Circuit Split Widens Over Enforceability of Arbitration Agreements Containing Class/Collective Action Waivers
In an article in the Polsinelli blog “Polsinelli at Work,” shareholder James C. Sullivan writes about how unsettled the law is on employer/employee arbitration provisions containing class/collective action waivers. For now, some guidance on the issue may depend upon where a case is filed, and the Supreme Court likely will resolve the conflicting lower court decisions on the issue.
“Five years ago, the United States Supreme Court in AT&T Mobility LLC v. Concepcion ruled, in a 5-4 decision written by Justice Scalia, that state laws prohibiting the enforcement of consumer contracts containing an arbitration provision with a class action waiver were contrary to the Federal Arbitration Act. Within a year of that decision, the National Labor Relations Board in D.R. Horton ruled that Concepcion did not apply in the context of employee rights under the National Labor Relations Act, specifically § 7 which vest employees with the right to engage in ‘concerted activities,’ ” writes Sullivan.
The Fifth Circuit, the Second and Eleventh Circuits have ruled that class/collective action waivers in employer-employee arbitration agreements are enforceable. But in June 2016, the Seventh Circuit turned the tide, becoming the first federal court of appeals to adopt the NLRB’s rationale in D.R. Horton. And later the Ninth Circuit adopted the reasoning of the Seventh Circuit.
