: https://www.supremecourt.gov/oral_arguments/argument_transcripts/2017/16-285_21o3.pdf

Class and Collective Actions