On August 9 the National Labor Relations Board (NLRB or Board) filed its responsive brief in one of three cases before the Supreme Court that may determine the future validity of individual arbitration agreements in the employment sector. Since 2012, the Board’s position has been that arbitration agreements prohibiting collective or class litigation or arbitration impermissibly interfere with employees’ rights to engage in “concerted activity” under Section 7 of the National Labor Relations Act (NLRA). The Board’s latest brief was filed in NLRB v. Murphy Oil USA, Inc., No. 16-307, which arose from the Fifth Circuit and has been consolidated with two other cases involving Epic Systems Corp. (No. 16-285) and Ernst & Young (No. 16-300) from the Seventh and Ninth Circuits. We have extensively covered the lengthy run-up of the cases involving Epic Systems Corp., Ernst & Young and Murphy Oil USA, Inc., including the grant of certiorari, in a Jan. 17, 2017, blog post here; a subsequent Sixth Circuit opinion in a June 1, 2017, blog post; and the Department of Justice (DOJ) change of position in a June 20, 2017, blog post.

The NLRB’s brief is notable in that it reflects the Board digging in its heels on the hotly contested position that the NLRA guarantees an employee’s right to engage in collective or class procedures, regardless of the presence of an arbitration agreement under the Federal Arbitration Act (FAA) requiring individual arbitration. In a June about-face, the DOJ broke from the Board’s position and switched sides to join the employers, arguing in an amicus brief that the Board is incorrect – that “the NLRA does not specifically bar enforcement of agreements to arbitrate statutory claims or declare such agreements to be unlawful.”

From the opening sentence of its responsive brief, the Board makes clear that it is not about to follow the DOJ. Indeed, throughout its brief, the Board emphasizes its view of the protective force of Section 7 of the NLRA in contrast to that of the DOJ. For example, the brief declares:

“The Employers, recently joined by the Acting Solicitor General, insist on a narrow construction of Section 157 [Section 7] inconsistent with this Court’s NLRA precedent.”
That’s not a surprise, of course, because the Board has stubbornly clung to its position regardless of federal appellate rulings, especially from the Fifth Circuit.

While the employer defendants and their amici in these cases focus on the fair enforcement of arbitration agreements under the FAA, the Board’s focus is on the NLRA and its historic mission. Time and again, throughout its brief, the Board argues matter-of-factly that the NLRA guarantees workers a right to collectively litigate wage-and-hour claims, either under Section 16(b) of the Fair Labor Standards Act (FLSA) or through the class-certification mechanism of Rule 23 of the Federal Rules of Civil Procedure. Yet if it were that clear, these cases would not be before the Supreme Court. After all, the Board’s assumption about the scope of Section 7 to substantially guarantee collective litigation rights is precisely the question that the Court is charged with resolving. And, as the employers and their amici point out, even if Section 7 does provide such a right, it cannot be squared with the FAA’s requirement to enforce arbitration acts as written or with other federal statutes that contain the right, like the FLSA.

As expected, the Board follows the position of the Seventh Circuit and declares that the FAA need not apply here because the “savings clause” built into Section 2 of the FAA restricts its enforcement of arbitration agreements that are subject to revocation under contract law. That is the approach that Seventh Circuit Judge Diane Wood took when authoring the Epic Systems opinion. Since then, however, the employers before the Court and their amici have pointed out that the FAA savings clause is not as broad as Judge Wood or the Board assume it is. Ultimately, the proper scope and role of the savings clause is among several issues for the Supreme Court to resolve in the months after it hears oral argument in these cases on Oct. 2. Apparently, NLRB General Counsel Richard F. Griffin Jr., who is counsel of record on the brief, will argue before the justices.

BakerHostetler was counsel of record for seven amici curie supporting the positions of petitioners Epic Systems Corp. and Ernst & Young, and of respondent Murphy Oil USA, Inc.

Bottom line:

The NLRB’s brief in one of the employment arbitration agreement cases pending before the Supreme Court reflects the Board’s entrenched position that the NLRA guarantees employees an unwaivable right to engage in collective and class proceedings. It will be interesting to see whether the brief of either the Board or the DOJ gains a broader following at the Court.