Supreme Court Reschedules Class Action Waiver Cases For Next Term

Nicholas Fortuna, February 9, 2017

The U.S. Supreme Court reportedly told the lawyers for the three cases testing the validity of class action and collection action waivers in employment arbitration agreements that they will be heard next term instead of this one. The Court granted petitions to hear the cases last month. The term will begin on October 2, 2017 and there will likely be a ninth justice sitting on the Court by then. There has been a vacancy on the court since the death of Justice Antonin Scalia in February 2016.

These cases are being closely watched because the outcome will have a significant impact on employers’ exposure to workplace lawsuits. Employers use class action waivers to keep labor disputes in arbitration on an individual basis rather than being subject to the cumulative effect of claims by multiple parties in a class action. A previous blog post described the cases and the issues at stake.

There is a circuit split regarding whether class action waivers in employment arbitration agreements are valid. The differing views are reflected on how the courts see the interplay between the Federal Arbitration Act (FAA) and the National Labor Relations Act (NLRA).

On one side, some courts and the National Labor Relations Board (NLRB) hold that the class action waivers interfere with the “right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.” On the other side, courts are relying on Supreme Court precedent of giving deference to arbitration over judicial action under the FAA. These courts have held that the FAA has a preemptive effect and that state and federal laws must bow to the enforcement of arbitration agreements in accordance with their terms.

Many were worried that the cases were headed for a 4-4 tie vote which would leave the lower court decisions in place and fail to resolve the split in the circuits. Deciding the case next term with a ninth justice on the court will avoid a tie. Judge Neil Gorsuch of the tenth Circuit Court of Appeals is the pending nominee on the Supreme Court, and is viewed as likely to favor class action waivers.


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