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

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URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385016_0699%3A24

## Record

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

## Text

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

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385016_0699%3A24. Public record. Not legal advice.