Class Action Bans and Protected Concerted Activity (Part II)

What does the National Labor Relations Board (“NLRB or “the Board”) have to do with bans on class actions, created through agreements that some employers have imposed unilaterally on their employees?  The answer is quite a lot.

Section 7 of the National Labor Relations Act (“NLRA”), 29 U.S.C. sec. 157, prohibits employers from interfering with, coercing or restraining their employees from engaging in “concerted activities for the purpose of … mutual aid or protection.”  Those protections are not limited to just unionized employees or to employees’ activities in the workplace.  In a series of cases, federal appeals courts have held that sec. 7 also grants employees the right to band together to file a lawsuit to achieve more favorable terms or conditions of employment.

The NLRB decided, during the Obama Administration, that class action bans — which require covered employees to file employment-related lawsuits individually, rather than filing cases with multiple plaintiffs or  class or collective actions — violate sec. 7 of the NLRA.  The Supreme Court has decided to hear three cases that raise that issue.  Those cases are NLRB v. Murphy Oil USA, Inc.; Epic Systems Corp. v. Lewis; and Ernst & Young LLP v. Morris.  The appeals court decisions in those cases are split.  The Seventh and Ninth Circuits upheld the Board’s position in the Epic Systems and Ernst & Young cases, while the Fifth Circuit ruled for the employer in the Murphy Oil case.

The Murphy Oil decision doesn’t contest the logic that a ban on class actions interferes with employees’ right to engage in concerted activity.  Instead, its decision is based mainly on those judges’ conclusion that the NLRA is not different in kind from other statutes, such as the Age Discrimination in Employment Act at issue in Gilmer, “that that have been found to give way to requirements of arbitration.”  That decision viewed the right to file a class action, or the similar procedure of a “collective action” in wage/hour or age discrimination cases, is just a “procedural device,” not a substantive right.

The Supreme Court granted certiorari — that is, it decided to review — these three cases on Jan. 13, 2017.  Even if Judge Gorsuch is confirmed as a Supreme Court justice, it is not clear whether he would be able to participate in the oral argument and in the decision in these cases.  In the next part of this multi-part post, I will discuss the reasons why I believe that the Court should affirm the NLRB’s decisions in these cases.