Earlier today, the United States Supreme Court granted certiorari in National Labor Relations Board v. Murphy Oil USA, Case No. 16-307, Epic Systems Corp. v. Lewis, Case No. 16-285 and Ernst & Young LLP v. Morris, Case No. 16-300, consolidating them for argument. The three cases present the question whether class action waivers in employment arbitration agreements violate the National Labor Relations Act (“NLRA”). The Supreme Court’s action promises the much-anticipated resolution of the circuit split on the issue.
Arbitration agreements that require employees to pursue claims in arbitration rather than in court have long been enforced pursuant to the Federal Arbitration Act (“FAA”). Due to a series of Supreme Court decisions, employers increasingly have included class and collective action waivers in such agreements. However, the National Labor Relations Board (“NLRB”) has taken the position that employers violate the NLRA when they make such waivers in arbitration agreements a condition of employment.
Disagreeing with the NLRB, in D.R. Horton, Inc. v. NLRB, 737 F.3d 344 (5th Cir. 2013) and Murphy Oil USA, Inc. v. NLRB, 808 F.3d 1013 (5th Cir. 2015), the United States Court of Appeals for the Fifth Circuit generally held that class and collective action waivers do not violate the NLRA. Since then, the Second and Eighth Circuits followed the Fifth Circuit and enforced arbitration agreements requiring employees to submit their employment claims to individual arbitration. (Click for more information on the D.R. Horton case.)
Last May, the Seventh Circuit created a circuit split in Lewis v. Epic Systems Corp., 823 F.3d 1147 (7th Cir. 2016), holding that arbitration agreements that prohibit employees from bringing or participating in class or collective actions violate the NLRA. Most recently, in Morris v. Ernst & Young, No. 13-16599, 2016 U.S. App. LEXIS 15638 (9th Cir. Aug. 22, 2016), the Ninth Circuit agreed with the Seventh Circuit and the NLRB. (Click for more information on the Epic Systems Corp. case and the Ernst & Young case.)
In September 2016, the employers in Epic Systems Corp. and Ernst & Young and the NLRB in Murphy Oil each petitioned the Supreme Court to decide the issue once and for all. Reflecting the state of uncertainty on the issue, cases presenting this same question are currently before several other Courts of Appeals.
Analysis of Supreme Court’s Action
Given the issue’s importance and the requests by both employers and the NLRB to have the Supreme Court decide the issue, it is unsurprising that the Supreme Court granted certiorari and consolidated these cases. In the past, critical Supreme Court’s decisions regarding class action waivers (albeit outside the employment context) were decided by 5-4 and 5-3 votes and were authored by the late Justice Antonin Scalia. By the time the Court decides the issue, Justice Scalia’s replacement is likely to be on the Court.
Following the Supreme Court’s decision today, the Petitioners’ merits briefs will likely be due within 45 days from today, the Respondents’ briefs will likely be due 30 days after the Petitioners’ briefs are filed, and reply briefs will likely be due 30 days thereafter. Still, the briefing schedule may be slowed, as many amicus briefs are anticipated.
Until the Supreme Court decides the matter one way or another, employers with such waivers will continue to face an uncertain landscape. We will keep you informed on the issue. In the meantime, please contact Jackson Lewis P.C. if you have any questions about drafting or enforcing arbitration agreements.