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Epic Systems v. Lewis: The Movements’ Time is More Clear Now

photo of US Supreme Court by Matt Popovich

by César F. Rosado Marzán

In Epic Systems v. Lewis, Supreme Court Justice Neil Gorsuch and four conservative Justices determined that class action waivers are enforceable, not least because of the Federal Arbitration Act’s (FAA) strong protection of arbitration agreements. Class action waivers are enforceable despite the National Labor Relations Act (NLRA), which provides workers with the right to “engage in … concerted activities for the purpose of collective bargaining or other mutual aid or protection.”

But Gorsuch’s opinion starts in a curious way. He states that while the policy relating to class action waivers “may be debatable,” “the law is clear.” He boldly defends the law’s clarity despite a Circuit split on the issue, with the 7th and 9th Circuits holding against enforcement, and one Circuit, the 5th, in favor of enforcement. Maybe 7th and 9th Circuit Judges just can’t read. Or maybe, just maybe, the law just isn’t clear. I believe the latter. The FAA, the Norris La Guardia Act (NLGA), and the NLRA, the laws analyzed in Epic Systems say nada about class actions in their texts.

The FAA, as Justice Ginsburg noted prominently in her dissent, deals with commercial agreements to arbitrate. These are contracts between merchants with relative bargaining power symmetries. The NLGA/NLRA deal with workers’ “freedom of association” in the context of relative bargaining inequality.

So to answer the question we rely, inevitably, on statutory purpose, policy, and legal principles. And the principle of nonwaiver is clear: labor and employment rights are not waivable. It would be illogical for Congress to provide workers with specified rights, such as the right to act concertedly for mutual aid and protection, but then give employers, the stronger bargaining agents, the right to demand waivers of these rights.

As Justice Ginsburg noted in her dissent, citing the work of Cornell University’s Alexander Colvin, the available empirical data shows that when employers ask employees to sign class action waivers, workers’ rights suffer. When workers waive their rights to seek judicial redress, they sue employers less frequently. And when workers – against all odds – file an arbitration claim, they generally prevail less frequently than in court. And even when workers prevail in arbitration, also against all odds, their awards are also lower than in litigation. Individual arbitration is a losing, ever more treacherous process.

But power asymmetries and empirical evidence are beyond the pale of our five conservative Supreme Court Justices. Gorsuch’s opinion is 19th century formalistic. It is rife with statements about the “parties” so-called “agreement”. He states, “[Congress] also specifically directed [judges] to respect and enforce the parties’ chosen arbitration procedures.” Also: “[t]he parties before us contracted for arbitration. They proceeded to specify the rules that would govern their arbitrations, indicating their intention to use individualized rather than class or collective action procedures.” And so on and so forth.

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