Justices should recognize NLRA trumps FAA

The U.S. Supreme Court will deliver a decision in early 2018 that will answer the question: Is the Federal Arbitration Act inapplicable to employees acting in concert to bring a class action for violation of employment rights? Epic Systems Corp. v. Lewis, 16-285; Ernst & Young LLP v. Morris, 16-300; and NLRB v. Murphy Oil USA Inc., 16-307.

The issue is raised because of a split among the federal circuit courts that have ruled differently in deciding if the National Labor Relations Act conflicts or is in harmony with the FAA's mandate to favor enforcement of contractual arbitration. Employers argue in support of FAA pre-emption that alternative dispute resolution is a cost-effective, expeditious alternative to a class action. They also write that that until recently, no one asserted the NLRA, enacted in 1935, was somehow exempt from the FAA, made law in 1925.

These employer arguments omit to mention that the initial charge to commence arbitration can be over a thousand dollars and that the daily arbitrator's fee can be between $1,000 and $3,000. These pro-employer articles also ignore the reach of the savings clause in the FAA. 9 U.S.C. Section 2 provides that such an arbitration contract is unenforceable "upon such grounds as exist at law or in equity for the revocation of any contract."

Pro-employer advocates also overlook the history of employer strong-arming that led Congress to pass the NLRA. 29 U.S.C. Section 151 provides a multi-paragraph recitation of the purpose and spirit of the act, giving it a unique standing among the various players in the flow of interstate commerce. This unique status was birthed by a fierce struggle of employees to band together to provide some equality of bargaining power for wages and working conditions. 29 U.S.C. Section 151 of the NLRA in its stated purpose, and 9 U.S.C. Section 2, in its broad exception, can and should be read harmoniously.

The cases now awaiting a decision by the Supreme Court are not a repeat of AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011). The Supreme Court found that Concepcion collided with the FAA because it classified a whole group of contracts as per se outside the reach of arbitration. The contracts in question were consumer contracts in the form of adhesion agreements with paragraphs of fine print, usually unread. The NLRA cases now pending are premised on specific federal statutory rights that permit employees to join together for their collective good when bargaining with employers. The difference is significant as the legislative purposes outlined in 29 U.S.C. Section 151 evidence. The court's decision will not be one of weighing levels of unconscionability, but of harmonizing two federal statutory purposes.

Employer arguments that for decades no one has raised the FAA as an unlawful interference overlook the lifecycle of class actions in the U.S. Class actions were virtually unknown in either 1925 or 1935. The procedure hit its peak in the 1970s and flattened or receded in the years following as federal courts tightened certification requirements. See "The Law; The Rise and Fall of the Class-Action Lawsuit," New York Times (Jan. 8, 1988). The argument that the NLRA is silent concerning the FAA on the subject of class action waivers speaks not to legislative intent, but lack of legislative prescience.

In summary, the Supreme Court should rule that the NLRA Sections 7 and 8 jointly state a fundamental policy that employees should be allowed to act in in combination to achieve bargaining parity with powerful employers. The Supreme Court should see that the FAA is itself an interference with the essential legislative purpose of the NLRA when restricting employee class actions.