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

CRIEFS

Nos. 16-2865/16-300/16-307

a

In The

Supreme Court of the Gnited States

EPIC SYSTEMS CORPORATION,

Petitioner,

as

Pav...

v.

JACOB LEWIS,

Respondent.

—¢

ERNST & YOUNG LLP, ET AL..,

Petitioners,

V.

STEPHEN MORRIS, ET AL..,

Respondents.

—?

NATIONAL LABOR RELATIONS BOARD,

Petitioner,

v.

MURPHY OIL USA, INC., ET AL..,

Respondents.

*

On Writs Of Certiorari To The

United States Courts Of Appeals For

The Seventh, Ninth, And Fifth Circuits

o

BRIEF OF AMICUS CURIAE

DRI-THE VOICE OF THE DEFENSE BAR

IN SUPPORT OF PETITIONERS IN CASE

NOS. 16-285 AND 16-300 AND RESPONDENT

MURPHY OIL USA, INC. IN CASE NO. 16-307

>

DRI-THE VOICE OF Horvitz & LEVY LLP

THE DEFENSE BAR DAVID M. AXELRAD

JOHN E. CUTTINO (Counsel of Record)

55 W. Monroe St., Ste. 2000 FELIX SHAFIR

Chicago, Illinois 60603 JOHN F. QUERIO

(312) 795-1101 3601 W. Olive Ave., 8th FL.

jcuttino@gwblawfirm.com Burbank, California 91505

(818) 995-0800

daxelrad@horvitzlevy .com

1

TABLE OF CONTENTS

Page

TABLE OF AUTHORITIES....... adinisidienianignecieusindiadiiia iv

INTEREST OF AMICUS CURIAE ...............2...206..00- 1

SUMMARY OF ARGUMENT. ....................22...-ccccs cece 4

ESSER TESTE As ee a ee ee ET 7

I. THE NLRBS D.R. HORTON RULE

RUNS AFOUL OF THE FAA

REGARDING THE ENFORCEABILITY

OF ARBITRAL CLASS ACTION

WAIVERS. THE FAA’S SAVING

CLAUSE CANNOT RESCUE IT. ...................7

A. The FAA requires that arbitral

class action waivers be enforced

according to their terms......................... 7

B. The NLRA protects employees’

right to engage in concerted

activities for mutual aid or

protection but says nothing about

class actions or arbitration. ................... 8

C The FAA’s saving clause does not

preserve the D. R. Horton rule’s

invalidation of arbitral class action

RES ES EL: 5

Il.

THE D. R. HORTON RULE SHOULD

BE OVERTURNED BECAUSE THE

NLRA’S TEXT DOES NOT CONTAIN A

CONTRARY CONGRESSIONAL

COMMAND OVERRIDING THE FAA’S

MANDATE THAT ARBITRAL CLASS

ACTION WAIVERS BE ENFORCED

ACCORDING TO THEIR TERMG..............

A. In any claimed conflict between

the FAA and another federal

statute, the FAA governs unless

the other statute embodies a

contrary congressional command

overriding the FAA’s mandate. ........

B. This Court’s decisions have

evolved from considering text,

legislative history, and statutory

purpose to an exclusive focus on

statutory text in applying the

contrary congressional command

eC Aa REESE a Bae

1. The contrary congressional

command test originated as

a method to reconcile the

FAA’ with potentially

conflicting federal statutes. ...

wit

soo

..15

il

2. This Court has more

recently shifted its focus

from statutory purpose to

statutory text in applying

the contrary congressional

IE ae 17

3. This Court has explicitly

and exclusively focused on

statutory text in its most

recent cases applying the

contrary congressional

I, cteininiteetiscbncnsones 19

C. Nothing in the NLRA’s text

contains a contrary congressional

command overriding the FAA with

the clarity this Court’s cases

I Cicicieiendnnipddedduniensdubasidansonsnpenbenniiy 22

Se ir sinetencncseninititcniscitnsnnidaniasinnniiobestatin 26

iv

TABLE OF AUTHORITIES

Page(s)

Cases

14 Penn Plaza LLC v. Pyett,

I a cacinwenaiinids 18, 23

Alexander v. Sandoval,

| CE ee ee ee 21

Am. Express Co. v. Italian Colors Rest.,

eG ay BE iciccinctintnsicccnsroctcescccess passim

AT&T Mobility LLC v. Concepcion,

gs 5. ES ee ea passim

Castano v. Am. Tobacco Co.,

GO FB TOG Cae, BI oon cscs ccccc cc ccccceccse. 00. 3

CompuCredit Corp. v. Greenwood,

I ccccnnescniccoccseccncccetbonnabenase passim

In re D. R. Horton, Inc.,

BHT N.DsBt. ES. SBTFCRORD).........c0cccccccccosececceee passim

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

737 F.3G S46 Gee Cie. BOITB)..........2..02.00.02.-.cceccces- 24

Deposit Guar. Nat’ Bank v. Roper,

ERR A ea NS RE Ee: 3

Exxon Mobil Corp. v. Allapattah Servs., Inc.,

EE 24

Vv

Gilmer v. Interstate/Johnson Lane Corp.,

218 % 7) — : Sa epeeees 8, 14, 17, 18, 23

Kindred Nursing Cirs. Ltd. P’ship v. Clark,

Se ee iad covndsnniicessinonsdbebuevendeids ll

Lawson v. FMR LLC,

I od ncaniabcensiill 24

Mitsubishi Motors Corp. v.

Soler Chrysler-Plymouth, Inc.,

NE idnsctesttncscetsccmaveonssocese 14, 15, 19

Murphy Oil USA, Inc.,

361 N.L.R.B. No. 72 (Oct. 28, 2014)............ 2, 9, 26

Perry v. Thomas,

I cee ensnennselenial 8

In re Rhone-Poulenc Rorer Inc.,

51 F.8d 1293 (7th Cir. 1995).......c.ccccececce-cseseseesevene

Rodriguez de Quijas v.

Shearson/Am. Express, Inc.,

490 U.S. 477 (1989) ....cecccececccecececeeceeeseeres 14, 15, 16

Shady Grove Orthopedic Assocs., P.A. v.

Allstate Ins. Co.,

ETE, ar eae ee a TO 21

Shearson/Am. Express, Inc. v. McMahon,

Ss SER ircciitccnccsenssetecsosennsors 8, 14, 16, 23

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

ee cuicuebtpnnninesiine denoted 12

Wilko v. Swan,

346 U.S. 427, 438 (1953)..........00..002.... ccehusncediiioint 14

Statutes

7 U.S.C. § 26(1n)(2) (2012) ......cccccecceceeesecsesceseseecerseeeee 20

SEE Te 5, 7,8

LE TE 20

BE TE, SE CI csctescccscecscnccecssvccceseccosness 20

BP ks 0 Be i ose snccicssverecsosinsseviai 5, 6, 8, 9, 22

Se Seas SEED CD cerrccesccccccsccccsccsscosscesess 9, 22

Rules

Federal Rule of Civil Procedure 23..................... 24, 25

Miscellaneous

Albina Gasanbekova, Building a Circuit

Split-Updating Moves By the NLRB

on Class Waivers, 34 Alternatives to

Re GAS Be, GP CBD cocccncccccccccccce sence ccccesess 2,9

Eric L. Barnum & Joshua A. Kurtzman,

More Money, More Problems: Class

Action Waivers in Mandatory

Arbitration Agreements Hit

Roadblocks from the NLRB, Emp. L.

Landscape (Feb. 8, 2016),

ic as ctccspschenminscadnoses ecneatechssie 2

1

INTEREST OF AMICUS CURIAE'

Amicus curiae DRI—the Voice of the Defense Bar

(DRD is an international organization that includes

more than 22,000 members involved in the defense of

civil litigation. DRI’s mission includes enhancing the

skills, effectiveness, and professionalism of defense

lawyers, promoting appreciation of the role of defense

lawyers in the civil justice system, and anticipating

and addressing substantive and procedural issues

germane to defense lawyers and the fairness of the civil

justice system. DRI has long been a voice in the

ongoing effort to make the civil justice system more

fair and efficient. To that end, DRI regularly

participates as amicus curiae in cases that raise issues

of vital concern to its members, their clients, and the

judicial system.

This case is of significant interest to DRI

because its members routinely represent clients

seeking to compel individual arbitration of claims

brought under wage-and-hour or other labor laws that

are subject to binding arbitration clauses containing

class action waivers. Accordingly, DRI’s members are

familiar with the increasingly common occurrence of

the National Labor Relations Board (NLRB), and even

1 This brief was authored by amicus curiae and its

counsel listed on the front cover, and was not authored in whole or

in part by counsel for a party. No one other than amicus curiae,

its members, or its counsel has made any monetary contribution

to the preparation or submission of this brief. All parties provided

written consent to the filing of amicus curiae briefs, and this

written consent is on file with this Court.

2

some courts, invalidating arbitral class action waivers

based on employees’ purported federal labor law right

to pursue wage-and-hour claims on a collective basis.

This case is the culmination of a sustained

campaign by the NLRB and the employment plaintiffs

class action bar to nullify this Court’s recent precedent

by refusing to obey the preemptive mandate of the

Federal Arbitration Act (FAA) that arbitration

clauses—including arbitral class action waivers—be

enforced according to their terms. See In re

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

(originating this effort); Murphy Oil USA, Inc., 361

N.L.R.B. No. 72 (Oct. 28, 2014) (reaffirming

D. R. Horton ruling); Albina Gasanbekova, Building a

Circuit Split-Updating Moves By the NLRB on Class

Waivers, 34 Alternatives to High Cost Litig. 60, 60

(2016) (the NLRB has issued several] dozen decisions

nationwide overturning arbitral class action waivers);

Eric L. Barnum & Joshua A. Kurtzman, More Money,

More Problems: Class Action Waivers in Mandatory

Arbitration Agreements Hit Roadblocks from the

NLRB, Emp. L. wandscape (Feb. 8, 2016),

http://goo.gl/P8TXdH (in December 2015 alone, NLRB

reportedly issued “well over a dozen decisions striking

down class action waivers in arbitration clauses”). Of

particular concern to DRI and its members is the

NLRB’s and some courts’ refusal to acknowledge this

Court’s consistent teaching that the FAA’s directive

can be overridden only by a contrary congressional

command that is expressed in the text of another

federal statute in the clearest and most express

possible terms. Nothing of the kind exists in the

National Labor Relations Act (NLRA).

3

DRI and its members seek uniform application

of the FAA across the nation in order to ensure that

arbitration can achieve its basic purpose of resolving

disputes efficiently, predictably, and at minimal cost.

In particular, class action waivers in employment

arbitration agreements allow employers and the civil

justice system to avoid the many injustices and

disadvantages of the class action mechanism in wage-

and-hour litigation. The prospect of a mass

proceeding—agegregating thousands or even millions of

claims, threatening to produce a crippling liability

determination, and possibly imposing a damages

award that would annihilate the employer as a going

concern—creates a pressure on employer defendants to

settle such cases that is virtually irresistible, and a

reality that robs the court system of its rightful role in

deciding the merits of such claims. See Castano v.

Am. Tobacco Co., 84 F.3d 734, 746 (5th Cir. 1996)

(“These settlements have been referred to as judicial

blackmail.”); In re Rhone-Poulenc Rorer Inc., 51 F.3d

1293, 1298 (7th Cir. 1995) (same); see also Deposit

Guar. Natl Bank v. Roper, 445 U.S. 326, 339 (1980)

(“That there is a potential for misuse of the class action

mechanism is obvious. Its benefits to class members

are often nominal and symbolic, with persons other

than class members becoming the chief beneficiaries.”).

The decisions of the Seventh Circuit, the Ninth

Circuit, and the NLRB in these cases, by invalidating

class action waivers in employment arbitration

agreements, threaten to revive the evils of the class

action device that were thought to have been put to

rest in Concepcion and Italian Colors. This Court

should therefore invalidate the NLRB’s D. R. Horton

4

rule on which those decisions are based and restore the

FAA’s role of ensuring that arbitration agreements,

including arbitral class action waivers, are enforced

according to their terms.

- ke nee

SUMMARY OF ARGUMENT

Enacted “in response to widespread judicial

hostility to arbitration,” the FAA requires courts to

“rigorously enforce’ arbitration agreements according

to their terms,” including terms setting “the rules

under which that arbitration will be conducted.”

Am. Express Co. v. Italian Colors Rest., 1383 S. Ct. 2304,

2308-09 (2013) (citations omitted). Since the FAA’s

enactment, this judicial hostility has continued to

manifest itself through “a great variety’ of ‘devices and

formulas” to avoid enforcing arbitration agreements as

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

333, 342 (2011) (citation omitted).

The latest such device is the NLRB’s

D. R. Horton rule—repeatedly reaffirmed by the NLRB

and adopted by the Seventh and Ninth Circuits in two

of the three cases under review—which interprets the

NLRA to confer a substantive right on employees to

pursue their wage-and-hour claims on a class or

collective basis, and invalidates class action waivers in

employment arbitraticn agreements by narrowing the

FAA so that it does not stand in the way. In arbitral

class action waivers like those at issue here, plaintiffs

agree to: (1) pursue their claims in arbitration, rather

than in court; and (2) proceed in arbitration on an

individual, bilateral basis, rather than on a class or

5

collective basis. The D.R. Horton rule effectively

nullifies this Court’s decisions in Concepcion, Italian

Colors, and many other cases that broadly construe the

FAA to provide robust protection to such arbitration

agreements that require claims to proceed on an

individual, bilateral basis in accordance with

fundamental attributes of arbitration.

Recognizing the D. R. Horton rule’s vulnerability

under Concepcion and its progeny, the NLRB and the

Seventh and Ninth Circuits relied on two arguments to

shield the rule from attack. First, they claimed the

rule fell within the protection of the FAA’s saving

clause, which preserves from preemption “such

grounds as exist at law or in equity for the revocation

of any contract.” 9 U.S.C. § 2 (2012). Second, they

maintained that employees’ right under the NLRA to

“engage in... concerted activities for the purpose

of .. . mutual aid or protection,” 29 U.S.C. § 157 (2012),

amounted to a “contrary congressional command”

overriding the FAA, see CompuCredit Corp. v.

Greenwood, 565 U.S. 95, 98 (2012) (citation omitted).

Both of these rationales are fundamentally flawed.

The FAA’s saving clause cannot shelter the

D. R. Horton rule because the rule disfavors arbitration

in precisely the manner this Court condemned in

Concepcion. “Th{e] saving clause permits agreements

to arbitrate 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.”

Concepcion, 563 U.S. at 339 (citation omitted). That is

exactly what the D. R. Horton rule does. While the

Seventh and Ninth Circuits and the NLRB below

6

claimed the rule treats arbitration clauses the same as

any other contract, this claim is belied by the fact that

the D. R. Horton rule requires collective proceedings

and thereby eviscerates arbitral class action waivers.

“Requiring the availability of classwide arbitration

interferes with fundamental attributes of arbitration

and thus creates a scheme inconsistent with the FAA.”

Id. at 344; accord Italian Colors, 133 S. Ct. at 2312 n.5

(“[T]he FAA does ... favor the absence of litigation

when that is the consequence of a class-action waiver,

since its “principal purpose” is the enforcement of

arbitration agreements according to their terms.”).

Nor can the D. R. Horton rule be sustained on

the ground that it amounts to a contrary congressional

command in the NLRA overriding the FAA. As this

Court’s cases applying the test make clear, the

contrary congressional command claimed to override

the FAA’s mandate must actually appear in the text of

the other federal statute. See, e.g., Italian Colors, 133

S. Ct. at 2309-10; CompuCredit, 565 U.S. at 100-01,

103-04. The generic reference in section 7 of the NLRA

to employees’ right to “engage in... concerted

activities for the purpose of...mutual aid or

protection,” 29 U.S.C. § 157, simply does not come close

to the “clarity” this Court has required of a competing

federal statute in order to override the FAA,

CompuCredit, 565 U.S. at 103. The “concerted

activities” provision does not mention arbitration or

class actions, and contains no indication that Congress

intended section 7 of the NLRA to displace the FAA’s

mandate.

7

Accordingly, this Court should disapprove the

NLRB’s D. R. Horton rule and restore the FAA to its

rightful place in ensuring that employment arbitration

agreements—including arbitral class action waivers—

are enforced according to their terms.

7

ARGUMENT

I. THE NLRB’S D. R. HORTON RULE RUNS

AFOUL OF THE FAA REGARDING THE

ENFORCEABILITY OF ARBITRAL CLASS

ACTION WAIVERS. THE FAA’S SAVING

CLAUSE CANNOT RESCUE IT.

A. The FAA requires that arbitral class action

waivers be enforced according to their

terms.

The FAA was enacted “in response to

widespread judicial hostility to arbitration.” JIJtalian

Colors, 133 S. Ct. at 2308-09. It embodies “a ‘liberal

federal policy favoring arbitration.” Concepcion, 563

U.S. at 339 (citation omitted).

The FAA’s core provision mandates 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. Thus, the FAA requires that “courts must place

arbitration agreements on an equal footing with other

contracts ...and enforce them according to their

terms.” Concepcion, 563 U.S. at 339 (citations

omitted). “The final phrase of § 2,” known as the

8

“saving clause[,] permits agreements to arbitrate to be

invalidated by ‘generally applicable contract defenses,

such as fraud, duress, or unconscionability,’ 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.” Id. (citations omitted).

As part of this directive, the FAA “mandates

enforcement of agreements to arbitrate statutory

claims.” Shearson/Am. Express, Inc. v. McMahon, 482

U.S. 220, 226 (1987). Thus, more than a quarter of a

century ago, this Court held that the FAA requires

employees to arbitrate statutory wage claims. Perry v.

Thomas, 482 U.S. 483, 486-93 (1987); accord Gilmer v.

Interstate/Johnson Lane Corp., 500 U.S. 20, 25 n.2

(1991).

The FAA’s mandate applies to claims arising

under federal statutes, and that mandate can only “be

overridden by a contrary congressional command. The

burden is on the party opposing arbitration . . . to show

that Congress intended to preclude a waiver of judicial

remedies for the statutory rights at issue.” McMahon,

482 U.S. at 226-27 (citations omitted).

B. The NLRA protects employees’ right to

engage in concerted activities for mutual

aid or protection but says nothing about

class actions or arbitration.

Section 7 of the NLRA provides that:

Employees shall have the right to self-

organization, to form, join, or assist labor

organizations, to bargain collectively

9

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. The NLRA declares it 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) (2012).

These provisions say nothing about arbitration or class

actions.

In 2012, for the first time, the NLRB interpreted

these NLRA provisions to confer on employees a

substantive federal right to pursue employment

claims—including statutory wage claims—in court on a

class or collective basis and to invalidate arbitral class

action waivers as an unfair labor practice.

D. R. Horton, 357 N.L.R.B. at 2277-82; see also Murphy

Oil USA, Inc., 361 N.L.R.B. No. 72, at *1-2, *5-11

(reaffirming D. R. Horton rationale).

C, The FAA’s saving clause does not preserve

the D.R. Horton rule’s invalidation of

arbitral class action waivers.

Since issuing D. R. Horton, the NLRB—now

joired by the Seventh and Ninth Circuits—has

repeatedly adhered to its determination that the NLRA

entitles plaintiffs to pursue their wage-and-hour claims

on a class or collective basis. See Epic Systems’ (Epic)

Pet. App. la-2a; Ernst & Young’s (E&Y) Pet. App. 1a;

NLRB Pet. App. 17a-23a; Gasanbekova, supra, at 60.

However, this Court held in Concepcion that class

10

proceedings “interfere| | with fundamental attributes

of arbitration and thus create|[ ] a scheme inconsistent

with the FAA.” Concepcion, 563 U.S. at 344; see id. at

348. The Court subsequently reaffirmed this holding,

stressing that class proceedings contravene the FAA by

“sacrific[ing] the principal advantage of arbitration—

its informality—and mak[ing] the process slower, more

costly, and more likely to generate procedural morass

than final judgment.” Jtalian Colors, 133 S. Ct. at

2312 (citation omitted). The NLRB has thus attempted

to deny precisely what the FAA protects—the

enforceability of class action waivers in arbitration

agreements.

Although this Court has repeatedly held that the

proper way to reconcile any potential conflict between

the FAA and another federal statute is the contrary

congressional command test, see infra, pp. 13-21, the

Seventh and Ninth Circuits and the NLRB instead

attempted to reconcile this conflict by relying on the

FAA’s saving clause. They maintained that the

D. R. Horton rule does not target arbitration and would

apply equally in litigation or any other dispute

resolution forum, such that the rule puts arbitration

agreements on an equal footing with all other

contracts. Epic Pet. App. 15a-17a; E&Y Pet. App. 12a-

14a, 20a-23a; NLRB Pet. App. 34a-35a, 44a-45a.

Putting aside the fact that the Seventh and

Ninth Circuits improperly ignored the contrary

congressional command test, see infra, pp. 13, 22-25,

their application of the FAA’s saving clause is

fundamentally flawed. This Court specifically rejected

their reasoning in Concepcion, using as an example a

rule barring enforcement of arbitral restrictions on

1]

discovery as against public policy. Concepcion, 563

U.S. at 341-42. Even if such a rule were labeled a

general rule equally applicable to all contracts,

including those outside the arbitral context, this Court

firmly declared that “[i]n practice, of course, the rule

would have a disproportionate impact on arbitration

agreements; but it would presumably apply to

contracts purporting to restrict discovery in litigation

as well.” Id. at 342. Concepcion thus condemned this

mode of analysis as manifesting “the judicial hostility

towards arbitration that prompted the FAA [which]

had manifested itself in ‘a great variety’ of ‘devices and

formulas’ declaring arbitration against public policy.”

Id. (citation omitted); see also Kindred Nursing Ctrs.

Lid. P’ship v. Clark, 137 S. Ct. 1421, 1426 (2017)

(holding FAA invalidates any “rule discriminating on

its face against arbitration” and “also displaces any

rule that covertly accomplishes the same objective by

disfavoring contracts that (oh so coincidentally) have

the defining features of arbitration agreements’).

The central fallacy of the Seventh and Ninth

Circuits’ and the NLRB’s reasoning is_ their

unsupported assumption—directly forbidden by

Concepcion and its progeny—that an arbitral class

action waiver is not integral to the arbitration

agreement of which it forms a part. See Epic Pet. App.

12a; E&Y Pet. App. 13a-14a, 22a-23a; NLRB Pet. App.

43a-45a; see also NLRB Pet. App. 181a-182a (Johnson,

Member, dissenting). As this Court has explained,

bilateral proceedi.igs are a fundamental attribute of

arbitration protected by the FAA, and attempts to force

parties to proceed on a class or collective basis in

contravention of a binding arbitral class action waiver

12

are forbidden. See Concepcion, 563 U.S. at 344, 348;

Stolt-Nielsen S.A. v. AnimalFeeds Intl Corp., 559 U.S.

662, 683-84 (2010) (holding that “parties may specify

with whom they choose to arbitrate their disputes,”

and “[ijt falls to courts and arbitrators to give effect to

these contractual limitations” in order “to give effect to

the intent of the parties”); Italian Colors, 133 S. Ct. at

2312 n.5 (“[T]he FAA does... favor the absence of

litigation when that is the consequence of a class-

action waiver, since its “principal purpose” is the

enforcement of arbitration agreements according to

their terms.”).

Thus, when some other law mandates collective

proceedings (even as a general rule), that law—when

applied to an arbitral class action waiver—“derive(s]

[its] meaning from the fact that an agreement to

arbitrate is at issue,” “interferes with fundamental!

attributes of arbitration[,] and thus creates a scheme

inconsistent with the FAA.” Concepcion, 563 U.S. at

339, 344.

The FAA’s saving clause cannot justify the

D. R. Horton rule because “a federal statute’s saving

clause “cannot in reason be construed as [allowing]

a... right, the continued existence of which would be

absolutely inconsistent with the provisions of the act.

In other words, the act cannot be held to destroy

itself."" Concepcion, 563 U.S. at 343 (citations

omitted). Thus, the D. R. Horton rule is squarely

irreconcilable with the FAA.

13

Il. THE D.R. HORTON RULE SHOULD BE

OVERTURNED BECAUSE THE NLRA’S

TEXT DOES NOT CONTAIN A CONTRARY

CONGRESSIONAL COMMAND

OVERRIDING THE FAA’S MANDATE

THAT ARBITRAL CLASS ACTION

WAIVERS BE ENYTORCED ACCORDING

TO THEIR TERMS.

By invoking the FAA’s saving clause to justify

the D. R. Horton rule’s invalidation of class action

waivers in employment arbitration agreements, the

Seventh and Ninth Circuits avoided having to confront

the dispositive question in these cases: whether

anythin; in the text of the NLRA overrides the FAA’s

mandate that arbitral class action waivers must be

enforced according to their terms. This Court has

many times addressed whether another federal statute

contains a contrary congressional command overriding

the FAA, and has formulated a clear statement rule

governing these cases: unless the text of the other

federal statute clearly evinces Congress’s intent to

override the FAA, the FAA’s mandate prevails and

requires that the arbitration agreement be enforced.

See Italian Colors, 133 S. Ct. at 28309; CompuCredit,

565 U.S. at 100-01, 103-04.

14

A. In any claimed conflict between the FAA

and another federal statute, the FAA

governs unless the other statute embodies

a contrary congressional command

overriding the FAA’s mandate.

The FAA requires courts to “rigorously enforce’

arbitration agreements according to their terms,.. .

including terms that ‘specify with whom [the parties]

choose to arbitrate their disputes,’... and ‘the rules

under which that arbitration will be conducted.”

Italian Colors, 133 S. Ct. at 2309 (citations omitted);

see also CompuCredit, 565 U.S. at 98. “That holds true

for claims that allege a violation of a federal statute,

unless the FAA’s mandate has been “overridden by a

contrary congressional command.” Italian Colors,

133 S. Ct. at 2309 (citations omitted).

While this Court has utilized various methods

over the years to analyze whether a contrary

congressional command can be found in another

federal statute, its modern precedent has never

actually reached that conclusion in the numerous times

it has addressed this issue. See, e.g., Mitsubishi Motors

Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614

(1985); McMahon, 482 U.S. 220; Rodriguez de Quijas v.

Shearson/Am. Express, Inc., 490 U.S. 477 (1989);

Gilmer, 500 U.S. 20; CompuCredit, 565 U.S. 95; Italian

Colors, 133 S. Ct. 2304.2

2 Wilko v. Swan did invalidate an arbitration clause on

the ground that it fell afoul of the Securities Act of 1933. 346 U.S.

427, 438 (1953). However, this Court overruled Wilko in

Rodriguez de Quijas because it concluded that the Securities Act

(continued...)

15

B. This Court’s decisions have evolved from

considering text, legislative history, and

statutory purpose to an exclusive focus on

statutory text in applying the contrary

congressional command test.

1. The contrary congressional

command test originated as a

method to reconcile the FAA with

potentially conflicting federal

statutes.

This Court confronted and began to develop its

approach to the issue of how to reconcile the FAA and a

potentially conflicting federal statute in Mitsubishi

Motors, which involved federal antitrust claims that

the parties had agreed to arbitrate. Mitsubishi Motors,

473 U.S. at 616-20. This Court held that agreements

to arbitrate federal statutory claims must be enforced

under the FAA “unless Congress itself has evinced an

intention to preclude a waiver of judicial remedies for

the statutory rights at issue.” Jd. at 628. The Court

explained that “if Congress intended the substantive

protection afforded by a given statute to include

protection against waiver of the right to a judicial

forum, that intention will be deducible from text or

legislative history.” Id. (emphasis added).

of 1933 does not contain a contrary congressional command

overriding the FAA. 490 U.S. at 480-85.

16

McMahon presented the next opportunity for

this Court to address this issue. That case involved

claims by investors against a brokerage under the

Securities Exchange Act of 1934 and the Racketeer

Influenced and Corrupt Organizations (RICO) Act,

which the parties had agreed to arbitrate. McMahon,

482 U.S. at 222-23. This Court reaffirmed that the

FAA “mandates enforcement of agreements to arbitrate

statutory claims.” Jd. at 226. However, it clarified

that, “[l]ike any statutory directive,” the FAA “may be

overridden by a contrary congressional command.” /d.

The Court explained that, “[i]f Congress did intend to

limit or prohibit waiver of a judicial forum for a

particular claim, such an intent ‘will be deducible from

[the statute’s] text or legislative history or from an

inherent conflict between arbitration and... the

statute’s underlying purposes.” Id. at 227 (citations

omitted). The Court also placed “[t]he burden... on

the party opposing arbitration...to show that

Congress intended to preclude a waiver of judicial

remedies for the statutory rights at issue.” Jd. After

finding no indication in the text or legislative history of

the Securities Exchange Act of 1934 or the RICO Act

that Congress intended to preclude arbitration of such

claims, this Court concluded that nothing in the

purposes behind those statutes conflicted with the

FAA’s mandate. See also Rodriguez de Quijas, 490

U.S. at 481-84 (applying same analysis to hold that the

Securities Act of 1933 does not override FAA’s

mandate).

17

2. This Court has more recently shifted

its focus from statutory purpose to

statutory text in applying the

contrary congressional command

test.

This Court refined the contrary congressional

command test in Gilmer, which involved the

enforceability of an agreement to arbitrate an Age

Discrimination in Employment Act (ADEA) claim.

Gilmer, 500 U.S. at 23-24. Gilmer held that the ADEA

did not contain a contrary congressional command

overriding the FAA because “Congress... did not

explicitly preclude arbitration or other nonjudicial

resolution of claims” in the ADEA. Id. at 29 (emphasis

added). While this Court also examined whether there

was an inherent conflict between the purposes of the

ADEA and the FAA, 500 U.S. at 26-27, its analysis

marks the beginning of a shift away from consideration

of inherent conflict between perceived statutory

purposes and towards an exclusive focus on statutory

text.

Of particular importance here, Gilmer rejected

the plaintiffs argument that because the ADEA

provided for class proceedings, enforcing a bilateral

arbitration clause would not achieve the ADEA’s

purposes. Gilmer explained that “even if the

arbitration could not go forward as a class action or

class relief could not be granted by the arbitrator, the

fact that the [ADEA] provides for the possibility of

bringing a collective action does not mean that

individual attempts at conciliation were intended to be

barred.” Jd. at 32 (citation omitted). Furthermore,

Gilmer clarified that “[m}ere inequality in bargaining

18

power... is not a sufficient reason to hold that

arbitration agreements are never enforceable in the

employment context.” Jd. at 33.

The Court reinforced its increasing focus on

statutory text in 14 Penn Plaza LLC v. Pyett, 556 U.S.

247, 251-53 (2009), which involved a collective

bargaining agreement that included an agreement to

arbitrate an ADEA claim. In enforcing this arbitration

clause, the Court disagreed with Justice Stevens’

dissenting view that the arbitration clause should not

be enforced because the ADEA’s purposes conflicted

with arbitration:

The Gilmer Court did not adopt Justice

STEVENS’ personal view of the purposes

underlying the ADEA, for good reason:

That view is not embodied within the

statute’s text. Accordingly, it is not the

statutory text that Justice STEVENS has

sought to vindicate—it is instead his own

“preference” for mandatory judicial

review, which he disguises as a search for

congressional purpose. This Court is not

empowered to incorporate such a

preference into the text of a federal

statute.

Id. at 267 n.9; see also id. at 270 (“We cannot rely on

this judicial policy concern as a source of authority for

introducing a qualification into the ADEA that is not

found in its text. Absent a constitutional barrier, ‘it is

not for us to substitute our view of... policy for the

legislation which has been passed by Congress.”

(citation omitted)).

19

3. This Court has explicitly and

exclusively focused on statutory text

in its most recent cases applying the

contrary congressional command

test.

In CompuCredit, this Court made explicit what

it had been signaling ever since Mitsubishi Motors:

that the contrary congressional command test looks

only to the other federal statute’s text. CompuCredit

involved claims under the Credit Repair Organizations

Act (CROA), which the plaintiffs had agreed to

arbitrate. CompuCredit, 565 U.S. at 96-97. The

plaintiffs argued that several of the CROA’s provisions

constituted a contrary congressional command

overriding the FAA’s mandate. /d. at 98-100. Without

mentioning the CROA’s underlying purposes or its

legislative history, this Court looked solely at the

CROA’s text for a contrary congressional command and

rejected the plaintiffs’ arguments, concluding: “If the

mere formulation of the cause of action in this

standard fashion were sufficient to establish the

‘contrary congressional command’ overriding the

FAA, .. . valid arbitration agreements covering federal

causes of action would be rare indeed. But that is not

the law.” Id. at 100-01 (citation omitted).

Notably, CompuCredit provided the following

examples of contrary congressional commands

sufficient to override the FAA’s mandate. Id. at 103-

04. These examples show the specificity with which a

contrary congressional command must appear in

statutory text to override the FAA:

20

° 7 US.C. § 26(m)(2) (2012): “No predispute

arbitration agreement shall be valid or

enforceable, if the agreement requires

arbitration of a dispute arising under this

section.”

2 15 U.S.C. §1226(a)(2) (2012): “Notwithstanding

any other provision of law, whenever a motor

vehicle franchise contract provides for the use of

arbitration to resolve a controversy arising out

of or relating to such contract, arbitration may

be used to settle such controversy only if after

such controversy arises all parties to such

controversy consent in writing to use arbitration

to settle such controversy.”

* 12 U.S.C. § 5518(b) (2012): “The [Consumer

Financial Protection] Bureau, by regulation,

may prohibit or impose conditions or limitations

on the use of an agreement between a covered

person and a consumer for a consumer financial

product or service providing for arbitration of

any future dispute between the parties, if the

Bureau finds that such a prohibition or

imposition of conditions or limitations is in the

public interest and for the protection of

consumers.”

In citing these examples, CompuCredit emphasized

that, “[w]hen [Congress] has restricted the use of

arbitration in other contexts, it has done so with a

clarity that far exceeds the claimed indications in the

CROA.” CompuCredit, 565 U.S. at 103.

21

Most recently, ihis Court reaffirmed

CompuCredit’s textual approach in Jtalian Colors, in

which the plaintiffs argued that the federal antitrust

laws amounted to a contrary congressional command

overriding the FAA’s mandate requiring the

enforcement of plaintiffs’ arbitral class action waiver.

Italian Colors, 133 S. Ct. at 2308. Without examining

statutory purpose or legislative history, the Court held

that “[njo contrary congressional command requires us

to reject the waiver of class arbitration here” because

“(t]he antitrust laws do not ‘evincle] an intention to

preclude a waiver’ of class-action procedure” since

“(t]he Sherman and Clayton Acts make no mention of

class actions.” Jd. at 2309 (emphasis added).

This Court has followed the same path away

from consideration of statutory purpose and toward

exclusive focus on statutory text in other cases calling

for interpretation of federal statutes or resolution of

statutory conflict. See, e.g., Alexander v. Sandoval, 532

U.S. 275, 286-88 (2001) (looking solely to statutory text

to hold that private right of action could not be implied

under Title VI of 1964 Civil Rights Act to sue for

disparate impact, and condemning earlier cases that

gave weight to congressional purpose in implied

private right of action analysis); Shady Grove

Orthopedic Assocs., P.A. v. Allstate Ins. Co., 559 U.S.

393, 402-05 (2010) (condemning resort to legislative

history and examining only statutory text in

determining whether state statute conflicted with

Federal Rule of Civil Procedure for Erie purposes).

22

C. Nothing in the NLRA’s text contains a

contrary congressional command

overriding the FAA with the clarity this

Court’s cases require.

Applying this Court’s strict textual approach

here, the NLRA does not contain any language even

approaching the clarity required of a contrary

congressional command that could override the FAA.

The Seventh and Ninth Circuits and the NLRB

below pointed to sections 7 and 8(a)(1) of the NLRA,

29 U.S.C. §§ 157, 158(a)(1), as creating a substantive

right for employees to pursue wage-and-hour claims on

a class or collective basis. Epic Pet. App. 3a-9a;

E&Y Pet. App. 3a-11a; NLRB Pet. App. 17a-20a, 31a-

33a, 38a-43a. But those provisions do not specifically

mention arbitration, as required to constitute a

contrary congressional command overriding the FAA’s

directive to enforce arbitration agreements according to

their terms, including their arbitral class action

waivers. See Italian Colors, 133 S. Ct. at 2309;

CompuCredit, 565 U.S. at 103-04. Section 7 merely

protects employees’ right “to engage in other concerted

activities for the purpose of collective bargaining or

other mutual aid or protection,” 29 U.S.C. § 157, while

section 8(a)(1) prohibits employers from “interfer[ing]

with, restrain[ing], or coerc[ing] employees in the

exercise of the rights guaranteed in” section 7, 29

U.S.C. § 158(a)(1).

23

This does not even come close to the level of

specificity and clarity embodied in the statutes this

Court pointed to in CompuCredit, 565 U.S. at 103-04,

as sufficient for a contrary congressional command

overriding the FAA. Indeed, both the CROA and the

ADEA, at issue respectively in CompuCredit, id. at

107, and Gilmer, 500 U.S. at 32, specifically provided

for class actions, but this Court did not hesitate to hold

that these specific textual references to class

proceedings were insufficient to displace the FAA’s

mandate. See Italian Colors, 133 S. Ct. at 2311 (“In

Gilmer, ...we had no qualms in enforcing a class

waiver in an arbitration agreement even though the

federal statute at issue, the [ADEA], expressly

permitted collective actions. We said that statutory

permission did “not mean that individual attempts at

conciliation were intended to be barred.”” (citations

omitted)).

Nor does the NLRA’s legislative history change

this analysis. While McMahon referenced legislative

history as a possible source for a _ contrary

congressional command, McMahon, 482 U.S. at 227,

this Court’s exclusive focus on statutory text since

McMahon demonstrates that mere legislative history

unaccompanied by anything in the text of a statute is

not a sufficient ground on which to base a contrary

congressional command overriding the FAA, see Italian

Colors, 133 S. Ct. 2309-10; CompuCredit, 565 U.S. at

103-04; Pyett, 556 U.S. at 267 n.9.

24

This development away from legislative history

makes sense. In recent years, this Court has

highlighted the frequent unreliability of legislative

history as a guide to congressional intent. See, e.zg.,

Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S.

546, 568 (2005) (“As we have repeatedly held, the

authoritative statement is the statutory text, not the

legislative history or any other extrinsic material.”);

see also Lawson v. FMR LLC, 1345S. Ct. 1158, 1176-77

(2014) (Scalia, J., concurring in principal part and

concurring in the judgment) (laying out several flaws

in the reliance on legislative history to interpret

statutes).

In any case, nothing in the legislative history of

sections 7 and 8(a)(1) of the NLRA even hints that

Congress intended those provisions to override the

FAA’s mandate that arbitration agreements—

including arbitral class action waivers—be enforced

according to their terms. This is not surprising. Like

the antitrust laws examined in Italian Colors, the

NLRA was

enacted . . . before the advent of Federal

Rule of Civil Procedure 23, which was

“designed to allow an exception to the

usual rule that litigation is conducted by

and on behalf of the individual named

parties only.” The parties here agreed to

arbitrate pursuant to that “usual rule,”

and it would be remarkable for a court to

erase that expectation.

Italian Colors, 133 S. Ct. at 2309 (citation omitted);

accord D. R. Horton, Inc. v. NLRB, 737 F.3d 344, 361

25

(5th Cir. 2013) (“Congress did not discuss the right to

file class or consolidated claims against employers,”

such that “the legislative history [of the NLRA]...

does not provide a basis for a congressional command

to override the FAA”); E&Y Pet. App. 37a (Ikuta, J.,

dissenting) (“The NLRA was enacted decades before

Rule 23 created the modern class action in 1966.”).

In short, nothing in the NLRA’s text nor in its

(irrelevant) legislative history amounts to a contrary

congressional command overriding the FAA’s mandate

that the arbitral class action waivers here be enforced

according to their terms.

26

CONCLUSION

For the foregoing reasons and for the reasons

stated in Epic Systems’, Ernst & Young’s, and Murphy

Oil USA’s briefs on the merits, this Court should

reverse the Seventh and Ninth Circuits’ decisions in

Epic Systems and Ernst & Young, affirm the Fifth

Circuit’s decision refusing to enforce the NLRB’s ruling

in Murphy Oil, and remand for further proceedings

consistent with this Court’s opinion.

June 16, 2017

Respectfully submitted,

HORVITZ & LEVY LLP

DAVID M. AXELRAD

Counsel of Record

FELIX SHAFIR

JOHN F. QUERIO

3601 West Olive Ave., 8th FI.

Burbank, California 91505-4681

(818) 995-0800

daxelrad@horvitzlevy.com

DRI-—THE VOICE OF THE

DEFENSE BAR

JOHN E. CUTTINO

55 W. Monroe St., Ste. 2000

Chicago, Illinois 60603

(312) 795-1101

jeuttino@gwblawfirm.com

Counsel for Amicus Curiae

DRI—The Voice of the Defense Bar