In late 2017 or early 2018, employers should anticipate clarity from the U.S. Supreme Court as to
whether arbitration agreements requiring workers to waive their right to file class or collective
actions violates the National Labor Relations Act (“NLRA”). Stemming from a series of rulings by the
National Labor Relations Board (“NLRB”) that it is unlawful to condition employment on the waiver of
the right to engage in class litigation, the U.S. Supreme Court is set to hear oral argument at the
beginning of October.
Since the NLRB’s D.R. Horton decision in 2012 there has been a split among the Circuit Courts of
Appeal on the legality of class action waivers. For example, Epic Systems Corp. v. Lewis the Seventh
Circuit rendered a class action waiver unenforceable in agreement with D.R. Horton. Subsequently,
the Seventh Circuit was joined by the Sixth and Ninth Circuits who took a similar position in Ernst &
Young LLP v. Morris. In contrast, the Second, Eighth, and Fifth Circuits have disagreed with the D.R.
Horton decision. Due to this disagreement in the lower courts, in January 2017 the Supreme Court
granted three petitions for certiorari and agreed to hear the Lewis, Morris, and Fifth Circuit case NLRB
v. Murphy Oil in one consolidated case on October 2, 2017.
Because the NLRA protects the “concerted activities” of employees irrespective of union
participation, the Supreme Court’s decision will affect many different types of industries across the
country. As shown in a recent class action survey, more than 50% of U.S. companies faced
employment class actions in 2016. Thus, the Supreme Court’s decision could significantly increase or
reduce the scope of class or collective action litigation tactics.
A Republican majority may also influence the Supreme Court’s decision. In both 2011 and 2013, eight
of the Supreme Court justices then sitting split 4-4 on the enforceability of commercial class action
waivers. Newly appointed Justice Neil Gorsuch will play a critical role in the Supreme Court’s decision
as to the validity of class action waivers in the employment context. Although his position is
unknown, Gorsuch’s history as a Tenth Circuit judge shows him to be employer friendly. Hence,
however the Supreme Court rules, employers may soon receive much needed clarity on the
contentious issue of class and collective action waivers.
Read the full story at Supreme Court Set To Weigh In On Class Action Waivers | Burr & Forman – JDSupra