Opinion analysis: Employers prevail in arbitration case

Opinion analysis: Employers prevail in arbitration case[NOTE: This post will be updated with additional analysis later in the day.] In 1925, Congress passed the Federal Arbitration Act, which (among other things) provides that an agreement to arbitrate a dispute “shall be valid, irrevocable, and enforceable.” Ten years later, Congress enacted the National Labor Relations Act, which makes clear that employees have […]

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Opinion analysis: Employers prevail in arbitration case

[NOTE: This post will be updated with additional analysis later in the day.]

In 1925, Congress passed the Federal Arbitration Act, which (among other things) provides that an agreement to arbitrate a dispute “shall be valid, irrevocable, and enforceable.” Ten years later, Congress enacted the National Labor Relations Act, which makes clear that employees have the right to work together for “mutual aid and protection.” Today the Supreme Court ruled, by a vote of 5-4, that employers can include a clause in their employment contracts that requires employees to arbitrate their disputes individually, and to waive the right to resolve those disputes through joint legal proceedings instead. Although it likely won’t garner the attention that some of this term’s other cases will receive, the decision was a huge victory for employers, because it could significantly reduce the number of claims against them.

Today’s opinion resolved three cases that were argued together on the first day of the term: Epic Systems Corp. v. Lewis, Ernst & Young LLP v. Morris and National Labor Relations Board v. Murphy Oil USA. Each arose when an employee who had signed an employment agreement that contained an arbitration provision filed a lawsuit in federal court, seeking to bring both individual and collective claims. The employers argued that, under the terms of the arbitration agreements, the employees needed to go to individual arbitrations, and today the Supreme Court agreed.

Justice Gorsuch with opinion in Epic Systems v. Lewis (Art Lien)

In an opinion by the court’s newest justice, Neil Gorsuch, the majority emphasized that the Federal Arbitration Act “instructed federal courts to enforce arbitration agreements according to their terms—including terms providing for individualized proceedings.” Nothing in the National Labor Relations Act trumps that requirement, the majority explained, particularly when the provision of the NLRA on which the employees rely “does not express approval or disapproval of arbitration” and “does not mention class or collective action procedures.” Indeed, the majority stressed, the NLRA “does not even hint at a wish to displace the Arbitration Act—let alone accomplish that much clearly and manifestly, as our precedents demand.”

The majority concluded that, although it “may be debatable” whether the result it reaches is a sound policy, “the law is clear.” Congress can always pass new legislation to reach a different result, the majority pointed out, but it is not the Supreme Court’s job to “substitute its preferred economic policies for those chosen by the people’s representatives.”

Justice Ginsburg dissents in Epic Systems v. Lewis (Art Lien)

Justice Ruth Bader Ginsburg took the relatively rare step of reading her dissent – which was joined by Justices Stephen Breyer, Sonia Sotomayor and Elena Kagan – from the bench. Criticizing the majority’s decision as “egregiously wrong,” Ginsburg lamented that today’s ruling will lead to “the underenforcement of federal and state statutes designed to advance the well-being of vulnerable workers,” because it will rarely be worthwhile for individual employees to pursue their own claims.

This post was originally published at Howe on the Court.

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