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High court class action waiver case key for employers

High court class action waiver case key for employers

A Supreme Court case involving class action waivers in employment agreements could be the most consequential labor and employment case decided by the court in decades, but employers’ ability to use the waivers is likely to be upheld by the court, according to a law professor.

The court heard arguments in three consolidated cases on Oct. 2 — National Labor Relations Board v. Murphy Oil USA, Epic Systems Corp. v. Lewis, and Ernst & Young v. Morris. The key question in the cases is whether arbitration agreements with individual employees bar them from pursuing work-related claims on a collective or class basis or whether such agreements limit employee rights under the National Labor Relations Act to engage in concerted activities. The issue caused a split in the lower courts, which led to the Supreme Court review.

The Murphy Oil case is potentially the most important case in this arena in a generation, Christopher David Ruiz Cameron, vice dean and Marshall F. McComb Professor of Law for Southwestern Law School in Los Angeles, California, told attendees of the American Bar Association’s Annual Labor and Employment Law Conference in Washington on Friday.

“If Murphy Oil was to be decided in a way that invalidated class action waivers, it would disrupt one of the most widespread business practices,” he said. “Second, a win for the plaintiffs bar would tip the balance of workplace power, at least potentially, because employers would possibly have to face in arbitration this sort of strength in numbers that comes from facing class or collective actions in litigation. Whether they would decide that’s better or not remains to be seen, but it seems to me that would encourage more settlements, it would give more bargaining power to employees who are able to proceed on a class basis whether they’re in court or in arbitration.”

“From my perspective as an academic, a loss for the plaintiffs side in this case would put a big nail in the coffin of the National Labor Relations Act,” Mr. Cameron said.

The National Labor Relations Board has come down on the side of employees — a stance dating back to the Obama administration — and will represent itself in the oral arguments, while the Trump administration filed a brief in June urging the court to rule in favor of employers arguing that class action waivers in arbitration agreements should be enforced.

Mr. Cameron predicted waivers are likely to be upheld, partly because of the administration’s changing position and because the court has demonstrated “hostility” to collective action in previous decisions.

“The court has not favored collective action when it had a chance to make a policy choice,” he said. “I would expect the same thing to take place here.”

In addition, the NLRA has previously conflicted with other federal laws such as bankruptcy and immigration laws in at least six cases and those other laws have always been favored.

“The NLRA is batting zero,” Mr. Cameron said.

But he cautioned employers against relying too heavily even on a decision preserving the use of class action waivers. For example, if an employer prevails against an attempt to enforce the waiver against class actions in arbitration, it could find itself having to defend hundreds of cases.

“I’m not sure that’s the outcome people are looking for,” Mr. Cameron said.

But if an employer wants to invoke the class action waiver provision, it must act quickly to do so, he said.

“If you have that defense, better raise that timely and not wait until the last minute because you can get into worse trouble,” Mr. Cameron said.