Supreme Court appears split on workers’ class-action rights

The Supreme Court appeared divided Monday in the first case of the new term challenging whether employers can strip employees of their right to join together and settle disputes through a class-action lawsuit or arbitration proceeding.

In a trio of cases involving wage and hour disputes, the court grappled with whether employment contracts with clauses that force workers to settle disputes individually with an arbitrator violate the National Labor Relations Act (NLRA).

The law gives employees the right to bargain collectively and “engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.”

The liberal wing of the court appeared unconvinced by the employers’ argument that these clauses, known as arbitration agreements, are enforceable under the Federal Arbitration Act.

{mosads}“The respondents claim arbitration agreements providing for individual arbitration that would otherwise be enforceable under the [Federal Arbitration Act] are nonetheless invalid by operation of another federal statute,” said former solicitor general Paul Clement, who represented the employers in three cases — Wisconsin-based software company Epic Systems Corp., accounting and financial firm Ernst & Young LLP, and Murphy Oil USA Inc.

Clement argued that the NLRA only protects the employees’ rights to engage in concerted activity in the workplace, not in court.

But Justice Ruth Bader Ginsburg said not being in the courthouse isn’t the issue.

“These employees say we don’t object to arbitration, but what we object to is the one-on-one, the employee against the employer,” she said.

“And the driving force of the NLRA was the recognition that there was an imbalance, that there was no true liberty of contract, so that’s why they said, in the NLRA, concerted activity is to be protected against employer interference,” she said. 

Ginsburg noted that in the case against Ernst & Young, individual arbitration would cost the employees more than the $1,800 they claim to be owed in back overtime pay.

“There is strength in numbers. We have to protect the individual worker from being in a situation where he can’t protect his rights,” she said.

But whether there are five justices willing to side with the employees and the National Labor Relations Board (NLRB) remains unclear.

Justice Anthony Kennedy, often the court’s swing vote, wanted to know if anything prevents employees with the same claim from being represented by the same attorney in their individual arbitration cases.

Richard Griffin Jr., NLRB’s general counsel, said they could do that. 

“Well that’s a collective action,” Kennedy said cutting him off.

But when Clement used Kennedy’s argument to bolster the employers’ defense, Ginsburg interjected to ask about an attorney’s duty of confidentiality. 

“What about the confidentiality agreements, which I take it, put a damper on how jointly these people can proceed,” she asked.

Clement claimed the employees could proceed jointly before they get to arbitration. 

“The confidentiality agreement’s not going to stop the same lawyer from thinking about the three cases in conjunction,” he said.

Acting Solicitor General Jeffrey Wall argued on behalf of the United States in support of the employers in the cases. He claimed the Federal Arbitration Act requires courts to “rigorously enforce arbitration agreements according to their terms, including terms that specify with whom the parties choose to arbitrate their disputes and the rules under which that arbitration will be conducted.”

“When parties agree in writing to resolve disputes through arbitration, the agreement is valid, irrevocable and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract,” he argued in briefs.

Chief Justice John Roberts, meanwhile, seemed blown away by the number of arbitration agreements that would be invalidated by a ruling in favor of the employees.

“So this decision in your favor would invalidate the agreements covering 25 million employees?” Roberts asked after the employees’ attorney Daniel Ortiz gave the estimate.

The Supreme Court’s newest member, Justice Neil Gorsuch, remained silent for the hourlong arguments, leaving questions as to how he will rule.

Monday’s cases were watched closely by labor rights groups and employment lawyers.

In a statement, Christine Owens, executive director of the National Employment Law Project, said a ruling in favor of the corporations could radically tilt the legal landscape in favor of big businesses that break workplace laws.

“Not only do these forced arbitration clauses deny workers their day in a public court of law should a dispute arise, they often require workers to give up their right to pursue collective or group action — so that their private arbitrations are handled individually, one by one,” she said.

“It’s a way to isolate workers and make it harder for individual workers to enforce their rights, thereby permitting workplace violations to go unchallenged,” she said.

Owens went on to criticize the Department of Justice for arguing on behalf of the employers in the cases before Court on Monday.

“It shows the hollowness of the president’s promise to put America’s workers first, and a frightening willingness to let corporations write the rules for the rest of us,” she said.

In a statement to The Hill, Samuel Shaulson, a partner at the law firm Morgan Lewis, who represents businesses in wage and hour disputes, argued that arbitration agreements allow employees and employers to resolve their workplace disputes promptly and at less cost.

“If the Court invalidates the non-class arbitration agreements, however, many workplace disputes will be subject to class proceedings that take years to complete, that are controlled by and often disproportionately benefit plaintiff class action lawyers, and that impose significant expenditures on employers that could instead be used to employ more employees or return to shareholders,” he said.