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Big Business Urges Justices to Uphold Bans on Employee Class Actions

The National Law Journal

Big-business advocates are lining up with the Trump administration's new position in the U.S. Supreme Court that workplace arbitration agreements banning class actions do not violate federal labor law.

The organizations, including the U.S. Chamber of Commerce and the Retail Litigation Center, submitted friend-of-the-court briefs after acting Solicitor General Jeffrey Wall notified the court on June 16 that President Donald Trump’s Justice Department was taking a different position than the Obama administration.

The justices next term will hear arguments in a trio of disputes that will be among the most closely watched business cases. More than 70 cases, representing major U.S. companies, were filed in the federal appeals courts. Appeals courts were divided in their rulings.

The three cases in the Supreme Court are: National Labor Relations Board v. Murphy Oil USA (from the U.S. Court of Appeals for the Fifth Circuit); Epic Systems v. Lewis (Seventh Circuit), and Ernst & Young v. Morris (Ninth Circuit). The high court will decide whether arbitration agreements are enforceable under the Federal Arbitration Act or whether they violate the National Labor Relations Act.

Most of the business groups filing amicus briefs are represented by veteran Supreme Court advocates. They include: Jones Day's Beth Heifetz for The Employers Group; Goodwin Procter's William Jay for The Business Roundtable; Mayer Brown's Andrew Pincus for the U.S. Chamber of Commerce; Jenner & Block's Adam Unikowsky for the Retail Litigation Center; and the Washington Legal Foundation's Richard Samp.

In the U.S. Chamber's brief, Pincus, among other arguments, contends the justices have "made clear" that a statute must expressly mention arbitration in order to displace the Federal Arbitration Act. "The NLRA says nothing about arbitration. Indeed, Section 7 does not mention class actions or joint litigation—and its general reference to 'other concerted activities' is at the very most ambiguous about whether such activities are protected, which is insufficient to overcome the FAA," Pincus wrote in the brief.

Jay, in his brief for The Business Roundtable, said a decision that says class action waivers violate the labor law "would force employers to undergo 'arbitration' that is bereft of the benefits of arbitration, shorn of the efficiency and cost savings that make arbitration favored in the first place. Nothing in the collective bargaining provisions of the NLRA compels such a result."

Friend-of-the-court briefs supporting employees in the three cases are not yet due.

The question before the justices arose from a 2012 ruling by the NLRB in D.R. Horton. That decision said agreements requiring employees to use individual arbitration for all work-related disputes interfered with employees' right to engage in "other concerted activities," including class and collective actions. The board said that when such an agreement violates the NLRA, the FAA does not require its enforcement.

Last fall, Deputy Solicitor Edwin Kneedler filed a petition in the Supreme Court on behalf of the NLRB, which had lost in the Fifth Circuit. "The board, which is charged with enforcing the NLRA, has reasonably concluded that such agreements are unlawful under that act, because they would deprive employees of their statutory right to engage in 'concerted activities' in pursuit of their 'mutual aid or protection,'" Kneedler wrote.

The Trump administration’s amicus brief this month announced the government's changed position. Wall, the acting solicitor, told the high court: "We do not believe that the board in its prior unfair-labor-practice proceedings, or the government’s certiorari petition in Murphy Oil, gave adequate weight to the congressional policy favoring enforcement of arbitration agreements that is reflected in the FAA."

The NLRB is likely now to look in-house for counsel to defend its position unless the board's composition changes and it repudiates that position between now and the Aug. 9 deadline for filing its brief on the merits.

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Reprinted with permission from the June 21, 2017 edition of The National Law Journal © 2017 ALM Properties, Inc. All rights reserved. Further duplication without permission is prohibited.

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