Opposition Brief — Epic Sys. Corp. v. Lewis, 138 S. Ct. 42 (2017) (No. 16-285)

No. 16-285

In the Supreme Court of the Gnited States

EPIC SYSTEMS CORPORATION,

PETITIONER

Vv.

JACOB LEWIS

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE SEVENTH CIRCUIT

BRIEF FOR THE RESPONDENT IN OPPOSITION

DANIEL R. ORTIZ DAVID C. ZOELLER

TOBY J. HEYTENS Counsel of Record

UNIVERSITY OF WILLIAM E. PARSONS

VIRGINIA SCHOOL OF CAITLIN M. MADDEN

LAW SUPREME COURT KATELYNN M. WILLIAMS

LITIGATION CLINIC HAWKS QUINDEL, S.C.

580 Massie Road 222 West Washington Ave.,

Charlottesville, VA Suite 450

22903 Madison, WI 53701

(434) 924-3127 (608) 257-0040

dzoeller@hq-law.com

[Additional Counsel Listed on Inside Cover] _

nm nl’ Cone

ADAM HANSEN

APOLLO LAW LLC

400 South 4th Street,

Suite 401M - 250

Minneapolis, MN

55415

(612) 927-2969

QUESTION PRESENTED

Whether arbitration agreements with individual

employees that bar them from pursuing work-related

claims on a collective basis in any forum are prohibited

as an unfair labor practice under 29 U.S.C. § 158(a)(1),

because they limit the employees’ right under the

National Labor Relations Act to engage in “concerted

activities” in pursuit of their “mutual aid or

protection,” 29 U.S.C. § 157, and are therefore

unenforceable under the saving clause of the Federal

Arbitration Act, 9 U.S.C. § 2.

I

TABLE OF CONTENTS

1 ECan a CE SRE II

Statutory Provisions Involved........................c..00+ 1

ERE: SEIT eae a Se Oe EE Eee 2

A. Statutory Background .........................00006 2

B. Factual Background And Court

eR ER I an 3

Reasons For Denying The Petition ....................... 8

I. The Actual Split ls Shallow And May Resolve

Itself Without This Court's Intervention ....... 9

Ii. The Decision Below Is Correct ..................... 18

A. The Seventh Circuit Correctly

Determined That Epic's Waiver Of Class

And Collective Claims Is Unlawful Under

Sections 7 & 8 Of The NLRA................... 18

B. The FAA's Saving Clause Does Not

Requirement Enforcement of Arbitration

Provisions That Violate Federal Statutes

RE RIES IT RAR 23

Ill. This Case Is A Poor Vehicle To Decide The

EE nee 30

RE RE SGI Si EET SE ae cere nee = 35

—

Il

Table Of Authorities

Cases: Page(s)

AT&T Mobility LLC v. Concepcion, 563 U.S. 333

See EEE eee Dan ieee nase e ae 13, 25, 27

Allen-Bradley Local No. 1111, United Elec.,

Radio & Mach. Workers of Am. v. Wis.

Employ't Relations Bd., 315 U.S. 740 (1942) ....27

Allis-Chalmers Corp. v. Lueck, 471 U.S. 202

SIRE STEN PRE Eevee, Pes OO > SD 28

Altex Ready Mixed Concrete Corp. v. NLRB, 542

Be I MIE ccceitnanrssineetonienenetndinensves 18

American Express Co. v. Italian Colors Rest.,

a caemsinontiaiiin 27

Bekele v. Lyft, Inc., No. 15-11650-FDS, 2016 WL

4203412 (D. Mass. Aug. 9, 2016) ...................004. 17

Brady v. Natl Football incase 644 F.3d 661

(8th Cir. 2011)... eae shinee

Cellular Sales of Missouri, LLC v v. NLRB, 824

Se a a iaieennsiene 11

Chevron, U.S.A., Inc. v. Natural Resources

Defense Council, Inc., 467 U.S. 837 (1984)........ 21

CompuCredit Corp. v. Greenwood, 132 S. Ct. 665

TEESE RS A tl SEA. TE 26, 27, 29

Consumer Prod. Safety Comm'n v. GTE

Sylvania, Inc., 447 U.S. 102 (1980)...........0000.... 19

D.R. Horton, Inc., 357 N.u.R.B. 2277 (2012)

EE AS SL 9 Pee passim

D.R. Horton, Inc. v. NLRB, 737 F.3d 344 (6th

ET 7, 13%, 16

Il

Cases—Continued: Page(s)

Doctor’s Assocs., Inc. v. Casarotto, 517 U.S. 681

EL Se TS AT ed Ae SSN COR aT PO 25

Eastex, Inc. v. NLRB, 437 U.S. 556

RE a ARS SE i ea 2, 18, 21, 23

Garrett v. Moore-McCormack Co., 317 U.S. 239

RT RM RES Se Be eee NR ee ee OV 26

Green v. Pro Football, Inc., 31 F. Supp. 3d 714

a a 28

Guaranty Trust Co. of New York v. York, 326

8 EL A On 26

Herrington v. Waterstone Mortg. Corp., 2012 WL

1242318 (W.D. Wis. Mar. 16, 2012) .................... 4

Iskanian v. CLS Transp. Los Angeles, LLC, 327

P.3d 129 (Cal. 2014)............. CF Aaa 14

J.I. Case Co. v. NLRB, 321 U.S. 332 (1944) .......... 22

Kaiser Steel Corp. v. Mullins, 455 U.S. 72

EERE ISIE SPS AE TY SP ha eaP ee eee 24, 28

Kelly v. Kosuga, 358 U.S. 516 (1959)..................0. 28

Lawson v. FMR LLC, S. Ct. 1158 (2014)............... 19

Lechmere, Inc. v. NLRB, 502 U.S. 527 (1992) .21, 22

Leviton Mfg. Co. v. NLRB, 486 F.2d 686 (1st Cir.

Mitsubishi Motors Corp. v. Soler Chrysler-

Plymouth, Inc., 473 U.S. 614 (1985).................. 26

IV

Cases—Continued: Page(s)

Morris v. Ernst & Young, LLP, No. 13-16599,

2016 WL 4433080, at *7-8 (9th Cir. Aug. 22,

II iniceiciehiiiiasiptliaaalittidallieia ta iainiareeiiasieencitstagiael 9, 15, 25

Moskal v. United States, 498 U.S. 103 (1990) ....... 19

Murphy Oil USA, Inc., 361 N.L.R.B. No. 72

ETS SI eee SE ene Ce nC NE 34

Murphy Oil USA, Inc. v. NLRB, 808 F.3d. 1013

EES Sao ee eee 16

NLRB v. Adel Clay Products Co., 134 F.2d 342

I Tints ce cpeeteniactgabedinaminatabentsiense 23

NLBB v. City Disposal Sys., Inc., 465 U.S. 822

ETE Ee aon eee 20, 21

NLRB vy. Express Publ’g Co., 312 U.S. 426 (1941)...2

NLRB v. Jahn & Ollier Engraving Co., 123 F.2d

CEE SS Ce ae 23

NLRB v. Jones & Laughlin Steel, 301 U.S. 1

REISS ag SS See a 27

NLRB vy. United Food & Commercial Workers

Union, Local 23, 484 U.S. 112 (1987)................ 21

Nat’ Licorice Co. v. NLRB, 309 U.S. 350 (1940)...22

Oakwood Healthcare, Inc., 348 NLRB 686

Ra Pee a ea 2 eT ae ae 30

Owen v. Bristol Care, Inc., 702 F.3d 1050 (8th

RE ae ea ee erty. is? passim

Patterson v. Raymours Furniture Company, No.

15-2820-cv, 2016 WL 4598542 — Cir. ddeiace

2, 2016) ... ssatadltahinadatiies euldad tan 37

Phillips Petrol Co. v. eink: 472 U.S. 797 cisen). 20

V

Cases—Continued: Page(s)

Roberts v. T.H.E. Ins. Co., 879 N.W. 2d 492

a ASS aa 24

Rodriquez de Quijas v. Shearson/Am. Express

Inc., 490 U.S. 477 (1989).....cccccccccccsescseseseeeee 26, 27

Shearson/American Express, Inc. v. McMahon,

~ t... ee 9,11

Sun Oil Co. v. Wortman, 486 U.S. 717 (1988) ....... 26

Sutherland v. Ernst & Young, LLP, 726 F.3d

i a catagianinbaie passim

Tallman v. Eighth Judicial Dist. Court, 359

BG TT cnciietichinrcsinscnnineeauitennsenamnnonss 14

Statutes, Rules, and Legislative Materials:

| SSSR YASSER I ee aR ay eRe ee ee 3

Eee er 1, 3, 24, 31

iinet cesta tbl iach 2

2O WGC. § W5Toeecesescececececcec-cccare-snsoeeseseeee 1, 2, 18, 96

29 U.S.C. § UGB(A) .o.eceeeeccceccceceseseseseeeeeees 1, 2, 22, 23

ae er ne we 29

caitlin eailiahabawettianititaiisininniiiaial 4

i sala datilernnnntilaidiiinisibsiins iia 15

Miscellaneous:

Black’s Law Dictionary (10th Ed. 2014)........... 19-20

Samuel Estreicher & Richard L. Revesz,

Nonacquiescence by Federal Administrative

Agencies, 98 Yale L.J. 679 (1989) ...................... 30

VI

Miscellaneous—Continued: Page(s)

3 Littler Mendelson’s The National Employer

ES ENDER Se RE RA, ASSET tae SP OP 30

New Oxford American Dictionary (3rd Ed. 2010)..19

Restatement (Second) of Contracts § 178 (Am.

Rt ENR RAE SCE PSTD 24

Webster’s Third New International Dictionary,

RE RR A SES 19

BRIEF IN OPPOSITION

STATUTORY PROVISIONS INVOLVED

This case involves both the National Labor

Relations Act (NLRA) and the Federal Arbitration Act

(FAA). Two provisions of the NLRA are at issue. The

first, section 7 of the NLRA, 29 U.S.C. § 157, provides:

Employees shall have 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, and shall also have the right to refrain

from any or all of such activities except to the

extent that such right may be affected by an

agreement requiring membership in a _ labor

organization as a condition of employment as

authorized in section 158(a)(3) of this title.

The second, section 8(a) of the NLRA, 29 U.S.C.

§ 158(a), states:

It shall be an unfair labor practice for an

employer—(1) to interfere with, restrain, or coerce

employees in the exercise of the rights guaranteed

in section 157 of this title.

The FAA provision at issue, 9 U.S.C. § 2, states:

A written provision in any maritime transaction

or a contract evidencing a transaction involving

commerce to settle by arbitration a controversy

thereafter arising out of such contract or

transaction, or the refusal to perform the whole or

any part thereof, or an agreement in writing to

submit to arbitration an existing controversy

arising out of such a contract, transaction, or

refusal, shall be valid, irrevocable, and enforceable,

save upon such grounds as exist at law or in equity

for the revocation of any contract.

STATEMENT

A. Statutory Background

1. In the NLRA, 29 U.S.C. §§ 151 et seg., Congress

articulated “the policy of the United States” of

encouraging collective bargaining and “protecting the

exercise by workers of full freedom of association.” 29

U.S.C. § 151. Section 7 of the NLRA expressly

provides that “[e]mployees shall have the right * * * to

engage in * * * concerted activities for the purpose of

*** mutual aid or protection.” Jd. § 157. This Court

has described the rights under section 7 as including

employees’ efforts “to improve terms and conditions of

employment or otherwise improve their lot as

employees through channels outside the immediate

employee-employer relationship,” including “through

resort to administrative and judicial forums.” Eastex,

Inc. v. NLRB, 437 U.S. 556, 565-566 (1978).

In addition, the NLRA provides that any employer

that “interfere[s] with, restrain[s], or coerce[s]

employees in the exercise of the rights guaranteed in

section [7]” commits an unfair labor practice, 29 U.S.C.

§ 158(a)(1), and this Court has held that the “acts

which constitute the unfair labor practice [are]

unlawful,” NLRB v. Express Publ’g Co., 312 U.S. 426,

436 (1941).

2. The FAA, 9 U.S.C. §§ 1 et seqg., provides that any

written contract “evidencing a transaction involving

commerce to settle by arbitration a controversy

thereafter arising out of such contract or transaction

* * * shall be valid, irrevocable, and enforceable, save

upon such grounds as exist at law or in equity for the

revocation of any contract.” 9 U.S.C. § 2.

B. Factual Background And Court Proceedings

1. On April 2, 2014, petitioner Epic Systems

Corporation (Epic), a healthcare software company,

sent an email containing an arbitration agreement to

some of its employees, including respondent Jacob

Lewis. Pet. App. la-2a. The agreement required

employees to bring all wage-and-hour claims through

individual arbitration and stated that the employees

waived “the right to participate in or receive money or

any other relief from any class, collective, or

representative proceeding.” Jd. at 2a. The agreement

included a clause stating that if the “Waiver of Class

and Collective Claims” was deemed unenforceable,

“any claim brought on a class, collective, or

representative action basis must be filed in a court of

competent jurisdiction.” Jbid. It also stated that

employees were “deemed to have accepted this

Agreement” if they “continue[d] to work at Epic.” Ibid.

(brackets in original). The email requested that

recipients review the terms and acknowledge their

acceptance by clicking two buttons. Ibid. The next

day, Jacob Lewis, then a “technical writer” at Epic, did

so. Ibid. “Epic gave employees no option to decline

[the agreement] if they wanted to keep their jobs.”

Ibid.

2. In February 2015, Lewis sued Epic in federal

court on behalf of a putative class of technical writers.

Pet. 5-6. He alleged that Epic had misclassified those

employees under the Fair Labor Standards Act of

1938, 29 U.S.C. §§ 201 et seq. (FLSA), and Wisconsin

law, Pet. App. 2a, thereby denying them required

overtime pay, id. at 24a. Epic moved to dismiss the

complaint, arguing that Lewis, through the arbitration

agreement, had waived his right to bring in court any

claim involving the payment of wages and any right to

participate in class actions. Ibid.; id. at 2a. Lewis

responded that the agreement was unenforceable

because, among other reasons, it interfered with

employees’ right to engage in “concerted activities”

under section 7 of the NLRA. Jd. at 2a-3a. He also

argued that pursuant to the arbitration agreement’s

own savings clause his class suit was properly brought

in federal court. Jd. at 25a. The district court agreed,

relying on its own precedent in Herrington v.

Waterstone Mortgage Corp., No. 11-cv-779-bbe, 2012

WL 1242318 (W.D. Wis. Mar. 16, 2012), and denied

Epic’s motion to dismiss. Pet. App. 28a.

3. Epic appealed. It “argufed] that the district

court erred in declining to enforce the agreement

under the FAA.” Pet. App. 3a. The Seventh Circuit,

however, unanimously rejected its argument. The

court noted first that section 7 of the NLRA provides

that “employees shall have the right * * * to engage in

*** concerted activities for the purpose of * * *

mutual aid or protection;” that section 8 “enforces

Section 7 unconditionally by deeming that it ‘shall be

an unfair labor practice for an employer ... to interfere

with, restrain, or coerce employees in the exercise of

the rights guaranteed in [section 7];” and that “the

[National Labor Relations] Board [(NLRB)] has, ‘from

its earliest days,’ held that ‘employer-imposed,

individual agreements that purport to restrict Section

7 rights are unenforceable” and has done so “with

‘uniform judicial approval.” Jd. at 3a-4a. “[Bjoth

courts and the [NLRB],” the court added, “have held

that filing a collective or class action suit constitutes

‘concerted activit[y]’ under Section 7.” Jd. at 4a

(brackets in original).

“Section 7’s text, history, and purpose,” the court

argued, “support this rule.” Pet. App. 5a. “Collective

or class legal proceedings fit well within the ordinary

understanding of ‘concerted activities,” ibid., the

relevant statutory term, and “[t]he NLRA’s history

and purpose confirm that the phrase * * * should be

read broadly to include resort to representative, joint,

collective, or class legal remedies,” id. at 6a.

“Collective * * * legal remedies,” the court reasoned,

“allow employees to band together and thereby

equalize bargaining power.” [bid.

The court alternatively held that “even if Section 7

were ambiguous—and it is not’—the NLRB’s

interpretation is “entitled to Chevron deference.” Pet.

App. 6a. (citation omitted). The court considered the

NLRB’s longstanding interpretation of sections 7 and

8 as “prohibit[ing] employers from making agreements

with individual employees barring access to class or

collective remedies,” concluding that “[t]he Board’s

interpretation is, at a minimum, a sensible way to

understand the statutory language, and thus we must

follow it.” Id. at 7a.

With these legal principles established, the court

found that “[t]he question thus becomes whether

Epic’s arbitration provision impinges on ‘Section 7

rights. The answer is yes.” Pet. App. 9a. The

collective action ban, it held, “runs straight into the

teeth of Section 7” and is therefore “unenforceable.”

Id. at 10a.

The court then turned to Epic’s FAA arguments.

First, it noted, “it is not clear to us that the FAA has

anything to do with this case.” Pet. App. 12a. Since

the contract “states that if the collective-action waiver

is unenforceable, then any collective claim must

proceed in court, not arbitration[,] *** we could

probably stop here: the contract itself demands that

Lewis’s claim be brought in a court.” Jbid. The court

nonetheless proceeded to consider—and reject—Epic’s

argument that it “should ignore the contract’s [own]

savings clause because the FAA trumps the NLRA.”

Ibid.

“[T|his argument,” the court noted, “puts the cart

before the horse.” Pet. App. 13a. As the court

explained, “[blefore we rush to decide whether one

statute eclipses another, we must stop to see if the two

statutes conflict at all.” Ibid. Because the FAA’s own

saving clause forecloses arbitration “upon such

grounds as exist at law or in equity for the revocation

of any contract [and iljllegality is one of those

grounds|, a] contract provision[] like Epic’s, which

strip[s] away employees’ rights to engage in ‘concerted

activities’ * * * is illegal, and meets the criteria of the

FAA’s saving clause for nonenforcement.” Jd. at 15a

(internal citation omitted). “[T]here is no conflict [in

this case] between the NLRA and the FAA, let alone

an irreconcilable one,” the court held. Jd. at 14a.

“Here the NLRA and the FAA work hand in glove.” Jd.

at 15a.

Next, the court acknowledged and rejected the

Fifth Circuit’s “opposite conclusion” in D.R. Horton,

Inc. v. NLRB, 737 F.3d 344 (5th Cir. 2013) (Horton IJ).

Pet. App. 15a. “There are,” it noted, “several problems

with [the Fifth Circuit’s] logic.” Jd. at 16a. For

starters, the Seventh Circuit pointed out, “[Horton IT]

makes no effort to harmonize the FAA and NLRA.”

Ibid. “Indeed, finding the NLRA in conflict with the

FAA would be ironic considering that the NLRA is in

fact pro-arbitration: it expressly allows unions and

employers to arbitrate disputes between each other

and to negotiate collective bargaining agreements that

require employees to arbitrate individual employment

disputes.” Jbid. (internal citation omitted). Second,

the court noted, “Sections 7 and 8 * * * say nothing

about class arbitration, or even arbitration generally.

Instead, they broadly restrain employers from

interfering with employees’ engaging in concerted

activities.” Jd. at 18a. Third, it held, “finding the

NLRA in conflict with the FAA would render the FAA’s

saving clause a nullity.” Jd. at 19a. As the court

explained, “[iJf the NLRA does not render an

arbitration provision sufficiently illegal to trigger the

saving clause, the saving clause does not mean what it

says.” Ibid. The Seventh Circuit declined to address

the other courts of appeals’ decisions Epic cited, noting

that “none has engaged substantively with the

relevant arguments.” Ibid.

Finally, the court rejected Epic’s argument that

section 7’s right to collective action “is procedural only,

not substantive, and thus the FAA demands

enforcement.” Pet. App. 20a. “The right to collective

action,” it stated, “lies at the heart of the restructuring

of employer/employee relationships that Congress

meant to achieve in the statute.” /bid. In fact, it held,

“Section 7 is the NLRA’s only substantive provision.

Every other provision of the statute serves to enforce

the rights Section 7 protects.” Jd. at 21a.

The Seventh Circuit therefore affirmed the

judgment of the district court. Jd. at 23a. Epic

petitioned for a writ of certiorari.

REASONS FOR DENYING THE PETITION

Petitioner asks this Court to review “whether

Section 7 of the NLRA, which gives employees the

right to ‘engage in * * * concerted activities for the

purpose of collective bargaining or other mutual aid or

protection,’ qualifies as a contrary congressional

command sufficient to overcome the FAA’s

presumption” favoring arbitration.” The courts below,

however, decided a quite different question: whether

the FAA’s saving clause bars enforcement of a

collective-action waiver that violates section 7 of the

NLRA. Because petitioner misunderstands what the

lower courts decided, it (1) mischaracterizes and

exaggerates any split, (2) fails to address the merits of

the issue the courts below actually did consider, (3)

spins as “important and recurring,” Pet. 4, an issue

missing from the case, and (4) ignores several defects

that make this case a poor vehicle to review the

question it might actually present, let alone one it does

not.

I. The Actual Split Is Shallow And May Resolve

Itself Without This Court’s Intervention

Petitioner claims that the courts of appeals are

split “five to two” with the “Second, Fifth, and Eighth

Circuits, as well as the Supreme Courts of California

and Nevada,” enforcing collective-action waivers and

“the Seventh and Ninth Circuits” “[o]n the other side.”

Pet. 7, 11. This characterization overclaims by much.

More careful evaluation reveals a shallower, less clear

split that may well resolve itself without this Court’s

intervention.

Framing the issue correctly—as the Seventh and

Ninth Circuits have done—largely dispels petitioner’s

alleged conflict. The proper question (the “saving-

clause question”) is (1) whether the NLRA makes

collective-action waivers illegal and (2), if so, whether

the FAA’s saving clause nonetheless requires their

enforcement. See Morris v. Ernst & Young, LLP, No.

13-16599, 2016 WL 4433080, at *7-8 (9th Cir. Aug. 22,

2016), petition for cert. pending, No. 16-300 (filed Sept.

8, 2016); Pet. App. 12a-15a. Most of the decisions

petitioner discusses concern a quite different question:

whether the NLRA or other statutes, particularly the

FLSA, represent a “contrary congressional command,”

Shearson/American Express, Inc. v. McMahon, 482

U.S. 220, 226 (1987), overriding the FAA. The saving-

clause question, unlike the congressional-command

question, does not ask whether the FAA stands in

intractable conflict with another statute and, if so,

which trumps. Rather, it asks whether the FAA’s own

saving clause renders particular contract provisions

made illegal by another statute unenforceable under

the FAA. Pet. App. 15a. Only three circuits have

10

analyzed and addressed this question. The Fifth

Circuit has held that the FAA’s saving clause requires

enforcement of such provisions; the Seventh and Ninth

Circuits have held that it bars their enforcement.

Petitioner mischaracterizes the depth of the split

because it confuses these two different arguments.

The “[{ijmportant and recurring question,” Pet. 4, it

discusses is whether the NLRA represents a contrary

congressional command, an issue the Seventh Circuit

never decided, see pp. 4-8, supra; pp. 30-31, infra, not

whether the FAA’s saving clause independently

forecloses enforcement of the collective-action waiver.

The petition itself, in fact, makes this framing

unmistakeably clear. It describes the “question

presented [as] ask{ing] whether Section 7 of the NLRA

*** qualifies as a contrary congressional command

sufficient to overcome the FAA’s presumption that

these agreements should be enforced according to their

terms.” Pet. 3 (emphasis added).

l.a. Petitioner relies mistakenly on Owen v. Bristol

Care, Inc., 702 F.3d 1050 (8th Cir. 2013), to

demonstrate that the Eighth Circuit supports its

“side” of the claimed split. Pet. 9-10. First, Owen

involved a different statute, the FLSA, not the NLRA.

The Eighth Circuit’s analysis focused on whether there

is an “inconsistency between either the FLSA text or

its legislative history and the conclusion that

arbitration agreements containing class waivers are

enforceable in cases involving the FLSA.” Owen, 702

F.3d at 1053. Finding none, it upheld the waiver at

issue in the case. Jd. at 1052-1053. In other words,

the Eighth Circuit analyzed whether the FLSA

contained a “contrary congressional command”

11

overriding the FAA. It nowhere mentioned, let alone

analyzed, the FAA’s saving clause and, although it

discussed the NLRB’s decision in D.R. Horton, Inc.,

357 N.L.R.B. 2277 (2012) (Horton J), the court

distinguished it as “limited *** to arbitration

agreements barring all protected concerted action,”

Owen, 702 F.3d at 1053, and notably refused the

employee’s “invitation to follow [Horton Ij’s rationale”

“given the absence of any ‘contrary congressional

command’ from the FLSA” to override the FAA, id. at

1055 (emphasis added).' To the extent the court

weighed saving-clause concerns at all, it did so only in

aid of a larger congressional-command argument and

only in passing.

b. As petitioner observes, “(t]he Second Circuit

agrees with the [Eighth],” Pet. 10, and thus suffers

from the same weakness. Like Owen, Sutherland v.

Ernst & Young, LLP, 726 F.3d 290 (2d Cir. 2013) (per

curiam), nowhere mentioned the FAA’s saving clause.

Also, like Owen, it upheld the arbitration agreement

largely because it found no “contrary congressional

command” in the FLSA that would override collective

action waivers. Id. at 295-297 (quoting McMahon, 482

U.S. at 226). The only time the opinion might possibly

1 For similar reasons, petitioner's other Eighth Circuit authority,

Cellular Sales of Missouri, LLC v. NLRB, 824 F.3d 772 (8th Cir.

2016), does not help its cause. That case held that a collective-

action waiver did not violate the NLRA without ever

substantively evaluating any saving-clause argument or

determining the proper relationship between the NLRA and the

FAA. See id. at 776-778 (failing to mention or cite to FAA). In

reaching its holding, moreover, Cellular Sales relied entirely on

Owen, id. at 776 (noting that “our holding in Owen is fatal to [the

NLRB’s] argument”), which never decided these issues.

12

reference a saving-clause argument occurs in a single

oblique sentence in which, quoting Owen, it “declinej{s]

to follow [Horton I because e]ven assuming that ‘it]

addressed the more limited type of class waiver

present here, we still would owe no deference to its

reasoning.” Jd. at 297 n.8 (quoting Owen, 702 F.3d at

1053-1054). But that oblique reference is unclear.

Horton I made both saving-clause and congressional-

command arguments under the NLRA. See Horton /,

357 N.L.R.B. at 2287-2288. Sutherland is thus best

understood as analyzing the saving-clause argument

the same way as Owen, the sole authority it quoted,

did—as, at most, one small part of a congressional-

command argument rather than as a saving-clause

argument standing on its own.?

2 Petitioner has not discussed Patterson v. Raymours Furniture

Company, No. 15-2820, 2016 WL 4598542 (2d Cir. Sept. 2, 2016)

petition for cert. pending, No. 16-388 (filed Sept. 22, 2016), a non-

precedential summary order filed by the Second Circuit on the

same day petitioner filed its petition for certiorari. That order

held that “[a}lthough the Sutherland court rejected Horton J in a

brief footnote, it unquestionably rejected the NLRB’s analysis and

embraced the Eighth Circuit's position in Owen.” Id. at *3. That

careful characterization indicates that the Patterson panel

believed that Sutherland had enforced the collective-action

waiver because of “the absence of any ‘contrary congressional

command’ from the FLSA,” Owen, 702 F.3d at 1055, which is as

far as Owen reached, not that it decided any saving-clause

question. Such a view is completely consistent with “reject|ing]

the NLRB’s analysis” in Horton I, which covered, among other

things, the congressional-command argument. Even if the

Patterson panel did wrongly believe that the Sutherland court

had decided the saving-clause claim, its view has no effect within

the Second Circuit going forward. A non-precedential summary

order cannot put an authoritative gloss, especially a mistaken

13

c. Unlike the Eighth and Second Circuits, the

Fifth Circuit has rejected the freestanding saving-

clause argument. In Horton II, it identified two

separate reasons why a collective-action waiver might

not be enforceable under the FAA—“(1) an arbitration

agreement may be invalidated on any ground that

would invalidate a contract under the FAA’s ‘saving

clause’ and (2) application of the FAA may be

precluded by another statute’s contrary congressional

command,” 737 F.3d 344, 358 (5th Cir. 2013) (internal

citation omitted)—and analyzed each independently,

ibid. (“The Board clearly relied on the FAA’s saving

clause. Less clear is whether the Board also asserted

that a contrary congressional command is present. We

consider each exception.”); id. at 358-362 (analyzing

each claim). Horton IT held that this Court’s decision

in AT&T Mobility LLC v. Concepcion, 563 U.S. 333

(2011), barred the saving-clause claim. “Like the

statute in Concepcion,” it stated, “the Board’s

interpretation is facially neutral [but its] effect * * * is

to disfavor arbitration.” Horton I, 737 F.3d at 359.

Thus, because “[r]Jequiring a class mechanism is an

actual impediment to arbitration and violates the

FAA|, t]he saving clause is not a basis for invalidating

the waiver of class procedures in the arbitration

agreement.” Jd. at 360. The Fifth Circuit is the only

circuit that has clearly rejected an independent

saving-clause claim.

—

one, on a precedential opinion. It represents at most what one

non-precedential panel thought a prior precedential panel had

held.

3 Petitioner also claims that two state supreme courts have sided

with the Fifth Circuit. Pet. 11. Petitioner gets things at best half

14

2. Petitioner is correct that the Seventh and Ninth

Circuits disagree with the Fifth. Pet. 11. Both hold

that (1) the NLRA makes collective-action waivers in

employment agreements illegal and (2) the FAA’s

saving clause therefore bars their enforcement. Pet.

App. 15a (“Because the provision at issue is unlawful

under Section 7 of the NLRA, it is illegal, and meets

the criteria of the FAA’: saving clause for

nonenforcement.”); Morris, 2016 WL 4433080, at *8

(“[Wle join the Seventh Circuit in treating the

right. In Iskanian v. CLS Transportation Los Angeles, LLC, the

California Supreme Court “agree[d] with the Fifth Circuit that,

in light of Concepcion, the Board’s rule is not covered by the FAA’s

savings [sic] clause.” 327 P.3d 129, 141 (Cal. 2014). At the same

time, however, that court correctly identified the Eighth and

Second Circu ts, on which it relied, as having weighed in on a

different matter: “We * * * conclude * * * that sections 7 and 8 of

the NLRA do not represent ‘a contrary congressional command’

overriding the FAA’s mandate.” Jd. at 142 (citing Sutherland, 726

F.3d at 297 n.8, and Owen, 702 F.3d at 1053-1055).

In Tallman v. Eighth Judicial District Court, 359 P.3d 113

(Nev. 2015), the Nevada Supreme Court took a somewhat

different approach. It correctly recognized the Fifth Circuit in

Horton II as having rejected both the freestanding saving-clause

claim and the claim that the FAA was “overridden by a contrary

congressional command,” id. at 123, but then its own opinion

went on to reject only the argument that “the NLRA cannot fairly

be taken as a ‘contrary congressional command’ sufficient * * * to

override the FAA,” ibid., and it cited as authority only that

portion of the California Supreme Court’s opinion dealing with

the congressional-command issue, ibid. (citing Jskanian, 327 P.3d

at 142). It then identified the Eighth and Second Circuits as sup-

porting only the view that “the NLRA cannot fairly be taken as a

‘contrary congressional command’ sufficient * * * to override the

FAA,” ibid. (citing Sutherland, 726 F.3d at 297 n.8, and Owen,

702 F.3d 1053-1055), not any holding concerning the saving

clause.

15

interaction between the NLRA and the FAA in a very

ordinary way: when an arbitration contract professes

to waive a substantive federal right, the saving clause

of the FAA prevents enforcement of that waiver.”). In

particular, both held that the NLRA’s bar to collective-

action waivers does not disfavor or target arbitration,

as the Fifth Circuit claimed, and thus does not fall

outside the scope of the saving clause. Pet. App. 16a-

19a; Morris, 2016 WL 4433080, at *10 (“At its heart,

this is a labor law case, not an arbitration case.” “The

contract here would face the same NLRA troubles if

Ernst & Young required its employees to use only

courts, or only rolls of the dice or tarot cards to resolve

workplace disputes.”).

3. When the Eighth, Second, and Fifth Circuits

decided Owen, Sutherland, and Horton Ii,

respectively, there was no circuit split—actual or

perceived—and only one of those circuits, the Fifth,

squarely decided the saving-clause issue. Since then,

however, both circuits that have considered this issue

for the first time have disagreed with the Fifth. The

Seventh and Ninth Circuits have also made clear that

saving-clause claims are different from claims

asserting that the NLRA represents a “contrary

congressional command” overruling the FAA and must

be analyzed independently. Because the prior cases

relied on a misplaced “consensus” at the time,

Sutherland, 726 F.3d at 296, and because the Seventh

and Ninth Circuits have now expressly addressed the

NLRA saving-clause question and gone against the

Fifth Circuit, the courts may resolve any conflict on

their own without this Court’s intervention. See Fed.

R. App. P. 35.

16

The Fifth Circuit, in fact, expressly relied on this

misplaced “consensus” in deciding Horton IJ. It was

“loath,” it stated, “to create a circuit split.” Horton II,

737 F.3d at 362 (citing Sutherland, 726 F.3d at 297—

298 & n.8, and Owen, 702 F.3d at 1055). It failed to

notice, however, that the Eighth and Second Circuit

cases it cited rested only on congressional-command,

not saving-clause arguments, see pp. 9-11, supra. As

the Seventh Circuit noted, the Eighth and Second

Circuit cases nowhere “engaged substantively with the

relevant [saving-clause] arguments.” Pet. App. 19a.

The Fifth Circuit’s concerns about a split, then, were

misguided at the time but ironically valid today. The

Fifth Circuit now represents a minority view of one. It

may thus—through an en banc proceeding—undo the

same split it was “loath to create.” Horton II, 737 F.3d

at 362.

The Fifth Circuit denied a petition for rehearing of

Horton IT on April 16, 2014, Horton I], 737 F.3d 344

(5th Cir. 2013), reh’g denied, No. 12-60031 (Apr. 16,

2014); see Murphy Oil USA, Inc. v. NLRB, 808 F.3d

1013, 1017 (5th Cir. 2015), petition for cert. pending,

No. 16-307 (filed Sept. 9, 2016), but that was before the

Seventh and Ninth Circuit decisions. Only after the

Seventh Circuit issued its decision in this case would

the Fifth Circuit have had any reason to reconsider the

panel decision in Horton II. Since then, however, no

one has asked it to reconsider Horton II en banc.

Likewise, the Second Circuit in its non-precedential

summary order in Patterson stated that “[ijf we were

writing on a clean slate, we might well be persuaded,

for the reasons forcefully stated in Chief Judge Wood’s

and Chief Judge Thomas’s opinions in Lewis and

17

Morris, to join the Seventh and Ninth Circuits and

hold that the *** waiver of collective action is

unenforceable.” 2016 WL 4598542, at *2. Even if the

Patterson court erroneously believed that Sutherland

had decided the saving-clause question, see n. 2,

supra, it correctly noted that an en banc proceeding

could clear up any confusion, Patterson, 2016 WL

4598542, at *2.

In any event, further percolaticn would be helpful

to this Court. Because none of those courts upholding

collective-action waivers against saving-clause

challenges had the benefit of the Seventh and Ninth

Circuits’ reasoning, and all but one of those courts had

either failed to consider saving-clause claims at all or

considered them only in aid of upholding a larger

contrary-congressional-command argument, see pp. 9-

15, supra, the issue warrants further development in

the lower courts. This Court would benefit from

further discussion in the courts of appeals and state

supreme courts that actually focuses on the question

presented. And there will be no shortage of

appropriate vehicles now that the Seventh and Ninth

Circuits have identified the proper issue. See, e.g.,

Bekele v. Lyft, Inc., No. 15-11650-FDS, 2016 WL

4203412 (D. Mass. Aug. 9, 2016) (upholding collective

action waiver), appeal docketed, No. 16-2109 (1st Cir.

Aug. 30, 2016).

18

Il. The Decision Below Is Correct

A. The Seventh Circuit Correctly Determined

That Epic’s Waiver Of Class And Collective

Claims Is Unlawful Under Sections 7 & 8 Of

The NLRA

The Seventh Circuit correctly determined that

section 7 of the NLRA grants employees a substantive

right to pursue “representative, joint, collective, or

class legal remedies.” .’et. App. 6a. Both the plain

language and purpose of the NLRA, as well as this

Court’s and the NLRB’s interpretations of section 7,

support this conclusion.

First, section 7 provides that “[e]mployees have 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.” 29

U.S.C. § 157 (emphasis added). This Court has

explained that section 7’s reference to “other concerted

activities” protects employees “seek[ing] to improve

working conditions through resort to administrative

and judicial forums.” EKastex, Inc. v. NLRB, 437 U.S.

556, 565-566 (1978). As a result, both courts and the

NLRB have consistently held that section 7 includes a

right to collectively pursue work-related legal claims.

See, e.g., Brady v. Natl Football League, 644 F.3d 661,

673 (8th Cir. 2011) (“[A] lawsuit filed in good faith by

a group of employees to achieve more favorable terms

or conditions of employment is ‘concerted activity’

under § 7 of the [NLRA].”); Altex Ready Mixed Con-

crete Corp. v. NLRB, 542 F.2d 295, 296-297 (5th Cir.

19

1976) (same); Leviton Mfg. Co. v. NLRB, 486 F.2d 686,

689 (1st Cir. 1973) (same).

The judicial consensus favoring a right to engage in

collective legal action is unsurprising given the plain

language of section 7. This Court has instructed that

“lalbsent a clearly expressed legislative intention to

the contrary, [the statutory] language must ordinarily

be regarded as conclusive.” Consumer Prod. Safety

Comm'n v. GTE Sylvania, Inc., 447 U.S. 102, 108

(1980). When interpreting the language of a statutory

provision, the court “givjes] the words used their

ordinary meaning.” Lawson v. FMR LLC, 134 S. Ct.

1158, 1165 (2014) (quoting Moskal v. United States,

498 U.S. 103, 108 (1990)).

The ordinary meaning of “concerted” is “jointly

arranged, planned, or carried out; coordinated.” New

Oxford American Dictionary 359 (3d ed. 2010); see also

Webster’s Third New International Dictionary,

Unabridged (2016), http://unabridged.merriam-

webster.com/unabridged/concerted (defining “concer-

ted” as “performed in unison”). “Activities” are

generally understood as “thing[s] that a person or

group does or has done” or “actions taken by a group

in order to achieve their aims.” New Oxford American

Dictionary 16 (3d ed. 2010); see also Webster’s Third

New International Dictionary, Unabridged (2016),

http://unabridged.merriam-webster.com/unabridged/

activity (defining “activity” as “an occupation, pursuit,

or recreation in which a person is active”). Similarly,

Black’s Law Dictionary defines “concerted activity” as

“falction by employees concerning wages or working

conditions; esp., a conscious commitment to a common

scheme designed to achieve an objective.” Black’s Law

20

Dictionary 349 (10th ed. 2014). Thus, while the NLRA

does not define “concerted activities,” collective legal

action fits easily within the term’s ordinary meaning.

Second, the NLRA’s underlying purpose further

supports an interpretation of “concerted activities”

that includes collective legal action. Congress enacted

section 7 “to equalize the bargaining power of the

employee with that of his employer by allowing

employees to band together in confronting an employer

regarding the terms and conditions of their

employment.” NLRB v. City Disposal Sys., Inc., 465

U.S. 822, 835 (1984). Collective legal remedies level

the playing field exactly as Congress intended: they

equalize employer-employee disputes by allowing

employees to band together in confronting their

employer. See Phillips Petroleum Co. v. Shutts, 472

U.S. 797, 809 (1985) (explaining how class action

procedures allow plaintiffs who otherwise would “have

no realistic day in court” to enforce their rights). This

Court has found, moreover, “no indication that

Congress intended to limit [section 7’s] protection to

situations in which an employee’s activity and that of

his fellow employees combine with one another in any

particular way.” City Disposal Sys., 465 U.S. at 835.

Adopting this Court’s inclusive understanding of

section 7, the court below appropriately concluded that

“other concerted activities” include collective legal

action. Pet. App. 4a-7a.

Third, the NLRB has interpreted section 7 to

include a right to engage in collective legal action and

the Board’s interpretation is entitled to deference.

This Court has “often reaffirmed that the task of

defining the scope of [section] 7 ‘is for the [NLRB] to

21

perform in the first instance as it considers the wide

variety of cases that come before it.” City Disposal

Sys., 465 U.S. at 829 (quoting Eastex, 437 U.S. at 568)

(noting that the NLRB’s interpretations of ambiguous

provisions of the NLRA are entitled to “considerable

deference”). This Court has, moreover, repeatedly

reviewed the NLRB’s interpretations of the NLRA

under the framework established in Chevron, U.S.A.,

Inc. v. Natural Resources Defense Council, Inc., 467

U.S. 837, 842-843 (1984). See Lechmere, Inc. v. NLRB,

502 U.S. 527, 536 (1992); NLRB v. United Food &

Commercial Workers Union, Local 23, 484 U.S. 112,

123 (1987). Under Chevron, the court must first

determine “whether Congress has directly spoken to

the precise question at issue.” 467 U.S. at 842. If the

court concludes that “the intent of Congress is clear,

that is the end of the matter; for the court, as well as

the agency, must give effect to the unambiguously

expressed intent of Congress.” /d. at 842-843. If the

statute is “silent or ambiguous” with respect to the

question at issue, the question is whether the agency’s

interpretation is “based on a permissible construction

of the statute.” Jd. at 843.

Here, Congress has unambiguously “spoken to the

precise question at issue.” Chevron, 467 U.S. at 842.

Both the plain language and purpose of the NLRA

support an interpretation of “concerted activities” that

includes collective legal action. See pp., 18-20, supra.

Even if one strained to find ambiguity where none

exists, however, the NLRB has interpreted section 7 to

include a right to engage in collective legal action. See

Horton I, 357 N.L.R.B. 2277, 2281 (2012) (“[T]he

substantive right to engage in concerted activity aimed

22

at improving wages, hours or working conditions

through litigation or arbitration lies at the core of the

rights protected by Section 7.”). To the extent

Congress left any ambiguity, the Board’s

interpretation is eminently reasonable and thus

“entitled to judicial deference.” Lechmere, 502 U.S. at

536.

Furthermore, section 7’s enforcement provision,

section 8 of the NLRA, makes clear that contractual

provisions that conflict with section 7 are unlawful.

Section 8 declares that “[i]t shall be an unfair labor

practice for an employer *** to interfere with,

restrain, or coerce employees in the exercise of the

rights guaranteed in section [7].” 29 U.S.C.

§ 158(a)(1). This Court has held that contracts that

“stipulate[ | for the renunciation by the employees of

rights guaranteed by the [NLRA]” are unlawful. Nat?

Licorice Co. v. NLRB, 309 U.S. 350, 361 (1940). In

particular, in National Licorice Co., this Court held

that individual contracts in which employees

prospectively waived their right to present grievances

“jn any way except personally” were unenforceable as

“a continuing means of thwarting the policy of the

[NLRA].” Jd. at 360-361. The Court further explained

in J.J. Case Co. v. NLRB that “[w]herever private

contracts conflict with [the NLRB’s] functions, they

obviously must yield or the [NLRA] would be reduced

to a futility.” 321 U.S. 332, 337 (1944); see also ibid.

(“Individual contracts no matter what the

circumstances that justify their execution or what

their terms, may not be availed of to defeat or delay

the procedures prescribed by the National Labor

Relations Act.”). In accordance with this inescapable

23

principle, the courts have, since the NLRB’s earliest

days, uniformly approved its decisions that contracts

violating the NLRA are unlawful. See, e.g., NLRB v.

Adel Clay Products Co., 134 F.2d 342, 345-346 (8th Cir.

1943); NLRB v. Jahn & Ollier Engraving Co., 123 F.2d

589, 593 (7th Cir. 1941).

Epic’s “Waiver of Class and Collective Claims”

unambiguously violates section 8 by “interfer[ing]

with” and “restrain[ing]” its employees’ section 7 right

to pursue collective legal action. 29 U.S.C. § 158(a)(1).

For covered claims, the collective-action waiver

prohibits employees from “participat[ing] in or

receiv[ing] money or any other relief from any class,

collective, or representative proceeding.” Pet. App.

3la. One could scarcely imagine terms that more

directly conflict with employees’ right to pursue

collective legal action under section 7. See Eastex, 437

U.S. at 565-566 (recognizing that section 7 protects

employees “seek[ing] to improve working conditions

through resort to administrative and judicial forums”).

The waiver is therefore unlawful as an “unfair labor

practice” under section 8 of the NLRA. 29 U.S.C.

§ 158(a)(1).

B. The FAA’s Saving Clause Does Not Require

Enforcement Of Arbitration Provisions

That Violate Federal Statutes Such As The

NLRA

The court of appeals was also correct in concluding

that because Epic’s contract violated the NLRA it was

an unenforceable illegal contract falling squarely

within the FAA’s saving clause.

24

It is a fundamental principle of contract law that

Ulegal promises cannot be enforced. See, e.g.,

Restatement (Second) of Contracts § 178 (Am. Law.

Inst. 1981) (“A promise or other term of an agreement

is unenforceable on grounds of public policy if

legislation provides that it is unenforceable.”). This

Court has unequivocally held that “our cases leave no

doubt that illegal promises will not be enforced in

cases controlled by *** federal law,” Kaiser Steel

Corp. v. Mullins, 455 U.S. 72, 77 (1982), and that

“court(|s}] ha[ve] a duty to determine whether a contract

violates [the] law before enforcing it,” id. at 83

(emphasis added).

Wisconsin contract law, moreover, which governs

the dispute in question, holds that “[t]he general rule

of law is, that all contracts which are * * * contrary to

the provisions of any statute, are void.” Melchoir v.

McCarty, 31 Wis. 252, 254 (1872); Roberts v. T.H.E.

Ins. Co., 879 N.W. 2d 492, 502 (Wis. 2016). Under

generally applicable state law, then, the agreement

between petitioner and respondent was a legal nullity.

Respondent cannot be forced into non-collective

arbitration based on an agreement which never had

legal effect under the contract law of the state.

The FAA does not mandate the enforcement of

illegal promises such as the one at the center of this

dispute. Foreseeing potential conflicts between the

FAA and other statutes, Congress included a saving

clause which states that arbitration agreements “shall

be valid, irrevocable, and enforceable, save upon such

grounds as exist at law or in equity for the revocation

of any contract.” 9 U.S.C. § 2 (emphasis added). Thus,

when an arbitration provision violates federal law, the

25

saving clause “prevents a conflict between the statutes

by causing the FAA’s enforcement mandate to yield.”

Morris v. Ernst & Young, LLP, 2016 WL 4433080, at

*7 (9th Cir. Aug. 22, 2016).

The saving clause recognizes a general defense of

illegality. This Court has stated that the saving clause

allows arbitration agreements to be invalidated by

“generally applicable contract defenses,” but not by

“defenses that apply only to arbitration or that derive

their meaning from the fact that an agreement to

arbitrate is at issue.” AT&T Mobility LLC v.

Concepcion, 563 U.S. 333, 339 (2011) (quoting Doctor’s

Assocs., Inc. v. Casarotto, 517 U.S. 681, 687 (1996)).

Here, the contract defense of illegality does not apply

only to arbitration or focus on the fact that an

agreement to arbitrate is at issue. The problem with

the collective-action waiver is not that it requires

arbitration as a forum, but rather that it forbids

collective action in any forum in violation of the NLRA.

Asserting illegality under the NLRA, moreover, hardly

disfavors arbitration. A contract forbidding collective

action in court (without mentioning arbitration) would

be equally invalid. Because the defense of illegality is

a “generally applicable contract defense” that does not

attack the arbitration clause itself, it falls squarely

within the FAA’s saving clause.

Nor can the collective-action waiver be saved, as

one of petitioner's amici suggests, by calling it a

“procedural,” rather than a “substantive,” provision.

Pacific Legal Foundation Amicus Br. 5-8 (arguing that

collective-action waivers are mere procedural rights

which can be waived in arbitration). This Court has

made clear that the FAA does not permit the

26

enforcement of contract terms that waive substantive

rights. See Mitsubishi Motors Corp. v. Soler Chrysler-

Plymouth, Inc., 473 U.S. 614, 628 (1985) (“By agreeing

to arbitrate a statutory claim, a party does not forgo

the substantive rights afforded by the statute.”). Here,

the rights granted by section 7 of the NLRA are clearly

substantive. In distinguishing between the substan-

tive and procedural protections of federal statutes, this

Court has focused on the statutes’ text, structure, and

central purpose. See, e.g., CompuCredit, 132 S. Ct. at

669-671 (judicial-forum provision not “principal

substantive provision[]” of the Credit Repair Organi-

zations Act); Rodriquez de Quijas v. Shearson/Am.

Express, Inc., 490 U.S. 477, 481 (1989) Gudicial-forum

and venue provisions in Securities Act not “so critical

that they cannot be waived”); Sun Oil Co. v. Wortman,

486 U.S. 717, 726-727 (1988) (characterizing statutes

of limitation as “procedural!” for choice-of-law purposes

but as “substantive” for Erie-doctrine purposes);

Guaranty Trust Co. of New York v. York, 326 U.S. 99,

109-110 (1945) (noting that a right to avoid litigation

under a statute of limitations could be considered

substantive); Garrett v. Moore-McCormack Co., 317

U.S. 239, 249 (1942) (holding that a burden of proof

standard was substantive rather than procedural).

The text of the NLRA itself reflects the Act’s

substantive character, granting the “/rjight of

employees as to organization.” 29 U.S.C. § 157

(emphasis added). And as the structure of the NLRA

makes clear, without section 7 the Act would be

rendered meaningless. The right of employees to

collective action is the Act’s central protection, not a

procedural provision designed to further ends defined

27

elsewhere. And with respect to the Act’s purpose, this

Court has described section 7 as a statute which

“guarantees labor its findamental right’ to self-

organization and collective bargaining.” Allen-Bradley

Local No. 1111, United Elec., Radio & Mach. Workers

of Am. v. Wis. Employ’ Relations Bd., 315 U.S. 740,

750 (1942) (quoting NLRB v. Jones & Laughlin Steel,

301 U.S. 1, 33 (1937)). The NLRB in turn has held that

the right to collective action granted by section 7 “is

the core substantive right protected by the NLRA and

is the foundation on which the Act and Federal labor

policy rest.” Horton I, 357 N.L.R.B. at 2286. Because

section 7 creates a core substantive right, the FAA

does not mandate enforcement of a provision that

violates it. See CompuCredit, 132 S. Ct. at 669-671;

Rodriquez, 490 U.S. at 481.

AT&T Mobility LLC v. Concepcion, 563 U.S. 333,

is not to the contrary. In that case, consumers

asserted that an arbitration provision was unen-

forceable under a California state law that barred

class-action waivers in most arbitration agreements.

Id. at 337-340. This Court declined to read the FAA’s

saving clause as facilitating a state policy protecting

low-value claims brought under other laws. Such a

policy, it held, “stjooJd as an obstacle to the

accomplishment of the FAA’s objectives.” Jd. at 340,

343; see also American Express Co. v. Italian Colors

Rest., 133 S. Ct. 2304, 2310, 2312 & n.5 (2013).

Likewise, in Italian Colors, the Court rejected a judge-

made rule rendering class arbitration waivers

unenforceable when the plaintiff’s cost of individually

arbitrating a claim exceeded the potential recovery.

Italian Colors, 133 S. Ct. at 2310-2312. Those holdings

28

do not suggest that the FAA requires enforcing a

contractual provision that directly violates a federal

statute such as the NLRA. Concepcion and Italian

Colors analyzed whether judge-made or implicit state

statutory policies were incompatible with the FAA, not

whether an arbitration provision violated the

substance of another federal law.

To suggest that the FAA requires the enforcement

of illegal contracts leads to surprising conclusions. If

that were true, all one would need to do to effectively

enforce an illegal contract would be to include an

arbitration provision. Taken to its logical conclusion,

petitioner's view would have breathtaking imply-

cations. Courts, for example, could not decline to en-

force arbitration provisions that violate other federal

statutes, such as agreements not to compete in

violation of federal antitrust statutes. But see Kaiser

Steel Corp., 455 U.S. at 77-79 (holding that a court

should not enforce a contract that is in violation of

federal antitrust laws); Kelly v. Kosuga, 358 U.S. 516,

521 (1959) (noting that a contract in violation of the

Sherman Act “could not be enforced by a court”). At

the extreme, if a party were willing to expose itself to

criminal liability, a court would presumably have to

enforce arbitration of a contract to murder for hire,

even though such a contract is most repugnant to

public policy. See, e.g., Green v. Pro Football, Inc., 31

F. Supp. 3d 714, 728-729 (D. Md. 2014) (citing Allis-

Chalmers Corp. v. Lueck, 471 U.S. 202, 212 (1985))

(refusing to force arbitration because underlying

dispute concerned provision “no more enforceable,

even if lesser in degree, than a contract to kill, the

universally illegal contract”).

29

Nothing in this Court’s jurisprudence requires the

enforcement of an illegal contract simply because it

contains an arbitration provision. And petitioner

points to no case in which this Court has enforced an

arbitration provision that violates a federal statute

like the NLRA.

This Court’s decision in CompuCredit, 132 S.Ct.

665, a choice-of-forum case which Epic relies heavily

upon, see Pet. 14-18, does not help it. In that case, the

Court characterized the issue as “whether claims

under the [Credit Repair Organization Act (CROA)]

can proceed in an arbitrable forum.” 132 S.Ct. at 673.

Here, the issue is not whether any particular forum,

including arbitration, is appropriate, but rather

whether a provision that ilegally bars collective action

in any forum can be enforced under the FAA.

CompuCredit concerned, moreover, a completely

different objection to arbitration: whether the CROA

represents a “contrary congressional command,” id. at

669-670, foreclosing arbitration. It nowhere discussed

whether an illegal provision of a contract could be

enforced under the FAA’s saving clause.

4 Petitioner’s amici pile on with a farrago of additional arguments.

The National Association of Manufacturers (NAM), for example,

contends that review is imperative because the NLRA’s venue

provision, 29 U.S.C. § 160(f), allows parties to “receive

contradictory decisions on the enforceability of the same

agreement,” NAM Amicus Br. 9, and because “the NLRB’s

definition of ‘supervisors’ * * * render{s] it difficult for employers

to determine which employees may enter into an agreement with

a class waiver,” id. at 10 (emphasis omitted). The NLRA’s venue

provision, however, actually protects employers. So long as they

“transact[ ] business,” 29 U.S.C. § 160(f), in a circuit that enforces

collective-action waivers, they can successfully overturn any

30

* * *

The court of appeals was correct to conclude that

since the collective-action waiver violates the NLRA

the FAA’s saving clause bars its enforcement.

Ill. This Case Is A Poor Vehicle To Decide The

Question Presented

This case is a poor vehicle for this Court to decide

petitioner’s question presented for two reasons. First,

the Seventh Circuit never reached it. As petitioner

itself describes it, “[t]he question presented * * * asks

NLRB decision that they have engaged in an unfair labor practice

by asking employees to agree to such a waiver—even when

another circuit has refused to enforce that same waiver in a

private lawsuit.

This employer-protecting venue provision also explains the

NLRB’s nonacquiescence policy, which petitioner’s amicus Pacific

Legal Foundation (PLF) complains of, PLF Amicus Br. 8-12. As

noted above, the NLRA’s venue provisions allow NLRB orders to

be reviewed in several circuits. Consequently, NLRB “nonac-

quiescence” is justified “by the fact that the venue provisions

make it difficult for any particular court of appeals to insist on

exclusive superintendence over the particular agency order.”

Samuel Estreicher & Richard L. Revesz, Nonacquiescence by

Federal Administrative Agencies, 98 Yale L.J. 679, 682 (1989).

Similarly, employers have lived for ten years under the

supervisory-status test clarified by the NLRB in Oakwood

Healthcare, Inc., 348 N.L.R.B. 686, 687 (2006). Although NAM

complains about that test now, all the courts it cites as criticizing

the NLRB’s supervisory-status test actually criticized the test in

place before 2006. See NAM Amicus Br. 11-12 (citing five cases

criticizing pre-Oakwood test). A leading employment law treatise

indicates, moreover, that “[m]ost employer representatives [have]

welcomed the Oakwood decision as providing additional

guidelines.” 3 Littler Mendelson’s The National Employer

§ 31.1.3( (3d ed. 2014) (emphasis added).

31

whether Section 7 of the NLRA * * * qualifies as a

contrary congressional command sufficient to

overcome the FAA’s presumption that [collective-

action waivers] should be enforced according to their

terms.”5 Pet. 3. The Seventh Circuit decided a

different question. It did not ask whether the NLRA

represented a “contrary congressional command”

overriding the FAA. To do so, it held, would “put[] the

cart before the horse.” Pet. App. 13a. It instead

decided the case on straight-forward saving-clause

grounds: “Because the [collective-action waiver] is

unlawful under Section 7 of the NLRA, it is illegal, and

meets the criteria of the FAA’s saving clause for

nonenforcement. Here, the NLRA and FAA work hand

in glove.” Id. at 15a; see also id. at 23a (similar). The

Seventh Circuit held that it need not reach petitioner’s

contrary-congressional-command argument because

“fijn order for there to be a conflict between the NLRA

* * * and the FAA, the FAA would have to mandate the

enforcement of Epic’s arbitration clause,” which it did

not. Id. at 13a-14a. The saving clause prevented that.

5 Epic’s discussion of the saving clause shows how peripheral it is

to its own question presented. The petition discusses the saving

clause for only two pages in its merits section, see Pet. 18-20, and

does so only to argue that the Seventh Circuit cannot be right

because “there [would] never [be] any need to determine whether

another federal statute qualifies as a contrary congressional

command.” Id. at 18-19 (emphasis added). It also makes the

remarkable claim in passing that the FAA’s saving clause does

not recognize “illegality-based defenses [that] arise[] only in some

contracts, not ‘any contract.” Id. at 20 (quoting 9 U.S.C. § 2). But

even petitioner agrees that the FAA’s saving clause recognizes

“classic universal defenses such as fraud and mistake,” ibdid.,

which apply only to “some contracts,” namely only to those

involving fraud and mistake.

32

Id. at 15a. Because the FAA itself forecloses enforcing

an illegal contract provision, “there is no conflict

between the NLRA and the FAA, let alone an

irreconcilable one,” id. at 14a, which requires a

“contrary congressional command” before the NLRA

can trump, id. at 13a-15a.6

Second, the case is a poor vehicle to decide

petitioner’s or even respondent’s question presented

because the collective-action waiver itself contains a

“savings clause,” which is dispositive and avoids the

need for any analysis under the FAA. This clause

states that “[i]Jf the Waiver of Class and Collective

Claims is found to be unenforceable, then any claim

brought on a class, collective or representative action

basis must be filed in a court of competent jurisdiction,

and such court shall be the exclusive forum for such

claims.” Pet. App. at 25a, 35a (emphasis added).

Under the plain language of the contract, if a court

determines that the collection-action waiver is illegal

(and therefore unenforceable) because it violates a

federal statute or for any other reason, no more

6 For these reasons, the suggestion by petitioner's amicus

Chamber of Commerce of the United States (Chamber) that

certiorari is necessary in this case in order to “put before the

Court all of the issues that must be resolved,” Chamber Amicus

Br. 23, is puzzling indeed. This case does not present the

straightforward “contrary congressional command’ issue” that

the Chamber believes this Court needs to consider, ibid., and

although it does present “the right-to-pursue-statutory-remedies

issue,” ibid., so too does the petition in NLRB v. Murphy Oil USA,

Inc., 16-307 Gov't Pet. 10-19, a vehicle posing none of the

problems this case does.

33

analysis is necessary. The contract itself proscribes

arbitration in this case.

Both the Seventh Circuit and the district court

rested their decisions primarily on the contractual

“savings clause,” which is unique to this particular

case. The Seventh Circuit stated, in fact, that “[s]ince

we have concluded *** that the collective-action

waiver is incompatible with the NLRA, we could

probably stop here: the contract itself demands that

Lewis’s claim be brought in a court.” Pet. App. 12a

(emphasis added). It went on to discuss the FAA only

because “Epic * * * contends that we should ignore the

contract’s savings clause because the FAA trumps the

NLRA. In essence, Epic says that even if the NLRA

killed off the collective-action waiver, the FAA

resuscitates it, and along with it, the rest of the

arbitration apparatus.” J/bid. In other words, the

Seventh Circuit considered the FAA’s saving clause

only because Epic claimed that the FAA somehow

overrode the contract’s own savings provision—a

position the court rejected. Jbid.

The district court likewise rested its holding on the

contract’s savings clause rather than the FAA’s

analog. It stated that because “the arbitration

agreement includes [its own] ‘savings clause[,|’ * * * if

{the court] conclude{s] that the [collective-action]

waiver is invalid, [Lewis’s] challenge to the rest of the

arbitration agreement is moot.” Pet. App. at 25a. It

34

was the agreement itself, not the FAA, that resolved

the dispute.’

If this Court believes that the saving-clause

question is now worthy of review, it should grant

certiorari in Murphy Oil USA, Inc. v. NLRB, 808 F.3d

1013, 1017 (5th Cir. 2015), petition for cert. pending,

No. 16-307 (filed Sept. 9. 2016). For starters, all cases

deciding the saving-clause issue rely on the NLRB’s

decision in Horton J, 357 N.L.R.B. 2277 (2012), the

reasoning of which Murphy Oil USA, Inc., 361

N.L.R.B. No. 72 (2014), recapitulates. In this case, for

example, respondent relied heavily on Horton I in

opposing Epic’s motion to compel arbitration. And the

court of appeals did the same, citing the NLRB’s

decisions numerous times and concluding that “[t]he

Board’s interpretation is, at a minimum, a sensible

way to understand the statutory language, and thus

we must follow it” under Chevron. Pet. App. 7a.

Because the NLRB is a full party in Murphy Oil and

that case fully considered the saving-clause issue, that

case would be the most appropriate vehicle for this

Court to review the question, if it wishes.

7 The contract’s own savings clause is, moreover, broader than its

statutory analog. Whereas the FAA’s saving clause forecloses

enforcement “upon such grounds as exist at law or in equity for

the revocation of any contract,” 9 U.S.C. § 2 (emphasis added), the

contract’s own savings clause requires that “[iJf the [collective-

action] waiver is found to be unenforceable, then any claim

brought on a * * * collective * * * basis must be filed in a couxi of

competent jurisdiction.” Pet. App. 25a, 35a (emphasis added). By

its own terms, the contract’s savings clause bars arbitration if the

collective-action waiver is unenforceable, not just revocable.

35

CONCLUSION

The petition for a writ of certiorari should be

denied.

Respectfully submitted.

DANIEL R. ORTIZ DAVID C. ZOELLER

TOBY J. HEYTENS Counsel of Record

UNIVERSITY OF WILLIAM E.. PARSONS

VIRGINIA SCHOOL OF CAITLIN M. MADDEN

LAW SUPREME COURT KATELYNN M. WILLIAMS

LITIGATION CLINIC HAWKS QUINDEL, S.C.

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NOVEMBER 2016