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

supreme Court, U.S.

FILED

RECORD

| wer No. 16-285 OCT - 3 20%

BRIEFS ee OFFICE OF THE CLERK __

IN THE

Supreme Court of the United States

EPIC SYSTEMS CORPORATION,

Petitioner,

JACOB LEWIS,

Respondent.

On a Petition for Writ of Certiorari to the

United States Court of Appeals

for the Seventh Circuit

—_ @ cereeenenee

BRIEF AMICUS CURIAE OF

ATLANTIC LEGAL FOUNDATION

IN SUPPORT OF PETITIONER

— —_—— @ —___ --—- — —

MARTIN S. KAUFMAN

Counsel of Record

ATLANTIC LEGAL FOUNDATION

2039 PALMER AVENUE, #104

LARCHMONT, NY 10538

(914) 834-3322

mskaufman@atlanticlegal.org

ATTORNEYS FOR

ATLANTIC LEGAL FOUNDATION

October 2016

i

QUESTION PRESENTED

Whether an agreement that requires an

employer and an employee to _ resolve

employment-related disputes through individual

arbitration, and waive class and collective

proceedings, is enforceable under the Federal

Arbitration Act, notwithstanding the provisions of

the National Labor Relations Act.

ii

CORPORATE DISCLOSURE STATEMENT

Pursuant to Rule 29.6 of the Rules of this

Court, amicus curiae Atlantic Legal Foundation

states that Atlantic Legal Foundation is a not-for-

profit corporation incorporated under the laws of

the Commonwealth of Pennsylvania. It has no

shareholders, parents, subsidiaries or affiliates.

TABLE OF CONTENTS

Page

QUESTION PRESENTED.................. i

CORPORATE DISCLOSURE STATEMENT. . ii

py | 8 6 OP SY, sa ge iv

INTEREST OF AMICUS CURIAE........... 1

PRELIMINARY STATEMENT. ............. 3

i eae Mains o's « 656 bce 5

SUMMARY OF ARGUMENT. .............. NS)

FE EER en Ee Eee ae re 10

I. There is an acknowledged and

indisputable split of authority

among the circuits on the

question presented................ 10

Il. The question presented is

exceptionally important and warrants

a he anak pe eee oe bok 20

It]. The seventh circuit’s decision is

SSA SERPS Mig ese A ee 20

Sir so ki ko ilne bene aena ven 4a 24

lv

TABLE OF AUTHORITIES

Page(s)

CASES:

American Express Co. v. Italian Colors

Restaurant, 133 S. Ct. 2304 (2013)... . passim

AT&T Mobility LLC v. Concepcion,

BR passim

Cellular Sales of Missouri, LLC v. NLRB,

824 F.3d 772 (8th Cir. 2016).......... 15, 16

Citi Trends, Inc. v. NLRB, No. 15-60913,

2016 WL 4245458, at *1 (5th Cir.

Aug. 10, 2016) (per curiam)(unpublished).. 12

CompuCredit Corp. v. Greenwood,

So Be ee passim

D.R. Horton, Inc. v. NLRB,

737 F.3d 344 (5th Cir. 2013). ........ passim

D.R. Horton, Inc., 357 N.L.R.B. 2277

ete wie ee eee ae i eee dviak & passim

DIRECTV, INC. v. Imburgia,

es ee I, wo 6 66 006 0p oe 00s 2,21

Gilmer v. Interstate/Johnson Lane Corp.,

Se I, nc a oe ceive ence ses 21, 23

Killion v. KeHE Distribs., LLC,

761 F.3d 574 (6th Cir. 2014). ............ 18

Lewis v. Epic Systems Corp..,

823 F.3d 1147 (7th Cir. 2016),

petition for cert. pending,

No. 16-285 (filed Sept. 3, 2016)....... passim

Vv

TABLE OF AUTHORITIES (cont'd)

Page(s)

CASES (cont’d):

Mitsubishi Motors Corp. v. Soler Chrysler-

Plymouth, Inc., 473 U.S. 614 (1985). ...... 21

Moses H. Cone Memorial Hospital v. Mercury

Construction Corp..,

ee See 20, 21

Murphy Oil USA, Inc.,

361 N.L.R.B. No. 72 (2014). .......... 13, 14

Murphy Oil, U.S.A., Inc. v. NLRB,

808 F.3d 1013 (5th Cir. 2015),

petition for cert. pending, No. 16-307

EE passim

NLRB v. Murphy Oil, No. 16-307 petition

rene 3, 4, 15, 20

Owen v. Bristol Care, Inc.,

702 F.3d 1050 (8th Cir. 2013). .. 15, 16, 17, 19

PJ Cheese, Inc. v. NLRB, No. 15-60610,

2016 WL 3457261, at *1 (5th Cir.

June 16, 2016) (per curiam).............. 12

Shearson/American Express Inc. v. McMahon,

a as eevee stew c pen 21

Stolt-Nielsen S.A. v. AnimalFeeds International

Corp., 559 U.S. 662 (2010)............... 21

Sutherland v. Ernst & Young LLP,

726 F.3d 290 (2d Cir. 2013)........... 17, 19

United Steelworkers of Am. v. Warrior &

Gulf Navigation Co.,

ee 23-24

vi

TABLE OF AUTHORITIES (cont’d)

Page(s)

CASES (cont’d):

Walthour v. Chipio Windshield Repair, LLC,

745 F.3d 1326 (11th Cir. 2014). .......... 18

STATUTES:

Credit Repair Organizations Act,

26 WG. BRP 6 cect ie wenn 22, 23

15 U.G. © BG oc vc ee ccseecvusenen 23

Fair Labor Standards Act,

F gtk fom Sy rats: passim

Federal Arbitration Act, 9 U.S.C. 1-16. .. passim

Fy otk fk retell passim

National Labor Relations Act,

aie hee 8: | re.” passim

C7, SPUBG 0268. ...... chokes 22

5 al, 20 VEL. § UGGS... os ec educueen 7

]

INTEREST OF AMICUS CURIAE'

The Atlantic Legal Foundation is a non-profit

public interest law firm founded in 1976 whose

mandate is to advocate and protect the principles

of less intrusive and more accountable

government, a market-based economic system, and

individual rights. It seeks to advance this goal

through litigation and other public advocacy and

through education. Atlantic Legal Foundation’s

board of directors and legal advisory council

consist of legal scholars, corporate legal officers,

private practitioners, business executives, and

prominent scientists. Atlantic Legal’s directors and

advisors are familiar with the role arbitration

clauses play in the contracts entered into between

companies and between companies and consumers.

Some of Atlantic Legal’s directors and advisers

have decades of experience with arbitration — as

legal counsel, as arbitrators, and as members or

supporters of organizations that administer

' Pursuant to Rule 37.2(a), amicus has given notice of

intent to file this brief to all parties more than 10 days

before this brief was filed. All parties have consented to the

filing of this brief.; the consents have been lodged with the

Clerk.

Pursuant to Rule 37.6, amicus affirms that no counsel

for any party authored this brief in whole or in part, and no

counsel or party made a monetary contribution intended to

fund the preparation or submission of this brief. No person

other than amici curiae nor their counsel made a monetary

contribution to the preparation or submission of this brief.

2

arbitration regimes. They are familiar with the

benefits of arbitration, especially the role of

arbitration (and other “alternative dispute

resolution” mechanisms) in facilitating business

and commerce and in alleviating the burdens on

courts and parties.

The abiding interest of the Foundation in the

promotion of arbitration as an efficient alternative

to protracted litigation is exemplified by its

participation as amicus or as counsel for amicus

in numerous cases before this Court, involving

arbitration issues, including American Express Co.

v. Italian Colors Restaurant, 133 S. Ct. 2304 (2013)

and DIRECTV, INC. v. Imburgia, 136 S. Ct. 463

(2015).

There is aclear, acknowledged, and undisputed

circuit split The federal courts of appeals are

divided as to whether the National Labor

Relations Act, 29 U.S.C. et seg. (NLRA) overrides

the Federal Arbitration Act, 9 U.S.C. §§ 1, et seq.

(“FAA”)’s presumption that arbitration agreements

are enforceable as written. The two circuits that

have held arbitration agreements in the labor-

relations context are unenforceable acknowledge a

clear circuit split and all of the petitioners in the

three cases now pending before the Court that

raise this issue — employers and the NLRB alike -

agree that there is a serious and direct circuit

split.

Amicus also believes that the decision of the

Court of Appeals for the Seventh Circuit in this

case is inconsistent with the purposes of the FAA

3

and both the long-standing and recent teaching of

this Court regarding arbitration, and is in direct

conflict with decisions of at least three other

Circuits.

The decision below, if allowed to stand, will

deter many employers from _ incorporating

arbitration as a dispute resolution mechanism in

their dealings with employees, thus frustrating a

fundamental purpose of the FAA.

PRELIMINARY STATEMENT

The Supreme Court is being asked to resolve a

clear circuit split arising from contrary conclusions

drawn recently by several circuits about whether

class and collective action waivers in employment

arbitration agreements violate the National Labor

Relations Act, and whether the NLRA overrides

the Federal Arbitration Act in three petitions for

certiorari filed in September 2016, namely the

instant case as well as Ernst & Young, LLP v.

Morris, No. 16-300, (filed Sept. 8, 2016) and NLRB

v. Murphy Oil, No. 16-307 (filed Sept. 9, 2016). The

fact that three petitions have been filed with the

Court in such a two week period, involving very

similar legal and factual issues, and that petitions

have been filed by both employers and the NLRB,

indicates the importance of the issues and the

importance of the Court determining the scope of

employers’ and employees’ rights under the two

federal statutory schemes at issue as applied to

arbitration agreements that contain a waiver of

4

the right to engage in class litigation or class

arbitration.

The FAA establishes a presumption in favor of

enforcing arbitration agreements as written that

can be overcome by another statute, but only if

that statute is a “congressional command” that is

contrary to the FAA’s mandate.

The Ninth Circuit in Morris v. Ernst & Young,

LLP, No. 13-16599, 2016 WL 4433080 (9th Cir.

Aug. 22, 2016), petition for cert. pending, No.

16-300 (filed Sept. 8, 2016), and Seventh Circuit in

this case held that the NLRA is a “congressional

command” that creates an exception to the FAA’s

promotion of arbitration as a preferred means of

dispute resolution. The Fifth Circuit, in Murphy

Oil, U.S.A., Inc. v. NLRB, 808 F.3d 1013 (5th Cir.

2015), petition for cert. pending, No. 16-307 (filed

Sept. 9, 2016) held that the NLRA is not an

unambiguous “congressional command,” and that

it did not fall within the FAA’s “saving clause” of

“jNegality.”

Petitioners in all three cases — employers and

the NLRB (charged with protecting the interests of

employees) — argue in strikingly similar language

that the issue whether an employer can lawfully

require its employees to sign agreements

mandating individual arbitration of workplace

disputes “is an important and recurring question”

about the federal policy encouraging arbitration

embodied in the Federal Arbitration Act and the

scope of employees’ rights under the NLRA. See

NLRB Petition in No. 16-307 at 9; see also Ernst

5

& Young Petition in No. 16-330 at 10 and Epic

Petition in this case at 4.

The employer petitioners in the cases arising

from the decisions of the Seventh and Ninth

Circuits — the case at bar and Ernst & Young v.

Morris, No. 16-330 — diverge from the NLRB

primarily in their respective positions on the

substantive issue in each case.

The outcome of these cases has far-reaching

implications for employers and employees across

the United States. If the Seventh and Ninth

Circuits’ rule stands, employers doing business in

those circuits will be subject to a different legal

regime than employers with employees in the

Second, Fifth, and Eighth Circuits, and even

employers in those circuits face the real threat of

enforcement action by the NLRB before

administrative tribunals until the Supreme Court

establishes a uniform nationwide rule.

BACKGROUND

Epic Systems is a Wisconsin-based developer of

computer software for recording, organizing,

storing and sharing healthcare data. Epic

employees develop, install, and maintain the

software.

In April 2014, Epic sent an email containing an

arbitration agreement to many of its employees.

The email asked recipients to confirm that they

understood and consented to the agreement, or

6

they could request that someone contact them

about it. Pet. App. 2a.

Lewis, a technical writer at Epic, acknowledged

the arbitration agreement and continued to work

at Epic. The agreement provided that by

continuing to work at Epic, Lewis was deemed to

have accepted its terms. In the agreement, Lewis

waived his “right to participate in or receive money

or any other relief from any class, collective, or

representative proceeding.”

Lewis left Epic’s employ and later filed suit in

federal court in Wisconsin on behalf of himself and

other technical writers alleging the company had

violated the Fair Labor Standards Act, 29 U.S.C.

§§ 201-219 (FLSA), by misclassifying them and

depriving them of overtime pay.

Epic moved to dismiss Lewis’s claim and compel

individual arbitration. Lewis responded that the

agreement’s class and collective action waiver was

unenforceable because it interfered with his right

to engage in concerted activities under Section 7 of

the NLRA. The district court agreed with Lewis’s

arguments and Epic appealed to the Seventh

Circuit. Epic appealed, and the Seventh Circuit

affirmed.

The Seventh Circuit’s Decision

The Seventh Circuit Court of Appeals concluded

that “[a] collective, representative, or class legal

proceeding is * * * a ‘concerted activit|y])” under

NLRA Section 7. Pet. App. 10a (brackets in

original), and Section 8 of the NLRA prohibits an

7

employer from interfering with an employee’s right

to engage in concerted activity, 29 U.S.C. §

158(a)(1). Thus, the court held, the NLRA renders

the waiver of class and collective proceedings

“unenforceable.” Pet. App. lla.

The Seventh Circuit began its analysis by

adopting the NLRB’s reasoning — promulgated in

D.R. Horton, Inc., 357 N.L.R.B. 2277 (2012) — that

engaging in class, collective or representative

proceedings is “concerted activity” and a protected

right under Section 7 of the NLRA, and thus it

would be an unfair labor practice under Section 8

of the NLRA for an employer “to interfere with,

restrain, or coerce employees in the exercise” of

this right. According to the court, the NLRA’s

legislative history and purpose indicated that

“concerted activity” unambiguously includes

representative, class, joint and collective actions.

Further, even if the court were to find the term

“concerted activity” ambiguous, it would then have

to defer to the NLRB’s interpretation of that term

and find the class action waiver to be unlawful.

The Seventh Circuit rejected Epic’s three

principal arguments. First, Epic argued that

because class actions under Rule 23 of the Federal

Rules of Civil Procedure did not exist when

Congress enacted the NLRA in 1935, Congress

could not have intended Rule 23 class actions to be

“concerted activity” under the NLRA. The court,

however, held that “concerted activity” is not

limited to what was “concerted activity” in 1935.

Also, the arbitration agreement not only waived

8

Rule 23 class actions, it waived all forms of

representative, collective or joint proceedings, and

these types of proceedings, including collective

actions under §216(b) of the FLSA, existed prior to

1935.

Second, the Seventh Circuit rejected the

argument, accepted by ali the other circuits that

had theretofore ruled on the matter, that the

arbitration agreement must be enforced under the

Federal Arbitration Act (FAA). The court even

went so far as to say that “it is not clear to us that

the FAA has anything to do with this case.”

Nevertheless, the court proceeded to examine

whether there was a conflict between the FAA’s

mandate to place arbitration agreements on the

same footing as any other contract and the NLRA.

In doing so, the court addressed the FAA’s

“savings clause,” contained in 9 U.S.C. § 2, which

provides that arbitration agreements are

“enforceable, save upon such grounds as exist at

law or in equity for the revocation of any contract.”

Pet.App. at 14a-15a (quoting 9 U.S.C. § 2) and

“fijllegality is one of those grounds.” Jd. at 15a.

The court found the savings clause provided a way

to harmonize the NLRA and FAA, by finding the

agreement’s class waiver to be unenforceable.

According to the court, the agreement is illegal

under the NLRA, and because an illegal

agreement is not enforceable under the FAA’s

savings clause, there is no conflict between the

FAA and NLRA. 7d. at 20a.

9

Finally, Epic contended that even if Section 7

protects a right to class or collective actions, the

right is merely procedural not substantive, and the

FAA requires enforcement of the agreement since

it does not involve the forfeiture of a substantive

right. The court rejected this argument because it

found the right to engage in “concerted activity”

through class or collective actions is a substantive

right under the NLRA, even though the class

action device itself is procedural. Since the

arbitration agreement required employees to

relinquish a right that the NLRB has declared to

be substantive, it was not enforceable under the

FAA.

The Seventh Circuit acknowledged that the

Fifth Circuit in D.R. Horton, Inc. v. NLRB, 737

F.3d 344 (5th Cir. 2013), had come “to the opposite

conclusion,” Pet. App. 15a, and proceeded to

“create a conflict in the circuits.” Jd. at 15a n.f.

SUMMARY OF ARGUMENT

The split of authority among several! circuits in

this case is clear, acknowledged, and undisputed.

The federal courts of appeals are divided, three to

two, on whether the NLRA overrides the FAA’s

presumption that arbitration agreements are

enforceable as written, requires’ that

employment-related disputes be resolved by

individual arbitration. Indeed, the two circuits

that have held arbitration agreements in the

labor-relations context are unenforceable

acknowledge a clear circuit split and all of the

10

petitioners in the three cases now pending before

the Court that raise this issue — employers and the

NLRB alike — agree that there is a serious and

direct circuit split.

Likewise, all three petitions pending before the

Court raising the issue presented in this case —

from employers and the NLRB ~— argue that the

circuit split is fully developed, acknowledged, and

ripe for resolution by this Court.

Review is also warranted because the decision

below was incorrect. It ignores this Court’s

teaching that the FAA embodies “a liberal federal

policy favoring arbitration agreements” and that

arbitration agreements must be enforced according

to their terms, that the foregoing principle applies

even when the claims at issue are federal statutory

claims, unless the FAA’s mandate has been

overridden by a contrary congressional command

which must be expressed with “clarity.”

ARGUMENT

I. THERE IS AN ACKNOWLEDGED

AND INDISPUTABLE SPLIT OF

AUTHORITY AMONG THE CIRCUITS

ON THE QUESTION PRESENTED.

The split of authority in this case is clear,

acknowledged, and undisputed. The federal courts

of appeals are divided, three to two, on whether

the NLRA overrides the FAA’s presumption that

arbitration agreements are enforceable as written,

requires that employment-related disputes be

11

resolved by individual arbitration. Indeed, the two

circuits that have held arbitration agreements in

the labor-relations context are unenforceable

acknowledge a clear circuit split and all of the

petitioners in the three cases now pending before

the Court that raise this issue —- employers and the

NLRB alike — agree that there is a serious and

direct circuit split.

The Second, Fifth, and Eighth Circuits have

held that arbitration agreements that incorporate

waivers of class and collective arbitration and

litigation in the employment context are

enforceable under the FAA.

The Fifth Circuit has squarely and repeatedly

upheld class waivers in employment-related

arbitration agreements. In D.R. Horton, Inc. v.

NLRB, 737 F.3d 344, 362 (5th Cir. 2013), the court

rejected a decision by the National Labor Relations

Board (NLRB or Board), which had found the class

waiver at issue unenforceable under the FAA and

the NLRA. See D.R. Horton, Inc., 357 N.L.R.B.

2277 (2012). The Fifth Circuit considered and

rejected the NLRB’s decision that the FAA’s saving

clause was a basis for invalidating class waivers

because of alleged “ illegality” under the NLRA.

737 F.3d at 360. The NLRB’s analysis was flawed,

the Fifth Circuit explained, because its finding of

illegality had “the effect of * * * disfavor[ing]

arbitration.” Jd. at 359 (citing AT&T Mobility LLC

v. Concepcion, 563 U.S. 333, 346 (2011)). The court

therefore concluded that the defense falls outside

the saving clause. Jd.

12

The Fifth Circuit then analyzed the issue in the

schema required by this Court’s in cases in which

a party seeks to avoid arbitration based on a

purported conflict with another federal statute

such as the NLRA. The court asked whether the

NLRA is “a contrary congressional command”

that overcomes the FAA’s presumption in favor of

arbitration. Jd. (quoting CompuCredit Corp. v.

Greenwood, 132 S. Ct. 665, 669 (2012). The Fifth

Circuit determined that “there is no basis on which

to find that the text of the NLRA supports a

congressional command to override the FAA.” Jd.

In so holding, the Fifth Circuit recognized that

“le]very one of our sister circuits to consider the

issue” has “held arbitration agreements containing

class waivers enforceable,” and the court was

“loath to create a circuit split.” Jd. at 362 and the

proper result was that a class waiver “must be

enforced according to its terms.” Id.

The Fifth Circuit has adhered to this view

consistently since its decision in D.R. Horton, in

the face of serial challenges to its decisions from

the NLRB, challenges that are brought when

aggrieved parties elect to file petitions to review

NLRB rulings in the Fifth Circuit. See Citi Trends,

Inc. v. NLRB, No. 15-60913, 2016 WL 4245458, at

*1 (5th Cir. Aug. 10, 2016) (per curiam)

(unpublished); PJ Cheese, Inc. v. NLRB, No.

15-60610, 2016 WL 3457261, at *1 (5th Cir. June

16, 2016) (per curiam); and, most recently, in

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

13

1021 (5th Cir. 2015), petition for cert. pending, No.

16-307 (filed Sept. 9, 2016).

In Murphy Oil, the Fifth Circuit again

addressed the legality of individual arbitration

agreements under Sections 7 and 8(a) of the NLRA

and once again upheld the legality of an

arbitration agreement that contains a waiver of

the right to commence or participate in class-wide

arbitration or litigation. The Fifth Circuit

considered a nearly identical case only two years

earlier in D.R. Horton.

Murphy Oil’s arbitration agreement included a

waiver of the employee’s right to pursue class and

collective actions. The agreement provided that

employees must individually “resolve any and all

disputes or claims...which relate...to Individual’s

employment...by binding arbitration.” Several

employees filed a FLSA collective action and

Murphy Oil sought dismissal of the suit and to

compel arbitration. One of the plaintiff employees

filed an unfair labor charge with the NLRB

alleging that the agreement unlawfully interfered

with employees’ Section 7 rights guaranteed by the

NLRA.

In October 2014, ten months after the Fifth

Circuit’s ruling in D.R. Horton, the NLRB issued

ils Murphy Oil opinion, Murphy Oil USA, Inc., 361

N.L.R.B. No. 72 (2014). The Board disregarded the

Fifth Circuit’s ruling in D.R. Horton and chose

instead to reaffirm its previous position that an

arbitration agreement similar to Murphy Oil’s

violated the NLRA because the agreement

14

restricted Section 7 rights to engage in concerted

activity. The NLRB applied its D.R. Horton

decision, In re D.R. Horton, Inc., 357 N.L.R.B. No.

184 (2012), to Murphy Oil’s arbitration agreement

and similarly concluded that both the original and

amended Murphy Oil arbitration agreements could

be interpreted as unlawfully prohibiting employees

from filing unfair labor practice charges, and thus

required corrective action.” Murphy Oil USA, Inc.,

361 N.L.R.B. No. 72 (20:4).

Before the NLRB issued its Murphy Oil ruling,

the Fifth Circuit had overturned the NLRB’s D.R.

Horton decision. D.R. Horton, Inc. v. N.L.R.B., 737

F.3d 344 (5th Cir. 2013). Murphy Oil petitioned

the Fifth Circuit to review the NLRB’s decision

that ignored the Court’s D.R. Horton ruling. The

Fifth Circuit held in Murphy Oil that the original

arbitration agreement violated employees’ Section

7 rights, but that the amended agreement was

lawful. The court considered Murphy Oil’s pre- and

post-D.R. Horton agreements separately because

the agreements had different language. The Fifth

Circuit concluded that the original agreement was

problematic because its language that employees

waived the right to pursue collective or class

claims for “any and all disputes or claims...which

relate...to Individual’s employment” could be

* After the Fifth Circuit’s D.R. Horton decision Murphy

Oil revised its agreement to include language clarifying

that the agreement did not bar employees from

“participating in proceedings to adjudicate unfair labor

practice[] charges before the Board.”

15

interpreted to mean that the employee could not

file unfair labor practice charges with the NLRB,

since “any and all” claims related to employment

had to proceed to individual arbitration, could

have a chilling effect on employees’ ability to act

collectively, and thus constituted an unfair labor

practice.

But the Court found Murphy Oil’s revised

arbitration agreement did not violate the NLRA

because an employee could not reasonably

interpret the revised agreement to prohibit filing

unfair labor practice charges, because the

agreement clearly stated the opposite. The Fifth

Circuit’s Murphy Oil decision held that individual

arbitration agreements are not a per se unfair

labor practices and held further that “an express

statement” preserving employees’ right to file

Board charges is not required. See NLRB Petition

in Murphy Oil, No. 16-307, Pet.App. 11a.

The Eighth Circuit also has concluded that

employment arbitration agreements containing

class waivers are enforceable under the FAA,

notwithstanding federal labor laws or the NLRB’s

interpretation of those laws. See Cellular Sales of

Mo., LLC v. NLRB, 824 F.3d 772, 776 (8th Cir.

2016); Owen v. Bristol Care, Inc., 702 F.3d 1050,

1052, 1054-1055 (8th Cir. 2013). In Owen, the

Eighth Circuit acknowledged the NLRB’s

determination that class waivers in employment

arbitration agreements are unenforceable, but

explicitly “reject[ed)” the “invitation to follow the

NLRB’s rationale.” 702 F.3d at 1055, and instead

16

found the FAA’s presumption in favor of the

enforcement of arbitration agreements to be

dispositive. See id. at 1052-1055.

The Eighth Circuit followed this Court’s

teaching that “there must be a ‘contrary

congressional command’ for another statute to

override the FAA’s mandate.” Jd. at i052 (quoting

CompuCredit, 132 S. Ct. at 669), and found that

the two potential contrary congressional!

commands alleged in Owen — the FLSA and the

NLRA — did not constitute such a “contrary

congressional command.” 7d. at 1053-1054. The

Eighth Circuit concluded that neither statute

sufficed to “override[] the mandate of the FAA in

favor of arbitration.” Jd. at 1055. Because Congress

had reenacted the FAA in 1947, after passing both

of the labor statutes, the court reasoned, “Congress

intended its arbitration protections to remain

intact even in light of the earlier passage of * * *

major labor relations statutes.” Jd. at 1053.

The Eighth Circuit reaffirmed its Owen decision

recently in Cellular Sales, 824 F.3d 772. That case

came before the court of appeals on a petition to

review the NLRB’s ruling “that a mandatory

agreement requiring individual arbitration of

work-related claims’ violates the NLRA.” Id. at

776. The court granted the petition in relevant

part, explaining that the “holding in Owen is fatal”

to the NLRB’s position because following Owen, an

“arbitration agreement that include[s] a waiver of

class or collective actions in all forums to resolve

employment-related disputes” is enforceable. Jd.

17

The Second Circuit is in agreement with the

Fifth and Eighth Circuits. See Sutherland v. Ernst

& Young LLP, 726 F.3d 290, 297 & n.8 (2d Cir.

2013) (per curiam); it, too, held that a class waiver

in an arbitration clause in the employment context

is enforceable. Sutherland worked for Ernst &

Young and agreed to resolve all disputes with

Ernst & Young through individual arbitration. Id.

at 293-294. After the plaintiff filed a class action in

federal court, Ernst & Young moved to compel

arbitration. Jd. at 294. The district court denied

the motion, but the Second Circuit reversed. Jd. at

299. Like the Eighth Circuit in Owen, the Second

Circuit began from the premise that “arbitration

agreements should be enforced according to their

terms unless the FAA’s mandate has been overrid-

den by a contrary congressional command.” Id. at

295 (internal quotation marks and citation

omitted). The court found that neither the FLSA

nor the NLRA was a “contrary congressional

command” that overrode the FAA. Id. at 296-297

& n.8. Like the Eighth Circuit, the Second Circuit

reached this conclusion even though the NLRB

had decided otherwise; the court “decline[d] to

follow” the Board’s views. Id. at 297 n.8. It held

that an employment arbitration agreement is

enforceable under the FAA. Id. at 292-293, 299

(citing American Express Co. v. Italian Colors

Rest., 133 S. Ct. 2304 (2013)).°

* The Sixth and Eleventh circuits have also held that

(continued...)

18

On the other side of the split are the Seventh

and Ninth Circuits. The Seventh Circuit deviated

from its sister circuits in the decision below. It

expressly recognized that its opinion “would create

a conflict in the circuits.” Pet. App. l5an ft. Unlike

the Second, Fifth, and Eighth Circuits, the

Seventh Circuit held that agreements to submit

employment disputes to individual arbitration are

not enforceable under the NLRA and the FAA. The

panel concluded that class waivers in employment

arbitration agreements are “illegal” under the

NLRA because they interfere with employees’ right

to engage in concerted activities. Jd. at 10a-11a. It

determined that such waivers are unenforceable

under the FAA’s saving clause because illegality is

a “ground[ ] * * * for the revocation of any

contract.” Id. at 14a-15a (quoting 9 U.S.C. § 2); see

id. at 20a.

The Seventh Circuit acknowledged that the

Fifth Circuit had reached “the opposite

conclusion.” Jd. at 15a, but the Seventh Circuit

minimized the Fifth Circuit’s reasoning as relying

on mere “dicta” from this Court’s decisions in

Concepcion and Italian Colors. Id. As for the

Second and Eighth Circuits, the panel did not

*(...continued)

the FAA requires enforcement of class waivers in

employment arbitration agreements, but without

discussing the NLRA in their decisions. See Killion v. KeHE

Distribs., LLC, 761 F.3d 574, 592 (6th Cir. 2014); Walthour

v. Chipio Windshield Repair, LLC, 745 F.3d 1326,

1334-1336 (11th Cir. 2014).

19

dispute that these “two circuits agree with the

Fifth,” citing Sutherland and Owen, but it viewed

the analysis by those circuits as insufficient. Jd. at

19a.

The Ninth Circuit has joined the Seventh. In

Morris v. Ernst & Young, LLP, No. 13-16599, 2016

WL 4433080 (9th Cir. Aug. 22, 2016), a divided

panel held that a waiver provision requiring

employees to bring legal claims through individual

arbitration violates the NLRA and therefore is

unenforceable. Jd. at *1, *5. The Ninth Circuit

majority concluded that the FAA’s saving clause

“caus|[es] the FAA’s enforcement mandate to yield”

to the NLRA. Id. at *7.

The majority acknowledged that it was

widening a circuit split. Although it “agree[d] with

the Seventh Circuit,” the majority “recognize[d]

that sister Circuits are divided on this question.”

Id. at *10 n.16.

Judge Ikuta dissented. She described the

majority’s decision as “breathtaking in its scope

and in its error.” Jd, at *11. In her view, the NLRA

was not a contrary congressional command that

overrode the FAA’s enforcement mandate. Id. at

*12-*14. Judge Ikuta stressed that the majority's

decision was “directly contrary to Supreme Court

precedent and join[ed] the wrong side of a circuit

split.” Jd. at *11.

The split in the circuits promises only more

turmoil and expensive, time-wasting litigation. It

frustrates Congress’s intent in passing the FAA “to

move the parties to an arbitrable dispute out of

20

court and into arbitration as quickly and easily as

possible” so as not to “frustrate[] the statutory

policy of rapid and unobstructed enforcement of

arbitration agreements.” Moses H. Cone Memorial

Hospital v. Mercury Constr. Corp., 460 U.S. 1,

22-23 (1983).

Il. THE QUESTION PRESENTED IS

EXCEPTIONALLY IMPORTANT AND

WARRANTS REVIEW.

All three petitions pending before the Court

raising the issue presented in this case — from

employers and the NLRB — argue that the circuit

split is fully developed, acknowledged, and ripe for

resolution by this Court. See Pet. at 20, Petition in

Ernst & Young v. Morris, No. 16-300 at 19, and

Petition in NLRB v. Murphy Oil, No. 16-307 at 24.

The competing decisions by several courts of

appeal have examined and evaluated the

arguments on both sides. The Second, Fifth and

Eighth Circuits have upheld class and collective

waivers under the FAA and the NLRA; the

Seventh and Ninth Circuits have invalidated the

waivers.

The split is unlikely to resolve itself. This Court

should intervene now to resolve it.

Ill. THE SEVENTH CIRCUIT’S

DECISION IS INCORRECT.

Review is also warranted because the decision

below was incorrect.

As this Court has repeatedly stated, the FAA

«“

embodies “a liberal federal policy favoring

21

arbitration agreements.” Moses H. Cone Memorial

Hospital, 460 U.S. 1, 24 (1983). Consistent with

that policy, the Court has repeatedly held that “as

a matter of federal law, any doubts concerning the

scope of arbitrable issues should be resolved in

favor of arbitration”) and has consistently upheld

the FAA’s policy favoring enforcement of

arbitration agreements as written. See, e.g.,

DIRECTV, Inc. v. Imburgia, 136 S. Ct. 463 (2015);

Italian Colors, 133 S. Ct. 2804; CompuCredit, 132

S. Ct. 665; Concepcion, 563 U.S. 333; Stolt-Nielsen

S.A. uv. AnimalFeeds Int'l Corp., 559 U.S. 662

(2010); Gilmer v. Interstate/Johnson Lane Corp.,

500 U.S. 20 (1991); Shearson / American Express,

482 U.S. 220; Mitsubishi Motors Corp. v. Soler

Chrysler-Plymouth, Inc., 473 U.S. 614 (1985);

Moses H. Cone, 460 U.S. 1). arbitration

agreements must be enforced according to their

terms. See, e.g., Italian Colors, 133 S. Ct. at 2309;

Concepcion, 563 U.S. 333, 339, 346.

The foregoing principle applies “even when the

claims at issue are created by federal statutory

claims, unless the FAA’s mandate has been

overridden by acontrary congressional command.”

CompuCredit, 132 S. Ct. at 669 (citation and

internal quotation marks omitted). The party

challenging the arbitration agreement has the

burden of showing that “Congress intended to

preclude a waiver of the judicial forum.” Gilmer,

500 U.S. 20, 26 (1991) and Congress’ intent to

supersede the FAA must be expressed with

“clarity.” CompuCredit, 132 S. Ct. at 672.

22

The Seventh Circuit did not evaluate whether

the NLRA supplies the necessary “contrary

congressional command” that overrides the FAA’s

overarching policy in favor of enforcing arbitration

agreements according to their terms. The NLRA

contains no congressional command contrary to

collective-action waivers. The collective bargaining

provisions of the NLRA do not mention arbitration

and do not confer a specific right to take legal

action at all, whether individually or collectively.

Section 7 gives employees the right to “engage in

* * * concerted activities for the purpose of

collective bargaining or other mutual aid or

protection,” 29 U.S.C. § 157, but it contains no

“command” that this Court has indicated would

override the presumption that arbitration

agreements should be enforced according to their

terms. The NLRA does not contain the requisite

“contrary congressional command,” that overrides

the parties’ arbitration agreement according to its

terms. CompuCredit, 132 S. Ct. at 669, 672.

In CompuCredit, the Court found that more

direct statutory language lacked the kind of clear

congressional command necessary to nullify an

arbitration agreement. The Court found the

language in the Credit Repair Organizations Act

(CROA), 15 U.S.C. § 1679-1679), insufficient to

override the FAA’s policy. Plaintiffs in that case

argued the CROA precluded enforcement of an

arbitration agreement that contained a waiver of

consumers’ right to litigate in court, 132 S. Ct. at

23

669* and held that Congress did not intend to

preclude arbitration of claims under CROA. See id.

at 672-673. The Court remarked that if Congress

had intended to bar arbitration of consumers’

claims, “it would have done so in a manner less

obtuse than what respondents suggest.” /d. at 672,

and it gave examples of congressional commands

that would be sufficiently clear. Jd.

Nothing in the language of the NLRA

establishes congressional intent to override the

FAA with the requisite clarity, and nothing in the

legislative history of the NLRA suggests an intent

to confer a right to file class or consolidated claims

against employers or that overrides the FAA. See

D.R. Horton, Inc. v. NLRB, 737 F.3d 344, 361 (5th

Cir. 2013). Nothing in the NLRA suggests that

employees’ right to bargain collectively includes

the right to resolve disputes using a particular

legal procedure.

Moreover, there is no conflict between collective

action waivers and the NLRA’s underlying

purposes. See Gilmer, 500 U.S. at 26. Indeed,

“arbitration of labor disputes under collective bar-

gaining agreements is part and parcel of the

collective bargaining process itself.” See United

* Plaintiffs in CompuCredit cited language in the CROA

that provided that “[aJny waiver by any consumer of any

protection provided by or any right of the consumer” was

void and could “not be enforced by any Federal or State

court,” 15 U.S.C. § 1679f(a). See 132 S. Ct. at 669.

24

Steelworkers of Am. v. Warrior & Gulf Navigation

Co., 363 U.S. 574, 578 (1960).

The Seventh Circuit’s application of the FAA’s

saving clause is inconsistent with this Court’s

decision in Concepcion. There, the Court explained

that, “when a doctrine normally thought to be

generally applicable * * * [is] applied in a fashion

that disfavors or interferes with arbitration,” it

does not trigger the saving clause. Concepcion, 563

U.S. at 341. This Court determined that a defense

that precludes the waiver of class or collective

arbitration is not generally applicable because

“[rlequiring the availability of classwide

arbitration interferes with fundamental] attributes

of arbitration and thus creates a scheme

inconsistent with the FAA.” Id. at 344.

CONCLUSION

For the foregoing reasons, this Court should

grant the Petition.

Respectfully submitted,

Martin S. Kaufman

Counsel of Record

Atlantic Legal Foundation

2039 Palmer Avenue, #104

Larchmont, New York 10538

(914) 834-3322

mskaufman@atlanticlegal.org

Attorneys for Amicus Curiae

Atlantic Legal Foundation

October 2016