In the first oral argument of the new term, a divided Supreme Court seemed likely to uphold employment agreements that require an employee to resolve a dispute with an employer through individual arbitration, waiving the possibility of proceeding collectively. The conflict among the justices could be captured by two exchanges this morning. The first came when Chief Justice John Roberts, in a back-and-forth with University of Virginia law professor Daniel Ortiz, who represented one of the employees in the case, observed that a decision in favor of Ortiz’s client would invalidate employment agreements covering 25 million people – a step that several of the justices would be reluctant to take, particularly given the court’s strong support of arbitration in recent years. Justice Stephen Breyer, on the other hand, had a very different concern: He told Paul Clement, who represented the employers in the case, that he had not seen a path for Clement’s clients to win without “undermining and changing radically” the labor laws that are the “entire heart of the New Deal.”

Before the justices turned to the oral argument in Epic Systems Corp. v. Lewis (which was consolidated with two other cases, Ernst & Young LLP v. Morris and National Labor Relations Board v. Murphy Oil USA), there were opening-day ceremonies to deal with. The chief justice began the session by indicating that he had the “honor to announce” the end of October Term 2016 and to convene the new 2017 term. Roberts then recognized and honored Deputy Solicitor General Jeffrey Wall, who until recently served as the acting solicitor general – including for much of the extensive litigation over President Donald Trump’s March 6 executive order banning travel to the United States from six Muslim-majority countries. From the lectern, Wall introduced Solicitor General Noel Francisco, who was recently confirmed; the chief justice welcomed Francisco to what he described as the “important office” that Francisco has assumed.

Today’s argument centered on two federal laws, both of which date back nearly a century. The first law, the Federal Arbitration Act, provides that arbitration agreements “shall be valid, irrevocable, and enforceable.” The second, the National Labor Relations Act, provides that employees have the right to engage in “concerted activities” for “mutual aid or protection.” During his 20 minutes at the lectern, Clement emphasized that the Supreme Court’s earlier cases provide a “well-trod path” to resolve the case: The FAA indicates that arbitration agreements should be enforced unless there is a clear contrary command from Congress, which is not present here.

Clement was pressed repeatedly by the court’s four more liberal justices to explain how his position could be reconciled with the NLRA. Justice Ruth Bader Ginsburg suggested that the “driving force” of the NLRA was to correct the imbalance between employers and employees, including by protecting concerted activity. Clement countered that the NLRA was only intended to protect collective action in the workplace, and to allow employees to get to a forum in which to raise their grievances with the employers. But once an employee arrives at that forum, an employer can raise any defenses that it may have, such as the fact that the employee had agreed to arbitrate any disputes individually.

Justice Elena Kagan was skeptical that the protection provided by the NLRA was as limited as Clement described. The NLRA doesn’t say that, she contended, and in fact the Supreme Court has said the opposite – that is, that the NLRA protects concerted activity as long as it is related to the workplace. Kagan also pointed to another provision of federal labor law, in the Norris-La Guardia Act, that in her view barred courts from enforcing any waiver of an employee’s right to concerted activity. Clement pushed back, characterizing arbitration provisions like the kind before the court as an agreement between an employer and an employee rather than a waiver.

Arguing on behalf of the United States, which initially filed a brief with the National Labor Relations Board asking the justices to review the case, but then sided with the employers after the change in presidential administrations, Wall stressed that the case was at the “heartland of the” FAA but at the “periphery of the” NLRA. But, once again, Ginsburg was unpersuaded. “What about reality?” she asked Wall. She noted that in one of the cases before the court, the individual employee’s claim was for $1800, which would be outweighed by the costs of an individual arbitration. “This is truly a case,” Ginsburg told Wall, in which there is strength in numbers – the “core idea” of the NLRA.

Wall pushed back, telling Ginsburg that the Supreme Court had already rejected exactly those arguments in its earlier cases. And when Breyer asked Wall why the court couldn’t just “say clearly” that forcing a worker to agree to bypass joint actions would be what labor law had already said was an unfair labor practice, Wall again stood firm, telling Breyer that his “historical premise is just wrong.”

Representing the NLRB, attorney Richard Griffin spent much of his 20 minutes hammering out exactly what kinds of collective action are protected under the NLRA. And several justices seemed puzzled after Roberts asked Griffin to weigh in on a hypothetical agreement that required an employee to arbitrate any work-related disputes, in an arbitration forum that would allow collective arbitration only when there are at least 50 employees joining the arbitration. Griffin told the chief justice that such an agreement would not run afoul of the NLRA, because the restriction on collective proceedings would come from the rules of the forum, rather than the agreement itself.

Justice Samuel Alito tested Griffin some more, asking him whether his answer would change if the rules of the arbitration forum barred class arbitration outright. When Griffin indicated that it would not, Alito seemed to think that Griffin was trying to draw a distinction without a difference. “You haven’t achieved very much,” Alito told Griffin.

During his 10 minutes before the court, Ortiz seemed to part ways with the NLRB, telling the chief justice that an employer cannot “coerce” an employee into a forum that would bar the employee from bringing a collective action unless some other forum is available. He repeated this argument a few minutes later in response to a question from Alito, telling the court that an employee just needs to have some right to joint action.

[UPDATED: On Tuesday afternoon, Griffin sent a letter to the court correcting his response to the chief justice’s questions. He told the court that, to the extent that his responses were different from Ortiz’s, they were incorrect. Ortiz, Griffin indicated, “correctly stated the Board’s position and there is no disagreement between the Board’s and the employees’ position on the answers to those questions.”]

In his rebuttal, Clement returned to an idea voiced by Justice Anthony Kennedy, on whose vote the case likely hinges: “Concerted activity” can take many forms, including – for example – a group of employees sharing one attorney for their individual but related claims, presumably allowing the employees to save money because the overlap between the cases would require fewer hours of the attorney’s time.

Some of the court’s more liberal justices were unmoved. Ginsburg voiced concerns about confidentiality, while Kagan chided Clement, telling him that taking away a right can’t be rationalized on the ground that another alternative is available. Sotomayor also chimed in, asking Clement how an employee could bring a claim that, for example, relied on how an employer had treated many employees over time.

Clement is not likely to get the votes of any of the four more liberal justices. He doesn’t need those votes, though, if he can garner the votes of the court’s five more conservative justices. He seems to have three of those votes – Roberts, Kennedy and Alito – but the two remaining justices – Justices Clarence Thomas and Neil Gorsuch – were silent today. Thomas has voted in favor of a broader reading of the FAA in earlier cases, but Gorsuch is harder to read. As a general matter, as Edith Roberts reported earlier this year, while on the court of appeals Gorsuch generally interpreted arbitration clauses “in light of the overriding presumption in favor of arbitration.” That track record, combined with his emphasis on relying on the plain text of a statute, could bode well for the employers in this case.

This post was originally published at Howe on the Court.

Recommended Citation: Amy Howe, Argument analysis: An epic day for employers in arbitration case? (UPDATED), SCOTUSblog (Oct. 2, 2017, 2:50 PM), https://www.scotusblog.com/2017/10/argument-analysis-epic-day-employers-arbitration-case/