U.S. Supreme Court Delays Review of Class Action Waiver Dispute Until At Least October 2017

On February 8, 2017, the Supreme Court announced it will schedule oral arguments in its review of class action waivers in the 2017 Supreme Court session, which starts in October.  In January, the Court announced it would review three cases involving whether class action waivers that are required as a condition of employment in individual employee arbitration agreements violate federal labor law.

In 2012, the National Labor Relations Board (“NLRB”) held that class action waivers in arbitration agreements violate rights of employees to engage in concerted activities protected by the National Labor Relations Act.  D.R. Horton, 357 NLRB No. 184 (2012). The Fifth Circuit Court of Appeal refused to enforce D.R. Horton. However, the NLRB continued to enforce D.R. Horton in cases before the NLRB.  In Murphy Oil USA, Inc., 361 NLRB No. 72 (2014), the NLRB again found class action waivers unlawful, which Murphy Oil appealed to the Fifth Circuit.  The Fifth Circuit refused to enforce the NLRB’s decision in Murphy Oil.

The Second and Eighth Circuit Courts of Appeal joined in refusing to enforce D.R. Horton. Recently, however, two other courts of appeals enforced the NLRB law, creating a circuit split. The Seventh Circuit agreed with the NLRB in Epic Systems v. Lewis in May 2016, and the Ninth Circuit also enforced the NLRB decision in August 2016 in Ernst & Young LLP v. Morris, 834 F.3d 975 (2016).

Opening briefs will be due February 27, 2017, followed by reply briefs by the parties and amici briefing.  This case will be closely watched and we will provide an update once the Court issues its decision, which may not occur until late 2017 or into 2018.

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