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

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Opposition Brief
- **Published:** January 1, 2017

## Text

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).

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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.

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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.
580 Massie Road 222 West Washington Ave.,
Charlottesville, VA Suite 450
22903 Madison, WI
(434) 924-3127 53701
(608) 257-0040
dzoeller@hq-law.com
ADAM HANSEN
APOLLO LAW LLC
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Suite 401M - 250
Minneapolis, MN 55415
(612) 927-2969

NOVEMBER 2016

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385016_0699%3A03. Public record. Not legal advice.