Supreme Court Rules that Class Action Waivers in Arbitration Agreements are Enforceable
Today, the U.S. Supreme Court ruled in a 5-4 decision that class action waivers in arbitration agreements are enforceable. The Court's long-awaited decision makes clear that employers can require employees to resolve any disputes with their employer through an individualized arbitration rather than through joint (class or collective) legal proceedings.
This decision resolved a split of authority regarding whether employers can contractually require employees to waive the ability to assert collective, work-related claims, or whether such "class action waivers" in employment arbitration agreements violate employees' right under the National Labor Relations Act (NLRA) to engage in concerted activities. The Court's majority held that the Federal Arbitration Act (FAA) mandates that arbitration agreements providing for individual proceedings must be enforced, and nothing in the NLRA or any other federal statute overrules the FAA's mandate.
The Supreme Court's decision comes after granting petitions for certiorari in consolidated cases NLRB v. Murphy Oil, USA, Inc. (5th Cir.), Epic Systems Corp. v. Lewis (7th Cir.), and Ernst & Young v. Morris (9th Cir.), and after hearing oral arguments on October 2, 2017. Justice Gorsuch delivered the majority opinion, joined by Justices Roberts, Kennedy, Thomas and Alito. Justice Ginsburg dissented, joined by Justices Breyer, Sotomayor and Kagan.
Although today's decision by the Court was focused on the enforceability of class action waivers, the majority's opinion includes language that heavily favors the general enforceability of arbitration agreements under the FAA and may be instructive to lower courts and state courts that have traditionally been hostile to the enforcement of such agreements in the employment context.
For more information on this ruling, please contact Tracey Holmes Donesky, Alexis Gabrielson, Pat Konopka, Larry Lee, Erin Naeger, Sara Welch or the Stinson Leonard Street contact with whom you regularly work.