Labor/Employment
Jan. 10, 2017
Class action waivers and the NLRA
Under the most recent 9th Circuit ruling in the Uber case, it remains an open question whether the NLRA allows employers to include a class action waiver provision in an independent contractor agreement's arbitration clause. By Sarah Hofstadter
Sarah Hofstadter
Of Counsel, California Appellate Law Group LLP
96 Jessie Street
San Francisco , California 94105
Phone: (415) 649-6700
Email: sarah@calapplaw.com
Stanford Univ Law School
Sarah Hofstadter is of counsel with the California Appellate Law Group LLP, an appellate boutique based in San Francisco. She spent more than a dozen years as a research and staff attorney for jurists on the California Courts of Appeal and the 9th Circuit. Find out more about Sarah and the California Appellate Law Group LLP at www.calapplaw.com
In a widely publicized decision issued last September, the 9th U.S. Circuit Court of Appeals held that arbitration clauses in the contracts between Uber and its drivers were enforceable, and thus precluded the drivers from pursuing their claims in court. Mohamed v. Uber Technologies, Inc., 836 F.3d 1102 (9th Cir. 2016), reversing in part Mohamed v. Uber Technologies, Inc., 109 F.Supp.3d 1185 (N.D. Cal. 2015). The court did, however, leave open a few avenues for Uber drivers, and plaintiffs in the same position, to circumvent arbitration provisions like the ones in the Uber contracts.
One of those avenues was the possibility that the class action waiver clauses in the agreements might be unenforceable as a violation of the National Labor Relations Act. The basis for this argument would be that because the NLRA protects workers' right to act collectively when dealing with their employers, any contractual abridgement of that right, including a ban on bringing class actions, would run afoul of federal labor law. In its September opinion, the court declined to address that issue, holding - in footnote 6 - that the Uber drivers had waived it by failing to raise it earlier in the proceedings. The last sentence of footnote 6 went on to remark, however, that if the agreements had not included a provision allowing drivers to opt out of the arbitration clause, the drivers might have had a valid argument that the class action waiver provision violated the NLRA. With this sentence, the court's opinion detoured into some very controversial territory - and unnecessarily, at that.
In a petition for rehearing en banc filed on Sept. 21, attorneys representing the drivers seized on this dictum as a flaw warranting further review of the case. They argued that the class action waiver provision violated the NLRA whether or not the drivers were permitted to opt out of the arbitration clause. They pointed to another 9th Circuit decision, issued shortly before the Uber opinion, holding (over a dissent) that class action waivers in employment contracts violate the right to engage in "concerted action" under the NLRA. Morris v. Ernst & Young LLP, 834 F.3d 975 (9th Cir. 2016). They also relied on a 7th Circuit decision from earlier in the year holding that the NLRA prohibits employers from requiring employees to waive in advance their right to engage in protected concerted action under the NLRA. Lewis v. Epic Sys. Corp., 823 F.3d 1147, 1155 (7th Cir. 2016).
In fact, as the dissenting judge in Morris pointed out, there is a split in the federal circuit courts, as yet unresolved by the U.S. Supreme Court, regarding whether the NLRA precludes class action waivers in employment agreements.
On Dec. 21, the 9th Circuit panel that issued the original Mohamed opinion denied the drivers' petition for rehearing en banc. In so doing, however, the panel modified its earlier decision by removing the last sentence from footnote 6. As a result, the opinion now says nothing about the merits of the drivers' argument that class action waiver provisions violate the NLRA. In particular, the opinion no longer intimates that because Uber drivers can opt out of the arbitration provision in their contracts, the class action waiver in that provision does not violate the NLRA.
The upshot is that under 9th Circuit law, it remains an open question whether the NLRA allows employers to include a class action waiver provision in the arbitration clause of an independent contractor agreement. It also remains an open question - indeed, even more open than before - whether permitting the contractor to opt out of an arbitration provision will rescue its class action waiver clause.
Submit your own column for publication to Diana Bosetti
For reprint rights or to order a copy of your photo:
Email
jeremy@reprintpros.com
for prices.
Direct dial: 949-702-5390
Send a letter to the editor:
Email: letters@dailyjournal.com