Epic Systems Corp. v. Lewis: Employees' Perspective

• Jurisdiction: United States,Federal
• Author: By Logan Starr
• Publication year: 2018
• Citation: Vol. 32 No. 5

Epic Systems Corp. v. Lewis: Employees' Perspective

By Logan Starr

Logan Starr is an associate attorney at Bryan Schwartz Law in Oakland, where he represents employees in wage-and-hour class and collective actions, as well as in employment discrimination and whistleblower matters.

Introduction

The seemingly banal holding of Epic Systems Corp. v. Lewis, that "arbitration agreements . . . must be enforced as written," conceals the true potential impact of the Court's decision, and that of the decades-long project of the Federalist Society and its loyal jurists to expand the scope of the Federal Arbitration Act (FAA). With Epic, the Roberts Court has largely accomplished its objective: many employers can insulate themselves from significant liability for wage violations, employment discrimination, and other vital worker protections by forcing employees into arbitration agreements that forfeit the right to bring class and collective actions.¹ Given the low value of most individual employment claims, mandatory individual arbitration may effectively exonerate some corporations from liability for widespread workplace violations.² As stated by Justice Ginsburg in dissent, "the inevitable result" of Epic will be "the underenforcement of federal and state statutes designed to advance the well-being of vulnerable workers."³

Epic involved three similar challenges to class waivers in employee arbitration agreements based on section 7 of the National Labor Relations Act (NLRA), which provides: "Employees shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection. . . ."⁴ Accordingly, the employees argued that section 7 prohibited their employers from mandating individual, binding arbitration as a condition of continued employment under the FAA's savings clause, which limits arbitration agreements "upon such grounds as exist at law or in equity for the revocation of any contract."⁵In reliance on the National Labor Relations Board's 2012 ruling in D.R. Horton, Inc., the employees asserted that mandatory arbitration agreements which forbid employees from joining together to assert their workplace rights—whether in court or in arbitration—violate section 7's guarantee.⁶ The employees sought not to keep their claims out of arbitration, but to be able to proceed in arbitration on a class-wide basis.⁷

Justice Gorsuch, writing for the majority, predictably rejected the employees' arguments and found that the NRLA has nothing to say about collective or class actions. Justice Gorsuch disagreed that the class or collective litigation qualified as "other concerted activities for the purpose of . . . mutual aid or protection."⁸ But he explained that, even if it did, the employees' argument would still fail because the savings clause may only invalidate arbitration agreements based on "generally applicable contract defenses, such as fraud, duress, and unconscionability."⁹(The Roberts Court previously rejected the unconscionability of class waivers in AT&T Mobility v. Concepcion and American Express v. Italian Colors Restaurant).¹⁰ In Justice Gorsuch's view, since the employees' NLRA argument seeks to invalidate arbitration agreements because they contain class waivers, it discriminates against "one of arbitration's fundamental attributes," i.e., forced individual proceedings, and it thus fails under the savings clause.¹¹

As demonstrated by Epic, the key concern in the Court's recent arbitration cases has been discrimination against arbitration, not, for example, discrimination against employees as a result of arbitration procedures. As discussed below, in adopting this framing, the Roberts Court has conferred on the FAA a special status as a sort of super-statute, which always prevails,

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regardless of its interference with the enforcement of fundamental statutory rights. Employees and those who advocate on their behalf have an increasingly limited toolbox to confront corporate abuse on a class-wide basis, but the fight is not over.

How We Got Here: "An Edifice of its Own Creation"

When Congress passed the FAA in 1925, it was intended to provide merchants with a means to agree to resolve commercial contract disputes efficiently, without resorting to a judicial forum.¹² Notably, in its first five decades, the FAA was not understood to apply to statutory claims, to proceedings in state courts, or to employment contracts.¹³ All of that has since changed, not because Congress amended the FAA, but because in the 1980s the Supreme Court embarked on a multi-decade project to transform it beyond recognition. Already in the 1990s, Justice O'Connor warned that "the Court has abandoned all pretense of ascertaining congressional intent with...