Since 1991, when the Supreme Court held that employment disputes could be subject to a mandatory arbitration agreement, Gilmer v. Interstate/Johnson Lane Corp., employers have increasingly included mandatory arbitration in their employment terms. And since 2011, when the Supreme Court upheld an arbitration clause that included a class-action waiver in a consumer case, AT&T Mobility LLC v. Concepcion, employers have increasingly added group-action waivers to their arbitration clauses. Today over half of nonunion companies impose arbitration agreements on their workers, and nearly all include group-action waivers.
Justice Ruth Bader Ginsburg wrote a compelling dissent in which she situated the issue in the context of the history of the NLRA and the Norris-LaGuardia Act. Before the 1930s, employers used many techniques to prevent their workers from acting collectively, including requiring them to assent to “yellow dog” contracts in which they promised to abstain from joining a union. Ginsburg argued that the NLRA and Norris-LaGuardia were an explicit rejection of such contracts. Instead, they were based on the premise that “employees must have the capacity to act collectively in order to match their employers’ clout in setting terms and conditions of employment.” Today’s employer-designed arbitration clauses that require employees to forgo the use of class actions in either a court or arbitration are, she claims, a latter-day version of the yellow dog contracts that Congress explicitly prohibited more than 80 years ago. And she pointed to research showing that the result of the decision is that workers will be unable to vindicate their rights to minimum wages and overtime protections.
The difference between the majority and dissenting opinions exemplifies two different modes of judicial analysis. Gorsuch avoids taking a position on the policy issue by reciting what he calls “a mountain” of Supreme Court precedent. He maintains that the outcome is mandated by that precedent.
In contrast, Ginsburg addresses the policy issue head on, using not merely judicial precedent, but also legislative history and current empirical evidence to show that the decision will lead to significant “underenforcement of federal and state statutes designed to advance the well-being of vulnerable workers.” Moreover, she questions the majority’s characterization of the precedent and argues that the court could uphold workers’ rights, protected by the labor law, to assert claims collectively without undermining the FAA. For example, Ginsburg points out the absurdity of the majority’s argument that, because Congress did not explicitly rule out class arbitration when it enacted the NLRA, the FAA compels the enforcement of arbitration agreements that ban collective procedures. As she explains, in 1935, at the time of the enactment of the NLRA, there were no class actions or class arbitrations, and it was 50 years before the Supreme Court decided that the FAA applied to statutory claims. Thus it is entirely unsurprising that Congress, in drafting the statute, did not expressly preclude the possibility of compelled waivers of collective assertion of statutory claims.
In Epic Systems, Gorsuch has shown himself to be a reliable, though perhaps less brash, version of Justice Antonin Scalia, the jurist he replaced on the Supreme Court. Like Scalia, Gorsuch musters a wall of precedent to support an outcome that was actually not at all preordained. And like Scalia, he washes his hands of the policy implications by claiming that he is only doing his job. His approach is disappointing, though unsurprising. Given that he had a bare 5-4 majority on his side, we might have hoped he would provide some reasoned analysis that tackled the serious policy issues at stake.
One telling omission from Gorsuch’s opinion is his failure, despite recounting a mountain of precedent, to mention a fundamental pillar of arbitration law that was articulated by Justice Harry Blackmun in Mitsubishi Motors v. Soler Chrysler-Plymouth. There the court proclaimed that under the FAA, arbitration is only appropriate when it entails no loss of substantive statutory rights. In that case, the court justified sending an antitrust case to arbitration by stating that “so long as the prospective litigant effectively may vindicate its statutory cause of action in the arbitral forum, the statute will continue to serve both its remedial and deterrent function.” It further elaborated by stating that “[b]y agreeing to arbitrate a statutory claim, a party does not forgo the substantive rights afforded by the statute.”
This principle, known as the effective vindication doctrine, is essential if courts are to justify closing the courthouse door to otherwise qualified litigants. And it is not a new idea. In the 19th century, Justice Joseph Story refused to order parties to arbitrate out of a concern that moving from a judicial to an arbitral forum could prejudice the rights of a party and lead to unjust results.
If there were ever a case in which compelled arbitration makes it impossible for parties to vindicate their substantive rights, it is a case like Epic Systems in which an employer insists that workers relinquish their ability to vindicate their employment rights on a collective basis. Under Mitsubishi’s effective vindication principle, the arbitration clause should not be enforced.
The Epic Systems decision not only closes the courthouse door to workers, it effectively bars them from any tribunal where they can vindicate their rights.
Read the whole etc.
There was an odd debate in the comments to the previous about whether the “real” problem was this decision or Concepcion. Well, Concepcion is certainly an outrageously bad decision. But it didn’t cause the outcome of this case. What caused the outcome, very simply, was Mitch McConnell’s successful Supreme Court blockade and the various malfunctions that produced president Donald Trump:
- If Barack Obama or Hillary Clinton had filled the vacancy left by Scalia’s death, it is 99.9% likely that the Rehnquist and Roberts Court’s arbitration decisions would have been overruled or distinguished. And that .1% would be Obama or Clinton screwing up massively. No Court with a Democratic median vote should consider this series of egregiously hacky 5-4 decisions as establishing a fixed interpretation of a FAA or give a moment’s consideration to applying the doctrine in future cases.
- If the previous FAA cases had come out the other way under a Democratic Court, there is a ~100% chance that this case would have come out the same way anyway. Admittedly, Roberts might have brought in Alito for the heavier lift, but bizarro-world FAA cases definitely would have been overruled or (more likely) distinguished the first time this Court got the opportunity.
Doctrine does not apply itself mechanically. The Supreme Court, of course, is not even formally bound by its own precedents, and while sometimes it chooses to defer to a long-established doctrinal line this would hardly be such a case where a Court with a Democratic median vote would (or should.) Supreme Court doctrine does formally bind lower courts and in many cases can be said to essentially cause particular outcomes, but again that’s not the case here. In the circuit split the Court was resolving 2 of the 3 had to be reversed, and given the unique context of the Norris-LaGuardia and the Wagner Acts distinguishing the previous FAA cases wasn’t even particularly challenging; it didn’t require one of those Alito “that plaintiff had blue eyes, but this plaintiff has green eyes” jobs. As much as Gorsuch would like you to think otherwise, Epic Systems was not determined by any previous ruling of the Court, but by the confirmation of Gorsuch. That’s it.