Amicus Curiae Brief — Ernst & Young, LLP v. Morris, 138 S. Ct. 51 (2017) (No. 16-300)

No. 16-300

IN THE

Supreme Court of the Gnited States

ERNST & YOUNG LLP, ET AL.,

Petitioners,

v.

STEPHEN MORRIS, ET AL.,

Respondents.

On Petition For A Writ Of Certiorari

To The United States Court Of Appeals

For The Ninth Circuit

BRIEF OF AMICUS CURIAE

THE EMPLOYERS GROUP

IN SUPPORT OF PETITIONERS

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

Counsel for Amicus Curiae The Employers Group

c “heer of Cong

STATEMENT OF INTEREST

SUMMARY OF ARGUMENT

ARGUMENT

I.

II.

Ill.

i

TABLE OF CONTENTS

Interpreting the NLRA to Displace the

FAA’s Protection of Individual Arbitration

Conflicts With the Decisions of This Court

and Other Circuits

A.

Interpreting the NLRA to Prohibit

Individual Arbitration Agreements

Would Repeal the FAA’s Protection of

Individual Arbitration ...........................

The NLRA Does Not Contain the

Requisite Clear Indication to Repeal

the FAA’s Protection of Individual

FEE ERENT EIN ESM coh ots et Poe

Chevron Deference Does Not Apply To

Agency Interpretations That Would

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

California Employers Have an Especially

Acute Interest In Combating the Growing

Trend of Judicial Hostility to Arbitration

This Case Is the Best Vehicle to Resolve

the Acknowledged Circuit Split

CONCLUSION

eee Te eee Pee eee ee eee Pe eee ee Ss |

STEER RRC ee

eet wee eee ee een eeee

SRR REET OO eee ee eee ee

4

TABLE OF AUTHORITIES

CASES

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

RI COO, Fe Ge cicccccsinccscenscccccccscseses

AT&T Mobility LLC v. Concepcion,

BE Se Be GOED cncccccccesccccscscssccccssenecess

Carter v. Welles-Bowen Realty, Inc.,

736 F.3d 722 (6th Cir. 2013)..................+.

Cathedral Candle Co. v. U.S. Int'l Trade

Comm'n,

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

Cellular Sales of Mo., LLC v. NLRB,

824 F.3d 772 (8th Cir. 2016)..............-.-.....--..+

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

Council, Inc.,

AGT U.S. 837 (1984) ....-.e.ceccecccesossesseseceeeee

Cipollone v. Liggett Grp., Inc.,

I Se Ce CEE eeerncccvecncccnscnccesoncvcescese

CompuCredit Corp. v. Greenwood,

LSS B. Cb. GSB GRORZ) .00cccecccccccocescocoseccceece

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

737 F.3d 344 (5th Cir. 2013) ........0.0.c00000.

DIRECTV, Inc. v. Imburgia,

136 S. Ct. 463 (2015) .....0....0e.ce-e0eceeceseeseeee

as passim

oasid passim

nl

TABLE OF AUTHORITIES

(continued)

FCC v. NextWave Pers. Commc’ns. Inc.,

637 U.S. 208 (BOOS) .............-.2...0.0.000-0:0-.

Gilmer v. Interstate/Johnson Lane

Corp.,

Be CR. BP CIB ED cece cccsesecscessccsescssescsesones

Hammon v. Barry,

826 F.2d 73 (D.C. Cir. 1987) .............2000+

Hoffman Plastic Compounds, Inc. v.

NLRB,

Re SE Be IED co cencsccnscccescosvesossccsscece

In Re D. R. Horton, Inc.,

367 N.L.R.B. 2277 (2012).............0.000e0c000

In re Stock Exchanges Options Trading

Antitrust Litig.,

317 F.3d 134 (2d Cir. 2003).................---.

INS v. St. Cyr,

RG SN ED senecisenccvesescecessvnvnbonnse

Iskanian v. CLS Transp. of Los Angeles,

LLC,

59 Cal. 4th 348 (2014), cert denied,

135 S. Ct. 1155 (2015) ......eceeececcseseeeeseeees

J.I. Case Co. v. NLRB,

321 U.S. BBZ (1944) ......c.ccccccrcsossocererereeees

iv

TABLE OF AUTHORITIES

(continued)

King v. Burwell,

135 S. Ct. 2480 (2015) ....cccccccccsccscseeceeeees

Ledezma-Galicia v. Holder,

636 F.3d 1059 (9th Cir. 2010).................

Lewis v. Epic Sys. Corp.,

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

Matsushita Elec. Indus. Co. v. Epstein,

SOG WB. BF CRD ccc evccsccecscsscsetorcssosecses

Morton v. Mancari,

GET Te I I ct erscccsscrececessevecneeniages

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

Wildlife,

GE. CAT. GEG GaP voccccncccnscnscese sscssvnscosies

NLRB v. Fin. Inst. Emps. of Am., Local

1182,

SF Ts FD Ga oveccccececcesvecetsocnentiwinies

Owen v. Bristol Care, Inc.,

702 F.3d 1050 (8th Cir. 2013) ............0

Perry v. Thomas,

BD Es Ge ED crccccresccccsnensiscotseniaionn

Posadas v. Nat'l City Bank of New York,

SED Be GG Ce crccerscnsossnccsesteenssbeqnesin

Preston v. Ferrer,

552 U.S. 346 (2008) ....ccccccsceccsesessesseseesen

Vv

TABLE OF AUTHORITIES

(continued)

Radzanower v. Touche Ross & Co..,

i ceicninscnanscesencaneseces

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

803 F.3d 425 (9th Cir. 2015)....................

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

Be BE OD seccccesscosscccescccesccocesecers

Southern S.S. Co. v. NLRB,

a

Southland Corp. v. Keating,

ich ciics.nenestinnecsnovesencnssoese

Sutherland v. Ernst & Young LLP,

726 F.3d 290 (2d Cir. 2013)

EER

United States v. Borden Co..,

308 U.S. 188 (1939).....................0: slabclasisaad

Watt v. Alaska,

SE I I IID acccsccnccnsssscscsoccccsecesceses

STATUTES

witha passim

vi

TABLE OF AUTHORITIES

(continued)

Page(s)

OTHER AUTHORITIES

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)......00000000.0000... eng ae

STATEMENT OF INTEREST

The Employers Group, a California non-profit

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

human-resources management organization 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. The Employers

Groups 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 No party or counsel for a party authored or contributed

monetarily to the preparation or submission of any portion of

this brief. Counsel of record for all parties received notice of the

Employers Group’s intention to file this brief more than 10 days

before it was due, and all parties have consented to its filing.

2

SUMMARY OF ARGUMENT

As petitioners have explained, this case squarely

presents an acknowledged circuit split on an

important and frequently recurring issue of federal]

law. That alone is reason enough to grant the

petition. Beyond that, however, review is also

urgently needed because the decision below is part of

an intensifying trend of precisely the type of “judicial

hostility to arbitration” that the FAA was enacted to

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

665, 668 (2012). In recent years, this trend has

manifested itself in lower courts devising ever more

creative ways of distorting or outright defying this

Court’s precedents in order to impede _ the

enforcement of arbitration agreements “according to

their terms.” Jd. at 669. Here, the Ninth Circuit

continued that disturbing trend by following a

decision of the Seventh Circuit that serially violates

this Court’s precedents and creates a circuit split on

at least three important issues of federal law.

First, the decision ignored this Court’s holding that

the FAA protects the right of individual arbitration,

and that refusing to enforce an agreement to

arbitrate on an individual basis is therefore

“inconsistent with the FAA.” AT&T Mobility LLC v.

Concepcion, 563 U.S. 333, 344 (2011).

Second, the decision distorted this Court's

precedent by diluting the level of clarity required for

a later statute such as the NLRA to displace an

earlier statute such as the FAA.

Third, the decision violated this Court’s teaching

that an agency interpretation is not entitled to

3

Chevron deference if it would bring one federal

statute into conflict with another.

On all three of these issues, the Ninth Circuit

broke from precedent in order to evade the venerable

canon against implied repeals, which prohibits

interpreting a statute such as the NLRA to displace

an older statute such as the FAA absent clear

congressional intent. Resolving these issues is thus

crucially important not only to the specific issue of

arbitration as it affects the nation’s employers, but

also to the integrity and predictability of the law

more broadly.

As between this and the other petitions currently

pending on the same issue, this case is the better

vehicle: It arises from California, which is ground

zero for judicial hostility to arbitration; it contains a

thorough dissenting opinion, which minimizes the

risk of vehicle problems; and it embodies a perfectly

square split with the Second Circuit, which upheld

precisely the same arbitration agreement that the

Ninth Circuit invalidated here.

ARGUMENT

l. Interpreting the NLRA to Displace the

FAA’s Protection of Individual Arbitration

Conflicts With the Decisions of This Court

and Other Circuits

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

4

affirmatively protects the right of individual

arbitration, such that+ refusing to enforce an

agreement to arbitrate on an individual basis is

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

344. The year after Concepcion was decided, however,

the National Labor Relations Board moved 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 or

collective 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, the Board suddenly declared that such

agreements have been illegal for eight decades—

without anybody ever noticing before.

Three circuits promptly rejected the Board’s novel

interpretation, but the Seventh and Ninth Circuits

have now embraced it. See Pet. 11-14. In doing so,

they have displayed an abject disregard for 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

5

(1974). This is a “relatively stringent standard,”

which is “rarfely]” satisfied. Matsushita Elec. Indus.

Co. v. Epstein, 516 U.S. 367, 381 (1996). Indeed, the

canon has even greater force here, in the context of

the arbitration-specific provisions of the FAA,

because such “specific” provisions cannot readily be

“controlled or nullified” by a more “general” statute

such as the NLRA, which refers generally to

“concerted activities” among a wide range of other

subjects, but which says nothing about arbitration.

Morton, 471 U.S. at 550—51.

Rather than following the canon against implied

repeals, however, the Seventh and Ninth Circuits

chose to evade it. In the process, they made three

glaring errors that conflict with the decisions of this

Court and other circuits: First, they denied that

prohibiting individual arbitration agreements under

the NLRA creates any conflict with the FAA. Second,

they claimed that the NLRA’s general reference to

“concerted activities” contains the type of “clear”

statement necessary to prohibit individual

arbitration agreements. And third, they concluded

that the Board’s interpretation of the NLRA is

entitled to controlling deference. This Court’s

intervention is urgently needed on all three issues.

A. Interpreting the NLRA to Prohibit

Individual Arbitration Agreements

Would Repeal the FAA’s Protection of

Individual Arbitration

In Concepcion, this Court squarely held that

refusing to enforce an _ individual arbitration

agreement—i.e., an agreement to arbitrate on an

individual basis instead of a class or collective basis—

6

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

Where the parties have agreed to arbitrate on an

individual basis, the imposition of collective

proceedings “interferes with fundamental attributes

of arbitration.” Jd. At the same time, the Court

specifically held that the FAA’s savings clause 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. Jd. 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.” Jd.

(citation omitted).

As Concepcion explained, the entire “point” of the

FAA is “to allow for efficient, streamlined

procedures,” which “reducfe] the cost and increasfe]

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.” Jd. at 344, 347-48 (emphasis

added). Moreover, the lack of appellate review in

arbitration makes it “poorly suited to the highf]

stakes of class litigation,” where “damages allegedly

owed to tens of thousands of potential claimants are

aggregated and decided at once.” Jd. at 350. Without

appellate review of a collective damages award, “the

risk of an error’ becomes “unacceptable,” which

7

effectively precludes arbitration as a viable option:

few if any defendants will choose to “bet the company

with no effective means of review.” Id. at 350-51. In

short, giving defendants the choice of arbitrating only

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

individual arbitration agreements effectively bans

arbitration altogether.

For these reasons, the FAA creates a “substantive

right” to enforce agreements to arbitrate on an

individual basis, and “invalidating private arbitration

agreements denying class adjudication, would be an

abridgment . . . of [that] substantive right.” Am. Exp.

Co. v. Italian Colors Rest., 133 S. Ct. 2304, 2309-10

(2013) (alteration omitted). Consequently, there is a

clear and direct conflict between the FAA and any

rule prohibiting agreements to arbitrate on an

individual basis. Indeed, in Concepcion, that conflict

was sufficiently clear for the FAA to preempt the law

of a sovereign state, which occurs 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.

The Seventh and Ninth Circuits flatly defied

Concepcion: The Ninth Circuit held that the Board’s

interpretation of the NLRA as prohibiting individual

arbitration agreements creates “no inherent conflict

[with] the FAA,” Pet. App. 18a n.13, 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

8

banning individual arbitration agreements is

“inconsistent with the FAA.” 563 U.S. at 344. No

explanation is possible, other than outright defiance

of Concepcion.

In defying Concepcion, the Seventh and Ninth

Circuits also created a conflict with three other

circuits, all of which have recognized that the FAA

protects the right to enforce individual arbitration

agreements, and that the NLRA cannot override this

right unless it contains a “contrary congressional

command.” Owen v. Bristol Care, Inc., 702 F.3d 1050,

1052 (8th Cir. 2013); Cellular Sales of Mo., LLC v.

NLRB, 824 F.3d 772, 775-76 (8th Cir. 2016);

Sutherland v. Ernst & Young LLP, 726 F.3d 290, 295

(2d Cir. 2013) (per curiam); D.R. Horton, Inc. v.

NLRB, 737 F.3d 344, 359-60 (5th Cir. 2013)

(expressly recognizing that Concepcion “leads to the

conclusion that the Board’s rule” conflicts with the

FAA, and “does not fit” within the FAA’s saving

clause). As a result, the decision below implicates a

square circuit split over whether interpreting the

NLRA to prohibit individual arbitration agreements

conflicts with the FAA.

B. The NLRA Does Not Contain the

Requisite Clear Indication to Repeal the

FAA’s Protection of Individual

Arbitration

The decision below also implicates a square split

over whether the NLRA contains the type of “clear”

indication necessary to overturn the FAA’s protection

of the right to individual arbitration. The answer to

that question is no, and by holding otherwise, the

9

Ninth Circuit contradicted multiple decisions of this

Court and other circuits.

Of course, “[ljike any statutory directive,” the FAA

“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. Natl City Bank of New York,

296 U.S. 497, 503 (1936). As this Court has

repeatedly emphasized, this is a “stringent standard”

that is “rar[ely]” 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) (“clear and manifest”). Under this stringent

standard, this Court “will not infer a statutory repeal

unless the later statute expressly contradicts the

original 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

10

“controlled or nullified” by the later enactment of

more “general” 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, 132 S. Ct. at 672—73. 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 S. 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.” Jd. ai

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 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.

11

The term most naturally refers to activities directly

related to unionization and collective bargaining,

which are the NLRA’s clear focus. And 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.J. 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 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

arbitration, the FAA provides that class-action rights

are presumptively waivable in the specific context of

arbitration agreements. Thus, even when federal law

expressly creates a right for plaintiffs to use a “class

mechanism,” the Supreme Court has “rejected th[e]

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

arbitration.” Italian 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 be

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

here, where the NLRA does not even mention cle .-

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

12

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 can 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.

In holding otherwise, the decision below not only

defies the decisions of this Court, but also squarely

conflicts with three other circuits. On the specific

question presented here, the Eighth Circuit has

explained that the NLRA “falls short of the ‘contrary

congressional command’ required to override the

FAA.” Owen, 702 F.3d at 1052-54; Cellular Sales,

824 F.3d at 775-76. The Second Circuit has expressly

agreed, Sutherland, 726 F.3d at 297 n.8, as has the

Fifth Circuit. The Fifth Circuit, in particular, has

recognized that the “general language” of the NLRA

is not a sufficiently clear “congressional command” to

displace the FAA's protection of individual

arbitration agreements, given that “much more

explicit language has been rejected in the past.” D.R.

Horton, 737 F.3d at 360-61. The Fifth Circuit has

also recognized that the NLRA cannot be read to

create a non-waivable, “substantive right to proceed

collectively,” because any such right “has been

foreclosed by prior decisions.” Id. at 361 (citing

Gilmer, 500 U.S. at 32). Moreover, because the NLRA

was enacted “prior to the advent in 1966 of modern

class action practice,” it cannot easily be read to

13

“protect[] a right of access to a procedure that did not

exist” at the time. /d. at 362.

In contrast to these decisions, the Ninth Circuit

held in the decision below that the NLRA’s general

protection of “concerted activities” imposes a “clear”

and “unambiguous” ban on individual arbitration

agreements. Pet. App. 6a, lla. The Ninth Circuit’s

decision thus implicates a square split on this issue

too.

C. Chevron Deference Does Not Apply To

Agency Interpretations That Would

Repeal Prior Federal Law

As an alternative way to reach the same result,

both the Ninth Circuit and the Seventh Circuit

concluded that the Board is entitled to Chevron

deference in interpreting the NLRA to prohibit

individual arbitration agreements. See Lewis, 823

F.3d at 1153; Pet. App. lla 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 “harmonize the FAA and NLRA,” the court

held thet “the FAA’s saving clause” must be read to

accommodate the Board’s view of the NLRA. Id. 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

made clear that agencies are bound to follow statutes,

not the other way around. Consequently, in order to

14

be faithful to this Court’s decisions, 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. Commce'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 Other 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

agency's view” of whether “one statutory scheme

supersedes the other.” In re Stock Exchanges Options

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

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

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

15

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).

In light of these principles, each of the Second,

Fifth, and Eighth Circuits have recognized that

courts “owe no deference to [the Board’s] reasoning”

in construing the NLRA to displace the FAA by

prohibiting individual arbitration agreements.

Sutherland, 726 F.3d at 297 n.8; D.R. Horton, 737

F.3d at 356, 361; Owen, 702 F.3d at 1054. These

decisions squarely conflict with the conclusion below

that courts “must follow” the Board’s interpretation

of the NLRA. Lewis, 823 F.3d at 1153; Pet. App. lla

n.5.3

(continued...) _

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

interpretation under Chevron cannot override the clear

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

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

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

all interpreters, administrative agencies included.”).

3 The Seventh Circuit stated as an alternative holding

that the Board’s interpretation is entitled to Chevron

deference. Lewis, 823 F.3d at 1153. The Ninth Circuit

16

Finally, the issue of Chevron deference makes this

case particularly worthy of review because it also

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

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

202 (1986) (ellipsis in original); see generally King v.

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

against agency deference on “question(s] of deep

economic and political significance”). That principle

applies directly here, where the Board has attempted

to revolutionize the entire field of workplace relations

by suddenly reinterpreting the NLRA to prohibit

individual arbitration agreements in virtually every

employment relationship in the country for the first

time in the 80-year history of the statute. Putting

aside the inherent implausibility of such a significant

prohibition lying dormant in the NLRA for eight

decades without anybody noticing, such a sweeping

(continued...)

expressly agreed with that conclusion, despite

disclaiming any “need” to reach the issue. Pet. App. lla

& n.5. Moreover, as petitioners note, the Board

“participated in this case before the Ninth Circuit as an

amicus curiae, and would presumably continue to do so

in this Court if certiorari is granted” here. Pet. 22. The

circuit split on the Chevron issue will thus be fairly

presented and fully briefed if this Court grants review.

17

policy change cannot and should not be imposed at

the unilateral discretion of the executive branch.

Ill. California Employers Have an Especially

Acute Interest In Combating the Growing

Trend of Judicial Hostility to Arbitration

This case makes a fitting vehicle to review the

question presented because, out of all the states in

the union, California employers suffer uniquely from

the judicial hostility to arbitration exemplified by the

decision below. This hostility is reflected in, among

other things, this Court’s reversal of several

California decisions refusing to enforce arbitration

agreements under the FAA in recent years. See, e.g.,

DIRECTV, Inc. v. Imburgia, 136 S. Ct. 463, 468

(2015); Concepcion, 563 U.S. at 341 (2011); Preston v.

Ferrer, 552 U.S. 346 (2008); Perry v. Thomas, 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. Just last year

in Imburgia, this Court admonished a California

appellate court that while “[ljower court judges are

certainly free to note their disagreement with the

decisions 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.” Id. “The fact that Concepcion

was a closely divided case, resulting in a decision

18

from which four Justices dissented, has no bearing on

that undisputed obligation.” Jd.

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 employees’ agreements to arbitrate on an

individual basis, and instead to seek mass awards for

alleged class-wide violations of the California Labor

Code. Even more distressingly, moreover, a divided

panel of the Ninth Circuit recently agreed with

Iskanian’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). The decision below now adds yet another

example of the same.

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

U.S. at 342 (2011). But now, alarmingly, the Ninth

Circuit appears to be getting in on the game. This is

not just a problem for California, but for the entire

national economy: Like the Petitioner in this case,

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

19

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 apparent in the decision below.

Accordingly, amicus the Employers Group submits

that granting review in the present case 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 without

flinching, and with a vigilant eye.

Ill. This Case Is the Best Vehicle to Resolve the

Acknowledged Circuit Split

Compared to the other petitions now pending in

Epic and Murphy Oil, Nos. 16-285 & 16-307, this case

is the better vehicle to resolve the question presented

for two reasons.

First, this case has a dissent. As a result, the law

and facts underpinning the majority’s decision have

already been carefully scrutinized in Judge Ikuta’s

thorough dissenting opinion, thus minimizing the

chance of a lurking vehicle problem. The extensive

back-and-forth between the dissent and the majority

help to ensure that all relevant issues have been fully

ventilated, and that the majority opinion presents the

best argument that can possibly be made in support

of its remarkable conclusion.

Second, this case embodies the squarest possible

split on the question presented, since the Second

Circuit has upheld the precise same arbitration

agreement that the Ninth Circuit invalidated in the

decision below. See Sutherland, 726 F.3d at 297 n.8;

Pet. 22-23. The presence of the same arbitration

agreement on both sides of the split ensures that

20

there is a square legal division among the circuits,

with no possible factual distinctions that could

explain the different outcomes. This is particularly

important since at least one member of this Court

has expressed the view that the permissibility of

invalidating an arbitration agreement under the FAA

may turn on whether there were any “defects in the

making of [the] agreement.” Concepcion, 563 U.S. at

353. (Thomas, J., concurring). Here, the “making of

[the] agreement” was the same as in Sutherland.

CONCLUSION

For the foregoing reasons, amicus supports

Petitioners’ petition for certiorari, and respectfully

requests that the petition be granted.

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.

s a Washington, D.C. 20001

J eel DAY (202) 879-3939

3161 Michelson Dr. bheifetz@jonesday.com

Irvine, CA 92612

October 2016

Counsel for Amicus Curiae The Employers Group