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

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FILED

AND 6 2017

BRIEFS | OFFICE OF THE CLERK

Nos, 16-285, 16-300, 16-307

IN THE

Supreme Court of the Gnited States

Epic SYSTEMS CORPORATION

Vv.

JACOB LEWIS

ERNST & YOUNG LLP, ET AL.

Vv.

STEPHEN MORRIS, ET AL.

NATIONAL LABOR RELATIONS BOARD

We

MuRPHY O1L USA, INC., ET AL.

On Writ Of Certiorari

To The United States Courts Of Appeals

For The Fifth, Seventh, And Ninth Circuits

BRIEF OF AMICUS CURIAE

THE EMPLOYERS GROUP IN SUPPORT OF

PETITIONERS IN NOS. 16-285 & 16-300 AND

RESPONDENT MURPHY OIL IN NO. 16-307

GEORGE S. HOWARD, JR. BETH HEIFETZ

JONES DAY Counsel of Record

12265 El Camino Real ANTHONY J. DICK

Suite 200 JONES DAY

San Diego, CA 92130 51 Louisiana Ave., N.W.

STEVEN ZADRAVECZ Washington, D.C. 20001

JONES DAY (202) 879-3939

3161 Michelson Dr. bheifetz@jonesday.com

Irvine, CA 92612

Counsel for Amicus Curiae The E rs Gro

2 raneros®

j

TABLE OF CONTENTS

Page

STATEMENT OF INTEREST .................-..0cceecceeeeeses 1

SUMMARY OF ARGUMENT. ...............00:ccccseceeeescnees 2

AREER REE Fei See a ee MRE ard SRN AE NE ne 3

I. THE NLRA DOES NOT DISPLACE THE

FAA’S PROTECTION OF INDIVIDUAL

pe cL 3

A. The FAA Protects The Right Of

Parties To Make and Enforce

Individual Arbitration Agreements............. 4

B. The NLRA Does Not Contain the

Requisite Clear Indication to Repeal

the FAA’s Protection of Individual

FE 7

C. Chevron Deference Does Not Apply To

Agency Interpretations That Would

Repeal Prior Federal Law.......................... 11

Il. CALIFORNIA EMPLOYERS HAVE AN

ESPECIALLY ACUTE INTEREST IN

COMBATING THE GROWING TREND

OF JUDICIAL HOSTILITY TO

I iitantninisnmideidunaticsxtciandatenscianbies 14

IIT cstindicidactiitinisntsinnsonrnnpnidenantesiesesesanitie 17

i

TABLE OF AUTHORITIES

Page(s)

CASES

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

bf fe eee 5, 8, 9, 10

AT&T Mobility LLC v. Concepcion,

Se i ssconennemni passim

Carter v. Welles-Bowen Realty, Inc.,

ro a >

Cathedral Candle Co. v. U.S. Int'l Trade Comm'n,

400 F.3d 1352 (Fed. Cir. 2005) ................cccccseceees 13

Chevron U.S.A., Inc. v. Nat. Res. Def. Council, Inc.,

eT ins sien sccncnstusnonccenit 11, 12,13

Cipollone v. Liggett Grp., Inc.,

cin eeseniatianeiens 7

CompuCredit Corp. v. Greenwood,

a cuseninsiinddtensensd 8,9

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

737 F.3d 344 (6th Cir. 2013).................cccsccccseees 3, 9

DIRECTV, Inc. v. Imburgia,

a 14,15

FCC v. NextWave Pers. Comme'ns Inc.,

AS Re 12

Gilmer v. Interstate/Johnson Lane Corp..,

I aici 9, 10

Hammon v. Barry,

ee i es Gate MEO vencatccontsccnscnesesossacsnsnen 4

ill

TABLE OF AUTHORITIES

(continued)

Page(s)

Hoffman Plastic Compounds, Inc. v. NLRB,

TELE TERI P ERE Ae eee 13

In Re D. R. Horton, Inc.,

I a i ecnasstmnadanadncesonos 3

In re Stock Exchanges Options Trading

Antitrust Litig.,

ee ee re Ee rie Be icccccscccscccececececescessecccs 13

INS v. St. Cyr,

a cieeneiniedionneil 12

Iskanian v. CLS Transportation

of Los Angeles, LLC,

TE ee ae ee ee 15

J.I. Case Co. v. NLRB,

ds csalcccshcoemeinsibininiiiomsennuinith 9

King v. Burwell,

TALC aE Seen EEN TES 14

Ledezma-Galicia v. Holder,

636 F.3d 1059 (9th Cir. 2010)............ 0... cceecceeec eee 13

Lewis v. Epic Sys. Corp.,

823 F.3d 1147 (7th Cir. 2016).................... 7, 11,12

Matsushita Elec. Indus. Co. v. Epstein,

LER SE RT ae eae 4,8

Morris v. Ernst & Young, LLP,

834 F.3d 975 (9th Cir. 2016)............. PERE OWT 7,11

Morton v. Mancari,

2 REE cee ne eRe NT 4,8

1V

TABLE OF AUTHORITIES

(continued)

Page(s)

Nat'l Ass’n of Home Builders v. Defs. of Wildlife,

I slaaidiiaiednimanti 8

NLBB v. Fin. Inst. Emps. of Am., Local 1182,

od lena anmouasnupuieting 14

Perry v. Thomas,

TET TERA AEE ETE TE AR: 14

Posadas v. Nat'l City Bank,

Se a TT 7,11

Preston v. Ferrer,

sii Ons”

Radzanower v. Touche Ross & Co..,

cans unlicainebindnnel 8

Sakkab v. Luxottica Retail N. Am., Inc.,

BOS F.Be GEG GG Car. BORG) ...ccccccccscccccecsce000000- 000 15

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

i sccubpsepbintions 7

Southern S.S. Co. v. NLRB,

a ceeeendoniineenal 13

Southland Corp. v. Keating,

I ssc nmesinemienabouiliaieie 14

United States v. Borden Co.,

a eeleleaiiinal 8

Watt v. Alaska,

SO ceieipsiiaeanninmneniibil 8

STATUTES

I I iia dlanses baainisaebidalimnaanleditiaglt 11

v

TABLE OF AUTHORITIES

(continued)

OTHER AUTHORITIES

81 Fed. Reg. 32,830 (May 24, 2016)...........0.............. 11

Stephen A. Broome, An Unconscionable

Application of the Unconscionability Doctrine:

How the California Courts are Circumventing

the Federal Arbitration Act,

3 Hastings Bus. L. J. 39 (2006)

STATEMENT OF INTEREST

The Employers Group, a California non-profit

organization, is one of the nation’s oldest and largest

human-resources management organizations for

employers. It represents nearly 3,500 California

employers of all sizes and every industry, which

collectively employ nearly 3 million employees. The

Employers Group also provides live helpline

assistance, online resources and tools, and in-

company human-resources consulting services and

support to its members. As part of its mission, the

Employers Group seeks to enhance the stability,

predictability, and fairness of the laws and decisions

regulating employment relationships. Many members

of the Employers Group have adopted arbitration

agreements and programs as a method to resolve

employment disputes promptly, fairly, and with far

less expense and delay than required for court

adjudication of such matters. The Employers Group

thus has a direct interest in the correct interpretation

and application of both the National Labor Relations

Act (NLRA) and the Federal! Arbitration Act (FAA).

1 Counsel of record for all parties have consented in writing to

the filing of this brief.

No party or counsel for a party authored or contributed

monetarily to the preparation or submission of any portion of

this brief.

2

SUMMARY OF ARGUMENT

The Federal Arbitration Act (FAA) protects the

right of parties to make and enforce agreements to

arbitrate on an individual basis instead of a class or

collective basis. Accordingly, as this Court has

recognized, the FAA requires the enforcement of

“class-action waivers” contained in arbitration

agreements, and any obstacle to the enforcement of

such waivers is “inconsistent with the FAA.” AT&T’

Mobility LLC v. Concepcion, 563 U.S. 333, 344 (2011).

The Nationa] Labor Relations Act (NLRA) does not

disturb the FAA’s protection of individual arbitration

rights. Because the NLRA was enacted after the

FAA, it must be interpreted in light of the venerable

canon against implied repeals, which holds that a

later-enacted statute cannot repeal any part of an

earlier statute unless Congress has given some clear

indication of its intent to effectuate the repeal. The

NLRA does not contain any such clear indication. It

does not even mention the issue of arbitration or

class litigation. much |ess create a non-waivable right

to class litigation in derogation of the right to make

and enforce individual arbitration agreements under

the FAA.

Because Congress did not supply the requisite

clear intent, the National Labor Relations Board

cannot repeal the FAA's protection of individual

arbitration rights by administrative fiat.

Administrative agencies. no less than courts. are

bound by the canon against implied repeals. Thus, in

the absence of clear authorization from Congress, the

Board cannot promulgate an administrative

interpretation that would repeal any part of the FAA.

3

ARGUMENT

I. The NLRA Does Not Displace the FAA’s

Protection of Individual Arbitration Rights

The NLRA was enacted in 1935, and for the next

80 years “no court decision” ever “held that the

Section 7 right to engage in ‘concerted activities’...

prohibited class action waivers in arbitration

agreements.” D.R. Horton, Inc. v. N.L.R.B., 737 F.3d

344, 356 (5th Cir. 2013). To the contrary, the NLRA

was enacted against the backdrop of the FAA, which

affirmatively protects the right of individual

arbitration: The FAA gives parties the right to enter

and enforce agreements to arbitrate on an individual

basis by mutually agreeing to a “class-action waiver.”

Concepcion, 563 U.S. at 340. Accordingly, any refusal

to enforce such an individual arbitration agreement

is “inconsistent with the FAA.” Jd. at 344.

The year after this Court recognized the protection

of individual arbitration rights under the FAA in

Concepcion, however, the National Labor Relations

Board sought to undermine that decision by

announcing a novel reinterpretation of the NLRA,

which carried sweeping implications for every

employer in the country: It proclaimed that,

“notwithstanding the [FAA],” agreements to arbitrate

on an individual basis (and waiving the right to

proceed on a class basis) are now prohibited in any

employment contract involving interstate commerce.

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

(2012). In other words, despite the fact that

individual arbitration agreements have long been a

common feature of the American employment

landscape, have been enforced for decades by this

4

Court and others. and enjoy pre-existing statutory

protection under the FAA, the Board suddenly

declared that such agreements have been illegal for

eight decades—without anyone ever noticing before.

The Board’s attempt to eliminate the FAA’s

protection of individual arbitration rights must be

rejected because it violates the venerable canon

against the “implied repeal of statutes,” which serves

the dual values of “stability and predictability” in the

law. Hammon v. Barry, 826 F.2d 73, 80 (D.C. Cir.

1987). Under this canon, a federal statute such as the

NLRA cannot be construed to displace any part of an

“earlier” statute such as the FAA unless it contains a

“clearly expressed congressional intention” to

effectuate the repeal. Morton v. Mancari, 417 U.S.

535, 550-51 (1974). This is a “relatively stringent

standard,” which is “rarfely]” satisfied. Matsushita

Elec. Indus. Co. v. Epstein, 516 U.S. 367, 381 (1996).

The NLRA does not provide the type of “clear”

indication necessary to repeal the FAA’s protection of

individual arbitration rights. The NLRA refers

generally to “concerted activities” among a wide

range of other subjects, but says nothing about

arbitration or class litigation. As a result, the NLRA

must be read to coexist with the FAA’s right to make

and enforce individual arbitration agreements, not to

displace it.

A. The FAA Protects The Right Of Parties

To Make And Enforce Individual

Arbitration Agreements

The FAA protects the right of parties to make and

enforce agreements to arbitrate on an individual

basis by mutually consenting to a “class-action

5

waiver.” Concepcion, 563 U.S. at 344. Accordingly, as

this Court has recognized, “invalidating private

arbitration agreements denying class adjudication,

would be an abridgment ... of [the] substantive

right” to make and enforce individual arbitration

agreements under the FAA. Am. Exp. Co. v. Italian

Colors Rest., 133 S. Ct. 2304, 2309-10 (2013)

(alteration omitted).

This conclusion follows directly from Concepcion,

which squarely held that refusing to enforce a “class-

action waiver” in an arbitration agreement is

“inconsistent with the FAA.” 563 U.S. at 344. Where

the parties have agreed to arbitrate on an individual

basis, the imposition of class proceedings “interferes

with fundamental attributes of arbitration.” Jd. As

Concepcion explained, the entire “point” of the FAA is

“to allow for efficient, streamlined procedures,” which

“reduc[e] the cost and increas[e] the speed of dispute

resolution.” Jd. at 344-45. Such “streamlined

procedures” are possible in individual arbitration, but

“imposing class procedures” would “sacrifice{] the

principal advantage of arbitration—its informality—

and makes the process slower, more costly, and more

likely to generate procedural morass than final

judgment.” Id. at 344, 347—48 (emphasis added).

Moreover, the lack of appellate review in

arbitration makes it “poorly suited to the high|]

stakes of class litigation,” where “damages allegedly

owed to tens of thousands of potential claimants are

aggregated and decided at once.” /d. at 350. Without

appellate review of a collective damages award, “the

risk of an error” becomes “unacceptable,” which

effectively precludes arbitration as a viable option:

few if any defendants will choose to “bet the company

6

with no effective means of review.” Jd. at 350—51. As

a result, giving defendants the choice of arbitrating

only on a class basis is really no choice at all, and it

effectively precludes arbitration as a meaningful

option.

At the same time, Concepcion specifically held that

the FAA’s savings clause, 9 U.S.C. § 2, does not alter

this conclusion. Because the FAA’s affirmative

provisions presuppose the availability of individual

arbitration, it would be “absolutely inconsistent” to

read the savings clause to authorize a ban on

individual] arbitration. Concepcion, 563 U.S. at 343.

In other words, the savings clause “cannot in reason

be construed” to allow the imposition of class

proceedings in contravention of a class waiver,

because that would violate the basic principle that

“the [statute] cannot be held to destroy itself.” Id.

(citation omitted).

Because the FAA protects the right to make and

enforce arbitration agreements containing class-

action waivers, any rule prohibiting the enforcement

of such waivers would conflict directly with the FAA.

Indeed, in Concepcion, the conflict was sufficiently

clear for the FAA to preempt the law of a sovereign

state, even though such preemption can occur only if

there is a “clear and manifest” conflict between state

and federal law. See Cipollone v. Liggett Grp., Inc.,

505 U.S. 504, 516 (1992). Accordingly, there can be no

doubt that interpreting the NLRA to prohibit

individual arbitration agreements would equally

create a “square and manifest” conflict with the FAA.

By holding to the contrary, the Seventh and Ninth

Circuits flatly defied Concepcion: The Ninth Circuit

7

held that the Board’s interpretation of the NLRA as

prohibiting individual arbitration agreements creates

“no inherent conflict [with] the FAA,” Morris v. Ernst

& Young, LLP, 834 F.3d 975, 987 n.13 (9th Cir.

2016), and the Seventh Circuit likewise found “no

conflict.” Lewis v. Epic Sys. Corp., 823 F.3d 1147,

1157 (7th Cir. 2016). But neither court explained how

this “no conflict” theory makes any sense given

Concepcion’s holding that banning individual

arbitration agreements is “inconsistent with the

FAA.” 563 U.S. at 344. No explanation is possible,

other than outright defiance of Concepcion.

B. The NLRA Does Not Contain the

Requisite Clear Indication to Repeal the

FAA’s Protection of Individual

Arbitration Rights

“Like any statutory directive,” the FAA’s

protection of individual arbitration “may be

overridden by a contrary congressional command.”

Shearson/Am. Exp., Inc. v. McMahon, 482 U.S. 220,

226 (1987). But in order for the FAA’s protection of

individual arbitration to be repealed, “the intention of

the legislature . . . must be clear and manifest.”

Posadas v. Nat'l City Bank, 296 U.S. 497, 503 (1936).

As this Court has repeatedly emphasized, this is a

“stringent standard” that is “rarfely]” satisfied.

Matsushita, 516 U.S. at 381 (1996). There is no

mistaking the level of clarity that this Court has

required: the conflict must be “clear and manifest,”

Watt v. Alaska, 451 U.S. 259, 267 (1981), “clearly

expressed,” Morton, 417 U.S. at 551, and

“irreconcilable,” Radzanower v. Touche Ross & Co.,

426 U.S. 148, 154 (1976) (“irreconcilable”); see also

United States v. Borden Co., 308 U.S. 188, 198 (1939)

8

(“clear and manifest”). Under this stringent standard,

this Court “will not infer a statutory repeal unless

the later statute expressly contradicts the origina) act

or unless such a construction is absolutely necessary

in order that the words of the later statute shall have

any meaning at all.” Nat? Ass'n of Home Builders v.

Defs. of Wildlife, 551 U.S. 644, 662 (2007) (alterations

omitted).

Importantly, the canon against implied repeal is

sensitive to the order of statutory enactments, as one

of its purposes is to avoid displacing “earlier”

statutes, thereby lending stability to the law and

protecting reliance interests. Morton, 417 U.S. at 550.

The canon also recognizes that it is even more

difficult for “specific” statutory provisions to be

“controlled or nullified” by the later enactment of

more “genera!” provisions. Jd. at 550-51.

In the specific context of the FAA, this Court has

consistently applied the rule that subsequent

statutes must speak with “clarity” in order to

displace the FAA’s requirement that arbitration

agreements be enforced “according to |their] terms.”

CompuCredit Corp. v. Greenwood,, 565 U.S. 95, 104

(2012). Unless a statute contains a “contrary

congressional command” that overrides the FAA, the

statute must be read to comport with the FAA.

Italian Colors, 133 §. Ct. at 2309. Thus. for example.

this Court “had no qualms in enforcing a class waiver

in an arbitration agreement even though the federal

statute at issue ... expressly permitted collective

actions.” Id. at 2311 (citing Gilmer v.

Interstate/Johnson Lane Corp.. 500 U.S. 20, 28

(1991)). Although the statute at issue in Gilmer (the

ADEA) expressly conferred a right to collective

9

action, it gave no indication that this was a non-

waivable right, and thus it was not sufficiently clear

to override the FAA’s policy that individuals must be

left free to enter agreements to arbitrate on an

individual basis.

These principles are dispositive here. The NLRA

easily can be read to coexist with individual

arbitration agreements, and indeed that is the way

everyone always did read the statute from its

enactment in 1935 until the Board decided D.R.

Horton in 2012.

At the outset, the NLRA does not mention the

procedural mechanism of class litigation, and the

term “concerted activities” can be read in any number

of ways that have nothing to do with class actions.

The term most naturally refers to activities directly

related to unionization and collective bargaining,

which are the NLRA’s clear focus. An employee’s

agreement to arbitrate individually does not remotely

“impede” employees’ efforts to unionize, “to bargain

collectively,” or to engage in like activities, which is

what the NLRA protects. J.1. Case Co. v. NLRB, 321

U.S. 332, 334 (1944). The Board’s contrary reading

would dramatically expand the reach of the NLRA to

encompass the procedural right of class litigation

without any connection to organizing or bargaining

activity, contrary to the way the statute has been

understood for eight decades.

Moreover, even assuming the NLRA could be

reinterpreted to create a novel “right” to class-action

proceedings, the statute contains no clear indication

that this hypothetical right would be non-waivable.

Indeed, even if the right were non-waivable outside of

10

arbitration, the FAA provides that class-action rights

are presumptively waivable in the specific context of

arbitration agreements. ‘Thus, even when federal law

expressly creales a right for plaintiffs to use a “class

mechanism,” the Supreme Court has “rejected thfe|

proposition” that this right is “nonwaivable ... in

arbitration.” Tialian Colors, 133 S. Ct. at 2310: see

also Gilmer, 500 U.S. at 32 (“[T]he fact that the

{statute] provides for the possibility of bringing a

collective action does not mean that individual

attempts at conciliation were intended to he

barred.”), The same conclusion has even greater force

here, where the NLRA does not even mention class-

action rights, much less clearly override the FAA's

specific rule that such rights can be waived in

arbitration agreements. To the contrary, the NLRA

indisputably allows individual employees to opt out of

class actions. and it would be anomalous to treat

arbitration agreements as a disfavored means of

opting out.

For these reasons, it is highly doubtful that the

NLRA even cun be read to prohibit agreements to

arbitrate on an individual basis. But in any event, it

certainly does not contain the type of “clear and

manifest” indication that would be necessary to

overcome the protection that such agreements enjoy

under the FAA. Posadas, 296 U.S. at 503.

It is instructive to compare the NLRA to another

recently enacted statute that contains a far clearer

indication of congressional intent to cut back on

arbitration rights. As part of the Dodd-Frank Act of

2010, Congress specifically authorized the Consumer

Protection Financial Bureau (CFPB) to “prohibit or

”?

impose conditions or limitations on” certain

11

“agreements providing for arbitration” involving

consumer financial services. 12 U.S.C. § 5518(a), (b).

Pursuant to that specific statutory authority, the

CFPB has now issued a proposed rule that would

prohibit the use of class-action waivers in covered

arbitration agreements. See NPRM, 81 Fed. Reg.

32,830 (May 24, 2016). This illustrates how Congress

can act with far greater clarity to impose new limits

on arbitration rights. It contrasts starkly with the

NLRA, which says nothing about imposing any

“prohibit[ions]” or “limitations” on any arbitration

agreement.

C. Chevron Deference Does Not Apply To

Agency Interpretations That Would

Repeal Prior Federal Law

Both the Ninth Circuit and the Seventh Circuit

further erred by concluding that the Board is entitled

to Chevron deference in interpreting the NLRA to

prohibit individual arbitration agreements. See

Lewis, 823 F.3d at 1153; Morris, 834 F.3d at 983 n.5

(stating that the Board’s interpretation of the NLRA

merits deference because it “is a _ permissible

construction” of the statute). The Seventh Circuit

held that “[t]he Board’s interpretation is, at a

minimum, a sensible way to understand the statutory

language, and thus we must follow it.” Lewis, 823

F.3d at 1153. Then, in order to “harmunize the FAA

and NLRA,” the court held that “the FAA’s saving

clause” must be read to accommodate the Board’s

view of the NLRA. /d. at 1157—59.

This reasoning is exactly backwards because it

requires the FAA statute to give way to an agency

interpretation. On multiple occasions, this Court has

12

made clear that agencies are bound to follow statutes,

not the other way around. Consequently, in order to

be faithful to this Court’s deqsions, the Board's

interpretation of the NLRA must be constrained by

the FAA, and cannot be transformed into an

authoritative basis to displace the FAA.

To determine whether an agency interpretation is

entitled to any deference, courts must first “apply[]

the normal ‘tools of statutory construction” to

determine whether the agency has any latitude to

construe the statute. INS v. St. Cyr, 533 U.S. 289,

320 n.45 (2001) (quoting Chevron U.S.A. Inc. v. Nat.

Res. Def. Council, Inc.. 467 U.S. 837, 843 n.9 (1984)).

See also FCC v. NextWave Pers. Comme'ns Inc., 537

U.S. 293, 304 (2003) (recognizing that interpretive

rules “circumscribe[]” the realm of “permissible

[agency] action” under Chevron). Here, the

dispositive “tool of statutory construction” is the

canon against implied repeals: because the NLRA

contains no clear indication that the NLRA was

intended to displace the FAA’s protection of

individual arbitration agreements, the Board is not

permitted to achieve that result by administrative

fiat.2

2 Multiple circuits, including the Ninth Circuit itself,

have recognized the same basic point: Where “the

presumption[] .. . against implied repeals remove(s]

any potential ambiguity that an agency might

otherwise resolve, Chevron deference has no role to

play.” Ledezma-Galicia v. Holder, 636 F.3d 1059, 1075

(9th Cir. 2010). No “deference may be accorded to an

agencys view’ of whether “one statutory scheme

supersedes the other.” In re Stock Exchanges Options

Trading Antitrust Litig., 317 F.3d 134, 149 (2d Cir.

13

Applying the same logic, this Court has “never

deferred to the Board’s remedial preferences where

such preferences potentially trench upon federal

statutes and policies unrelated to the NLRA.”

Hoffman Plastic Compounds, Inc. v. NLRB, 535 U.S.

137, 144 (2002). “[T]he Board has not been

commissioned to effectuate the policies of the Labor

Relations Act so single-mindedly that it may wholly

ignore other and equally important Congressional

objectives.” Southern S.S. Co. v. NLRB, 316 U.S. 31,

47 (1942).

Accordingly, this case provides an opportunity for

this Court to reaffirm the crucial importance of the

major-questions doctrine in _ constraining’ the

overreach of the NLRB. As this Court has long

recognized, “[djeference to the Board cannot be

allowed to slip into a judicial inertia which results in

the unauthorized assumption . . . of major policy

decisions properly made by Congress.” NLRB v. Fin.

Inst. Emps. of Am., Local 1182, 475 U.S. 192, 202

(1986) (ellipsis in original); see generally King uv.

Burwell, 135 S. Ct. 2480, 2489 (2015) (warning

against agency deference on “question[s] of deep

economic and political significance”). That principle

(continued...)

2003) (citation omitted). See also Cathedral Candle Co.

v. U.S. Int'l Trade Comm’n, 400 F.3d 1352, 1374 (Fed.

Cir. 2005) (Dyk, J., dissenting) (A “policy-driven

interpretation under Chevron cannot override the clear

command of a conflicting statute”); Carter v. Welles-

Bowen Realty, Inc., 736 F.3d 722, 731 (6th Cir. 2013)

(Sutton, J., concurring) (“Rules of interpretation bind

all interpreters, administrative agencies included.”).

14

applies directly here, where the Board has attempted

to revolutionize the entire field of workplace relations

by suddenly, for the first time in 80 years,

reinterpreting the NLRA to prohibit individual

arbitration agreements in virtually’ every

employment relationship in the country. Putting

aside the inherent implausibility of such a significant

prohibition lying dormant in the NLRA for eight

decades, such a sweeping policy change cannot and

should not be imposed at the unilateral discretion of

the executive branch.

II. California Employers Have an Especially

Acute Interest In Combating the Growing

Trend of Judicial Hostility to Arbitration

California employers have suffered uniquely from

the recurring pattern of judicial hostility to

arbitration in defiance of the FAA. This hostility is

reflected in, among other things, this Court’s reversal

of several California decisions and statutes refusing

to enforce arbitration agreements under the FAA.

See, e.g., DIRECTV, Inc. v. Imburgia, 136 S. Ct. 463,

468 (2015); Concepcion, 563 U.S. at 341; Preston v.

Ferrer, 552 U.S. 346 (2008); Perry v. Thoraas, 482

U.S. 483 (1987); Southland Corp. v. Keating, 465 U.S.

1 (1984); see also Stephen A. Broome, An

Unconscionable Application of the Unconscionability

Doctrine: How the California Courts’ are

Circumventing the Federal Arbitration Act, 3

Hastings Bus. L. J. 39, 54, 66 (2006).

This Court’s decision in Concepcion has been a

special target of defiance in California. Most recently

in Jmburgia, this Court admonished a California

appellate court that while “[lJower court judges are

15

certainly free to note their disagreement with a

decision of this Court,” they may not “refus[e] to

recognize [its] superior authority.” 136 S. Ct. at 468.

“Concepcion is an authoritative interpretation of [the

FAA],” and, “[cjonsequently, the judges of [lower

courts] must follow it.” Jd. “The fact that Concepcion

was a closely divided case, resulting in a decision

from which four Justices dissented, has no bearing on

that undisputed obligation.” Id.

Another example of the defiance of Concepcion is

the recent decision of the California Supreme Court

in Iskanian v. CLS Transportation of Los Angeles,

LLC, 59 Cal. 4th 348 (2014), cert denied, 135 S. Ct.

1155 (2015). In that case, the court announced a new,

non-waivable right to bring “representative” actions

under the California Private Attorney Generals Act

(PAGA). This is a clear end-run around Concepcion

because it authorizes private class counsel to

disregard agreements to arbitrate on an individual

basis and instead seek mass awards for alleged class-

wide violations of the California Labor Code. Even

more distressingly, a divided panel of the Ninth

Circuit recently agreed with TIskanian’s anti-

arbitration holding, thus joining in the effort to

undermine Concepcion. See Sakkab v. Luxottica

Retail N. Am., Inc., 803 F.3d 425, 434 (9th Cir. 2015).

(A petition for certiorari raising the Iskanian/Sakkab

issue is now pending before this Court in

Bloomingdale’s, Inc., v. Vitolo, No. 16-1110.)

California employers have for years struggled to

enforce valid arbitration agreements in the face of an

ingenious array of “devices and formulas” erected by

California state judges and legislators intent on

ignoring this Court’s jurisprudence. Concepcion, 563

16

U.S. at 342. But now, alarmingly, the Ninth Circuit

too has begun subverting employers’ federal

arbitration rights. This is not just a problem for

California, but for the entire national economy: Like

the employers in these consolidated cases, many

California-based employers do business nationwide

or in multiple states, and are thus subject to differing

outcomes when seeking to enforce their arbitration

agreements in different circuits. Other national and

international employers also have a significant

portion of their workforce in California, and thus

have no choice but to contend with the anti-

arbitration animus of the California courts.

Accordingly, vindicating the FAA’s protection of

individual arbitration rights here will send a much-

needed message to both state and federal judges in

California that this Court will continue to enforce the

authority of its FAA precedents with a vigilant eye.

17

CONCLUSION

For the foregoing reasons, this Court should

reverse the judgments in Epic and Ernst & Young,

and affirm the judgment in Murphy Oil.

Respectfully submitted,

GEORGE S. HOWARD, JR. BETH HEIFETZ

JONES DAY Counsel of Record

12265 El Camino Real ANTHONY J. DICK

Suite 200 JONES DAY

San Diego, CA 92130 51 Louisiana Ave., N.W.

Washington, D.C. 20001

STEVEN ZADRAVECZ (202) 879-3939

JONES DAY bheifetz@jonesday.com

3161 Michelson Dr.

Irvine, CA 92612

June 2017

Counsel for Amicus Curiae The Employers Group