Arbitration Returns to the US Supreme Court

Arbitration Returns to the US Supreme Court

      In 2011, a case styled at AT&T Mobility v. Concepcion, the US Supreme Court upheld the validity of agreements in a variety of contracts providing that disputes must be resolved through arbitration and that class arbitration is forbidden (i.e., each dispute must proceed on its own individual merits and not as part of a group). Earlier this month, the US Supreme Court agreed to hear three cases asking whether this rule applies equally to employment relationships.

      It is now common in employment relationships for the employer, often via an employee manual or similar document, to require that all of disputes as to the employment relationship be resolved by arbitration. It is also common for those same agreements to preclude class actions. The effect of such a provision is that, to the extent a number of employees allege injury, they must proceed on an individual, not a collective, basis. These rules have been challenged based upon a provision of the National Labor Relations Act that protects the right of workers to engage in “concerted activities.” Several lawsuits have been moving through the courts asserting that this protection of “concerted activities” serves to invalidate any waiver of the right to bring a class action over terms and conditions of employment.

     Two cases, decided by courts sitting in Chicago and San Francisco, have accepted the argument that the “concerted activities” protection precludes enforcement of a class action waiver. Conversely, a court sitting in New Orleans rejected that argument.

      The question will now go to the US Supreme Court. A ruling should come down of by the end of the Courts 2016-2017 session in June of this year.