United States Supreme Court to Resolve Class Action Waiver Issue

By Michelle D. Wyrick

In a matter of great interest to many employers, last week, the United States Supreme Court agreed to decide whether arbitration agreements that prohibit employees from pursuing class and collective remedies are enforceable. Courts are currently divided on the issue. The Supreme Court granted certiorari in three cases, Epic Sys. Corp. v. Lewis, from the Seventh Circuit, Ernst & Young LLP v. Morris, from the Ninth Circuit, and NLRB v. Murphy Oil, USA, from the Fifth Circuit, to resolve the question.

The dispute pits the savings clause of the Federal Arbitration Act (“FAA”), 9 U.S.C. §2, which allows invalidation of arbitration agreements only “upon such grounds as exist at law or in equity for the revocation of any contract” against employees’ rights to engage in protected, concerted activity under the National Labor Relations Act, 29 U.S.C. §157. The National Labor Relations Board (“NLRB”) takes the position that provisions in arbitration agreements requiring employees to waive their rights to pursue class or collective actions violate employees’ rights to engage in protected, concerted activity under the National Labor Relations Act (“NLRA”). In May 2016, the Seventh Circuit agreed and

Fifth Circuit Refuses to Grant NLRB a Hearing En Banc in DH Horton

By Edwin S. Hopson

The Fifth Circuit Court of Appeals has just denied the NLRB’s request for an en banc rehearing in DR Horton Inc.

In December, 2013, a panel of the Fifth Circuit rejected the Board’s finding that Section 7 of the Act prevented employers, as a condition of employment, from putting in place arbitration agreements that waived an employee’s right to pursue class claims in an arbitration forum. The Fifth Circuit panel ruled that the Board’s decision was not supported by the language in the National Labor Relations Act or its legislative history or purpose. The court also found that there was nothing in the Act that would override the application of the Federal Arbitration Act. Therefore the Board’s decision was in error because the Act does not prevent the enforcement of arbitration agreements of the type at issue.

So DH Horton is not the law anywhere in the Fifth Circuit. The Board may be considering petitioning the Supreme Court, as its next step.