Earlier this week, the U.S. Supreme Court decided three consolidated cases, styled Epic Systems Corp. v Lewis, Nos. 16–285, 16–300, 16–307, 584 U.S. __ (2018), that all raised the issue of whether a class arbitration wavier in various employment contracts was enforceable, given the potentially conflicting mandates of the Federal Arbitration Act (FAA) and the National Labor Relations Act (NLRA). In a 5-4 majority opinion authored by Justice Neil Gorsuch, the Court held that there was no conflict between the two federal statutes and that both were consistent with enforcing the class arbitration wavier. Justice Ginsburg, writing for the dissent, also found no conflict but believed that both statutes were consistent with the opposite conclusion—namely, that the class arbitration wavier was illegal and should not be enforced. In the alternative, the dissent reasoned that even if there were a conflict, the waiver was still unenforceable.
The basic facts of these consolidated cases were that certain employees sought to bring a putative class action against their employers even though their employment contract contained a class arbitration waiver—that is, a clause that not only requires the employee to arbitrate rather than sue in court, but that also prohibits the employee from bringing a class arbitration on behalf of similarly situated employees. The employees argued that the waiver was illegal and thus unenforceable, because NLRA section 7 had been construed by the National Labor Relations Board to give employees an absolute, non-waivable right to band together in a class when suing their employers. See D. R. Horton, 357 N. L. R. B. 2277 (2012). The employers countered that under the FAA section 2, class arbitration waivers must be enforced strictly according to their terms, in some cases even if those terms are otherwise illegal.
These cases therefore raised the specter of a conflict between two federal statutes: The NLRA, enacted in 1935, and the FAA, enacted in 1925. Under traditional conflict of laws principles, in the event of an unavoidable conflict between coequal statutes the later-enacted statute controls (in this case, the NLRA). In Epic Systems, that would translate into a victory for the employee. So the employers had to hang their hat on the argument that there was no inherent conflict between the FAA and the NLRA.
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