Class Action Waiver Update: Ogletree Deakins Files Supreme Court Amicus Brief Supporting Businesses and Employers

On June 16, 2017, Ogletree Deakins filed an amicus brief in the class action waiver cases that are currently before the Supreme Court of the United States: National Labor Relations Board v. Murphy Oil USA, Inc., Epic Systems Corp. v. Lewis, and Ernst & Young LLP v. Morris. The high court had agreed to take up the contentious class action waiver issue earlier this year to decide whether the National Labor Relations Board (NLRB) can ban class action waivers in employment arbitration agreements under the National Labor Relations Act (NLRA) or whether such waivers are protected under the Federal Arbitration Act (FAA). Ogletree Deakins prepared the amicus brief on behalf of the National Association of Home Builders, the National Federation of Independent Business, the Society for Human Resource Management, and the Council on Labor Law Equality, which collectively represent thousands of employers and businesses across the country.

Background

The controversy stems from the 2012 D.R. Horton case in which the NLRB decided that employers cannot use class action waivers in arbitration agreements with employees covered by the NLRA. The holding in that case conflicted with the Supreme Court’s precedent under the FAA approving class action waivers—albeit in a non-NLRA context. Most federal courts, including the Second Circuit, Eighth Circuit, and  Fifth Circuit (in an appeal handled by Ogletree Deakins), disagreed with the Board’s reasoning. Although dozens of courts continued to reject the Board’s rationale as inconsistent with the FAA, three courts of appeals—the Seventh Circuit in Epic Systems v. Lewis, the Ninth Circuit in Ernst & Young LLP v. Morris, and the Sixth Circuit in NLRB v. Alternative Entertainment, Inc.—went the other direction, creating a circuit split.

The Brief’s Arguments

The appeals involve the interaction of the FAA and the NLRA, and the parties in large part focus their arguments on the FAA. Ogletree Deakins’ brief, on the other hand, focuses on the NLRA, demonstrating that statute does not grant employees a substantive, non-waivable right to invoke class action, collective action, and joinder procedures in litigating their employment-related claims. 

The brief encourages the Supreme Court to overrule D.R. Horton on the basis that it incorrectly asserts that the NLRA grants covered employees a substantive right to invoke class action, collective action, and joinder procedures. The brief notes that the Supreme Court “has already held litigants do not possess a substantive right to specific adjudicatory procedures” and argues that “[t]he Board has no authority to grant employees a substantive right to invoke collective procedures.”

The brief also encourages the Court to “hold the NLRA does not provide a substantive right to invoke collective procedures” to avoid any possible ambiguity about the enforceability of individual employment arbitration agreements outside the coverage of the FAA. Ogletree Deakins argues that the Court should reach this issue (i.e., whether the NLRA provides such a right irrespective of the FAA), because not all employees and not all arbitration agreements are covered by the FAA.

Looking Forward

The employers filed their briefs on June 9, and amicus briefs supporting the employers were filed on June 16. The cases will likely be argued before the Supreme Court in the Fall of 2017, with a decision expected in late 2017 or early 2018.

Ogletree Deakins shareholders, Brian E. Hayes (who is a former Member of the Board), Ron Chapman, Jr., and Christopher C. Murray, authored the brief on behalf of the four trade groups. Chapman and Murray successfully represented D.R. Horton before the Fifth Circuit in its landmark decision rejecting the Board’s class-action-waiver ban and have represented numerous other employers challenging the Board’s D.R. Horton decision, including in the Second Circuit in Patterson v. Raymours Furniture Company, Inc., 659 Fed. App’x 40 (2d Cir. 2016).