Last spring the Court of Appeals for the 7th Circuit ruled that Epic System Corp.'s arbitration agreement, which prohibits employees from participating in “any class, collective or representative proceeding,” violated the employees’ right to engage in concerted activity under the National Labor Relations Act (NLRA). In doing so, the 7th Circuit became the first federal circuit to side with the National Labor Relation Board ("NLRB") (see D.R. Horton Inc., 357 NLRB 184 (2012) and created a circuit split as the Second, Eighth, and most notably, the Fifth Circuit have rejected this opinion, with the Ninth Circuit acknowledging the trend.
In holding that Epic's arbitration agreement violated the NLRA, the 7th Circuit held that collective actions are "concerted activity" and “[c]ollective, representative, and class legal remedies allow employees to band together and thereby equalize bargaining power,” wrote Judge Diane Wood for the three-judge panel. “Given Section 7’s intentionally broad sweep, there is no reason to think that Congress meant to exclude collective remedies from its compass.”
At issue before the Supreme Court is “Whether an agreement that requires an employer and an employee to resolve employment-related disputes through individual arbitration, and waive class and collective proceedings, is enforceable under the Federal Arbitration Act, notwithstanding the provisions of the National Labor Relations Act.”
What makes this an especially interesting case for me is that my law school classmate and colleague, Attorney David Moeller of Hawks, Quindel is of counsel for the respondent. A huge congrats to him and his firm!
For more on this issue, see here and here.