On Monday, the Supreme Court ruled in a landmark case that employers can include a clause in their employment contracts that requires employees to arbitrate their disputes individually, thus waiving the right to resolve those disputes through joint legal proceedings.
The vote was 5-4, with Chief Justice John Roberts, Justices Anthony Kennedy, Clarence Thomas, Samuel Alito and Neil Gorsuch concurring. Gorsuch wrote the opinion, which resolved three disparate cases: Epic Systems Corp. v. Lewis, Ernst & Young LLP v. Morris and National Labor Relations Board v. Murphy Oil USA. All three cases were precipitated by an employee who had signed an employment agreement that contained an arbitration provision filed a lawsuit in federal court. The plaintiffs desired to bring individual and collective claims. The employers countered that under the terms of the arbitration agreements, the employees needed to go to individual arbitrations.
Writing the majority opinion, Gorsuch noted that the conflict between the Federal Arbitration Act, passed in 1925, which stated that an agreement to arbitrate a dispute “shall be valid, irrevocable, and enforceable” and the National Labor Relations Act, passed in 1935, which stated that employees had the right to work together for “mutual aid and protection,” was very recent. He pointed out that it was in 2012 when the National Labor Relations Board suggested that “the NLRA effectively nullifies” the FAA in cases like the ones before the court.
Gorsuch wrote, “It is this Court’s duty to interpret Congress’s statutes as a harmonious whole rather than at war with one another. And abiding that duty here leads to an unmistakable conclusion. The NLRA secures to employees rights to organize unions and bargain collectively, but it says nothing about how judges and arbitrators must try legal disputes that leave the workplace and enter the courtroom or arbitral forum. This Court has never read a right to class actions into the NLRA — and for three quarters of a century neither did the National Labor Relations Board.”
The court majority decided that the text of the FAA is abundantly clear that enforcing the terms of an agreement to arbitrate is just. The justification for the FAA was, in fact, its response “to a perception that courts were unduly hostile to arbitration.” Thus it directed courts to enforce agreements to arbitrate, and “also specifically directed them to respect and enforce the parties’ chosen arbitration procedures.”
As Amy Howe writes at SCOTUS Blog, “Nothing in the National Labor Relations Act, the majority concluded, trumps the FAA’s requirement that arbitration agreements be enforced. When a court is tasked with determining how two laws interact, the majority explained, it must figure out how to give them both meaning. … The majority rejected the employees’ argument that the NLRA’s reference to the right to engage in “other concerted activities for the purpose of collective bargaining or other mutual aid or protection” supersedes the FAA’s command to enforce arbitration agreements. The majority stressed that the NLRA provision at issue “focuses on the right to organize unions and bargain collectively.” It is significant, the majority noted, that the provision “does not express approval or disapproval of arbitration” and “does not mention class or collective action procedures.”
After the decision was announced, Epic Founder and CEO Judy Faulkner, who is an admitted liberal who donates hugely to Democrats, still stated: “It is important that employers protect an employees’ right to file complaints, while also providing for a fair forum in which those grievances are addressed. When it comes to grievances regarding wages and hours, we believe individual arbitration agreements strike that reasonable balance and are pleased with the court’s decision in support of this.”