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

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FILED

pECORD “a

onare No. 16-285 a “ci

In The

Supreme Court of the Anited States

Sd

EPIC SYSTEMS CORPORATION,

Petitioner,

v

JACOB LEWIS,

Respondent

-o

On Petition For Writ Of Certiorari

To The United States Court Of Appeals

For The Seventh Circuit

—@

BRIEF FOR AMICUS CURIAE

INTERNATIONAL ASSOCIATION OF DEFENSE

COUNSEL IN SUPPORT OF PETITIONER

MARY-CHRISTINE SUNGAILA ALEX R STEVENS

Counsel of Record HAYNES AND BOONE, LLP

HAYNES AND BOONE, LLP = =-_:2323 Victory Ave , Suite 700

600 Anton Blvd , Suite 700 Dallas, TX 75219

Costa Mesa, CA 92626 GEG SSE-Sere

(949) 202-3062 Alex Stevens@

MC Sungaila@ haynesboone com

haynesboone com

Attorneys for Amicus Curiae

International Association of Defense Counsel

September 30, 2016

1

TABLE OF CONTENTS

Page

INTEREST OF AMICUS CURIAE so cineseeneves 1

SUMMARY OF THE ARGUMENT i hassccccns 2

ARGUMENT siligteanisiaiabnametioninieindsing ll 4

I The Seventh Circuit’s Analysis Incorrectly

Burdens the Proponent of Arbitration in

Contravention of this Court’s Analysis in

CompuCredit Corp v Greenwood

II The NLRA’s Broad Appellate Jurisdiction

Provisions Ensure that the Spht of Au-

thority Concerning the Enforceability of

Employment Arbitration Class or Collec-

tive Action Waivers Will Reverberate

Across the Country

CORTE AIMEEIEN cxvavvesveasscescense epcscownnes cunsesconsees one

ii

TABLE OF AUTHORITIES

Page

CASES

American Express Co. v. Italian Colors Rest. , 133

Ss settiierntnihemialmiciniionnaniiennns 1,5

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

REISE seer Cac Ne eR A 4,5

Bloomingdale’s, Inc., 363 NLRB No. 172, 2016

NLRB LEXIS 314 (Apr. 29, 2016)......................00... 10

Cellular Sales of Mo., LLC v. NLRB, 824 F.3d

a carsdeamnitetiimeunabinate 7

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

EEE

D.R. Horton, Inc., 357 NLRB 2277 (2012).......... passim

D.R. Horton, Inc. v. Nat'l Labor Relations Bd.,

737 F.3d 344 (5th Cir, 2013)...............cccccccccseeecceseerees 7

DIRECTV, Inc. v. Imburgia, 136 S.Ct. 463

ST inciting eterna tial tn tietebbc aeeiiciaienianiantneigbiinnnneagitiis 2

Gilmer v. Interstate/Johnson Lane Corp., 500

ey SII scrcocsccsccesnccsoccosedupensnensseneneseene satmeemeemend 5

Iskanian v. CLS Transp. L.A., LLC, 327 P.3d 129

(Cal. 2014) .......sceccereees sovsenompenesseeses seennenane ieiedgpimaeiees 7

Johnmohammadi v. Bloomingdaie’s, 755 F.3d

IE TE iccictencniunstetsteitinses sebtonstsirennsesees 11

Labor Ready Sw., Inc., and Jason Kuller, Esq. of

Thirman Law Firm, P.C., 363 NLRB No. 138,

2016 NLRB LEXIS 159 (Feb. 26, 2016).................. 10

Mitsubishi Motors Corp. v. Soler Chrysler-

Plymouth, 105 S. Ct. 3346 (1985) ..............cccceceeeeeees 3

iii

TABLE OF AUTHORITIES — Continued

Page

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

2016 WL 4433080 (9th Cir. Aug. 22, 2016), pe-

tition for cert. pending, Case No. 16-300.............. 7,8

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

EEN Siciadniiiatbinmebatiabenrenscenen 7

Samsung Elecs. Am., Inc. v. NLRB, No. 16-

60089 (5th Cir. 2016), consolidated sub nom.

Jorgie Franks v. NLRB, No. 16-10644 (11th

ss REI SC Sha” EEC ea Bees area Re a —

Shearson/American Express, Inc. v. McMahon,

eee

Stolt-Nielsen S.A. v. Animalfeeds Int'l Corp., 559

i a TITIEY aiciniccctecmbinisenmniniepentenconnes siesaeinidiabiainianins 4,5

Sutherland v. Ernst & Young LLP, 726 F.3d 290

ee Se ao cccccsccsccsssevscnscceneccosonoces 7

Tallman v. Eighth Jud. Dist. Ct., 359 P.3d 113

(Nev. 2015) ee eeeersdnesee ee veeeeeeaaene aeeseeseas ¢evabeee reece ict aei to 7

Volt Info. Scis., Inc. v. Bd. of Trs. of Leland Stan-

ford Jr. Univ., 489 U.S. 468 (1989)................ ee. 4,5

STATUTES

i I Oe ci eceterrenstecnssscnnmncemtenten pininiinndanainatnaiaea passim

ES

RS eT

29 U.S.C. § 158(a(1) .....sccrcreeseses sonaedeeten a +». passim

IV

TABLE OF AUTHORITIES — Continued

BO ULBA.C. § 1GDe) ...nccccncrocscscsvcascunenancsvesenecsecccocssossccccosos

5 ee Ff

RULES

29 C.E.R. § 102.9 ...cccsers. sietsiiaiiaitniiaainidiindamasiieminainlinil ee:

Baa. C6. BR. DFTA) nccccsscvececsecsovesesscscrcncenveteesocstscnssnsnenense A

1

INTEREST OF AMICUS CURIAE'

The International Association of Defense Counsel

(IADC), established in 1920, is an association of ap-

proximately 2,500 corporate and insurance attorneys

from the United States and around the globe whose

practice is concentrated on the defense of civil law-

suits. The LADC is dedicated to the just and efficient

administration of civil justice and continual improve-

ment of the civil justice system. The LADC supports a

justice system in which plaintiffs are fairly compen-

sated for genuine injuries, culpable defendants are

held liable for appropriate damages, and non-culpable

defendants are exonerated and can defend themselves

without unreasonable cost. In particular, the [ADC has

a strong interest in the fair and efficient administra-

tion of class actions as well as arbitrations, both of

which are increasingly global in reach.

The abiding interest of the LADC in the benefits of

arbitration is exemplified by its participation as ami-

cus before this Court in several cases concerning fed-

eral arbitration law, including, inter alia, American

Express Co. v. Italian Colors Rest., 133 S. Ct. 2304

2 No counsel for a party authored this brief in whole or in

part. Neither a party, nor its counsel, nor any other entity other

than amicus curiae and counsel has made a monetary contribu-

tion intended to fund the preparation or submission of this brief.

Counsel for the parties were timely notified of the amicus’ intent

to file this brief under Sup. Ct. R. 37.2(a), and all parties have filed

general letters with the Clerk’s office consenting to the filing of

amicus briefs or have separately consented to the filing of this

brief.

2

(2013) and DIRECTV, Inc. v. Imburgia, 136 S. Ct. 463

(2015).

SUMMARY OF THE ARGUMENT

As Epic System Corporation’s petition for writ of

certiorari makes clear, there is an undisputed, deepen-

ing circuit split — originating with the Seventh Cir-

cuit’s opinion in this case — concerning an issue of

federal statutory interpretation and the enforceability

of arbitration agreements with class action or collec-

tive action waivers in the employment context. In this

amicus brief, we provide additional reasons why this

Court’s guidance concerning the impact of the Na-

tional Labor Relations Act (NLRA) on the enforceabil-

ity of such arbitration agreements under the Federal

Arbitration Act (FAA) is needed now, and not later.

In the decision below, the Seventh Circuit became

the first federal circuit court of appeals to hold that

employer-employee agreements to arbitrate employ-

ment disputes on an individual basis are impermissi-

ble restrictions on employees’ rights to act in concert

under the NLRA and therefore unenforceable under

the FAA. The Seventh Circuit reached this conclusion

by improperly beginning with an analysis of whether

such agreements could be deemed unlawful under the

NLRA and then looking to whether the FAA changed

this result. The Seventh Circuit should have begun

with the presumption of enforceability required by the

FAA and this Court’s prior decisions.

3

This Court should grant review now because the

Seventh Circuit’s decision opens the door to increased

collateral unfair labor practice litigation before the

National Labor Relations Board (NLRB) for employers

across the country. Where employers seek to compel in-

dividual arbitration of employment disputes pursuant

to a lawful arbitration agreement, they may face unfair

labor practice charges from the NLRB asserting that,

by seeking to compel arbitration, they committed an

unfair labor practice* — even if they successfully com-

pelled arbitration in a jurisdiction that enforces arbi-

tration agreements with class action waivers. And

because the NLRA’s broad appellate venue provisions

preclude any certainty regarding where such NLRB

decisions may be heard on appeal, there is no guaran-

tee that an appeal of an NLRB order invalidating an

arbitration agreement and declaring an employer to

have engaged in an unfair labor practice will be heard

in the same jurisdiction as the one that heard the mo-

tion to compel arbitration.

Thus, the uncertainty created by the circuit split

concerning the enforceability of employment arbitra-

tion agreements has repercussions across the country.

* This approach amounts to punishing an employer for in-

voking its arbitration rights and improperly threatens the “em-

phatic federal policy in favor of arbitral dispute resolution”

underlying the FAA, which this Court has reaffirmed multiple

times. Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, 105

S. Ct. 3346, 3356 (1985).

4

As a result, this Court should not wait for the circuit

split to deepen even further before taking up the issue.

~>

ARGUMENT

I. The Seventh Circuit’s Analysis Incorrectly

Burdens the Proponent of Arbitration in

Contravention of this Court’s Analysis in

CompuCredit Corp. v. Greenwood.

The FAA declares that arbitration agreements

“shall be valid, irrevocable, and enforceable, save upon

such grounds as exist at law or in equity for the revo-

cation of any contract.” 9 U.S.C. § 2. The FAA, and FAA

section 2 in particular, was intended to “‘revers[e] cen-

turies of judicial hostility to arbitration agreements,’

by ‘placling] arbitration agreements upon the same

footing as other contracts.’” Shearson/American Ex-

press, Inc. v. McMahon, 482 U.S. 220, 226 (1987)

(citing Scherk v. Alberto-Culver Co., 417 U.S. 506, 510-

11 (1974)). The FAA reflects “a ‘liberal federal policy

favoring arbitration.’” AT&T Mobility LLC v. Concep-

cion, 563 U.S. 333, 340 (2011) (quoting Moses H. Cone

Mem Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24

(1983); Buckeye Check Cashing Inc. v. Cardegna, 546

U.S. 440, 443 (2006)). This Court has repeatedly held

that the “fundamental principle [is] that arbitration is

a matter of contract,” Concepcion, 563 U.S. at 339

(quoting Rent-A-Center, West, Inc. v. Jackson, 561 U.S.

63, 67 (2010)); see also Stolt-Nielsen S.A. v. Animalfeeds

Int'l Corp., 559 U.S. 662, 681 (2010); Volt Info. Scis., Inc.

v. Bd. of Trs. of Leland Stanford Jr. Univ., 489 U.S. 468,

5

479 (1989), and that courts must enforce arbitration

agreements according to their terms, Volt, 489 U.S. at

478; Stolt-Nielsen, 559 U.S. at 682; Concepcion, 563

US. at 339.

This Court has repeatedly upheld agreements re-

quiring the parties to arbitrate disputes individually,

rather than on a class or collective basis. See, e.g.,

American Express Co. v. Italian Colors Rest., 133 S. Ct.

2304, 2308-10 (2013); Concepcion, 563 U.S. at 352. And

this Court has further explained that these principles

apply “even when the claims at issue are federal stat-

utory claims, unless the FAA’s mandate has been over-

ridden by a contrary congressional command.”

CompuCredit Corp. v. Greenwood, 132 S. Ct. 665, 669

(2012). These principles have been applied equally to

employment disputes, even where the claims at issue

implicated federal statutes that expressly provide for

class or collective action litigation. See, e.g., Gilmer v.

Interstate/Johnson Lane Corp., 500 U.S. 20, 32 (1991)

(employee’s claims under the Age Discrimination in

Employment Act must be arbitrated “even if the arbi-

tration could not go forward as a class action”).

In contravention of this Court’s precedent, the

NLRB determined in 2012 that agreements requiring

individual arbitration of employment disputes unlaw-

fully interfere with employees’ rights to engage in

“concerted activities for the purpose of collective bar-

gaining or other mutual aid or protection” under NLRA

Section 7. D.R. Horton, Inc., 357 NLRB 2277, 2279

(2012); see also 29 U.S.C. § 157. The NLRB further

concluded that such agreements violate NLRA Section

6

8(a)(1), which makes it an unfair labor practice to

“interfere with, restrain, or coerce employees in the ex-

ercise of rights guaranteed in [Section 7].” Jd. at 2280;

see also 29 U.S.C. § 158(a)(1). The NLRB accordingly

ordered the employer-respondent to cease and desist

from invoking a mandatory arbitration agreement

with class and collective action waivers, and to rescind

or revise its existing arbitration agreement to clarify

that it did not constitute a waiver of the right to main-

tain employment-related class or collective actions. Id.

at 2289.

NLRB orders are not self-enforcing. Rather, if an

employer does not voluntarily comply with a remedial

order issued by the NLRB, the NLRB may file a peti-

tion for enforcement with a United States circuit court

of appeals within any circuit where the unfair labor

practice in question occurred or where the person al-

leged to have committed an unfair labor practice re-

sides or transacts business. 29 U.S.C. § 160(e).

Similarly, “any person aggrieved by a final order of the

[NLRB)” may obtain judicial review and seek to have

the order modified or set aside by “any United States

court of appeals in the circuit in which the unfair labor

practice in question was alleged to have been engaged

in or wherein such person resides or transacts busi-

ness,” or in the D.C. Circuit. 29 U.S.C. § 160(f). The em-

ployer-respondent in D.R. Horton filed a petition for

review in the Fifth Circuit, and the NLRB filed a cross-

application for enforcement. The Fifth Circuit ulti-

mately refused to enforce the portion of the NLRB’s or-

der invalidating the employer’s arbitration agreement

7

on the basis of its class and collective action waivers,

finding the NLRB’s hostility to such waivers in em-

ployee arbitration agreements to be incompatible with

the FAA. D.R. Horton, Inc. v. Nat'l Labor Relations Bd.,

737 F.3d 344, 364 (5th Cir. 2013).

Despite the Fifth Circuit’s refusal to enforce the

NLRB’s order in D.R. Horton, employee-plaintiffs have

begun citing the NLRA in opposition to employer-de-

fendants’ attempts to enforce agreements to arbitrate

employment disputes on an individual basis. Until re-

cently, this argument met little success. The Second

and Eighth Circuits and the Supreme Courts of

California and Nevada all joined the Fifth Circuit in

rejecting the argument that the NLRA renders unen-

forceable employee-employer agreements to resolve

employment disputes in individual arbitration. 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, 1054-55 (8th Cir. 2013); Sutherland v.

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

2013) (per curiam); Iskanian v. CLS Transp. L.A., LLC,

327 P.3d 129, 141 (Cal. 2014); Tallman v. Eighth Jud.

Dist. Ct., 359 P.3d 113, 122-23 (Nev. 2015).

But the Seventh Circuit in this case, followed by

the Ninth Circuit, see Morris v. Ernst & Young, LLP,

No. 13-16599, 2016 WL 4433080 (9th Cir. Aug. 22, 2016),

petition for cert. pending, Case No. 16-300, reached the

opposite conclusion in employment cases involving mo-

tions to compel arbitration, concluding that arbitration

agreements with class or collective action waivers were

unenforceable under the NLRA. Both decisions relied

8

on the FAA’s savings clause, which creates an excep-

tion to the FAA’s presumption of enforceability “upon

such grounds as exist at law or in equity for the revo-

cation of any contract,” 9 U.S.C. § 2, and rejected this

Court’s prescribed analysis in CompuCredit, under

which courts are required to determine whether an-

other federal statute like the NLRA contains a “con-

trary congressional command” to that of the FAA. 132

S. Ct. at 669.

In this case, the Seventh Circuit concluded that

performing the analysis required by CompuCredit

would “put[] the cart before the horse” and instead be-

gan its analysis with the NLRA, determining that the

“concerted activities” protected by NLRA Section 7 in-

cluded “filing a collective or class action suit.” Pet. App.

13a. The court then concluded that because “the provi-

sion at issue is unlawful under Section 7,” it “meets the

criteria of the FAA’s savings clause for nonenforce-

ment.” Jd. at 15a. Similarly, the Ninth Circuit con-

cluded that NLRA Section 7 creates a “substantive

right” to the collective pursuit of “work-related legal

claims” and that an employment arbitration agree-

ment with a class or collective action waiver “interferes

with” concerted legal action, and “cannot be enforced.”

Morris, 2016 WL 4433080 at **11-15. Like the Seventh

Circuit, the Ninth Circuit relied on the FAA’s savings

clause to conclude that the FAA “does not dictate a con-

trary result.” Jd. at *17.

In reaching these conclusions, the Seventh and the

Ninth Circuits have inverted this Court’s FAA juris-

prudence by beginning with the NLRA and requiring

9

the proponent of arbitration to show that the FAA

overrides the NLRA, rather than beginning with the

FAA’s presumption that arbitration agreements are

enforceable as written. See 9 U.S.C. § 2. This back-

wards framework is inimical to the policies underlying

the FAA.

Il. The NLRA’s Broad Appellate Jurisdiction

Provisions Ensure that the Split of Author-

ity Concerning the Enforceability of Em-

ployment Arbitration Class or Collective

Action Waivers Will Reverberate Across

the Country.

The Seventh and Ninth Circuits’ hostility to arbi-

tration agreements with class action waivers affects

employers outside those circuits. This is because both

courts’ decisions pave the way for employee-plaintiffs

opposing arbitration to file collateral unfair labor prac-

tice charges against employers who seek to assert their

rights under the FAA.

As Petitioner’s brief notes (see p. 18), the logical

consequence of the position that class and collective Lit-

igation is a protected “substantive” right is that any

employer opposition to class or collective actions via ef-

forts to enforce a provision requiring individual arbi-

tration unlawfully “interferes with” this putative

“right” in violation of NLRA Section 8(a)\(1). See 29

U.S.C. § 158(a)(1). In accordance with this interpreta-

tion, the NLRB has not limited itself to ordering em-

ployers to rescind or revise arbitration agreements

10

with class or collective action waivers, as it did in D.R.

Horton. Instead, the NLRB has taken its hostility to

such agreements to its logical conclusion, ordering em-

ployers to reimburse employee-plaintiffs for fees spent

opposing motions to compel individual arbitration. See,

e.g., Bloomingdale’s, Inc., 363 NLRB No. 172, 2016

NLRB LEXIS 314 at *26 (Apr. 29, 2016).

Neither the FAA nor this Court’s prior decisions

support treating efforts to enforce lawful, valid arbi-

tration agreements like a poison pill that invites

significant litigation costs and collateral litigation.

Nevertheless, attorneys representing plaintiffs® in em-

ployment class actions have already seized on the in-

creased leverage that a tactical unfair labor practice

charge may confer; so long as the circuit split remains,

this practice will be encouraged. Thus, an employer

facing an employment class action may successfully

compel arbitration in a state or federal district court,

and further successfully defend on appeal the court’s

order compelling the parties to arbitration. But the

NLRB may still pursue that employer in collateral un-

fair labor practice litigation. See id. at **15-26 (Apr. 29,

2016) (ordering employer to reimburse all fees ex-

pended by plaintiffs incurred in unsuccessfully oppos-

ing employer's motion to compel arbitration, even

® Because the NLRB’s rules permit charges to be filed by

“any person,” 29 C.F.R. § 102.9, an attorney representing a group

of employees may file such a charge, even if no class members file

a charge themselves. See Labor Ready Sw., Inc., and Jason Kuller,

Esq. of Thierman Law Firm, P.C., 363 NLRB No. 138, 2016 NLRB

LEXIS 159 (Feb. 26, 2016).

11

though the Ninth Circuit affirmed the agreement’s en-

forceability, and that its opt-out provision rendered it

voluntary and not unlawful under the NLRA); see also

Johnmohammadi v. Bloomingdale’s, 755 F.3d 1072

(9th Cir. 2014).

Moreover, because an appeal of an NLRB decision

ordering the reimbursement of attorneys’ fees incurred

in opposition to a successful motion to compel arbitra-

tion may be heard in nearly any circuit, an employer

may face inconsistent rulings and punishment for en-

forcing an arbitration provision that was already found

to be enforceable by a different federal circuit court or

a state supreme court.

There is no certainty at the outset of unfair labor

practice litigation that an appeal of an NLRB order in-

validating such an agreement will land in a specific

venue. “[A]ny person” who is “aggrieved” by an NLRB

order may obtain review of the order in either the cir-

cuit in which the unfair labor practice was alleged to

have been committed, the circuit wherein such person

resides or transacts business, or the Court of Appeals

for the District of Columbia. 29 U.S.C. § 160(f). Fur-

ther, even if an employer timely files a petition for re-

view in its home circuit, another petition may be filed

in another circuit by another person “aggrieved” by

that NLRB order. When these competing petitions for

review are filed in different circuits on the same day,

the conflict is resolved by the judicial panel on multi-

district litigation selecting a circuit “by means of ran-

dom selection” and consolidating all other petitions

for review of the NLRB’s order there. 28 U.S.C.

12

§ 2112(aX(3); see also Samsung Elecs. Am., Inc. v.

NLRB, No. 16-60089 (5th Cir. 2016), consolidated sub

nom. Jorgie Franks v. NLRB, No. 16-10644 (11th Cir.

2016). Such consolidated appeals could easily end up

in the Seventh or Ninth Circuits.

As a result, employers across the country — even

those who “reside or transact business” outside the

Seventh or Ninth Circuits — cannot know whether the

lawfulness of their arbitration agreements will be as-

sessed in a jurisdiction that is faithful, or hostile, to

such agreements. This uncertainty may well lead em-

ployers to assess whether to promulgate, maintain, or

enforce arbitration agreements in light of the least-

protective jurisdictions, which would further under-

mine the Congressional policy expressed in the FAA.

We urge this Court to remedy the perverse incen-

tives for gamesmanship and tactical unfair labor prac-

tice litigation created by the Seventh Circuit’s decision

and the attendant deepening circuit split.

—

13

CONCLUSION

For the foregoing reasons and for the reasons ex-

pressed in the Petition for Writ of Certiorari, the Peti-

tion should be granted.

Respectfully submitted,

MARY-CHRISTINE SUNGAILA

Counsel of Record

HAYNES AND BOONE, LLP

600 Anton Blvd., Suite 700

Costa Mesa, CA 92626

(949) 202-3062

MC.Sungaila@haynesboone.com

ALEX R. STEVENS

HAYNES AND BoongE, LLP

2323 Victory Ave., Suite 700

Dallas, TX 75219

(214) 651-5475

Alex.Stevens@haynesboone.com

Attorneys for Amicus Curiae

International Association of

Defense Counsel