Arbitration Law

In May, the U.S. Supreme Court issued a 5-4 opinion in Epic Systems Corp. v. Lewis, which further established the court’s deference to employee arbitration agreements containing class and collective action waivers. The court’s consolidation of three cases from the U.S. Courts of Appeals 5th, 7th, and 9th Circuits resolved a larger, six-circuit split regarding the enforceability of such waivers, holding that “arbitration agreements providing for individualized proceedings must be enforced.” Although the lower courts in Epic Systems (7th Circuit) had found that the National Labor Relations Act’s protection of “concerted activity” prohibited the petitioners from enforcing an individual arbitration agreement, the court rejected this argument, noting that while the National Labor Relations Act, or NLRA, secured for employees the “right to organize unions and bargain collectively,” the NLRA did not include “a right to class actions.” As such, the Federal Arbitration Act, or FAA, required courts “to enforce arbitration agreements according to their terms—including terms providing for individualized proceedings.” In the short time since the ruling came down, multiple district and circuit courts have already cited Epic Systems in dismissing collective action cases brought by employees who had previously signed individual arbitration agreements.