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Total Articles: 15

Supreme Court Hears Argument on Validity of Class Action Waivers in Employment Arbitration Agreements

The United States Supreme Court heard a one-hour consolidated oral argument in three arbitration cases involving the intersection of the National Labor Relations Act and the Federal Arbitration Act on October 2, 2017.

Future of Class Action Waivers: The Supreme Court Hears Oral Argument

On October 2, 2017, the Supreme Court of the United States heard oral argument in three consolidated cases that will decide the future of class action waivers in the employment context. These cases—National Labor Relations Board v. Murphy Oil USA, Inc., Epic Systems Corp. v. Lewis, and Ernst & Young LLP v. Morris—kicked off the Court’s new term and likely will be the most important employment cases to be decided in the coming year. We were present this morning for the Court’s oral argument, and while you never know how the Court will rule, a few telling moments stood out, as explained below.

Sixth Circuit Adopts NLRB’s D.R. Horton Rule and Deepens Circuit Split on Class Action Waivers

The Sixth Circuit Court of Appeals—apparently unable to wait a few months for the Supreme Court of the United States to rule on the issue—has now cast its lot with the National Labor Relations Board (NLRB) and the Seventh and Ninth Circuits in finding class action waivers in employment arbitration agreements unlawful under the National Labor Relations Act (NLRA).

Class and Collective Action Waivers Lawful under NLRA, Eighth Circuit Finds, Contrary to Seventh Circuit

The National Labor Relations Board erred in determining that a company violated the National Labor Relations Act by maintaining and enforcing a mandatory arbitration agreement which prohibited employees from bringing or participating in class or collective actions to redress employment-related disputes in any forum, the U.S. Court of Appeals for the Eighth Circuit, in St. Louis, has held.

Supreme Court Review Likely After Seventh Circuit Creates Split on Class and Collective Action Waivers under NLRA

Setting the stage for U.S. Supreme Court review, the U.S. Court of Appeals for the Seventh Circuit, in Chicago, has held that arbitration agreements that prohibit employees from bringing or participating in class or collective actions violate the National Labor Relations Act. Lewis v. Epic Systems Corp., No. 15-cv-82-bbc (7th Cir. May 26, 2016). This holding is contrary to that of the Second, Fifth, Eighth, and Ninth Circuit Courts of Appeals.

Eighth Circuit Finds Class and Collective Action Waivers Lawful Under NLRA, Contrary To Seventh Circuit

On the heels of the 7th Circuit’s May 27 Lewis v. Epic Systems decision, reported here, yesterday the Eighth Circuit Court of Appeals held that the NLRB erred in determining that Cellular Sales of Missouri, LLC violated the NLRA by maintaining and enforcing a mandatory arbitration agreement under which employees waived their rights to pursue class or collective action to redress employment-related disputes in any forum.

Fifth Circuit Overrules NLRB on D.R. Horton Mandatory Arbitration Case

As we previously reported, in D.R. Horton, the NLRB held that a mandatory arbitration agreement that waives employees’ rights to participate in class or collective actions is unlawful under the National Labor Relations Act (NLRA). As recently as last month, the NLRB and its ALJs have continued to rely on D.R. Horton to find unlawful both mandatory and non-mandatory arbitration agreements, and even expanded the case’s holding to further restrict the rights of employers to invoke arbitration agreements, even if such agreements contain opt-out clauses.

Fifth Circuit Rejects NLRB's D.R. Horton Decision

In a major win for employers, the Fifth Circuit Court of Appeals, on December 3, 2013, rejected the highly controversial D.R. Horton, Inc. decision from the National Labor Relations Board (NLRB).

5th Circuit Dashes Class Action in Arbitration Setting

The interaction between arbitration and class/collective actions which seems to be continually evolving, took another positive step for employers in the 5th Circuit with today's decision in Reed v. Florida Metro University, Inc. (5th Cir 5.18.12).

Divided Supreme Court Endorses Use of Class Arbitration Waivers

On April 27, 2011, a divided U.S. Supreme Court held that the Federal Arbitration Act (FAA) protects an employer’s right to include a class action waiver in its arbitration agreement even though a state law bars such provisions as unconscionable. In a 5-4 decision, the Court found that “[s]tates cannot require a procedure that is inconsistent with the FAA, even if it is desirable for unrelated reasons.”

High Court Says Arbitrators Cannot Decide Class Claims Unless Arbitration Agreement Specifically Says So – Does this Apply to Employment Claims?

In Stolt-Nielsen S.A. v. AnimalFeeds International Corp., the Supreme Court ruled that arbitrators cannot decide class action styled arbitration claims unless an arbitration agreement specifically provides for it. But the Court’s ruling may not become the boon that it seems for employers. An argument can be made that the decision does not apply in the context of employment claims because the National Labor Relations Act (NLRA) gives employees the right to engage in concerted activities for the purpose of mutual aid or protection. Employers that interfere with those rights commit unfair labor practices. So, theory being, employers that impose arbitration on employees—but at the same time prohibit them from banding together to arbitrate their claims—unlawfully interfere with employees’ rights protected the NLRA.

Supreme Court Rules Against Inference of Class Arbitration in “Silent” Contracts.

On April 27, with Justice Samuel Alito writing for the 5-3 majority (Justice Sonia Sotomayor abstained), the U.S. Supreme Court addressed class-action arbitration when the parties’ agreement was silent regarding the aggregation of multiple parties’ claims. According to the Court, the arbitration panel’s imposition of class arbitration – despite the parties’ stipulation that they had not reached an agreement on this issue – is “fundamentally at war” with the Federal Arbitration Act (FAA) principle that arbitration is a matter of consent. “[A]n implicit agreement to authorize class action arbitration,” the Court ruled, “is not a term that the arbitrator may infer solely from the fact of an agreement to arbitrate.”

Supreme Court Rules Class Arbitration Not Allowed When Agreement is Silent.

On April 27, 2010 the U.S. Supreme Court decided that class arbitration is permissible only when the parties to a contract specifically agree. That is, silence does not amount to an implicit agreement to class arbitration. This question had confounded courts and arbitrators for years.

No Class Arbitration Under the FAA Unless Specifically Agreed, At Least for Now.

Today the Supreme Court decided a case important in the employment law field although the underlying case was a commercial dispute. The question in Stolt-Nielsen v. AnimalFeeds International (S.Ct. 4.27.10) [pdf] was whether under the Federal Arbitration Act, arbitrators could decide that class action was appropriate if the arbitration agreement was silent on that issue. Holding that the answer was no, Justice Alito wrote:

Careful What You Ask For... (4th Cir.)

A recent Fourth Circuit case highlights potential pitfalls with class and collective action arbitrations. In Long John Silver’s Restaurants, Inc. v. Cole, et al., 514 F.3d 345 (4th Cir. 2008), the court affirmed an arbitrator’s award determining (i) the Fair Labor Standards Act’s (FLSA) “opt-in” collective action certification process was inapplicable to the arbitration proceedings, and (ii) employees could pursue an “opt out” class action. The award magnified the scope of the case by including all employees who fell within the definition of the putative class, not just those who filed consents to join the action.
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