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On October 2, the U.S. Supreme Court will hear a case that implicates the very concept of collective action. NLRB v. Murphy Oil asks whether it is a violation of workers’ rights to force them to enter into arbitration agreements that prohibit collective or class litigation. Such agreements, often entered into as conditions of employment, require workers who want to sue their employers to do so individually in a private arbitration setting, rather than as a class of aggrieved workers who can pool their resources and knowledge. According to a recent study by the Economic Policy Institute, more than 60 million U.S. workers have now lost access to the courts because of such forced arbitration agreements.
Now, the Trump administration is entering the fray, submitting a brief to the Supreme Court in the Murphy Oil case aimed at advancing an anti-worker legal theory poised to erode protections for workers outside of the union context.
Such efforts could have far-reaching implications. In a 1997 paper for Arizona Law review, professor of law emeritus Jack Greenberg argued, “Civil rights and class actions have an historic partnership,” with class actions routinely used “to challenge discrimination in employment, education, the use of public facilities and housing, to assert prisoners’ rights, and to promote welfare reform, to name just a few areas that conventionally are put in the civil rights category.”
More recently, the NAACP went further, arguing in an amicus brief submitted in August 2016 to the Supreme Court that “American democracy depends upon our unwavering commitment to equal opportunity. Federal labor law honors that commitment by guaranteeing employees the right to challenge workplace discrimination through concerted activity, including picketing, striking and group adjudication of workplace rights.”
Yet, in recent years, the rights of most Americans to engage in concerted legal has greatly diminished. In a 2015 investigative series on this trend, The New York Times reported that, starting in 1999, a “Wall Street-led coalition of credit card companies and retailers” — with soon-to-be Chief Justice of the Supreme Court John Roberts Jr. involved — engineered a plan to get rid of class action lawsuits, because such lawsuits allow individuals to pool their power against companies.
Years later, in a pair of cases decided in 2011 and 2013, with John Roberts Jr. as Chief Justice, the Supreme Court narrowly held that companies could include contract provisions that require plaintiffs to go through arbitration instead of court, while waiving their rights to class actions.
A federal judge interviewed in 2015 by the Times explained that the result is that now, “business has a good chance of opting out of the legal system altogether and misbehaving without reproach.”
The Times study of thousands of arbitrations — most of which are not publicly available — found that more and more consumer and labor and employment cases are being funneled into arbitration. Between 2010 and 2014, there was a 215 percent rise in arbitrations in labor cases over the previous four years. This represents a privatization of the justice system.
Furthermore, in many instances, the funneling of cases to individual arbitrations rather than class actions pressures workers into foregoing the process altogether. Looking at 2010 to 2014, the Times found that Verizon and Time Warner Cable, which have 140 million subscribers combined, faced only 72 arbitrations. After all, who would go up against an outmatched opponent alone?
It is understandable that workers would bow out, given that such arbitration settings are favorable to the employer. Unlike judges who are assigned cases randomly, arbitrators are chosen by the parties, meaning they are chosen regularly to arbitrate before the same corporations. If arbitrators against the corporations too often, there is a strong likelihood that the arbitrators will not be chosen again and therefore lose business in the future. This creates a financial incentive for arbitrators to side with corporations. The Times series notes that dozens of arbitrators “described how they felt beholden to companies. Beneath every decision, the arbitrators said, was the threat of losing business.”
Various attempts have been made to protect individuals from these arbitration provisions, including state laws holding these provisions to be unconscionable, as well as legal arguments claiming that such provisions violate federal anti-trust rules. But these arguments have failed at the Supreme Court. What has remained is the National Labor Relation Board’s (NLRB) position that Section 7 of the National Labor Relations Act (NLRA) protects workers’ substantive rights to join together in class actions. Section 7 provides that workers have “the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.”
The NLRB has taken the position that employment class actions constitute “other concerted activities,” which are protected under labor law. And workers cannot sign away these rights, in the same way that they cannot sign away the right to form or join a union. The Seventh and Ninth Circuit Courts of Appeals agreed with the Board that the employer violated workers’ rights by making them sign arbitration agreements with class action waivers, but the Fifth Circuit held otherwise.
This split in the circuits made the issue ripe for Supreme Court review, and the matter was indeed appealed to the Supreme Court in September 2016, and accepted for review by the Supreme Court in January 2017. At the time, President Obama’s Solicitor General filed a brief with the Supreme Court supporting the NLRB’s position. But Trump’s Solicitor General later changed this position in order to side with employers.
In this case, the Trump administration expresses a view of labor law in the Solicitor’s brief that completely reorients workers’ rights. The brief acknowledges that Section 7 of the NLRA contains what it terms “core” rights, which relate to unionizing and collective bargaining, but pushes aside all other concerted activities as only contained in “residual language” and therefore not deserving of the same level of protections. Such a reading of labor law effectively states that the law’s protections only apply to workers’ activities as they relate to unions.
However, the NLRB clearly states that “the law we enforce gives employees the right to act together to try to improve their pay and working conditions, with or without a union. If employees are fired, suspended or otherwise penalized for taking part in protected group activity, the [NLRB] will fight to restore what was unlawfully taken away.” These rights are far broader than the Trump administration acknowledges in its brief before the Supreme Court, and any limitation of them would greatly diminish the few rights workers have in the workplace.
This week, management-side Republicans gained a majority on the NLRB, and soon a management-side Republican will become the agency’s General Counsel. This new conservative Board is likely to shift labor law away from worker protections, as was the case during the George W. Bush years. However, Trump’s Solicitor’s argument goes much further. It invites the Supreme Court to formally bifurcate and limit workers’ rights to act collectively.
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Moshe Z. Marvit is an attorney and fellow with The Century Foundation and the co-author (with Richard Kahlenberg) of the book Why Labor Organizing Should be a Civil Right.