case number one sixty s one three eight five national labor relations board feet alternative entertainment incorporated or arguments not to exceed fifteen minutes to be shared by responded  and fifteen minutes to be shared by petitioner amicus mr timothy ryan for the respondents morning around and it is a pleasure to be here my name's tim ryan from law from objects and laws and i represent the respondent in this case alternative entertainment with the course permission the way that we would like to split our of us takes that three minutes after we hear thank you very much so the question here on this discharge issue i guess is is it always is in these cases was a substantial evidence to support the decision that mr de comer was illegally discharged and of course the the theory of the case is that he was discharged from gauging in concert addictively there are three reasons why i think each of which lead to the conclusion that you can't say there was substantial evidence here the first of these is that the theory on which we end up having the ruling that there was an unfair labor practice is entirely different than the employees complained about their wages and that's the reason why he was fired well if that's true if that were true if there had been a joint complaint like that made i don't think anybody would argue it wasn't consort addictively but what the evidence at the trial showed was none of that happened and those dates there was no joint complaint it was only mr the common complaining by himself to his employer about his pay so then we get a decision from the administrative law judge and he says well it comes up a whole new theory in the theory as well you didn't fire it isn't that he was fired because of the complaint he made it's because of his discussions behind the scenes and background with his coworkers that's a whole different the of concerted activity that's a whole different case that requires different evidence and different witnesses and nobody knew that was part of the case until we get the decision from the administrative law judge was there evidence on that topic that was except for maybe one or two names he was not able to identify who these employees were he was not clear on when these conversations took place in the nature of the conversations if you read the record is extremely big only to if i was the issue or was john versus joe versus harry the question is did he disobeyed this order hypothetically not to talk to anybody well that gets us to the question of knowledge i mean you're right there is that allegation and that's a separate unfair labor practice that that he was told not to not to discuss his wages with other people which if it had happened would be an unfair labor practice and the judge found based on the testimony you have we dispute that we don't admit it but but i'm not here arguing that there's not substantial evidence to support that because that was the testimony but the key i think is the knowledge issue everybody agrees that a necessary element of proving the discharge case is you have to show the people who made the decision to discharge knew about the concerted activity so if we're going to say that this new theory of concerted activity is legitimate then somebody's got to have knowledge that he had these background conversations in the conversation you're talking about is one where the judge the way the judge says very plainly in his decision there's no direct evidence of knowledge and then he goes on to say basically but i'm going to win for it because mr robinson told de calmer to stop talking to other employees and of course if he had said stop that would certainly suggest he had knowledge of what's going on the problem is the word stop does not appear in mr de commerce testimony the record that was totally added by the judge so if we go back to the substantial evidence evidence standard how can a necessary element of their case according to the judge is dependent on testimony that does not exist in so you cannot have does not meet the substantial evidence standard so if the word stop was not there could the communication have included to another person in the presence of mr humphrey that he had talked to other people but if you read the testimony and i'm sure this is what is on page thirty two of the transcript if you read the testimony thirty one thirty two it's it is not clear where mr humphries it is not clear what mr humphreys may or may not hurt you cannot i don't think you can read that testimony in the sun from it that you could fairly read it to say that would show mr humphreys knew and in fact neither the board nor the judge thank you your honor my name's have and take are representing the chamber of commerce of the united states i mean what we call the d r horton issue the whole case boils down to whether the d horton rule comes within the savings clause because the board does not contend that the rule satisfies the supreme court's strict contrary congressional command standard if the rule doesn't come within the savings clause we win the case so let me turn directly to that question the board's argument rests on the following so which is the savings cause allows the invalidation of arbitration provisions on grounds that are equally applicable to all contracts illegality is one such ground we the board have the term in that class waivers in all employment agreements or illegal under section eight therefore the d r horton rule falls within the savings clause the argued there that one unconscionable it is a defense that applies to any contract to the california supreme court held in the discover bank case that class waivers and consumer contracts of it she's been are generally unconscionable and therefore three the discover bank rule fell within the savings clause i think i understand the point i'm curious for both of you is the case law that says where the savings clause only applies to state law because what's a little that is different from concepcion that was a state law rule here this is a federal come from federal statute as it is that relevant is the case law  seen that's a great question i've been pondering it i don't know that there's case law and i think conceptually it does because it does apply to federal it does because it doesn't it's not limited in its in its terms so if there is a let's say a case is governed by federal common law and if there is and if a court supplies a federal ground that is neutral th i would think it could apply and it's a mix course now i understand there's arguments that each that savings clause should not apply at all and that they're stuck with the country congressional command but looking at the saving clause in nine u s c section two there's no indication within the savings clause that it's limited that's what i was saying i'm just trying to figure out where where that such limitation would come from because it says sabir upon such grounds as exist or in equity for the revocation of any contract yeah i think if people were to make the argument it would be based on a tally in colors and saying look the supreme court there they just dealt with contrary congressional command they didn't worry themselves about the savings cause but we're not you know we're going to address the argument head on we're not going to argue of though i think it's a war worth considering for the court but we're not going to argue no no it doesn't apply at all and so they really there's no case law at this point that said one way or another on this point i mean it's i don't really applies to stay because that's where it's the most often and i think you know when congress enacted it it was thinking of state law because that's what governs contracts by and large but you do have two circuits the seventh and the ninth that have rejected your position yes and and and they're they're just wrong because judge  yes judge wood is wrong judge accoutred is right i thought you would say justice lewis just very well said as well as the majority on the fifth circuit but the point is it they did not they they it distinguished concepcion on the grounds that it a state that it's a state law case but as the court has said the savings clause applies apply equally it is to the savings clause does not apply if it would if it would if the new to your stance a plea neutral principle would frustrate the purposes of the arbitration  is the same as clause doesn't apply to federal law but it does apply to federal law applies needs axiom way it applies to state logs it says law and if you can't have it you can't treat it differently exactly so i had all the same that's exactly right and i would add that that's what the supreme court said in the conclusion of italian colors on page twenty three twelve of one thirty three escort the the plaintiffs in that case made the argument that the policies underlying the antitrust laws required invalidation of the order of arbitration provisions containing class waivers and the claim the court said in the conclusion truth to tell our decision in concepcion all of it resolves this case there we invalidated a lot conditioning enforcement of arbitration and the availability of class procedure because that law quote interfered with a context in other words no no it was california had a statute which by the way the board gets along it's not just some made up state law rule it was a statute a prohibit clauses and the california supreme court said in discover bank that in consumer contracts and then he she in maybe maybe i'm sorry interrupt you but i think i think we get this point maybe the way in which it makes a difference if the same is clause does apply to federal law one way you might say that the law at issue is different if it's federal versus state is if the federal law is implemented by an agency that gets deference with respect to interpretations statute which gets you to you know the role chevron deference plays or does not play in this case i'm sure everyone agrees here the agents the board gets deference when it comes to explaining what section seven does and why  forth that seems to me i see you would agree with that if it's reasonable they get deference on that don't they as a general principle we would agree with that we would not accept that that's a reasonable interpretation of section seven but for purposes of our argument we accepted it for purposes of the argument to contend that they get no f a o deference when it comes to the savings clause so the they get  it's reasonable they get to explain how section seven works why the can maybe even say concerted action covers class class actions i guess that that's exactly right i'll be allowed to do that and that's why we sort of didn't spend the whole our efforts on that argument if you had a contract an employment contract that said nothing about or attrition but just any lawsuits you want to bring against this you have to bring on an individual basis then the f a a would have no place in the case and if the board's interpretation is a permissible one then they could say that's an unfair labor practice but as soon as it's part of an arbitration agreement the same thing is in california supreme court is perfectly entitled to say and has said that if you've got a contract that bars class actions a consumer contract that bars class actions it's  if it didn't involve arbitration there's nothing in concepcion that prevents california from saying you can't do that but if the supreme court held in concepcion and then reinforced in italian colors viewing treating arbitration as some uniquely bad area but giving full effect to the right to bring collective concerted action well i think you would say the same thing about california next kulpa toy clauses but it in any event this whole argument about there's this right it's not clear to me how that changes anything about what the supreme court said about the savings cause which is i f it has a disproportionate impact on our patrician as well as conditioning and force ability on the availability of class procedures does then it doesn't qualify for the savings cause that's the holding of concepcion reinforced in italian colors so i think there's a very powerful argument that they're wrong that it's substantive if you look at section one it describes it as a procedure if you look at well case which the the board ironically cites but not for the proposition they call it a procedure in the supreme court those so and then makes sense you know the for purposes of this and therefore nothing the supreme court said in concepcion or italian colors matters so obviously i'm well over my time we've taken you over but we thank you very much thank you you good morning renee please the court order from the national labor relations board i will take twelve minutes and counsel from me this will take three the n r a protects employee's right to act collectively but any eyes policy requires employees to act individually policy thus violates the ellery's pro had bishan an interference with section seven rights and is in a legal contract under federal law there's no real challenge today to the board's findings for which it receives deference they concerted legal action is section seven activity and the prospect of individual waivers of that right like eight eyes violate section eight a one of the n r a and these are areas under chevron for which the board receives significant deference to suit help me out with this let's let's say under chevron deference you get to take the phrase can sort of action and say it applies to class actions which isn't self evident but with sake of this question let's just say that's right so that just that just makes the case like gilmer to me i mean there you have in the a d a s say a statute that's about age discrimination incorporates section two sixteen from the f l a say so it allows for collective slash class actions and yet waivers were upheld there so i mean i'm i'm just i just feel like that's the harder case i think is that if the whole statute says don't say can sort of action it says in order to enforce this right we're going to give you the right for class action relief because it's important when it comes to age discrimination claims which of course is a lot like the worker rights here and i just don't understand how that could be allowed in you know the school either refers to in time colors and  had no qualms in enforcing a class waiver in arbitration agreement even though the federal statute issue the expressly permitted class collective actions this one's not even express but i think you've already mentioned two reasons why kilmer is different one it was under the employees bringing the f l s a claim are statutory employees under the n r a if they have a section seven right then the waiver is unlawful it violates section eight a one they're not in and if they're not covered by the n r a then that's a different question i to another case but all i'm saying all i'm saying is that if it is the board's decision is that if they were covered by the n l aure that case would turn out like the board's decision in horton and murphy oil rather than gilmer there was not evidence that gilmer was  statutory employee in that case and the other point you mentioned is that the permits collective actions but the n r a guarantees the right to concerted activity and makes interference with that right unlawful makes it an unfair labor practice under section eighty one so those are the two key distinctions with gilmore it is also well established that federal courts will not enforce illegal contracts including contracts that violate the n l array look at the supreme court's decision in kaiser steel for example so the only question left is whether there should be a different result whether federal courts should enforce illegal contracts earlier about federal versus state law when it comes to say these clauses or authority that we can just look at and say don't worry about it it covers federal didn't come up in a case like italian colors because no one was making a saving clause argument in italian colors the telling colors was about there was no question about the validity of the contract i think on the savings clause that's not your hard case the hard cases concepcion concepcion is distinguishable and i would say judge wood is right on this one in that it involved it's not just state versus state law versus federal law though that is certainly key distinction because when  you have two federal laws the supreme court is instructed that both must be given effect to the extent possible but it's also that the policy in concepcion was a generalized judge made policy a gloss on california unconscio statutes that was meant to your first point the way your interpretation respects the f a a and all our way is just by saying the f a a is covered by the i mean the n r a is covered by the savings cause that's your expressed statutory protection of the right to engage in concerted activity and in a day when you have a specific statutory prescription on interference with that right the so and so back when  in the thirty's when these labor laws were enacted there it's true you didn't have rule twenty three but you had collective actions and so forth so i mean is there any evidence in the lives of that history anywhere that concerted action referred to class actions or collective actions or any other formulation used that law in the one nine hundred thirty s or before section seven is written very broadly it says it gives a couple examples and then says other concerted activities for mutual aid or protection and the supreme court said in city disposal that section seven is not limited to any particular type of concerted activity it is where the borders refers to collect the vaccines the supreme court in east texas talked about how the section seven right is is a broad one and has been held to include resort to judicial and our patrol forums and the board since the very early years going back i believe the one nine hundred forty s has held that section seven covers concerted legal activity and has done so throughout the present day with a quarter class actions and collective actions i'm just asking if anyone's ever said it applies to rule twenty three like procedures the board has there's nothing in the legislative history or there's nothing in the legislative history specifically about concerted legal action whether that be class action joinder any of these because this is not just a about class rule twenty three class action is about concerted legal action more broadly but again since the very beginning of the act and with court approval the board has held it to be including in a in a cave board case called united postal service or parcel service that this court enforced the board held that it i believe nec case it was n f l s a claim but i might be wrong was protected activity under section one question i guess for both of you everybody is you know there's a bunch of circuit titian's up at the court on this issue what's your preference here is your preference for us to  march ahead no matter what the court does wait to see if the court grants review and then still march ahead or hold it in the bands what would you like us to do you're right that there are several separate tensions pending the supreme court has not ruled on any of them the board certainly appreciate another view of the of the case from this court if you can of sorts granted even if there is granted we will leave that up to this court's discretion then the other potential in the room is you don't have agency the way you do most executive branch agencies with the new president the potential for a proper change of position because here it's a function of constituent who's on the board right now could take a long time and i take it the board members are for terms yes right so there's no reason to think as with other agency is the right under the n r a it is not a tangential lord incentive to bring some to take some other action is the right that the n l or a protects what makes this is substantive right as opposed to a procedural right yes i think you can you can classify it in those terms that substantive because it is the core right under the n l r a everything else in federal labor law extends from that even if they invoke rule twenty three and that's the whole case was decided under rule twenty three certifying can sort of actions right ascertain ability and opt in opt out it's going to be rule twenty three the whole thing right it will twenty three or so georgia's would have mattered let's say that there was a provision that says you can't use rule twenty three but here's a different procedure for proceeding collectively if there was an employer policy that said that no i don't believe they would be different employers don't get to pick and choose what types of concerted activity their employees  can then i have a problem with what you're saying because if the right is to proceed collectively and not to any particular procedure then it would seem that if there's a fair vehicle for proceeding collectively there you shouldn't have a complaint because that's the core that's the core value of the dollar is that you're saying they're being deprived they are being deprived of the right to engage a concerted legal action in some form this is not just a bad arbitration if there was a judicial forum of vailable for a concerted legal activity the employer could require that all arbitration proceed individually the board has said that but as just as an employer cannot say well you can you can pick it up on tuesdays but not on thursdays or you can go on strike but you can't join a union the employer can't say you can only engage in particular in certain types of concerted legal action that we like the the right is undefined section seven right is undifferentiated so the employer could not say can we demand that you ar itrate all disputes and you can do it in concerted actions that would not be acceptable to let me make sure has to be arbitration but it can be considered in the and be conservative and would that be acceptable yes they would not be violating the board set is such an insult or city of boulder city yes which is cited if you work through i mean i haven't worked through this but i mean there's a lot of different rule twenty three mechanisms it's not always obvious they're helpful to the plaintiffs  some of them are helpful to the other side i mean is that first of all harper's do people really want what to do go down this road question number one is this really in the board's interest when it comes to the workers and second if i my suspicion is right there are parts of let's just focus on rule twenty three that are quite hurtful to workers if they bring these actions do the workers then get to say you well you don't apply that part of rule twenty three because that's interfering with our concerted action right is that what's going to happen eight no part of the n r a affects how rule twenty three works so there's no you know a judge faced with the rule twenty three action in this setting would not have to lean towards certifying to further the purposes of the n r a and i write about that yes you are right if the if the employer comes back with a defense on the merits to certification you don't meet the numerosity requirement for example as long as that is a a generally applicable defense that is not targeting concerted action as concerted action numerosity example for example it would say the employer is essentially saying you're not concerted enough and so the the the board's position is not that those kind of merits defenses to certification in the opt in opt out you've worked through that i'm just have a strong suspicion this is not going to work out well well that is i guess maybe a policy argument that employees will have to figure out for themselves as time goes is for them to make free of employer interference that is the core of the board's decision that it is the employee's choice whether it's a good or a bad choice for them that's not for the person sound is interference to a close classification or raise all kinds of arguments  question of is so long as it is a kind of generally applicable defenses we're talking about and not opposing class certification on the basis of a policy like that just says no concerted legal action or in effect says no concerted legal action th for a concerted legal action yes because at that point it's the it's for the employee to choose whether to proceed individually or to perceive collectively and that is the right that they have under the n r a and that is the right that employers cannot job on the savings cause issue there's two other issues one is that the agreement here does what the supreme court says agreements may not do which is waive a substantive right but let me go directly to your question judge sutton about what is a substantive right collective bargaining is a core substantive right of the analog or a it is a process the first amendment creates a right to petition that just begs the question of whether concerted action is meant to cover this unique procedural device twenty three i mean there's no evidence in legislative history and it's not just that rule twenty three is one thousand nine hundred sixty six it's not a chronology problem there were collective actions back in the one nine hundred thirty s there's no no one was thinking that's what they're phrase referred to so i get what happens if you say it incorporates the phrase i get that but i'd i just find it very difficult to get there and even to i don't think it's unreasonable to get there your honor the question of the construction of section seven is as you have pointed out is  counsel for the board it's pointed out is subject to chevron deference and the supreme court has made very clear that section seven encompasses not only attempting to improve terms and conditions directly through the employment relationship collective bargaining strikes picketing but through other means such as could titian in the courts that's what the supreme court has said the board in an unbroken line of cases that i've said lect of we're allowed in thinking about that issue about this federal statute which has another very strong policy in fact the irony of all this is that's what an enormously gardy was about was furthering arbitration and here we have the board saying arbitration suddenly bad and it's very odd your honor the board is not saying arbitration is bad employees can opt to go to arbitration if the employee thinks that arbitration is the better option for all the reasons that you outline an employee can make a choice to go to arbitration all of the board is saying is that the employer cannot also unique about the n r a here is not only that the right at issue to take concerted act action in court or arbitration it's not simply rule twenty three as my colleague has pointed out it's two sixteen of the f l s say it's even joined or they can't even go with another employee into court join the two claims even if they're parallel it's much broader prohibition than simply rule twenty three so it's a substantive right it's the core right protected by the statute unlike gilmer the parallel to gilmer is if the grieving gilmer had said you can bring age cases you just can't do it if you're over age eighty five that's what this agreement provides so what happens to interest him like getting work through this but let's just say someone takes the view that concepcion applies here when it comes to construction the savings clause ok so i realize that's bad for you you don't agree with it that's why it's hypothetical but just say hypothetically a quarter judge thinks ha you know i just think that steps to the analysis your honor and that's where i tried to begin that is if you were to agree with counsel to my left here that the savings clause does not apply you have to go two different steps the first is is  coming from once you once to savings clauses out of that don't you in interpret section seven have to be thinking about the f a a and at that point because your main argument is you can consolidate them respect both of them to the savings clause but if that washes out you still have the f a a so you still think it's ok to say hey section seven is a subset of right and concerted action covers rule twenty three and other class have an agreement for arbitration but what that agreement cannot provide is a waiver of the substantive rights a italian covers colors explained that quote exception would certainly cover a provision in an arbitration agreement forbidding the assertion of certain statutory rights forbidding the assertion of certain statutory rights that's exactly what the board is hell to take collective legal action is no different to mine collective bargaining why wouldn't the fair approach be even still do concer action you can still share expenses you can still you can so when it comes to litigating arbitrating these cases individually you can have the same counsel you can share expenses that just seems like the much more natural way of accounting for both statutes particularly in a world in which the us supreme court has supplied the f a a to lots of class action waivers right i mean if you're going to respect those decisions in answer to your question going back to your question about legislative history and to bring in the horses guardia which would be the third step of the analysis would have to go through if you look at the north of already act in its forbidding of yellow dog contracts it's clear from the legislative history that a yellow dog contract was not simply you can't join a union but you can't join  union or you can't join the mineworkers those agreements to for bid that type of collective action congress clearly intended to forbid even though they allowed other collective action so you can't say you can share expenses you can talk to your fellow employees about suing but you can't join your claims and you can't file a representative action and you can't opt in to represent about action that is you can't if you're the employer require the seating of a statutory right even if you allow some part of it still to be exercised that that's clear from the legislative history of nourse of why it's exactly that those types of agreements which allowed certain types of exercise but not others which section three of norse authority act was aimed at and that's the third part of the analysis which no court even those courts which have ruled for the employers in these cases like the fifth circuit has got to the fist circuit dismissed lorton nourse a guardian a footno but what's important about norse authority is that even before the agreements to cede statutory rights agreements to cede the ability to engage in collective activity around in forcible that is what's unique about this statu is not only that the substantive right is the right to engage in collective action in court or otherwise but that agreements just like this one have been a target of the congress since before the act and that's what's important about nor the reason why you have to take that step through the first two most states have many and a long race the n r a preamp state law there are no worker agencies i was trying to figure out if there was any analog at the state level there just isn't there just only in the public sector and in some states very narrow statutes for employees who are exempt from the n r a so if it and if it but apply the same to those so the public sector setting  that's correct ron that is you do have state laws in some states ohio for example of course which are many at a lower rate for public employees and your rule would apply there you would you would you would be able to avoid class action waivers and so forth and forcing that would be correct your honor if the state of ohio for example imposes a condition of employment that all employees had to agree not to take any form of concerted after action in court or an arbitration against the state for grievances arising out of their work that would violate the state law if it was parallel to the hour so what's in conclusion those are the three steps that you would have to go through we of course agree with the board and the seventh circuit in the ninth circuit as to the application of the savings clause but even if you disagree with that and you look at the jurisprudence and the f a a it makes very clear that you may not have an agreement which weighs a substantive right and this is the substantive right no different than the right to petition under the first amendment even if you do disagree with that you have to go to north of the r t o because north of already it clearly says this agreement is on enforceable in federal court and you therefore honest to march ahead with  decision no matter what the court does with these pending serpentis ins your honor you point to a number of very perplexing uncertainties and which we are standing in the middle of right now i think it is very unclear what the court will do very unclear when the court will have a night i mean i just was easy if the court doesn't grant them we have to decide i think that one's easy but i guess the real question is if they grant should we march ahead or what's your preference we would appreciate a decision we think this a developing jurisprudence we think as the courts have considered it more thoroughly they have sided with the boards judgment and we would appreciate the judgment of this court thank you very much i guess i'll start with that we do too and the only other thing i'd add is that there are two vacancies on the board which the president can fill relatively quickly and that of course could change the board position because it's currently two to one on that issue turning to the point to mr rubin me i'd like to start by saying the board is limited to the arguments the board vindicating substantive right the board in its underlying decisions has always relied on either or both of the savings costs in the country congressional command that is never separately or acute that this thi rd exception which justice scalia recognized in a tongue in color is to be an independent exception they've never relied on as as a basis for their for their rule assumption you're right about how to deal with the savings clause in the concepcion controls in other words what do you do next is that where you are well i'm just saying they've sort of not complaining i just want to i just want to read along and follow i you could put it that way ok all right making an alternative argument that i'm responding to ok and this vindication of statutory rights exception which the court discussed at some l the tallying colors has been mentioned in several cases but never once has the court found it applicable and all of those cases dealt with the deprivation when they talked about what it meant they talked about depriving someone of their cause of action or their remedy for the cause of action so if you said you can't bring a claim for treble damages you know that would be a problem because the antitrust that's part of the remedy but the court has never even hinted that the deprivation of a procedure would satisfy that standard so even if you accept the proposition that  that they can raise that this in the pending basis first for for supporting the the board's decision i think it's an exception that doesn't apply and i'd also like to secondarily say the term substantive right which they invoke again is not a valid interpretation and i i feel like i have to read from the important capital case because that's where the court says it's procedural it says section seven rapes are protected not for their own sake but as an instrument of the national labor policy of minimizing industrial strength by encouraging the practice and procedure of collective bargaining in other words there are a means to the end means are procedural and or substantive and later in the opinion the again make the point saying the orig mitt raised by the by the respondents in that case confuses the employees substantive right to be free of racial discrimination under title seven with the procedures available under the end of an hour a for securing these rights so again they're very clear that it's a procedure even the seven they're talking about court the bargaining and unionizing even those they see as procedural and then finally i'd like to reinforce the point that judge sutton made  about not giving adequate weight to the f a a and in a case that the union themselves cites the southern steamship case which is a very interesting read i might say  because it involved mutiny the court was confronted with the question whether a strike by maritime workers which constitutes mutiny is protected a and the court and the board wanted to be in the courts it is sufficient for this case to observe that the board has not been commissioned to effectuate the policies the labor relations act so single mindedly that it may wholly ignore other and equally important congressional objectives that's exactly what they're asking the court to do thank you very much thank you for a long time too but we've enjoyed learning all about this case