"Should employees and employers be allowed to agree that any disputes between them will resolve through one-on-one arbitration? Or should employees always be permitted to bring their claims in class or collective actions, no matter what they agreed with their employers?"
That's how Supreme Court Justice Neil Gorsuch summarized the dispute at the heart of today's 5-4 ruling in Epic Systems Corporation v. Lewis. Writing for a sharply divided Court, Gorsuch held that employees and employers have the legal right to make employment contracts that include one-on-one arbitration. Gorsuch's majority opinion was joined by Chief Justice John Roberts and Justices Anthony Kennedy, Clarence Thomas, and Samuel Alito.
The legal puzzle in the case was how to best interpret the language of two far-reaching federal statutes. Under the Federal Arbitration Act of 1925 (FAA), arbitration agreements made between employers and employees "shall be valid, irrevocable, and enforceable" by the courts. Under the National Labor Relations Act of 1935 (NLRA), employees have the right to form and join labor unions and "to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection." In other words, if a labor contract that includes an individual arbitration agreement is valid under the FAA, does it become invalid when the NLRA is factored in?
Justice Gorsuch thought not. "In the Federal Arbitration Act, Congress has instructed federal courts to enforce arbitration agreements according to their terms—including terms providing for individualized proceedings," he wrote. "Nor can we agree with the employees' suggestion that the [NLRB] offers a conflicting command. It is this Court's duty to interpret Congress's statutes as a harmonious whole rather than at war with one another."
Writing in dissent, Justice Ruth Bader Ginsburg, joined by Justices Stephen Breyer, Sonia Sotomayor, and Elena Kagan, offered a very different view. "Enacted later in time, the NLRA should qualify as 'an implied repeal' of the FAA, to the extent of any genuine conflict." According to Ginsburg, the best reading of applicable federal law in this case is that "employees must have the capacity to act collectively in order to match their employers' clout in setting terms and conditions of employment."
Upping the rhetorical ante, Ginsburg then accused Gorsuch of seeking to resurrect the Supreme Court's pre-New Deal "Lochner-era contractual 'liberty' decisions." Lochner refers to Lochner v. New York, the 1905 Supreme Court ruling which invalidated a state economic regulation on the grounds that it served no legitimate public health or safety purpose. In certain legal circles, to call something Lochner-ian is to dismiss it as tantamount to "judicial activism." Among those who have deployed the case in this insulting fashion was the late conservative legal thinker Robert Bork, who attacked Lochner as "the symbol, indeed the quintessence of judicial usurpation of power." Ginsburg favorably cited Bork in her dissent today.
In his majority opinion, Gorsuch responded directly to this critique. According to Ginsburg's dissent, he observed, "today's decision ushers us back to the Lochner era when this Court regularly overrode legislative judgments." Yet as Gorsuch retorted, "instead of overriding Congress's policy judgments, today's decision seeks to honor them. This much the dissent surely knows. Shortly after invoking the specter of Lochner, it turns around and criticizes the Court for trying too hard to abide the Arbitration Act's 'liberal federal policy favoring arbitration agreements.'"
As for Ginsburg playing the Bork card against him, Gorsuch responded in kind, citing the liberal legal thinker Laurence Tribe, who wrote, "'Lochnerizing' has become so much an epithet that the very use of the label may obscure attempts at understanding."
The Supreme Court's decision in Epic Systems Corp. v. Lewis is available here.