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Dozens of Companies Await SCOTUS Ruling on Workplace Class-Action Bans

Dozens of companies in retail, banking, health care and technology await the U.S. Supreme Court’s answer to whether workplace arbitration agreements that ban class actions violate federal labor law.

National Labor Relations Board in Washington, D.C. (Photo: Diego M. Radzinschi/NLJ)

Dozens of companies in retail, banking, health care and technology await the U.S. Supreme Court’s answer to whether workplace arbitration agreements that ban class actions violate federal labor law.

The National Labor Relations Board on Tuesday distributed a list of pending cases in courts across the country that were sued over alleged labor violations rooted in arbitration agreements. The companies include household names such as AT&T Mobility Service, Uber Technologies Inc., Kmart Corp., UnitedHealth Group Inc. and Neiman Marcus. In all, the labor board identified some 75 disputes whose outcomes rest on how the Supreme Court resolves the dispute.

The justices in January agreed to decide that question, brought by the National Labor Relations Board and by two private parties. The high court last month moved those cases to the fall docket, making it more likely that a ninth justice will be on the bench. In addition to the three cases granted review, four other petitions are pending in the high court, according to the board. NLRB general counsel Richard Griffin Jr. included the list in a memo he sent to division heads, regional directors and officers in charge.

The issue pending at the Supreme Court is rooted in a 2012 board ruling that said the homebuilder D.R. Horton’s class action waivers violated federal labor law. Agreements that require employees to use arbitration for all work-related disputes interfered with employees' right to engage in concerted activities under the National Labor Relations Act, the board determined. The board said that when such an agreement violates the act, the Federal Arbitration Act does not require its enforcement.

Multiple challenges followed, and a split among the federal circuits drew the high court's attention. Companies have attracted major law firms to represent them, including Mayer Brown; Morgan, Lewis & Bockius; Holland & Knight; and Squire Patton Boggs.

The three high court cases granted review are: NLRB v. Murphy Oil USA (from the U.S. Court of Appeals for the Fifth Circuit); Epic Systems Corp. v. Lewis (Seventh Circuit), and Ernst & Young v. Morris (Ninth Circuit).

At the March meeting of an American Bar Association committee of the labor and employment law section, the board was asked how it is handling new cases raising the class action issue while awaiting the Supreme Court's decision.

Richard Griffin of the NLRB (National Labor Relations Board)(Photo, left: Richard Griffin of the NLRB, National Labor Relations Board)

In merit cases that allege the employer is maintaining an agreement prohibited by the D.R. Horton line of cases, Griffin (at left) said, regions are to propose that the parties enter informal settlement agreements that are conditioned on the agency winning in the Supreme Court.

For cases alleging the maintenance of an unlawful arbitration agreement, as well as allegations unrelated to that issue, regions will go forward on the unrelated allegations absent settlement. The labor board said cases that involve opt-in/opt-out clauses should be held in abeyance.

The National Labor Relations Act was enacted in 1935 to protect the rights of employees and employers, to encourage collective bargaining and to curtail certain harmful private sector labor and management practices. The act applies to most private-sector employers, including manufacturers, retailers, private universities and health care facilities. The act does not apply to federal, state or local governments.

The NLRB, employers and employees in the three high court cases had all urged the justices to decide the issue. Major business and employer organizations also filed amicus briefs urging review and a decision finding class action waivers enforceable.

The board's petition in Murphy Oil was filed during the Obama administration by Deputy Solicitor General Edwin Kneedler. Whether the Trump administration will support the board's position is unknown. Opening briefs on the merits will be filed by April 28, and response briefs by July 27.

Originally published on National Law Journal. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Contributing Author

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Marcia Coyle

Marcia Coyle is chief Washington correspondent for The National Law Journal. She covers the U.S. Supreme Court and national legal issues. On Twitter: @MarciaCoyle

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