Certiorari Granted in Class Action Waiver Case

On January 13, 2017, the United States Supreme Court agreed to resolve a circuit split and decide whether an employee arbitration agreement barring class action claims is prohibited as an unfair labor practice.

The National Labor Relations Act (“NLRA”) protects employees’ right to engage in concerted activities in pursuit of their mutual aid or protection. The issue facing the Court in National Labor Relations Board v. Murphy Oil USA, Inc., will be whether the right to pursue class or collective action claims is part of the conduct protected under the NLRA.

Additionally, the Federal Arbitration Act (“FAA”) contains a saving clause, which provides that arbitration agreements “shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” If class and collective action claims are found to be protected activity, then arbitration agreements which bar employees from pursuing those claims would presumably be unenforceable.

The Court will be called upon to resolve a circuit split on these issues. The Fifth Circuit deferred to the arbitration provisions of the FAA to hold that the arbitration agreements in question are valid, while the Ninth Circuit and Seventh Circuit have held that the individual arbitration requirement improperly prohibited employees from banding together in an action against their employer.

Certiorari was sought in this case by the National Labor Relations Board after the Fifth Circuit overturned its ruling that arbitration agreements barring workers from pursuing class or collective actions were unlawful. The case has been consolidated with Ernst & Young LLP v. Morris, and Epic Systems v. Lewis, which address the same issue.