Employees appeared to face an uphill fight in the U.S. Supreme Court on Monday as the justices heard arguments in a closely watched dispute over whether class action waivers in workplace arbitration agreements violate federal labor laws.
The three cases, consolidated for an hour of argument on the new term’s opening day, offered the justices a clash between the commands of two old, federal laws—the National Labor Relations Act, which protects employees’ rights to engage in “concerted” activities, and the Federal Arbitration Act, which mandates enforcement of valid arbitration agreements.
The high court’s arbitration decisions offer a “well trod path” for resolving the issue, argued Kirkland & Ellis partner Paul Clement, counsel to the three employers. Any tie, he added, “goes to the FAA.”
Not so, countered National Labor Relations Board general counsel Richard Griffin. The board’s position that such class waivers violate labor laws relies on “long-standing precedent,” he argued. Workers can agree to arbitrate individually as long as there is some forum for collective actions.
Here are some key moments and takeaways from the arguments in Epic Systems v. Lewis; Ernst & Young v. Morris; and NLRB v. Murphy Oil. Disputes involving dozens of companies are on holding pending the resolution of the cases.
‘All the Essential Features of Yellow-Dog Contracts’
The high court’s liberal wing pounced early and often on arguments by Clement and Principal Deputy Solicitor General Jeffrey Wall.
“This kind of contract, there is no true bargaining,” Justice Ruth Bader Ginsburg told Clement. “This has all the essential features of yellow-dog contracts. That is, that there is no true liberty to contract on the part of the employee, and that’s what Norris-LaGuardia wanted to exclude.” (Yellow-dog contracts were agreements in which a prospective employee promises as a condition of employments not to join a union. They were outlawed by the 1932 Norris-LaGuardia Act.)
Ginsburg, addressing Wall, noted that in one of the three cases, the individual claim was for $1,800. “This is truly a situation where there is strength in numbers. That was the whole idea of the NLRA, to protect the worker,” she said.
Justice Stephen Breyer was not any happier with Clement’s position, telling the former George W. Bush solicitor general, “I haven’t seen a way that you can, in fact, win the case, which you certainly want to do, without undermining and changing radically what has gone back to the New Deal, that is, the interpretation of Norris-LaGuardia and the NLRA.”
And Justices Sonia Sotomayor and Elena Kagan also seemed skeptical of the employer-side arguments.
Justice Department’s Litigation Switch Goes Unaddressed
In June, the Justice Department reversed its position in the labor cases, telling the Supreme Court that workplace arbitration agreements prohibiting class actions do not violate federal labor law. Wall, the acting solicitor general at the time, told the court that after the change in administrations, the Justice Department had reconsidered. The new position put the department at odds with the NLRB.
About-faces by the Justice Department during the Obama administration drew reactions from some justices during oral arguments in several cases. But no one mentioned the Trump administration switch on Monday.
Four Lawyers, One Hour
The Justice Department’s reversal of position in the labor cases set loose the National Labor Relations Board to defend its contrary position. The board’s general counsel, Griffin, shared argument time with Daniel Ortiz of the University of Virginia School of Law, counsel to one of the employees, Jacob Lewis, in the cases. Clement shared argument time with the Justice Department’s Jeffrey Wall, now the second-in-command to Noel Francisco, the U.S. solicitor general.
“With that number of lawyers, you run the risk of inconsistent positions, which we saw at one point with Griffin and Ortiz,” said Paul Salvatore, a Proskauer Rose employment lawyer.
Griffin and Ortiz disagreed over whether an arbitrator’s rule prohibiting class actions of fewer than 50 employees would violate the NLRA. Griffin said no. An employee who agrees to arbitration, he said, must follow the arbitral rules just as an employee who chooses to file a class action in court must follow the class action rules of that forum. Ortiz, however, said yes. The National Labor Relations Act, he said, requires the availability of a forum for collection actions.
Two Justices to Watch: Kennedy and Roberts
Justice Anthony Kennedy and Chief Justice John Roberts Jr. asked only a few, but pointed questions. Kennedy has been a solid pro-arbitration vote over the last 20 years, according to Proskauer’s Salvatore. Kennedy may have tipped his hand a bit when he told Griffin, “If you prevail, it seems to me quite rational for an employer to say, ‘Forget it.’ You’re saying employers are now constrained in the kind of arbitrations they have.”
When Ortiz informed Roberts that 25 million nonunion, private employees have arbitration agreements waiving class actions, Roberts said, “So this decision in your favor would invalidate agreements covering 25 million employees?”
Gorsuch and Thomas Asked No Questions
Neither Justice Clarence Thomas nor Justice Neil Gorsuch spoke during the hourlong arguments. Gorsuch’s silence was somewhat surprising to some observers, given his interest in and fidelity to statutory texts. The language and the policies animating the two federal laws were in play.
Gimme a Break!
Sotomayor was dominating Wall’s time at one point with a series of questions when Justice Samuel Alito Jr. interjected: “I have a question I’d like to get in before your time expires, if I could just note that,” he told Wall.