The Fight to Preserve Class Action Suits for Employees

By Maximilian Raileanu

Amidst the vast array of policy changes that have occurred during the first ten months of the Trump administration, one in particular has drawn the attention of the nation and the Supreme Court of the United States.[1]  On January 13, 2017, the Supreme Court consolidated two cases and granted a writ of certiorari in NLRB v. Murphy Oil USA, Inc.[2] The issue in this case is, “whether arbitration agreements with individual employees that bar them from pursuing work-related claims on a collective or class basis in any forum are prohibited as an unfair practice under 29 U.S.C. § 158(a)(1) . . . .”[3]  This case is the result of a series of lower court cases that began in 2011 with AT&T Mobility LLC v. Concepcion.[4]  In AT&T Mobility LLC v. Concepcion, the Supreme Court held that the Federal Arbitration Act preempted a California rule making class arbitration waivers in consumer contracts unconscionable.[5]  Nonetheless, the National Labor Relations Board (“NLRB”), in In re D. R. Horton, Inc. concluded that a mandatory arbitration provision for employees was an unfair labor practice and violated section 8(a)(4) and 8(a)(1) of the National Labor Relations Act.[6]  The board’s decision in In re D. R. Horton, Inc. is relevant because the board concluded that it’s decision supersedes the Supreme Court’s interpretation of the FAA in Concepcion.[7]  Now, the Supreme Court will look to end this ongoing debate.

In Murphy Oil USA, the NLRB is arguing that these arbitration agreements violate 29 U.S.C. 158(a)(1) which made it “unfair for employers to interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in section 157”.[8]  Specifically, Murphy Oil USA argues that, “the NLRA should be construed to avoid conflicting with the FAA’s unambiguous mandate.” [9]  Observing the relevant language from the FAA’s mandate, the position of the NLRB appears to contravene it:

a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction, or the refusal to perform the whole or any part thereof, or an agreement in writing to submit to arbitration an existing controversy arising out of such a contract, transaction, or refusal, shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.[10]

This language clearly mandates that contracts evidencing agreement to arbitrate controversies are valid and must be enforced and Murphy Oil’s contract with its employees appears to fall within the FAA.[11]  The NLRA also appears to be against the NLRB as it says that, “employees shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection . . . .”[12]  Interpreting the language of this statute plainly, employer to employee arbitration contracts does not fall under “assist labor organizations” or “to bargain collectively”.  The only opportunity for the NLRB to make a persuasive argument is the NLRA’s language allowing employees to carry out “concerted activities for the purpose of . . . protection”.[13]

Viewing this issue as a whole, the law appears to favor Murphy Oil USA, Inc.  However, after oral arguments were heard on October 3, 2017, most of the justices seem to be leaning towards their standard ideological opinions.[14]  This case needs to be closely watched because the implications for the business community, in either result, are considerable.  If the Supreme Court were to rule in favor of NLRB, businesses would be bound to drudge through the courts for many disputes arising with their employees.  But if the court rules in favor of Murphy Oil USA, it could be seen as depriving employees of their right to have a dispute resolved by a neutral Article III court.

 

[1] See Renwei Chung, The Trump Administration Seeks to Rip The Heart Out Of Labor And Employment Law, Above the Law (Sept. 29, 2017, 7:02 PM) https://abovethelaw.com/2017/09/the-trump-administration-seeks-to-rip-the-heart-out-of-labor-and-employment-law/?rf=1 (revealing that the Trump administration changed the stance of the Justice Department to allow employers to require employees to enter into arbitration agreements).

[2] NLRB v. Murphy Oil USA, Inc., SCOTUSblog (Last Updated Oct. 3, 2017), http://www.scotusblog.com/case-files/cases/national-labor-relations-board-v-murphy-oil-usa-inc/.

[3] Id.; See Unfair Labor Practices, 29 U.S.C. A. § 158(a)(1) (West 1947) (explaining that this statute protects certain rights of employees and the Supreme Court must determine whether mandatory arbitration infringes upon these protected rights).

[4] See Evan Tager, Supreme Court Will Review NLRB’s Anti-Arbitration D.R. Horton Rule, Mayer Brown: Class Defense Blog (Jan. 17, 2017)

https://www.classdefenseblog.com/2017/01/supreme-court-will-review-nlrbs-anti-arbitration-d-r-horton-rule/ (explaining the progression of this issue throughout the lower courts and revealing there is a circuit split for the Supreme Court to deal with).

[5] AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 352 (2011).

[6] In re D. R. Horton, Inc., 357 NLRB 2277, 2292 (West 2012).  But See Tager, supra note 4 (revealing that multiple circuit courts have rejected the holding in this case).

[7] Tager, supra note 4.

[8] Unfair Labor Practices, 29 U.S.C. A. § 158(a)(1) (West 1947).

[9] Reply of petitioner Epic Systems Corp. & respondent Murphy Oil USA, Inc. at 4, NLRB v. Murphy Oil USA, Inc., SCOTUSblog (Sept. 11, 2017) http://www.scotusblog.com/wp-content/uploads/2017/10/16-28516-307rb.pdf.

[10] Federal Arbitration Act, 9 U.S.C.A. § 2 (West 1947).

[11] See Murphy Oil USA, Inc. v. N.L.R.B., 808 F.3d 1013, 1015 (5th Cir. 2015) (explaining that there is a balance between the FAA and unfair labor practices, and the arbitration agreement between Murphy Oil and its employees is a valid contract).

[12] Right of employees as to organization, collective bargaining, etc., 29 U.S.C.A. § 157 (West 1947).

[13] Id.

[14] Alison Frankel, In SCOTUS Class Waiver Case, DOJ, Employers Say Don’t Trust NLRB, Reuters, (Oct. 3 2017, 2:16 PM), https://www.reuters.com/article/legal-us-otc-nlrb/in-scotus-class-waiver-case-doj-employers-say-dont-trust-nlrb-idUSKCN1C82BM.

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