Monday, May 21, 2018

Supreme Court Holds That NLRA Does Not Prohibit Class Action Arbitration Waivers

Supreme CourtThe Supreme Court today issued its decision in Epic Systems, ruling for employers who, as part of mandatory arbitration clauses, require their employees to waive their right to class actions. This should come as a surprise to no one, as the case pitted the Court's hatred of class actions against the NLRA. 

The 5-member majority decision followed a typical pattern in many respects, including a continuation of its ever-broadening reading of the Federal Arbitration Act's protection of arbitration agreements and a rejection of an argument to grant the NLRB Chevron deference. What's more surprising though was the majority's reading of the NLRA's Section 7. Although it was not required to do so, the Court essentially overruled long-standing NLRB precedent holding that Section 7 protected employees who join together in collective legal actions to advance their workplace conditions. The Court defended this conclusion by, among other things, saying that "Section 7 focuses on the right to organize unions and bargain collectively" and holding that Section 7's protection for "other concerted activities," "like the terms that precede it, serve to protect things employees 'just do' for themselves in the course of exercising their right to free association in the workplace, rather than 'the highly regulated, courtroom-bound ‘activities’ of class and joint litigation.'” I've taught labor law for many years and have never seen Section 7 described in this narrow of a fashion. Indeed, the Court oddly cites the famous Washington Aluminum case for the proposition that "§7 cases have generally involved efforts related to organizing and collective bargaining in the workplace, not the treatment of class or collective action procedures in court or arbitration." One may debate whether Section 7 was originally thought to encompass class actions, but describing Washington Aluminum as an "organizing and collective bargaining" case is nuts--that's the classic decision involving non-union collective action. It involved a walkout by non-union workers who were sick of severely cold conditions in their plant; there was no union on the scene, no attempt to organize a union, and no collective bargaining.

Justice Ginsburg's dissent does a thorough job of showing why Section 7 is much broader than the majority makes it out to be. Using history, the NLRA's text, and NLRB precedent she also emphasized that access to the legal enforcement was a key aspect of the new rights embodied in the NLRA. She finishes with this:

If these untoward consequences stemmed from legislative choices, I would be obliged to accede to them. But the edict that employees with wage and hours claims may seek relief only one-by-one does not come from Congress. It is the result of take-it-or-leave-it labor contracts harking back to the type called “yellow dog,” and of the readiness of this Court to enforce those unbargained-for agreements. The FAA demands no such suppression of the right of workers to take concerted action for their “mutual aid or protection.” 

Given that this case will likely be followed shortly by a loss for public-sector unions in the Janus case, this term looks to go down as one that brought a major constriction of labor rights.

-Jeff Hirsch

http://lawprofessors.typepad.com/laborprof_blog/2018/05/supreme-court-holds-that-nlra-does-not-prohibit-class-action-arbitration-waivers.html

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Comments

Thanks, Jeff, for blogging on this today. I couldn't bring myself to do it. The decision is not even wrong.

Posted by: Rick Bales | May 21, 2018 3:11:10 PM

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