United States: U.S. Supreme Court Delivers An Epic Decision For Employers

On May 21, 2018, Justice Gorsuch delivered a 5−4 opinion for the U.S. Supreme Court holding that arbitration agreements containing class and collective action waivers must be enforced pursuant to the Federal Arbitration Act (FAA), and are not otherwise nullified by the FAA's savings clause or the National Labor Relations Act (NLRA). Epic Systems Corp. v. Lewis, No. 16-285; Ernst & Young LLP, et al. v. Morris, et al., No. 16-300, National Labor Relations Board v. Murphy Oil USA. Inc. et al., No. 16-307 (May 21, 2018).

Justice Gorsuch outlined the question presented by this case: Should employers be allowed to insist that workplace disputes be handled in one-on-one arbitration or should employees always have an option to bring claims in collective actions? Justice Gorsuch, writing for the Court's conservative majority, wrote, "As a matter of law the answer is clear. In the Federal Arbitration Act, Congress has instructed federal courts to enforce arbitration agreements according to their terms – including terms for individualized proceedings."

Chief Justice Roberts and Justices Alito and Kennedy joined Justice Gorsuch's opinion, and Justice Thomas filed a concurring opinion.

Justice Ginsburg filed a strong dissenting opinion, joined by Justices Kagan, Sotomayor and Breyer.

An examination of the cases and proceedings leading up to this highly anticipated Supreme Court decision provides interesting context.


On May 26, 2016, a panel for the Seventh Circuit Court of Appeals in Lewis v. Epic Systems Corp. unanimously held that a collective action waiver, as a condition of continued employment, violates employees' rights to engage in concerned activity protected by Section 7 of the NLRA.¹ The Seventh Circuit covers Illinois, Indiana and Wisconsin.

On August 22, 2016, the Ninth Circuit Court of Appeals, which covers Alaska, Arizona, Hawaii, Idaho, Montana, Nevada, Oregon and Washington, followed suit in Morris v. Ernst & Young, LLP

Epic Systems and Ernst & Young each filed petitions for certiorari to the Supreme Court on September 2, 2016, and September 8, 2016, respectively.

Meanwhile, in the Fifth Circuit (covering Louisiana, Mississippi and Texas), the law was taking a different direction.

In 2012, the National Labor Relations Board (NLRB or the Board) issued a decision in D.R. Horton, Inc.,³ wherein the Board first held that class and collective action waivers found in arbitration agreements violate the NLRA. The NLRB explained that, "from its earliest days [the Board has held that] employer-imposed, individual agreements that purport to restrict Section 7 rights violate the NLRA.4 The employer appealed the NLRB's decision to the Fifth Circuit, and the Fifth Circuit overturned the Board's decision on December 3, 2013.5

At this point, the Court comprised a 5−4 split favoring Republican-appointed justices, who were thought to share conservative ideology. In any event, the Board chose not to seek review from the U.S. Supreme Court.

Instead, on October 28, 2014, the NLRB issued its decision in Murphy Oil USA, Inc., once again affirming its position that class and collective action waivers contained in arbitration agreements violate the NLRA.6

Under applicable rules, Murphy Oil could have appealed the Board's decision to the D.C. Circuit or to any circuit where it has sufficient business operations. The facts and underlying proceedings at issue in Murphy Oil occurred in Alabama, which falls within the Eleventh Circuit Court of Appeals. In a seemingly calculated move, however, Murphy Oil appealed the Board's decision to the Fifth Circuit, availing itself of the Fifth Circuit's pro-employer precedent in D.R. Horton.

The Fifth Circuit once again overturned the NLRB finding that the Board erroneously held that an employer violates the NLRA by requiring employees to sign an arbitration agreement with a class or collective action waiver. Relying on Supreme Court precedent, the Fifth Circuit explained that the Board's decision failed to afford proper deference to the policies favoring arbitration pursuant to the FAA.

Rather than directly appeal the Fifth Circuit's decision to the Supreme Court, the NLRB first asked for a re-hearing from the Fifth Circuit en banc (a rehearing from all judges in the circuit). The Fifth Circuit denied the Board's request on December 13, 2015.

On September 9, 2016, the same week that Epic Systems and Ernst & Young filed their respective petitions for review to the Supreme Court, the NLRB filed its petition requesting that the Court reverse the Fifth Circuit in Murphy Oil.

On January 13, 2017, the Supreme Court granted certiorari in Epic Systems, Ernst & Young, and Murphy Oil to resolve the circuit split as to the lawfulness of class and collective action waivers in arbitration agreements. The Court consolidated the three cases.

A 4−4 tie was expected until Justice Gorsuch joined the Court in April 2017. The two prior Supreme Court opinions addressing the enforceability of class and collective action waivers (both outside of the employment context) were decided 5−47 and 5−38, and authored by the now deceased Justice Scalia.

One final note of interest as to these proceedings: In September 2016, the Solicitor General under the Obama Administration filed a petition for writ of certiorari on behalf of the NLRB seeking to overturn the Fifth Circuit's decision in Murphy Oil. In June 2017, the Solicitor General, now under the Trump Administration, changed positions and filed an amicus brief in support of the petitioners-employers in the Seventh and Ninth Circuit cases. As a result, the NLRB was permitted to represent itself, and the U.S. government presented briefs advocating for both sides of the issue.

Following the Supreme Court decision, Wilson Elser recommends that its clients review their current practices to determine if arbitration agreements with class and collective action waivers are appropriate for their businesses.

Wilson Elser boasts a national platform of attorneys specializing in labor and employment law, including the drafting of arbitration agreements and defense of individual, multi-party, class and collective actions in federal and state court or arbitration forums.


1. 823 F.3d 1147 (7th Cir. 2016), cert. granted, 137 S. Ct. 809 (U.S. Jan. 13, 2017) (No. 16-285), rev'd, 2018 U.S. LEXIS 3086 (U.S. May 21, 2018).

2. 834 F.3d 975 (9th Cir. 2016), cert. granted, 137 S. Ct. 809 (U.S. Jan. 13, 2017) (No. 13-16599), rev'd, 2018 U.S. LEXIS 3086 (U.S. May 21, 2018).

3. In Re D. R. Horton, Inc., 357 NLRB 2277 (2012).

4. Id. at 2280.

5. D.R. Horton, Inc. v. N.L.R.B., 737 F.3d 344, 354 (5th Cir. 2013), petition for rehearing en banc denied, No. 12-60031, 2014 U.S. App. LEXIS 24994 (5th Cir. April 14, 2014).

6. Murphy Oil USA, Inc., 361 NLRB 72 (Oct. 28, 2014).

7. AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 131 S. Ct. 1740 (2011)

8. DIRECTV, Inc. v. Imburgia, 136 S. Ct. 463 (2015)

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions