This post is part of OnLabor’s continuing analysis of National Labor Relations Board v. Murphy Oil USA.
Yesterday, the Supreme Court heard oral arguments in the consolidated cases of Murphy Oil USA, Epic Systems, and Ernst and Young. The court has released the transcript of this morning’s oral argument. It is available here.
Opening for the employers, Paul Clement framed his argument by stating that the “the Court’s cases provide a well-trod path for resolving [these] claims… the FAA will only yield in the face of a contrary congressional command and the tie goes to arbitration.” The liberal justices questioned Clement about the range of collective action that a class action arbitration bar might impose, opening up the conversation beyond Rule 23-like actions to include questions regarding the arbitral analogue of joinder. The liberal justices also expressed concern that failing to find that the NLRA prevents these types of agreements turns back the clock on the NLRA and undermines the Act. Justice Breyer “worried… what [Clement is] saying is overturning labor law that goes back to, for FDR at least, the entire heart of the New Deal.” Similarly, Justice Ginsburg emphasized that “the driving force of the NLRA was the recognition that there was an imbalance, that there was no true liberty of contract, so… concerted activity is to be protected against employ – employer interference” and that these agreements undermine that recognition.
Deputy Solicitor General Jeffrey Wall emphasized the argument that “in giving employees the right to act in concert, the NLRA does not then extend to concerted activities that they have validly agreed to waive under other federal statutes like the FLSA and the FAA.” He also made clear his position that even if the “reality” is that lawyers might not take some workers’ low dollar claims if collective procedures are not open to them “those [arguments] are exactly the kind of arguments this Court rejected” previously. Wall also highlighted that in his opinion “this case is at the heartland of the FAA. It is, at best, at the periphery of the NLRA, on the margins of its ambiguity.”
Richard Griffin, the General Counsel of the NLRB began his argument by stating that (1) the Board’s reading of the NLRA was not novel; that (2) both statutes would be “given effect” by finding this kind of arbitration agreement unenforceable; and (3) finding for the employers would “require this Court, for the first time, to enforce an arbitration agreement that violates an express prohibition in another coequal statute.” The Chief Justice pressed Griffin on the Board’s position that the employees’ section 7 rights may not be waived, but the Board would find no waiver of these rights if a collective bargaining agreement required employees to bring their case in arbitration. Justice Kennedy followed-up with a question of whether having the same attorney represent multiple employees in their claims also constituted a type of collective action. He explained:
My question is that many of the advantages of concerted action can be obtained by going to the same attorney. Sure, the cases are considered individually, but you see if – if you prevail, it seems to me quite rational for many employers to say forget it, we don’t want arbitration at all.
Also appearing on behalf of the employees, Daniel Ortiz, director of the Supreme Court litigation clinic at the University of Virginia Law School, pushed back on the comparison between waiving Rule 23-like processes in employment-related claims, such as an FLSA claim, and contracting away the right to collective action under Section 7 of the NLRA. He argued that while Rule 23-like processes are “procedural mechanisms,” the NLRA establishes “substantive rights.” To try and reach the difference between these two categories, the Chief Justice posed a tricky hypothetical to both Griffin and Ortiz. He asked whether it would be permissible to have a provision mandating that a group could bring a single claim only if the group had more than 50 members. Griffin answered that it would be permissible if that were the rule of the arbitral forum, while Ortiz said that an employer could not insist on a forum with this rule.
At the end of the argument, Justices Breyer, Ginsburg, Sotomayor, and Kagan seemed in favor of holding that the NLRA is incompatible with the enforcement of a class action bar in an employment arbitration agreement. Based on their questions, Justice Alito and the Chief Justice appear to be leaning in favor of the employers. Justice Kennedy’s questions do not clearly reveal is position. He may side with Justice Alito and the Chief Justice, but his initial question to Clement asking whether Clement was conceding that class actions were a form of collective action under the NLRA makes his position seem less certain. Justice Gorsuch and Justice Thomas did not ask any questions during the argument.
We will post commentary as it is published.