Breaking: Supreme Court Issues Decision Upholding Workplace Arbitration Agreements That Bar Class Actions

Earlier this morning, the United States Supreme Court issued a much anticipated ruling that addressed whether employers can impose mandatory arbitration agreements on their employees that would bar an employee's right to join a class action lawsuit against their employer.  The Court's decision resolved three different cases before the Court (Epic Systems Corp. v. Lewis, Ernst & Young LLP et al. v. Morris, and National Labor Relations Board v. Murphy Oil USA, Inc., et al.) in which an employee that signed an employment agreement which contained an arbitration provision attempted to file a lawsuit in federal court on both individual and collective causes of action.  The employers in these cases argued that under the terms of the arbitration agreements, the employees needed to individually arbitrate their claims and therefore were barred from proceeding with class actions.

In a 5 - 4 decision in favor of employers, Justice Neil Gorsuch authored the majority opinion for the Court which held that nothing in the National Labor Relations Act ('NLRA') trumped the Federal Arbitration Act ('FAA') nor its requirement that arbitration agreements be enforced.  (The FAA provides that an arbitration agreement "shall be valid, irrevocable, and enforceable".  Ten years after the FAA was enacted by Congress, Congress implemented the NLRA which provides, among other things, that employees have the right to work together for "mutual aid and protection"  The majority opinion did note the conflict between the FAA and the NLRA but pointed out that the FFA pointed in the direction of enforcing the terms of an agreement to arbitrate.)  As a result, Justice Gorsuch (joined by Chief Justice John Roberts and Justices Anthony Kennedy, Clarence Thomas, and Samuel Alito) wrote that while it "may be debatable" whether the Court's opinion amounted to sound policy, employers could lawfully have arbitration agreements in place which barred their employees from proceeding with class actions against their employers.

As well, in an attempt to head off the dissenting opinion, Justice Gorsuch pointed out that the NLRA "does not even hint at a wish to displace the Arbitration Act [FAA]..." and used that as further evidence that the language of the FAA controls the interpretation of whether an arbitration provision in an employment agreement is enforceable.

It is worth noting that Justice Ruth Bader Ginsberg wrote a 30 page dissenting opinion in which she critiqued the majority opinion as "egregiously wrong".  In the dissenting opinion, Justice Ginsberg characterized the Court's ruling as likely to lead to "the underenforcement of federal and state statutes designed to advance the well-being of vulnerable workers" as it will infrequently be worthwhile for individual employees to pursue their own claims in arbitration (as opposed to the "easier" route of employees being able to join class actions against their employers.)

With that being said, the 5 - 4 majority opinion clarified the matter and results in a major victory for employers.

For a copy of the Court's opinion:  https://www.supremecourt.gov/opinions/17pdf/16-285_q8l1.pdf