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SCOTUS: No right to class actions under NLRA

May 21st, 2018  |  Lisa Milam

In one of the most significant employment decisions in years–and a critical blow to employees seeking to resolve employment disputes on a class or collective basis, or in a court of law, for that matter–a divided U.S. Supreme Court has held that the National Labor Relations Act (NLRA) does not endow employees with the right to pursue class action lawsuits. The Federal Arbitration Act (FAA) strongly favors the arbitration of disputes, including employment-related disputes, and the FAA instructs federal courts to enforce arbitration agreements according to their terms, including terms mandating individualized proceedings. Therefore, employers are free to compel employees, as a condition of employment, to agree to waive the right to file suit and to force them instead into arbitration–and to require that such arbitration proceed on an individual, not classwide basis.

The issue arises most frequently in the context of wage-hour claims, for which damages are typically too insignificant on a per-employee basis to warrant the prohibitive costs of individual judicial pursuit. Plaintiffs had briefly entertained the notion that, where other impediments to compulsory arbitration proved fruitless, the NLRA might offer recourse. But the High Court majority took the wind from those sails in a majority opinion authored by Justice Neil Gorsuch, the Court’s freshman jurist. “Union organization and collective bargaining in the workplace are the bread and butter of the NLRA, while the particulars of dispute resolution procedures in Article III courts or arbitration proceedings are usually left to other statutes and rules—not least the Federal Rules of Civil Procedure, the Arbitration Act, and the FLSA. It’s more than a little doubtful that Congress would have tucked into the mousehole of Section 7’s catchall term an elephant that tramples the work done by these other laws; flattens the parties’ contracted-for dispute resolution procedures; and seats the Board as supreme superintendent of claims arising under a statute it doesn’t even administer.”

Justice Thomas filed a separate concurring opinion. Justice Ginsburg, joined by Justices Breyer, Sotomayor, and Kagan, dissented–largely on policy grounds. “The policy may be debatable,” Gorsuch conceded, “but the law is clear.”

The case is Epic Systems Corp. v. Lewis, No. 16–285, May 21, 2018.