Source: https://leastdangerousblog.com/2017/10/02/epic-systems-corp-v-lewis-faa-v-nlra/
Timestamp: 2019-04-21 22:54:47+00:00

Document:
It should come as no surprise given the size of the United States Code, but every now and again two federal statutes point crossways.
Epic Systems Corp. v. Lewis presents the Court with one such conflict between the Federal Arbitration Act on the one hand and the National Labor Relations Act on the other. How the Court resolves the conflict will have an effect on millions of employees and thousands of employers. And, it seems to me, over against the view of a number of my ideological compatriots, that the employees have the better of the argument. Let’s dig in.
The issue in Epic Systems Corp. is whether—as the employees argue—collective proceedings by employees against employers (e.g., class actions) constitute “other concerted activities for the purpose of . . . mutual aid or protection” that employers cannot interfere with, notwithstanding the endorsement of arbitration in the FAA; or whether—as the employers argue—such joint and class proceedings by employees do not count as “concerted activities” under the NLRA, allowing for employers to require employees to resolve disputes by way of individual arbitration without violating the NLRA. The courts of appeals have split over this issue.
In D.R. Horton, Inc. v. NLRB, the Fifth Circuit sided with employers in this dispute, rejecting the NLRB’s position and holding that the FAA’s “liberal federal policy favoring arbitration agreements” prevailed over the NLRA’s less-clear protection of “other concerted activities.” This meant that an employer could “require[e] its employees to sign an arbitration agreement that . . . prohibited an employee from pursuing claims in a collective or class action” without violating the NLRA.
In this case, “the entire scope of Congressional purpose calls for careful accommodation of one statutory scheme to another,” given the compelling interests embodied in both the FAA and the NLRA On the one hand, the employees in Epic Systems Corp. argue that the Court can reconcile these statutes by looking to the saving clause of the FAA which prohibits the enforcement of arbitration agreements when such agreements conflict with other laws—in this case, the NLRA. On the other hand, the employers in Epic Systems Corp. argue that the Court can reconcile these statutes by concluding that filing lawsuits is not “concerted activity” under the NLRA. We take them in turn.
One tack the Court might take to side with the employees is to find the relevant provisions of the two statutes in tension and then to apply the “common rule of statutory construction” that the “statute which came later in time” should control. As Justice Scalia stated, “When the plain import of a later statute directly conflicts with an earlier statute, the later enactment governs, regardless of its compliance with any earlier-enacted requirement of an express reference or other ‘magical password.’” In this case, the NLRA, which was enacted in 1935, would take precedence over the FAA, which was enacted in 1925. The NLRA did not need to contain a “magical password” to carve itself out from the general language of the FAA, nor did the FAA require the NLRA to do so. Rather, the NLRA’s express grant of the substantive right to engage in “other concerted activities,” by force of the language itself, carves out that later-in-time pronouncement from the earlier-enacted FAA.
Additionally, “It is a well-settled rule of statutory construction that a specific, narrowly drawn statute takes precedence over a more generally applicable statute.” In this case, the NLRA specifically speaks to employer-employee relations and bestows a specific, substantive right on employees to engage in “other concerted activities” for their mutual benefit. The FAA, on the other hand, states a general federal policy favoring arbitration agreements. The more-particular scope of the NLRA should control over the general mandate of the FAA with respect to employer-employee relations.
Congress sought generally to equalize the bargaining power of the employee with that of his employer by allowing employees to band together in confronting an employer regarding the terms and conditions of their employment. There is no indication that Congress intended to limit this protection to situations in which an employee’s activity and that of his fellow employees combine with one another in any particular way. . . .
Therefore the NLRA protects filing a collective action from employer interference, including interference by mandatory, individualized-arbitration provisions in employment contracts.
This conclusion would accord with a general principle the Court appeared to endorse nearly forty years ago, that the NLRA protects employees “when they seek to improve working conditions through resort to administrative and judicial forums.” Additionally, if the Court so decided, it would agree with longstanding Board precedent on the subject. The Court would also affirm a number of federal courts’ of appeals who have considered the general issue, including in opinions authored by conservative jurists.
While this conclusion is compelling, the employers can argue that this proposed accommodation of the NLRA and FAA is too facile. They are obviously not without a basis to so argue.
Under the ejusdem generis canon, the term ‘other concerted activities’ thus must be interpreted to mean other concerted activities of a similar type as the three enumerated activities. . . . It would not . . . include an employee’s ability to bring a class-action lawsuit under [Rule] 23, which is of a different class or character than the enumerated rights.
But again, it has long been recognized that collective resort to an administrative or judicial forum to resolve employment disputes is, in fact, protected as “other concerted activities” under Section 7, and this understanding makes intuitive sense given the dictionary definition of “concerted,” so it would be a heavy lift at this late stage to argue that ejusdem compels the opposite conclusion.
The employers also argue, in essence, that the command of the FAA is more important than the command of the NLRA, pointing to recent cases emphasizing that the FAA is the rule and exceptions to it are to be narrowly drawn and explicitly carved out. The Roberts Court has decided a number of cases dealing with the FAA that emphasize its importance and centrality, requiring a clear “contrary congressional command” before it is overridden. Supporting this reasoning, there is also a long line of cases where the Court has affirmed the importance of arbitration in the labor relations context. The employers point to these in support of their contention that employer-imposed, mandatory, individualized arbitration agreements sit comfortably within these two strands of cases.
The Roberts’ Court FAA jurisprudence should not be overread, however: those decisions do not “go so far as to say that anything that conceivably makes arbitration less attractive automatically conflicts with the FAA . . . .” In those cases the Court dealt with statutory schemes very different than the NLRA, which is unique insofar as it explicitly gives employees the right to engage in concerted action. Cases involving the supposed “public policy” of other federal statutes, or involving conflicting state law, are qualitatively different than the issue presented in Epic Systems, given that the NLRA is a federal statute with an express, rather than implied, policy of favoring concerted action by employees.
Furthermore, the employees can readily distinguish the Court’s labor-arbitration jurisprudence to which the employers point. One theme running through that line of cases that is not applicable to the types of agreements at issue here is that, in those cases, mandatory arbitration agreements were the result of the collective bargaining process, not a condition of employment preceding any collective bargaining negotiations. Where the union agrees, on behalf of all represented employees, to submit disputes for mandatory arbitration and forego recourse to a court of law or to collective relief, it is not the employer interfering with employees’ right to pursue “other concerted activities,” and thus the NLRA is not violated. In Epic Systems, the nub of the problem is the employers’ labor contracts that they require hirees to sign before being employed. This is a distinction that makes all the difference.
The employers also argue that the saving clause in the FAA is beside the point here because the NLRA is not a “ground as exist[s] at law or in equity for the revocation of any contract.” In the past, the Court has stated that the saving clause did not apply where specific provisions in a contract were possibly illegal but rather only where there were grounds at law or equity “for the revocation of any contract”—that is, generic, contract-law defenses to formation with respect to the whole contract. Unless the employment agreements are illegal on the whole, the employees’ argument that the arbitration provisions are illegal is simply not “grounds as exist at law or in equity for the revocation of any contract.” Though this argument smacks of overwrought casuistry, this argument, as a matter of statutory interpretation, actually appears to make the most sense of the text of the FAA.
However, I am not sure this ultimately helps the employers. If, in fact, there is a direct conflict between the two statutes, the NLRA should prevail for the reasons already mentioned. “When there are two acts upon the same subject, the rule is to give effect to both if possible.” The way the Court has frequently done this is to apply “a limited statute” in the specific field it covers while leaving “a broad enactment” in place as the background general rule, out of which the narrow enactment is carved as an exception of sorts to that background rule. In this case, that would mean enforcing the NLRA’s prohibition on employer interference with “other concerted activities” by employees in the field of labor relations even if it displaces the FAA in this field, while allowing the FAA’s general preference for arbitration to stand as the general rule everywhere else. Ipso facto, employees still win.
The employers’ ultimate problem, it seems to me, is that the NLRA guarantees to employees, as a substantive right, the ability to engaged in concerted activities. This is a specific grant, which comes later-in-time than the more-general FAA. The idea that a broad “public policy” embodied in the terms of one general statute could trump the express terms of a different, more-specific statute is the sort of idea at which judicial conservatives normally scoff—akin to the sort of spirit-over-letter arguments that are non-starters for textualists. The employers try to dodge the blunt force of this point by arguing variously that class proceedings are procedural rather than substantive and are not included within Section 7, that the NLRA is ambiguous as to the rights guaranteed by Section 7 and so the FAA should trump Section 7, that “class waivers merely channel concerted activities into a particular procedural form,” and so on. Reading through the employers’ brief, however, leaves me with the distinct feeling that these maneuvers are a “bit of interpretive jiggery-pokery,” seeking to “subordinate the express words” of the NLRA “to the mere implications” of the FAA.
Just as it is the congressional policy manifested in the Federal Arbitration Act that requires courts liberally to construe the scope of arbitration agreements covered by that Act, it is the congressional intention expressed in some other statute on which the courts must rely to identify any category of claims as to which agreements to arbitrate will be held unenforceable.
The Court has to accommodate two conflicting principles to make them work together: the national policy favoring arbitration agreements dovetailed with the national policy favoring concerted action by employees that disapproves of a particular type of arbitration agreement. It seems to me, in this case, that the accommodation is fairly straightforward: Congress “has evinced an intention to preclude” waiver of collective-action remedies in Section 7 of the NLRA by protecting “other concerted activities” from employer interference.
Notwithstanding that, this is an incredibly well-lawyered case, with the employers represented by an ideologically diverse set of seasoned Supreme Court advocates and with oral argument for their side being conducted by former Solicitor General Paul Clement. We will see in short order whether a majority of the Court finds their reasoning persuasive enough to rule in their favor.
 See Epic Sys. Corp. v. Lewis, SCOTUSblog, http://www.scotusblog.com/case-files/cases/epic-systems-corp-v-lewis/ (linking to amicus briefs supporting the employers, including from the Washington Legal Foundation and the Pacific Legal Foundation).
 See, e.g., NLRB v. Jones & Laughlin Steel Corp., 301 U.S. 1, 41 (1937) (“When industries organize themselves on a national scale, making their relation to interstate commerce the dominant factor in their activities, how can it be maintained that their industrial labor relations constitute a forbidden field into which Congress may not enter when it is necessary to protect interstate commerce . . . .”).
 EEOC v. Waffle House, Inc., 534 U.S. 279, 289 (2002).
 737 F.3d 344 (5th Cir. 2013).
 Moses H. Cone Memorial Hospital v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983).
 D.R. Horton, 737 F.3d at 348.
 823 F.3d 1147 (7th Cir. 2016).
 Id. at 1152 (quoting Eastex, Inc. v. NLRB, 437 U.S. 556, 566 (1978)).
 Id. at 1153–54. Cf. Perry v. Merit Systems Protection Board, 137 S. Ct. 1975, 1994 (2017) (Gorsuch, J., dissenting) (“At the end of a long day, I just cannot find anything preventing us from applying the statute as written—or heard any good reason for deviating from its terms.”).
 Morton v. Mancari, 417 U.S. 535, 551 (1974).
 Chicago & N.W.R. Co. v. United Transp. Union, 402 U.S. 570, 582 (1971).
 Southern S.S. Co. v. NLRB, 316 U.S. 31, 47 (1942).
 Envt’l Transp. Sys. v. Ensco, 763 F. Supp. 384, 391 (C.D. Ill. 1991).
 Lockhart v. United States, 546 U.S. 142, 149 (2005) (Scalia, J., concurring).
 United States v. Lowery, 15 F. Supp. 2d 1348, 1356 (S.D. Fla. 1998) (citing Simpson v. United States, 435 U.S. 6, 15 (1978)).
 Id. at 835 (emphasis added).
 Eastex, Inc. v. NLRB, 437 U.S. 556, 566 (1978). The Court did note in a footnote that it did “not address here the question of what may constitute ‘concerted’ activities in this context.” Id. at 566 n.15. The Court nevertheless endorsed in the text of the opinion the view that the clause “protects employees from retaliation by their employers” when they pursue such remedies. Id. at 566.
 See Leviton Mfg. Co., Inc. v. Local 1274, Int’l Bhd. Elec. Workers, AFL-CIO, 203 N.L.R.B. 309, 311 (1973) (describing the filing of a civil suit as “activity . . . protected under the Act unless . . . done with malice or in bad faith”).
 See, e.g., Mohave Elec. Co-op, Inc. v. NLRB, 206 F.3d 1183, 1189 (D.C. Cir. 2000) (affirming the view that “the filing of a judicial petition—supported by fellow employees and joined by a co-employee—constitutes concerted action under the NLRA”); Altex Ready Mixed Concrete Corp. v. NLRB, 542 F.2d 295, 297 (5th Cir. 1976) (“Generally, filing by employees of a labor related civil action is protected activity under section 7 of the NLRA unless the employees acted in bad faith.”); Leviton Mfg. Co. v. NLRB, 486 F.2d 686, 689 (1st Cir. 1973) (“[T]he filing of a labor related civil action by a group of employees is ordinarily a concerted activity protected by § 7, unless the employees acted in bad faith.”).
 See, e.g., Brady v. NFL, 644 F.3d 661, 673 (8th Cir. 2011) (Colloton, J.) (“[A] lawsuit filed in good faith by a group of employees to achieve more favorable terms or conditions of employment is ‘concerted activity’ under § 7 of the National Labor Relations Act.”).
 Bekele v. Lyft, Inc., 199 F. Supp. 3d 284, 311 (D. Mass. 2016).
 Cf. King v. Burwell, 135 S. Ct. 2480, 2497 (2015) (Scalia, J., dissenting) (cleaned up) (“Any effort to understand . . . a law must accept and apply the presumption that lawmakers use words in their natural and ordinary signification. Ordinary connotation does not always prevail, but the more unnatural the proposed interpretation of a law, the more compelling the contextual evidence must be to show that it is correct.”).
 See, e.g., AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011).
 CompuCredit Corp. v. Greenwood, 132 S. Ct. 665, 669 (2012) (quoting Shearson/American Express Inc. v. McMahon, 482 U.S. 220, 226 (1987)).
 See Steelworkers v. Warrior & Gulf Nav. Co., 363 U.S. 574 (1960).
 Lewis v. Epic Sys. Corp., 823 F.3d 1147, 1158 (7th Cir. 2016).
 See, e.g., 14 Penn Plaza LLC v. Pyett, 556 U.S. 247, 257 (2009) (“As in any contractual negotiation, a union may agree to the inclusion of an arbitration provision in a collective-bargaining agreement in return for other concessions from the employer.”); see also Lewis v. Epic Sys. Corp., 823 F.3d 1147, 1158 (7th Cir. 2016) (“The NLRA does not disfavor arbitration; in fact, it is entirely possible that the NLRA would not bar Epic’s provision if it were included in a collective bargaining agreement.”).
 Cf. Emporium Capwell Co. v. W. Addition Cmty. Org., 420 U.S. 50, 62 (1975) (“Central to the policy of fostering collective bargaining, where the employees elect that course, is the principle of majority rule.”).
 Southland Corp. v. Keating, 465 U.S. 1, 16 n.11 (1984).
 See, e.g., Lawrence v. Comprehensive Business Servs. Co., 833 F.2d 1159, 1162 (5th Cir. 1987) (reasoning that a law that applied to only a specifically subset of contracts [those subject to the Texas Public Accountancy Act of 1979] was “not a ground that exists at law or in equity for the revocation of any contract”).
 See supra text accompanying notes 17–20.
 United States v. Borden Co., 308 U.S. 188, 198 (1939).
 Id. at 199. See also id. at 201 (“These explicit provisions requiring official participation and authorizations show beyond question how far Congress intended that the Agricultural Act should operate to render the Sherman Act inapplicable.”).
 See, e.g., NLRB v. Fruit & Vegetable Packers & Warehousemen, 377 U.S. 58, 83–84 (1964) (Harlan, J., dissenting) (criticizing the Court for ignoring the language of the statute even though it “substantially acknowledges that the statutory language does not itself support” the view that the Court sustained, which was rooted in broader policy considerations that apparently conflicted with the plain text of the NLRA).
 Cf., e.g., King v. Burwell, 135 S. Ct. 2480, 2497 (2015) (Scalia, J., dissenting) (“Let us not forget . . . why context matters: It is a tool for understanding the terms of the law, not an excuse for rewriting them.”). Compare Church of the Holy Trinity v. United States, 143 U.S. 457, 459 (1892) (“It is a familiar rule, that a thing may be within the letter of the statute and yet not within the statute, because not within its spirit, nor within the intention of its makers.”), with Public Citizen v. U.S. Dep’t of Justice, 491 U.S. 440, 473 (1989) (Kennedy, J., concurring) (“The problem with spirits is that they tend to reflect less the views of the world whence they come than the views of those who seek their advice.”), and Branch v. Smith, 538 U.S. 254, 304 (2003) (O’Connor, J., concurring in part and dissenting in part) (“Because the plurality’s construction . . . has no statutory basis, the only way to understand the Court’s opinion is that the Court is overlooking the words of the statute for nontextual prudential reasons.” (citing Justice Scalia)).
 At times, the employers’ argument falls by its own logic. For instance, they argue that, “unlike the specific activities listed in Section 7, class proceedings burden parties extrinsic to the employer-employee relationship. This is no small distinction.” Pet’rs Brief at 34. The unfair labor practice suits that employees can bring before the NLRB also “burden parties extrinsic to the employer-employee relationship,” yet it would be absurd to argue that jointly filing an unfair labor practice complaint is not among the “other concerted activities” in Section 7 simply because it involves third parties in the employer-employee relationship. The employers would likely respond by arguing that unfair labor practice complaints are clearly endorsed in the scheme of the NLRA as a whole, but this would then require them to draw a line between the ostensibly protected act of resorting to administrative forums on the one hand, and the allegedly unprotected act of resorting to judicial forums on the other. The Court, however, has seen these as kindred acts, so they would be hard-pressed to draw such an artificial line. See Eastex, Inc. v. NLRB, 437 U.S. 556, 566 (1978).
 King v. Burwell, 135 S. Ct. 2480, 2500 (2015) (Scalia, J., dissenting).
 Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, 473 U.S. 614, 627–28 (1985) (citations omitted).
 Deposit Guar. Nat’l Bank v. Roper, 445 U.S. 326, 332 (1980).
 See NLRB v. Alt. Entm’t, Inc. 858 F.3d 393, 403 (6th Cir. 2017) (“Rule 23 is not a substantive right, but the Section 7 right to act concertedly through Rule 23, arbitration, or other legal procedures is.”); cf. NLRB v. Jones & Laughlin Steel Corp., 301 U.S. 1, 33 (1937) (describing “the right of employees to self-organization and to select representatives of their own choosing for collective bargaining or other mutual protection without restraint or coercion by their employer” as “a fundamental right”).
 Noting, of course, that jurists whom I greatly admire have disagreed. See, e.g., Alt. Entm’t, Inc., 858 F.3d at 412 (Sutton, J., dissenting) (contending that the theory that the NLRA “encompasses the right to engage in class actions and thus makes . . . arbitration agreement[s] unenforceable” is a theory that “errs at each turn”). Without discussing in great detail, the point of disagreement appears to turn on Judge Sutton’s characterization of the Board’s view as one that “nullifies” the FAA. Id. at 412. That view appears to underpin Judge Sutton’s rationale, but it seems to be an overstatement. Nothing about the Board’s view here “nullifies” the FAA; it simply creates a specific right that constitutes a carve-out of the FAA in this particular field—a scenario envisioned in the FAA itself given its saving clause. Judge Sutton also characterizes this view as finding in Section 7 an unconditional “right to engage in the activity of a class action.” Id. at 415. This is a misstatement: it is not that Section 7 guarantees an unconditional right to do so, other restrictions notwithstanding (e.g., the commonality requirement of Rule 23); it is that Sections 7 and 8, operating in tandem, prohibit employers from interfering with employees’ right to do so. Other requirements may pose an obstacle to employees’ ability to pursue “concerted” litigation, but that is beside the point with respect to determining the meaning and scope of Section 7 of the NLRA. See Murphy Oil USA, Inc., 361 N.L.R.B. 72, 2014 NLRB LEXIS 820, at *2 (Oct. 28, 2014).
 Mitsubishi Motors Corp., 473 U.S. at 627–28.

References: v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 § 7
 v. 
 § 7
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v.