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

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IN THE

Supreme Court of the Anited States

EPIC SYSTEMS CORP.,

Petitioner,

JACOB LEWIS,

Respondent.

ERNST & YOUNG LLP, £7 AL.,

Petitioners,

Vv.

STEPHEN MORRIS, ET AL.,

Respondents.

NATIONAL LABOR RELATIONS BOARD,

Petitioner,

MURPHY OIL USA, INC., ET AL.,

Respondents.

On Writs of Certiorari to the United States Courts of

Appeals for the Fifth, Seventh, and Ninth Circuits

BRIEF OF AMICUS CURIAE

PUBLIC CITIZEN, INC., SUPPORTING

RESPONDENTS IN NOS. 16-285 AND 16-300,

AND PETITIONER IN NO. 16-307

ScoTT L. NELSON

Counsel of Record

ALLISON M. ZIEVE

PUBLIC CITIZEN LITIGATION GROUP

1600 20th Street NW

Washington, DC 20009

(202) 588-1000

snelson@citizen.org

Attorneys for Amicus Curiae

August 2017

Cong

Liteury ef Congres ag Peet

Yom) ineeew

TABLE OF CONTENTS

TABLES OF AUTRES BBEMD oc cccscesscsssesecvecsosensconssnees

INTRODUCTION AND SUMMARY OF

FITS icransesvnvscsvsinisietivinsesdicleniuicnncsseendition

PII bitin sreocsiescinssnssiioueenemeaiaa

I. The FAA does not require enforcement of

provisions of an arbitration agreement that

infringe workers’ statutory rights to engage

Si GERI Cs hnthcceccvisisdecsutinetisttacsdeleseansi

Il. The FAA is best read together with the

NLRA and NLGA to preserve workers’ right to

engage in concerted activity. .....................0020006

Ill. The FAA’s saving clause reinforces the

conclusion that the FAA does not displace

sens

ies

workers’ rights under the NLRA and NLGA..... 12

A. The labor laws’ prohibition on enforcement

of contracts that interfere with concerted

activity provides “grounds [that] exist at law

or in equity for the revocation of any contract”

within the meaning of the saving clause. .....

B. The rights created by the NLRA and NLGA

cannot be displaced on the theory that they

interfere with fundamental attributes of

Sei ciissunsienoicidahisedsecttenstendamannaiaiaaiaais

CE III 5, ss sctcasnnnsnéchneduntidiotieksnbterbiiemeas

TABLE OF AUTHORITIES

Cases Pages

14 Penn Plaza LLC v. Pyett,

a 6, 9, 21

Alexander v. Gardner-Denver Co..,

EO 20

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

133 S. Ct. 2904 (3013).......................-. 1, 8, 9, 10, 19

Arthur Andersen LLP v. Carlisle,

i sans ernmnetenmncnnannns 15

AT&T Mobility LLC v. Concepcion,

5638 U.S. 333 (2011).................... 1, 13, 15, 17, 19, 21

Bernhardt v. Polygraphic Co. of Am.,

a 20

Buckeye Check Cashing, Inc. v. Cardegna,

a 15

Circuit City Stores, Inc. v. Adams,

an ecrnscennenncuncennnees 9, 20

CompuCredit Corp. v. Greenwood,

EL 1, 5, 6, 7,9

Doctor’s Assocs., Inc. v. Casarotto,

Ee 15

Eastex, Inc. v. NLRB,

eee 16

EEOC v. Waffle House, Inc.,

a 6,9

Fallbrook Hosp. Corp. v. Cal. Nurses Ass’n,

652 F. App’x 545 (9th Cir. 2016) ................cceees 12

Hines v. Davidowiiz,

I ill 18

Hosp. of Barstow, Inc. v. Cal. Nurses Ass’n,

2013 WL 6095559 (C.D. Cal. Nov. 9, 2013), app.

dism’d, No. 13-57131 (9th Cir. July 2, 2014) ...... 12

Gilmer v. Interstate/Johnson Lane Corp.,

TT itiniciindicintateintenietantionndamente 6, 9, 20

J.E.M. Ag Supply, Inc. v. Pioneer Hi-Bred Int'l, Inc.,

i a iemictioall 10

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

| ke, 15, 16, 17

Mitsubishi Motors Corp. v. Soler Chrysler-

Plymouth, Inc.,

Eee eee 6,9

Nash v. Fla. Indus. Comm’n,

EE ee 11

NLRB v. Washington Aluminum Co.,

EEE ee 16

POM Wonderful LLC v. Coca-Cola Co.,

a 10, 18

Preston v. Ferrer,

ATL aren nen g

Rodriguez v. United States,

ce 18

Rodriguez de Quijas v. Shearson/Am. Express, Inc.

a ccnncnicemtnenninnnnmiansninl 6,9

Scherk v. Alberto-Culver Co.,

ea virinnansnnnteiisnniensemmnensecnnnaain 5, 6

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

itiscmsiinieninctindatnininenncemmnca 6, 9

Southland Corp. v. Keating,

EC ena ee 15

Textile Workers Union v. Lincoln Mills of Ala.,

ir icticnscninsictesiiitcsinimeeaicsianine 20, 21

Three D, LLC v. NLRB,

629 F. App’x 33 (2d Cir. 2015)..........cccccccccccressesees 16

United Paperworkers Int’l Union v. Misco, Inc.,

EE eR 19

United Steelworkers v. American Mfg. Co.,

SE 20

United Steelworkers v. Enter. Wheel & Car Corp.,

EEE ERT CC ae 20

United Steelworkers v. Warrior & Gulf Nav. Co.,

363 U.S. 574 (19G0)..................00eeceeeees 19, 20, 21, 22

Vimar Seguros y Reaseguros, S.A. v. M/V Sky Reefer,

NS ES RN AT ea NE 6

Wyeth v. Levine,

TT SRE Ser sneer 18

Wilko v. Swan,

I eal 5

Statutes and Rules

Federal Arbitration Act,

TS passim

(0 ssaadiinaddenunniaiiiniadiceniahdall 20

ite sisichtsintnasersneccets 4, 12, 13, 14, 15, 17

Ee aN TS een a ee ee 15

2) ee soi instanieslincigentinpiaitiagenesl 15

Labor Management Relations Act of 1947 § 301,

I OF i hisiniscenerpseecvsnmmnceniuseciemmmnnnccentgnecene 21

National Labor Relations Act,

ey Oe I cicctececcensesessccesverssanennneng passim

es Oe I cicccnercnccrserscsscsssnsestonnereenernsncnn 2

ly Oe cre tececncescccermsessevpnsencscenmesenesnen 11

Norris-LaGuardia Act,

ION. scsicccdsosamesensininentnenennend passim

BD ey 0 Bi ciccorececce<ccccecesssscnsesccmocnseassoesvesese 2,14

OS i 18

RE, Be GI FP BB eccccccersccercscecccevecnscsnsessescesvacesassasessoseess 8

INTEREST OF AMICUS CURIAE'

Public Citizen, Inc., is a non-profit consumer advo-

cacy organization that appears on behalf of its mem-

bers and supporters nationwide before Congress, ad-

ministrative agencies, and the courts. Public Citizen

works on a wide range of issues, including enactment

and enforcement of laws protecting consumers, work-

ers, and the public.

Public Citizen has a longstanding interest in issues

concerning the enforcement of mandatory predispute

arbitration agreements. It advocates for legislation and

regulations concerning the use of arbitration agree-

ments in consumer and employment contracts, and it

has appeared as amicus curiae in this Court and others

in many cases involving arbitration. See, e.g., Am. Ex-

press Co. v. Italian Colors Rest., 133 S. Ct. 2304 (2013).

Public Citizen’s attorneys have also represented par-

ties in many cases involving such issues in this Court

and other federal and state courts. Among other cases,

Public Citizen attorneys argued AT&T Mobility LLC v.

Concepcion, 563 U.S. 333 (2011), and CompuCredit

Corp. v. Greenwood, 565 U.S. 95 (2012), both of which

figure prominently in the briefing in these cases.

* This brief was not authored in whole or part by counsel for

a party. No one other than amicus curiae made a monetary con-

tribution to preparation or submission of this brief. General let-

ters of consent to the filing of amicus briefs from counsel for all

parties are on file with the Clerk.

INTRODUCTION AND SUMMARY OF

ARGUMENT

Critical to the outcome of this case is whether the

Federal Arbitration Act (FAA) requires enforcement of

employer-employee arbitration agreements that con-

tain provisions preventing employees from engaging in

concerted activity for mutual aid and protection. As the

briefs of the National Labor Relations Board (NLRB)

and the individual employees who are parties to these

cases demonstrate, engaging in collective litigation ef-

forts (whether through joinder, class actions, statutory

collective actions, or litigation by employee organiza-

tions) falls easily within the plain meaning, purpose,

and judicial and administrative construction of the

scope of concerted activity under the federal labor laws.

Contracts in which employers seek to forbid employees

to engage in such activity are thus unenforceable under

section 3 of the Norris-LaGuardia Act (NLGA), 29

U.S.C. § 103, and illegal under section 8(a)(1) of the

National Labor Relations Act (NLRA), 29 U.S.C.

§ 158(a)(1).

Public Citizen does not intend to reiterate the argu-

ments of the parties demonstrating that concerted le-

gal proceedings fall within the scope of protection of

the NLRA and NLGA. However, Public Citizen be-

lieves that further discussion of the issue whether the

FAA requires enforcement of provisions in arbitration

agreements that interfere with the right to engage in

concerted activity may be of assistance to the Court.

The argument that the FAA permits arbitration

agreements to do what other contracts cannot—negate

rights protected by federal statute—depends heavily

on the proposition that a federal law may only “over-

ride” the FAA if it expressly prohibits enforcement of

arbitration agreements. That view, however, rests on a

line of precedent that has no application here, involv-

ing whether particular statutes altogether prohibit ar-

bitration of claims arising under them. This case in-

volves no assertion that any type of claim cannot be ar-

bitrated, nor any other challenge to arbitration per se;

it concerns only a conflict between a particular term in

an arbitration agreement and specific statutory rights

that enforcement of that term would infringe. The FAA

does not mandate enforcement of a contractual provi-

sion that violates such specific rights merely because it

is part of an arbitration agreement.

Indeed, this Court has repeatedly stated that the

FAA does not operate to deprive parties to arbitration

agreements of statutory rights, such as the fundamen-

tal right to engage in concerted activity at issue here.

That understanding of the FAA—that it operates as a

forum-selection provision without otherwise altering

the rights of the parties—strongly supports the conclu-

sion that the NLRA, NLGA, and FAA are best harmo-

nized by a holding that, while employers and employ-

ees may agree to arbitrate claims, the FAA neither re-

quires nor permits arbitration agreements that would

interfere with the right to engage in concerted activity

under the NLRA and NLGA. By contrast, a holding

that subordinated statutory rights conferred by the

NLRA and NLGA to provisions in arbitration agree-

ments would perversely open the door to the inclusion

of other unlawful provisions in arbitration agree-

ments—including, for example, agreements that pur-

ported to bar employees from reporting grievances to

the NLRB.

The proper reading of the statutes is confirmed by

the FAA’s “saving clause,” which provides that arbitra-

tion agreements are not enforceable to the extent there

are grounds at law or in equity for setting them aside

that apply equally to non-arbitration agreements. 9

U.S.C. § 2. The NLRA and NLGA provisions that ren-

der contracts that infringe the right to engage in con-

certed activity unenforceable fall readily within the

terms of the saving clause, as they establish rules of

both law and equity that are applicable not merely to

arbitration agreements, but to any contract between

employers and employees protected by the federal la-

bor laws. The principles that make arbitration agree-

ments that preclude concerted activity unenforceable

do not single out arbitration agreements for unfavora-

ble treatment, but apply evenhandedly to a broad

range of illegal employer conduct.

Nor can the NLRA’s and NLGA’s protections be

cast aside on the theory that they are incompatible

with the nature of arbitration and thus interfere with

achievement of the FAA’s purposes and objectives.

That theory has no place in this case, because it is de-

rived from concepts of implied federal preemption of

state law, which do not determine the relationship of

two or more federal laws: Federal statutes, unlike state

laws, may and often do limit the achievement of the

objectives of prior federal statutes. In any event, con-

certed activity is not incompatible with arbitration of

workplace disputes. The two have coexisted comforta-

bly for more than eight decades, particularly since the

enactment of the NLRA. This Court can give full effect

to the NLRA’s and NLGA’s protection of concerted ac-

tivity without in any way destroying the essential at-

tributes of workplace arbitration.

ARGUMENT

I. The FAA does not require enforcement of

provisions of au arbitration agreement

that infringe workers’ statutory rights to

engage in concerted activity.

The Acting Solicitor General and the employers in

each of these cases argue that contractual terms that

would otherwise be unenforceable and unlawful are,

under the FAA, enforceable if included in an arbitra-

tion agreement. That argument rests in large part on

the assertion that under decisions of this Court such as

CompuCredit Corp. v. Greenwood, 565 U.S. 95 (2012),

statutes that do not “expressly prohibit arbitration” do

not “displace” the FAA. E&Y Pet. Br. 22; see also Epic

Pet. Br. 16-18. According to the Acting Solicitor Gen-

eral, these precedents teach that the FAA’s “presump-

tion” that an arbitration agreement is enforceable can

be “overcome” only by a “specific congressional com-

mand” that “address[es) arbitration agreements in

particular.” SG Br. 18.

These arguments rely on a line of cases that address

a different problem and rest on reasoning inapplicable

to the issue posed by this case. In CompuCredit and

most other precedents cited by the employers and the

Acting Solicitor General, the issue was whether the

FAA requires enforcement of an agreement to arbi-

trate a private right of action created by a federal stat-

ute. This Court had originally interpreted the FAA as

not applying generally to rights of action created by

federal statutes because it viewed the ability to access

a court for resolution of statutory claims as part and

parcel of the rights created by the statute creating the

right of action. See Wilko v. Swan, 346 U.S. 427, 433-

38 (1953). But beginning with Scherk v. Alberto-Culver

Co., 417 U.S. 506 (1974), and continuing with a string

of cases from the 1980s onward, the Court adopted a

different view: that arbitration involves a choice of fo-

rum that the FAA authorizes parties to make, and

courts to enforce, for a broad range of claims.”

Given the Court’s construction of the FAA as a gen-

eral authorization of arbitration of both common-law

and statutory claims, the Court has adopted the view

that if Congress, acting against the backdrop of that

statutory authorization, creates a right of action,

courts should generally infer an intent that the claim

will be subject to arbitration. See CompuCredit, 565

U.S. at 98. Accordingly, in evaluating arguments that

particular types of statutory claims are not subject to

compelled arbitration under the Act, the Court has

looked for a “congressional command” to “overrid[e]”

the FAA and exempt them from arbitration. Jd. As a

corollary, the Court has held that the language Con-

gress commonly uses to create a right of action does not

by itself constitute a command that the right cannot be

subject to arbitration under the FAA. See id. at 100-

01. Thus, the Court has looked for specific indications

that Congress intended to exclude a particular type of

claim from arbitration, see id. at 103-04, although it

has not necessarily insisted on statutory language that

addresses arbitratiun agreements expressly.

2 See, e.g., Mitsubishi Motors Corp. v. Soler Chrysler-Plym-

outh, Inc., 473 U.S. 614, 428 (1985); Shearson/Am. Express, Inc. v.

McMahon, 482 U.S. 220, 229-30 (1987); Rodriguez de Quijas v.

Shearson/Am. Express, Inc., 490 U.S. 477, 483 (1989); Gilmer v.

Interstate/Johnson Lane Corp., 500 U.S. 20, 29 (1991); Vimar Se-

guros y Reaseguros, S.A. v. M/V Sky Reefer, 515 U.S. 528, 534

(1995); EEOC v. Waffle House, Inc., 534 U.S. 279, 295 & n.10

(2002); 14 Penn Plaza LLC v. Pyeit, 556 U.S. 247, 269 (2009); Com-

puCredit, 565 U.S. at 101-02.

Those principles, however, have no bearing on the

issue in this case, which does not involve an argument

that a statute creating particular rights of action pro-

hibits their arbitration. Indeed, the issue here is not

whether any type of claim is or is not subject to arbi-

tration. The NLRB, and the employees, do not here

claim that the NLRA or NLGA “overrides” the FAA by

categorically exempting from arbitration claims as-

serted by employees under those statutes or any oth-

ers.* The principle that the creation of a right of action

does not “override” the FAA absent a more specific

congressional command thus has no application here.

Rather, the issue in this case is whether a particular

feature of an arbitration agreement—its prohibition of

concerted action—violates rights to engage in con-

certed action specifically granted by other federal stat-

utes. The line of cases exemplified by CompuCredit

does not address such an issue. Nor has the Court ever

addressed the circumstance where one element incor-

porated in an arbitration agreement—but not the re-

quirement of arbitration as such—directly conflicted

with a right granted by a federal statute. To the extent

they have touched on the point, however, the Court’s

opinions strongly indicate that the employers and Act-

ing Solicitor General are wrong to assert that the FAA

requires enforcement of parts of an arbitration agree-

ment that conflict with a statutorily created right un-

less the statute creating the right specifically addresses

its application to arbitration.

3 Of course, the statutes at issue—the NLRA and NLGA—do

not create the rights of action asserted by the employees in the

Epic and Ernst & Young cases. Indeed, the provisions of those

statutes relevant here do not create private rights of action for

individual employees against employers.

In particular, this Court’s decision in American Ex-

press Co. v. Italian Colors Restaurant, 133 S. Ct. 2304

(2013), although vited by the employers and Acting So-

licitor General as supporting their views, suggests a

very different approach from the one they advocate. In

Italian Colors, parties challenging an arbitration

agreement’s class-action ban asserted that the provi-

sion violated nonwaivable rights to engage in collective

litigation under the antitrust laws and Federal Rule of

Civil Procedure 23. If the view of the Acting Solicitor

General and the employees were correct, the Court

would have had to go no further to reject the argument

than to point out that neither the antitrust laws nor

Rule 23 refer specifically to arbitration.

But that approach is not the one the Court took. In-

stead, the Court examined the antitrust laws and Rule

23 and concluded that they did not in fact create a right

to engage in collective litigation that could not be

waived by a private agreement. See id. at 2309-10. The

Court’s mode of analysis strongly signals that, had the

Court found a federal statutory basis for the claimed

right, it would have sufficed to establish a “congres-

sional command” that would overcome the otherwise

applicable principle that courts will enforce agree-

ments establishing “the rules under which ... arbitra-

tion will be conducted.” Jd. at 2309 (citation omitted).

Here, where the relevant statutes expressly grant

workers a right to engage in concerted action—a right

that encompasses collective legal proceedings and is

not subject to waiver in employment agreements—the

analysis of Italian Colors thus supports the conclusion

that the FAA does not require enforcement of provi-

sions of an arbitration agreement that violate that

right.

ll. The FAA is best read together with the

NLRA and NLGA to preserve workers’

right to engage in concerted activity.

That the FAA does not negate the right to engage

in concerted activity under federal labor laws finds fur-

ther support in the Court’s repeated statements that

the FAA itself does not operate to deprive parties to ar-

bitration agreements of substantive rights. See, e.g.,

Italian Colors, 133 S. Ct. at 2310; Pyett, 556 U.S. at

266; Preston v. Ferrer, 552 U.S. 346, 359 (2008); Waffle

House, 534 U.S. at 295 n.10; Circuit City Stores, Inc. v.

Adams, 532 U.S. 105, 123 (2001); Gilmer, 500 U.S. at

26; Rodriguez de Quijas, 490 U.S. at 481; McMahon,

482 US. at 229-30; Mitsubishi, 473 U.S. at 637 n.19.

The Court has stated this proposition in explaining

that arbitration of a statutory right of action is not in-

consistent with the statute creating the right, as long

as the arbitration agreement allows a party to obtain

relief on the statutory claim and thus “satisfies the

statutory prescription of civil liability in court.” Com-

puCredit, 565 U.S. at 101. But the insight underlying

the Court’s statements—that “[bly agreeing to arbi-

trate a statutory claim, a party does not forgo the sub-

stantive rights afforded by the statute; it only submits

to their resolution in an arbitral, rather than a judicial,

forum,” Mitsubishi, 473 U.S. at 628—has broader ap-

plication. The principle that a party “relinquishes no

substantive rights” when agreeing to arbitrate, Pres-

ton v. Ferrer, 552 U.S. 346, 359 (2008), is as applicable

where, as here, a particular provision of an arbitration

provision directly infringes a statutory right as it is

when the provision interferes with the right by not per-

mitting relief for claims based on the statute.

In light of this Court’s consistent statements that

the FAA does not limit rights otherwise granted by

statute, and its implicit recognition in Jtalian Colors

that the FAA does not require enforcement of provi-

sions in an arbitration agreement that would violate

statutory rights, a holding that the FAA does not au-

thorize enforcement of provisions in an arbitration

clause that infringe a worker’s statutory right to en-

gage in concerted activity represents “the best way to

harmonize the statutes.” POM Wonderful LLC v. Coca-

Cola Co., 134 S. Ct. 2228, 2237 (2014). That view gives

all of the relevant statutes ample scope: It permits en-

forcement (subject to applicable contract-law princi-

ples) of agreements between workers and employers

providing for arbitration of any otherwise arbitrable

claim, and prohibits only enforcement of particular

provisions within an arbitration agreement that would

interfere with the right to engage in concerted action

by preventing any form of collective legal action. Such

a reading treats “each statute as effective because of its

different requirements and protections,” id. at 2238

(quoting J.E.M. Ag Supply, Inc. v. Pioneer Hi-Bred

Int'l, Inc., 534 U.S. 124, 144 (2001)), and gives each “its

own scope and purpose.” Jd.

The contrary view of the employers and the Acting

Solicitor General, under which provisions in arbitra-

tion agreements that violate otherwise applicable stat-

utory rights must be enforced unless the statute creat-

ing the right “address[es] arbitration agreements in

particular,” SG Br. 18, would produce incongruous “re-

sult(s] that Congress likely did not intend.” POM Won-

derful, 134 S. Ct. at 2239. For example, as the employ-

ees’ briefs have pointed out, that view suggests that the

FAA would require enforcement of provisions in arbi-

tration agreements that would otherwise violate Title

VII's prohibitions on race and sex discrimination—for

example, provisions requiring male arbitrators in cases

involving claims of sexual harassment or discrimina-

tion asserted by women employees, or white arbitra-

tors in cases brought by African-American employ-

ees—-because Title Vii does not explicitly say it applies

to procedural provisions in arbitration clauses.

Perhaps a bit closer to home on the facts of this

case, the employers’ and Acting Solicitor General’s po-

sition would seemingly call for the enforcement of an

arbitration agreement that provided that it was the

sole remedy for any claims involving unfair labor prac-

tices and thus purported to preclude a worker from

complaining to the NLRB about such practices. The

NLRA expressly prohibits employers from retaliating

against workers who file unfair labor practice charges,

29 U.S.C. § 158(a)(4), and this Court (as well as the

NLRB) has long recognized that “Congress has made

it clear that it wishes all persons with information

about such practices to be completely free from coer-

cion against reporting them to the Board.” Nash v. Fla.

Indus. Comm’n, 389 U.S. 235, 238 (1967). Thus, “it is

unlawful for an employer to seek to restrain an em-

ployee in the exercise of his right to file charges.” /d.

(citing cases).

These fundamental prohibitions of the NLRA, how-

ever, are no more express or specific in their applica-

tion to arbitration agreements than is the protection

for concerted activity. Thus, a ruling in this case that

the FAA requires enforcement of a prohibition on con-

certed legal proceedings in the face of the NLRA and

NLGA would similarly indicate that an arbitration

clause could displace an employee's right to complain

about unfair labor practices to the NLRB.

Importantly, the notion that an employer would

seek to use an arbitration agreement in such a manner

is far from fanciful. Employers have already argued in

other cases that filing unfair labor practice charges

breaches arbitration agreements. See, e.g., Fallbrook

Hosp. Corp. v. Cal. Nurses Ass’n, 652 F. App’x 545 (9th

Cir. 2016); Hosp. of Barstow, Inc. v. Cal. Nurses Ass’n,

2013 WL 6095559 (C.D. Cal. Nov. 9, 2013), app. dism’d,

No. 13-57131 (9th Cir. July 2, 2014). Although the

courts in those cases saw no merit to the argument that

a provision in an arbitration agreement could displace

a right conferred by the NLRA, a decision by this Court

that the arbitration agreements here are enforceable

would, at a minimum, cast significant doubt on those

rulings. And without question, employers willing to use

arbitration to displace the labor laws’ protection of

concerted activity and free themselves from accounta-

bility in collective legal proceedings would be just as

eager to use arbitration to excuse themselves from hav-

ing to account for their actions before the Board.

Itl. The FAA’s saving clause reinforces the

conclusion that the FAA does not displace

workers’ rights under the NLRA and

NLGA.

Because the relevant statutes are best read together

to preclude enforcement of a provision in an arbitra-

tion clause that interferes with the right of workers to

engage in concerted activity, this Court need not con-

sider the effect of the FAA’s “saving clause,” found in

the final phrase of 9 U.S.C. § 2. Consideration of the

clause, however, underscores that the illegality and un-

enforceability of a provision of an arbitration clause

under the NLRA and NLGA renders that provision un-

enforceable under the FAA as well.

A. The labor laws’ prohibition on enforce-

ment of contracts that interfere with

concerted activity provides “grounds

[that] exist at law or in equity for the

revocation of any contract” within the

meaning of the saving clause.

The saving clause “permits arbitration agreements

to be declared unenforceable ‘upon such grounds as ex-

ist at law or in equity for the revocation of any con-

tract.’"” AT&T Mobility LLC v. Concepcion, 563 U.S.

333, 339 (2011) (quoting 9 U.S.C. § 2). The NLRA’s and

NLGA’s provisions rendering contracts interfering

with the right to engage in concerted action illegal and

unenforceable fall straightforwardly within the de-

scription of the “grounds” the saving clause establishes

for denying enforcement to a provision in an arbitra-

tion agreement.

The employers and the Acting Solicitor General,

however, contend that a “saving clause” in a federal

statute is somehow, by nature, inapplicable to another

federal law, but can only “save” a state law. See Epic

Pet. Br. 20; E&Y Pet. Br. 34; SG Br. 31. (At the same

time, the Acting Solicitor General acknowledges that

nothing in the FAA’s language supports that view. See

SG Br. 31.) But generalities about saving clauses do not

determine the effect of the FAA’s language.‘ “Saving

clause” is not a rigidly defined legal term of art, and it

is even not a term used in the FAA itself; it is a label of

convenience applied by this Court to the relevant lan-

guage in section 2 of the FAA. That language, not the

* As the respondents’ brief in the Epic case demonstrates, the

employers’ and Acting Solicitor General’s argument is wildly in-

accurate even as a matter of the conventional, generic usage of the

term “saving clause.” See Epic Resp. Br. 38.

label “saving clause,” determines the effect of the stat-

ute.

The language of section 2 looks to “such grounds as

exist in law or in equity,” not to whether the source of

those legal or equitable grounds is federal or state au-

thority. The NLRA’s prohibition of contracts interfer-

ing with the exercise of protected rights is surely a

“ground” that “exist[s] in law.” And the NLGA’s pro-

hibition on enforcement of contracts that interfere

with concerted activity explicitly establishes grounds

for denying enforcement of contracts both at law and

in equity. See 29 U.S.C. § 103 (providing that contracts

violating the public policy protecting concerted action

“shall not afford any basis for the granting of legal or

equitable relief”).

The employers and Acting Solicitor General, how-

ever, assert that the NLRA and NLGA do not render

“any contract” unenforceable, but only contracts to

which they apply. That contention, however, would be

equally applicable to all legal or equitable principles af-

fecting the validity or enforceability of contracts. The

argument would thus render the saving clause virtu-

ally meaningless. Its interpretive error lies in its con-

fusion of the requirement that a ground for revocation

under the saving clause be applicable to “any contract”

with a requirement that the ground be applicable to

“every contract.” As a simple matter of English usage,

the NLRA and NLGA fall within the saving clause be-

cause they provide a ground for setting aside “any con-

tract” in which an employer purports to interfere with

the right of covered employees to engage in concerted

activity within the meaning of the federal labor laws.

The employers’ “any contract” argument not only

finds no support in the plain meaning of the statutory

language, but is also foreclosed by this Court’s deci-

sions. The Court has considered the scope of the saving

clause in a string of decisions going back to Southland

Corp. v. Keating, 465 U.S. 1 (1984), and as recent as

Kindred Nursing Centers Ltd. Partnership v. Clark,

137 S. Ct. 1421 (2017), and given it a meaning incom-

patible with the contention that a principle must be

broadly applicable to every contract to render an arbi-

tration clause unenforceable under the saving clause.

Under this Court’s longstanding construction, the

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

cation of any contract” language “permits agreements

to arbitrate to be invalidated by ‘generally applicable

contract defenses, such as fraud, duress, or uncon-

scionability,’ but not by defenses that apply only to ar-

bitration or that derive their meaning from the fact

that an agreement to arbitrate is at issue.” Concepcion,

583 U.S. at 339 (quoting Doctor’s Assocs., Inc. v. Casa-

rotto, 517 U.S. 681, 687 (1996)).° As the Court stated

this past Term in Kindred, the clause “establishes an

equal-treatment principle” that allows courts to inval-

® The suggestion of the employers in Epic that the saving

clause applies only to defenses relating to a narrow understanding

of the “making” of an agreement, Epic Pet. Br. 28, is flatly at odds

with this Court’s repeated recognition that the saving clause

broadly incorporates defenses to the “validity of arbitration agree-

ments.” Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440,

444 (2006); see also Concepcion, 563 U.S. at 339; Kindred, 137 S.

Ct. at 1426. The argument also reads critica] words out of section

2, including “enforceable” and the key word “revocation,” which

are not specific to contract formation. This Court has accordingly

sens DOSE etnias Sat caw pu eee eee

provisions (sections 3 and 4) not to “substantively restrict[]” sec

tion 2’s enforceability provisions. Arthur Andersen LLP v. Co.

lisle, 556 U.S. 624, 63-31 (2009).

idate arbitration agreements on the basis of legal de-

fenses to contract enforcement if those rules are not

“tailor-made to arbitration agreements” and do not

“singl[e] out those contracts for disfavored treatment.”

137 S. Ct. at 1426, 1427.

The legal and equitable grounds at issue here are

not specific to arbitration agreements in that sense

and, thus, are protected by the saving clause. The

NLRA and NLGA prohibit enforcement of employer-

employee contracts that interfere with workers’ exer-

cise of the right to engage in concerted activity regard-

less of whether the contracts involve arbitration, or

even whether the contracts involve resolution of legal

disputes at all. Thus, the statutes would render unen-

forceable a contract that, while not requiring arbitra-

tion, purported to prohibit employees from pursuing

collective legal actions in court. But they also have

much broader application: They invalidate all manner

of potential contracts through which an employer

might seek to interfere with concerted activity—from

the traditional “yellow dog” contract prohibiting em-

ployees from joining a union, to efforts to prevent such

activities as distribution of newsletters and protests of

working conditions, see Eastex, Inc. v. NLRB, 437 U.S.

556, 565-66 (1978); NLRB v. Washington Aluminum

Co., 370 U.S. 9, 14-15 (1962), to twenty-first-century

contracts seeking to prevent employees from engaging

in “inappropriate” discussions on Facebook and other

social media platforms. See, eg., Three D, LLC v.

NLRB, 629 F. App’x 33 (2d Cir. 2015).

The breadth of the types of contracts covered by the

NLRA and NLGA principles at issue refutes any sug-

gestion that they are “too tailor-made to arbitration

agreements ... to survive the FAA[].” Kindred, 137 S.

Ct. at 1427. Unlike the state-law rule targeting arbitra-

tion that the Court held to be outside the saving clause

in Kindred, these principles cannot possibly be charac-

terized as establishing an “arbitration-specific ... rule,

much as if [they] were made applicable to arbitration

agreemenis and black swans.” Jd. at 1428. Far from

applying merely to arbitration agreements and a “slim

set of ... utterly fanciful [non-arbitration] contracts,”

id. at 1427, the protection of concerted activity applies

to a great range of common employer conduct—includ-

ing the practice of requiring employees to sign arbitra-

tion agreements that waive the right to engage in con-

certed activities. That breadth qualifies them as gener-

ally applicable contract defenses under the saving

clause and this Court’s decisions construing it.

B. The rights created by the NLRA and

NLGA cannot be displaced on the theory

t at they interfere with fundamental

attributes of arbitration.

Notwithstanding the text of section 2 and this

Court’s cases addressing it, respondents and the Acting

Solicitor General contend that application of the

NLRA’s and NLGA’s protection of concerted activity to

arbitration clauses would “interfere with fundamental

attributes of arbitration,” SG Br. 32-33 (quoting Con-

cepcion, 563 U.S. at 344), and they invoke Concepcion’s

observation that the saving clause does not “preserve

state-law rules that stand as an obstacle to the accom-

plishment of the FAA’s objectives,” SG Br. 32 (quoting

Concepcion, 563 U.S. at 343) (emphasis added).

As the Acting Solicitor General himself acknowl-

edges, however, that observation does not govern this

case because it reflects the application of the saving

clause in the context of implied preemption of stave-law

contract principles. Jd. at 33. The Court’s implied

preemption doctrine condemns state laws that “stand|(|

as an obstacle to the accomplishment and execution of

the full purposes and objectives of Congress.” Hines v.

Davidowitz, 312 U.S. 52, 67 (1941). That doctrine is

controversial even in its application to state laws, see

Wyeth v. Levine, 555 U.S. 555, 583 (2009) (Thomas, J.,

concurring in the judgment), and it is quite clear that

it does not control the relationship between two federal

laws, see POM Wonderful, 134 S. Ct. at 2236.

Congress, unlike the states, is fully empowered to

enact statutes limiting the extent to which other fed-

eral laws accomplish their full purposes. And because

“no legislation pursues its purposes at all costs,” Ro-

driguez v. United States, 480 U.S. 522, 525-26 (1987),

it is natural to look to other enactments (particularly

subsequent ones) as expressions of “legislative choice”

concerning “what competing values will or will not be

sacrificed to the achievement of a particular objective,”

id. Thus, where, as here, federal statutes establish gen-

erally applicable grounds for non-enforcement of a con-

tract, the FAA’s saving clause supports application of

those grounds to provisions in an arbitration agree-

ment, without the conflict-preemption-based overlay of

considering whether doing so would interfere with

“fundamental attributes of arbitration.”®

® Indeed, if the NLRA and NLGA were viewed as incompatible

with essential features of arbitration, such a conflict with a previ-

ously enacted law would constitute an implied repeal (or an ex-

press repeal in the case of the NLGA, see 29 U.S.C. § 115), and for

that reason the labor laws would still have to be given effect rather

than the FAA. See POM Wonderful, 134 S. Ct. at 2237 (noting that

a later statute impliedly repeals an earlier one if they are in irrec-

oncilable conflict).

In any event, no interference with fundamental at-

tributes of arbitration would result from a ruling that

employers may not consign employees protected by the

NLRA and NLGA to individual arbitration as their ex-

clusive means of resolving legal disputes arising out of

their employment. The contrary argument of the em-

ployers and Acting Solicitor General rests on this

Court’s statements in Concepcion and Italian Colors

that limiting arbitration to “bilateral” proceedings is

essential to preserving the speed, informality, low

costs, and low stakes that the Court there saw as “fun-

damental” to the “benefits” of consumer and commer-

cial arbitration. See Concepcion, 563 U.S. at 347-51;

Italian Colors, 133 S. Ct. at 2312. But Concepcion itself

recognizes that the nature of arbitration procedures

may vary with “the type of dispute.” 563 U.S. at 344.

Regardless of whether bilateral proceedings are a fun-

damental attribute of consumer or commercial arbitra-

tion, that is not and has never been true of workplace

arbitration.

As this Court has long emphasized, the critical at-

tributes that make workplace arbitration desirable are

substantially different from those of commercial arbi-

tration because “arbitration of labor disputes has quite

different functions from arbitration under an ordinary

commercial agreement.” United Steelworkers v. War-

rior & Gulf Nav. Co., 363 U.S. 574, 578 (1960). Arbi-

tration of workplace disputes developed as an expres-

sion of workers’ right to engage in concerted legal ac-

tivity, not as a means of suppressing it. Both before and

after the enactment of the NLRA, arbitration was

widely adopted in collective bargaining agreements as

a preferred mechanism for resolving workplace griev-

ances. See, e.g., United Paperworkers Int’l Union v.

Misco, Inc., 484 U.S. 29, 36-37 (1987); Amicus Br. of

Ten Int’1] Labor Unions, et al., 28-31. Such arbitration

by nature involves concerted activity, with unions rep-

resenting both individual workers and large groups of

workers in resolving workplace disputes.’

This Court long ago held that arbitration agree-

ments in collective bargaining agreements are judi-

cially enforceable, see Textile Workers Union v. Lincoln

Mills of Ala., 353 U.S. 448 (1957), and soon thereafter

issued its decisions in the “Steelworkers Trilogy,” af-

firming a strong federal policy in favor of enforcement

of such agreements.’ The Court’s decisions make clear

that the fundamental attributes of workplace arbitra-

” By contrast, individual arbitration of workplace disputes is a

relatively recent phenomenon, largely postdating this Court’s in-

terpretations of the FAA in Gilmer and Circuit City. Before the

1991 decision in Gilmer, the issue whether claims under federal

statutes governing employment were arbitrable was disputed. See

Alexander v. Gardner-Denver Co., 415 U.S. 36 (1974). Moreover,

before Circuit City, whether the FAA even applied to employment

contracts was uncertain, as employment contracts not deemed to

involve interstate commerce fell entirely outside the FAA’s scope.

See Bernhardt v. Polygraphic Co. of Am., 350 U.S. 198 (1956). And

those that involved interstate commerce were, until relatively re-

cently, widely thought to fall within the statute’s exception for

“contracts of employment of seamen, railroad employees, or any

other class of workers engaged in interstate or foreign commerce,”

9 U.S.C. § 1; see Circuit City, 532 U.S. at 129-30 (Stevens, J., dis-

senting) (citing cases). Circuit City’s conclusion that the FAA ex-

ception is limited to cases involving transportation workers, to-

gether with Gilmer’s approval of arbitration of statutory employ-

ment-law claims, gave rise to widespread use of arbitration for in-

dividual employment claims, as well as collective ones.

® United Steelworkers v. American Mfg. Co., 363 U.S. 564

(1960); Warrior & Gulf, 363 U.S. 574; United Steelworkers v. En-

ter. Wheel & Car Corp., 363 U.S. 593 (1960).

tion are quite different from those the Court has sub-

sequently ascribed to commercial arbitration.

“In the commercial case, arbitration is the substi-

tute for litigation. [In labor cases,] arbitration is the

substitute for industrial strife.” Warrior & Gulf, 363

U.S. at 578. Workplace arbitration has therefore rested

not on perceived needs for streamlined and exclusively

bilateral dispute resolution, but on a preference for

mechanisms of “industrial self-government” that allow

resolution of questions arising between groups of

workers and their em~loyers by mutually trusted, ex-

pert arbitrators familiar not only with governing legal

principles, but also with the practices of the industry

and the “common law of the shop.” Jd. at 581-82. As-

sertions that concerted activity is incompatible with

the fundamental nature of workplace arbitration, or

that employers will not choose arbitration unless they

can use it as a means of prohibiting collective action,

run counter to the entire history of workplace arbitra-

tion since enactment of the NLRA.®

To be sure, allowing employers to enforce contracts

requiring employees to use bilateral arbitration to re-

solve purely individual disputes because of the ad-

vantages employers perceive in “streamlined proceed-

ings.” Concepcion, 563 U.S. at 344, may also serve the

purposes of the FAA as they are currently understood

® Although the Court’s earliest decisions relied on section 301

of the Labor Management Relations Act of 1947, 29 U.S.C. § 185,

as the basis for the courts’ power to enforce arbitration provisions

in collective bargaining agreements (because at the time the

FAA’s application to employment contracts and to statutory

claims generaily was in doubt), see Lincoln Mills, 353 U.S. at 456,

it has subsequently treated such provisions as involving arbitra-

tion within the meaning of the FAA, see Pyett, 556 U.S. at 254,

265, 269 n.10.

and may be consistent with federal labor law as well.

But where collective grievances are at issue, precluding

enforcement of arbitration agreements that prohibit

concerted activity not only gives effect to the labor

laws’ protection of that activity, but also preserves

what has historically been the primary advantage of ar-

bitration in the employment context—its usefulness as

a means to foster “industrial peace” and as a “substi-

tute for industrial strife,” Warrior & Gulf, 363 U.S. at

578, through the resolution of workplace disputes on a

collective rather than individual basis. By allowing

both for individual arbitration of purely individual dis-

putes, and for enforcement of arbitration agreements

that allow concerted activity for disputes involving

multiple employees, the NLRA and NLGA amply pre-

serve the “fundamental attributes” of workplace arbi-

tration.

CONCLUSION

For these reasons, as well as those set forth in the

briefs of the NLRB and the employee parties, the Court

should affirm the judgments of the courts of appeals in

Nos. 16-285 and 16-300, and reverse the judgment of

the court of appeals in No. 16-307.

August 2017

Respectfully submitted,

ScoTtT L. NELSON