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Epic Systems v. Lewis; Ernst & Young LLP v. Morris

10/22/2016

 
Click here to read the brief in Epic Systems v. Lewis

Click here to read the brief in Ernst & Young LLP

NELF will be filing an amicus brief in support of certiorari in both of these cases, arguing that the Supreme Court should grant certiorari and decide that the NLRA does not repeal the FAA’s mandate to enforce class and collective action waivers in employment arbitration agreements. An employee’s NLRA “right to . . . engage in . . . concerted activities for mutual aid or protection” lacks the specificity and directness required by the Supreme Court to override the FAA’s mandate to enforce arbitration agreements according to their terms. NELF argues that, to displace the FAA’s mandate, the NLRA would have to state clearly that employees have the nonwaivable right to pursue group legal action against their employer. Nowhere does the NLRA announce this “contrary congressional command” to displace the FAA’s mandate. Therefore, the FAA should require courts to enforce class and collective action waivers in employment arbitration agreements. The background facts and procedure for each case are provided below.


Epic Sys. v. Lewis (7th Cir.): Jacob Lewis was a technical writer for Epic Systems, a health care software company. Epic required Lewis and certain other groups of employees, as a condition of continued employment, to agree to to submit any future wage-hour and other employment claims to binding individual arbitration only. Lewis consented by email to Epic’s arbitration agreement. (The agreement also contained a nonseverability or “jettison” clause, in which the parties agreed that if the class arbitration waiver were declared invalid, Lewis could only bring a class action in court.) A dispute arose concerning whether Lewis was entitled to overtime pay under the FLSA and state wage-hour law. Lewis filed both a Rule 23 class action and collective (opt-in) under the FLSA. Epic moved to dismiss the complaint and to compel the arbitration of Lewis’ claims on an individual basis. Lewis argued in opposition that Epic’s arbitration agreement was an unfair labor practice, in violation of § 8 of the NLRA, because it interfered with his right to engage in concerted activity for mutual aid or protection under § 7 of the same statute. The federal district court agreed, and the Seventh Circuit affirmed the lower court’s decision.

Ernst & Young v. Morris (9th Cir.): Stephen Morris and Kelly McDaniel were employees of the accounting firm Ernst & Young. As a condition of employment, Morris and McDaniel were required to sign agreements promising to pursue any future work-related claims exclusively through arbitration, and on an individual basis only. Notwithstanding the arbitration agreement, Morris brought a class and collective action against Ernst & Young in federal court, which McDaniel later joined, alleging that Ernst & Young had misclassified Morris and similarly situated employees as exempt from overtime pay under the FLSA and California law. The trial court granted Ernst & Young’s motion to compel, but a 2-1 panel of the Ninth Circuit reversed, agreeing with the employees that the NLRA provided them with a nonwaivable right to pursue group legal action. The dissent agreed with Ernst & Young and with the Fifth Circuit that the NLRA’s “concerted activities” language falls short of the “contrary congressional command” required by the Supreme Court to override the FAA’s mandate.

In particular, NELF will argue that, to escape their contractual obligation to arbitrate disputes on an individual basis only, the employees in these cases would have to show that the NLRA announces a “contrary congressional command” that employees have the nonwaivable right to pursue group legal action against their employer. But the NLRA contains no such contrary congressional command. The statute makes no mention of class actions and was enacted decades before the advent of the modern class action. Nor does the NLRA mention collective actions or even provide for an individual right of action. Congress could not have intended to provide employees with certain nonwaivable procedural rights associated with a nonexistent right of action.

The NLRA’s “right . . . to engage in . . . concerted activities for . . . mutual aid or protection” lacks the specificity and directness that this Court has required for a federal statute to repeal the FAA’s mandate to enforce arbitration agreements according to their terms. Under CompuCredit v. Greenwood, 132 S. Ct. 665, 669 (2012), a contrary congressional command should announce itself clearly on the face of a statute. Such an intent should not be “found” in the interstices of a statute, and certainly not by engaging in a strained and anachronistic interpretation of a vague statutory term such as “concerted activities.”

As with the Credit Repair Organization Act (“CROA”) under review in CompuCredit, the NLRA is also silent on the issue of invalidating the terms of an arbitration agreement. At issue in CompuCredit was whether the CROA overrode the contractual term to submit claims to binding arbitration. At issue here is whether the NLRA overrides the contractual term to arbitrate all employment-related disputes on an individual basis only. In both cases, the federal statute at issue says nothing about the enforceability of the disputed contractual term. Therefore, the FAA’s mandate to enforce the arbitration agreement according to its terms remains undisturbed for both CROA and NLRA claims. Accordingly, Lewis’ class and collective action waiver should be enforced.

This is confirmed by the NLRA’s statement of purpose, which makes no mention of legal action of any kind. To the contrary, the NLRA was expressly intended to avoid “industrial strife” through the “friendly adjustment of industrial disputes,” by protecting the employee’s right to self-organization in order to negotiate on an equal footing with the employer over the terms and conditions of employment. This clear purpose of industrial progress through negotiated compromise is incompatible with the coercive aims of a class or collective legal action, with its attendant threat of exacting an “in terrorem” settlement from the employer.
​

Finally, NELF intends to argue that the lower courts’ reliance on Eastex, Inc. v. NLRB, 437 U.S. 556 (1978), is entirely misplaced. Eastex did not involve any judicial action taken by employees, did not involve the FAA, and did not even interpret the NLRA’s “concerted activities” language. Instead, that case decided the entirely unrelated issue whether employees acted “for mutual aid or protection” if they acted outside of the immediate employer-employee relationship, by taking political action with respect to work-related issues.

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