Epic Sys. Corp. v. Lewis

• Decision Date: 21 May 2018
• Docket Number: 16–300,Nos. 16–285,16–307.,s. 16–285
• Parties: EPIC SYSTEMS CORPORATION, Petitioner v. Jacob LEWIS. Ernst & Young LLP, et al., Petitioners v. Stephen Morris, et al. National Labor Relations Board, Petitioner v. Murphy Oil USA, Inc., et al.
• Court: U.S. Supreme Court

138 S.Ct. 1612

200 L.Ed.2d 889

EPIC SYSTEMS CORPORATION, Petitioner

v.Jacob LEWIS.

Ernst & Young LLP, et al., Petitioners

v.Stephen Morris, et al.

National Labor Relations Board, Petitioner

v.Murphy Oil USA, Inc., et al.

Nos. 16–285

16–300

16–307.

Supreme Court of the United States

Argued Oct. 2, 2017.

Decided May 21, 2018.

Paul D. Clement, Washington, DC, for Petitioners in Nos. 16–285 and 16–300.

Jeffrey B. Wall, for the United States as amicus curiae, by special leave of the Court, supporting the petitioners in Nos. 16–285 and 16–300 and respondents in No. 16–307.

Richard F. Griffin, Jr., Washington, DC, for Petitioner, acting as Respondent, in No. 16–307.

Daniel R. Ortiz, Charlottesville, VA, for Respondents in Nos. 16–285 and 16–300.

Paul D. Clement, Kirkland & Ellis LLP, Neal Kumar Katyal, Frederick Liu, Colleen E. Roh Sinzdak, Daniel J.T. Schuker, Hogan Lovells US LLP, Washington, DC, Thomas P. Schmidt, Hogan Lovells US LLP, New York, NY, for Epic Systems Corporation and Murphy Oil USA, Inc.

Noah A. Finkel, Andrew Scroggins, Seyfarth Shaw LLP, Chicago, IL, for Epic Systems Corporation.

Jeffrey A. Schwartz, Jackson Lewis P.C., Atlanta, GA, Daniel D. Schudroff, Jackson Lewis P.C., New York, NY, for Murphy Oil USA, Inc.

David C. Zoeller, William E. Parsons, Caitlin M. Madden, Katelynn M. Williams, Madison, WI, Daniel R. Ortiz, Toby J. Heytens, University of Virginia, School of

Law, Supreme Court Litigation Clinic, Charlottesville, VA, Adam Hansen, Apollo Law LLC, Minneapolis, MN, for Respondent in No. 16–285.

Paul D. Clement, Kirkland & Ellis LLP, Pratik A. Shah, Daniel L. Nash, Akin Gump Strauss Hauer & Feld LLP, Kannon K. Shanmugam, Allison Jones Rushing, A. Joshua Podoll, William T. Marks, Eden Schiffmann, Williams & Connolly LLP, Washington, DC, Rex S. Heinke, Gregory W. Knopp, Akin Gump Strauss Hauer & Feld LLP, Los Angeles, CA, for Petitioners in No. 16–300.

Ross Libenson, Libenson Law, H. Tim Hoffman, Oakland, CA, Max Folkenflik, Margaret McGerity, Folkenflik & McGerity, LLP, New York, New York, for Respondents in No. 16–300.

Richard F. Griffin, Jr., General Counsel, Jennifer Abruzzo, Deputy General Counsel, John H. Ferguson, Associate General Counsel, Linda Dreeben, Deputy Associate General Counsel, Meredith Jason, Deputy Assistant General Counsel, Kira Dellinger Vol, Supervisory Attorney, Jeffrey W. Burritt, Attorney, Washington, DC, for National Labor Relations Board.

Justice GORSUCH delivered the opinion of the Court.

Should employees and employers be allowed to agree that any disputes between them will be resolved through one-on-one arbitration? Or should employees always be permitted to bring their claims in class or collective actions, no matter what they agreed with their employers?

As a matter of policy these questions are surely debatable. But as a matter of law the answer is clear. In the Federal Arbitration Act, Congress has instructed federal courts to enforce arbitration agreements according to their terms—including terms providing for individualized proceedings. Nor can we agree with the employees' suggestion that the National Labor Relations Act (NLRA) offers a conflicting command. It is this Court's duty to interpret Congress's statutes as a harmonious whole rather than at war with one another. And abiding that duty here leads to an unmistakable conclusion. The NLRA secures to employees rights to organize unions and bargain collectively, but it says nothing about how judges and arbitrators must try legal disputes that leave the workplace and enter the courtroom or arbitral forum. This Court has never read a right to class actions into the NLRA—and for three quarters of a century neither did the National Labor Relations Board. Far from conflicting, the Arbitration Act and the NLRA have long enjoyed separate spheres of influence and neither permits this Court to declare the parties' agreements unlawful.

I

The three cases before us differ in detail but not in substance. Take Ernst & Young LLP v. Morris . There Ernst & Young and one of its junior accountants, Stephen Morris, entered into an agreement providing that they would arbitrate any disputes that might arise between them. The agreement stated that the employee could choose the arbitration provider and that the arbitrator could "grant any relief that could be granted by ... a court" in the relevant jurisdiction.

App. in No. 16–300, p. 43. The agreement also specified individualized arbitration, with claims "pertaining to different [e]mployees [to] be heard in separate proceedings." Id., at 44.

After his employment ended, and despite having agreed to arbitrate claims against the firm, Mr. Morris sued Ernst & Young in federal court. He alleged that the firm had misclassified its junior accountants as professional employees and violated the federal Fair Labor Standards Act (FLSA) and California law by paying them salaries without overtime pay. Although the arbitration agreement provided for individualized proceedings, Mr. Morris sought to litigate the federal claim on behalf of a nationwide class under the FLSA's collective action provision, 29 U.S.C. § 216(b). He sought to pursue the state law claim as a class action under Federal Rule of Civil Procedure 23.

Ernst & Young replied with a motion to compel arbitration. The district court granted the request, but the Ninth Circuit reversed this judgment. 834 F.3d 975 (2016). The Ninth Circuit recognized that the Arbitration Act generally requires courts to enforce arbitration agreements as written. But the court reasoned that the statute's "saving clause," see 9 U.S.C. § 2, removes this obligation if an arbitration agreement violates some other federal law. And the court concluded that an agreement requiring individualized arbitration proceedings violates the NLRA by barring employees from engaging in the "concerted activit[y]," 29 U.S.C. § 157, of pursuing claims as a class or collective action.

Judge Ikuta dissented. In her view, the Arbitration Act protected the arbitration agreement from judicial interference and nothing in the Act's saving clause suggested otherwise. Neither, she concluded, did the NLRA demand a different result. Rather, that statute focuses on protecting unionization and collective bargaining in the workplace, not on guaranteeing class or collective action procedures in disputes before judges or arbitrators.

Although the Arbitration Act and the NLRA have long coexisted—they date from 1925 and 1935, respectively—the suggestion they might conflict is something quite new. Until a couple of years ago, courts more or less agreed that arbitration agreements like those before us must be enforced according to their terms. See, e.g., Owen v. Bristol Care, Inc., 702 F.3d 1050 (C.A.8 2013) ; Sutherland v. Ernst & Young LLP, 726 F.3d 290 (C.A.2 2013) ; D.R. Horton, Inc. v. NLRB, 737 F.3d 344 (C.A.5 2013) ; Iskanian v. CLS Transp. Los Angeles, LLC, 59 Cal.4th 348, 173 Cal.Rptr.3d 289, 327 P.3d 129 (2014) ; Tallman v. Eighth Jud. Dist. Court, 131 Nev.Adv.Op. 71, 359 P.3d 113 (2015) ; 808 F.3d 1013 (C.A.5 2015) (case below in No. 16–307).

The National Labor Relations Board's general counsel expressed much the same view in 2010. Remarking that employees and employers "can benefit from the relative simplicity and informality of resolving claims before arbitrators," the general counsel opined that the validity of such agreements "does not involve consideration of the policies of the National Labor Relations Act." Memorandum GC 10–06, pp. 2, 5 (June 16, 2010).

But recently things have shifted. In 2012, the Board—for the first time in the 77 years since the NLRA's adoption—asserted that the NLRA effectively nullifies the Arbitration Act in cases like ours. D.R. Horton, Inc., 357 N.L.R.B. 2277. Initially, this agency decision received a cool reception in court. See D.R. Horton, 737 F.3d, at 355–362. In the last two years, though, some circuits have either agreed with the Board's conclusion or thought themselves obliged to defer to it under Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). See 823 F.3d 1147 (C.A.7 2016) (case below in No. 16–285); 834 F.3d 975 (case below in No. 16–300) ; NLRB v. Alternative Entertainment, Inc., 858 F.3d 393 (C.A.6 2017). More recently still, the disagreement has grown as the Executive has disavowed the Board's (most recent) position, and the Solicitor General and the Board have offered us battling briefs about the law's meaning. We granted certiorari to clear the confusion. 580 U.S. ––––, 137 S.Ct. 809, 196 L.Ed.2d 595 (2017).

II

We begin with the Arbitration Act and the question of its saving clause.

Congress adopted the Arbitration Act in 1925 in response to a perception that courts were unduly hostile to arbitration. No doubt there was much to that perception. Before 1925, English and American common law courts routinely refused to enforce agreements to arbitrate disputes. Scherk v. Alberto–Culver Co., 417 U.S. 506, 510, n. 4, 94 S.Ct. 2449, 41 L.Ed.2d 270 (1974). But in Congress's judgment arbitration had more to offer than courts recognized—not least the promise of quicker, more informal, and often cheaper resolutions for everyone involved. Id., at 511, 94 S.Ct. 2449. So Congress directed courts to abandon their hostility and instead treat arbitration agreements as "valid, irrevocable, and enforceable." 9 U.S.C. § 2. The Act, this Court has said, establishes "a liberal federal policy favoring arbitration agreements." Moses H. Cone Memorial Hospital v. Mercury Constr. Corp., 460 U.S. 1, 24, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983) (citing Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 87 S.Ct. 1801, 18 L.Ed.2d 1270 (1967) ); see id., at 404, 87 S.Ct. 1801 (discussing "the plain meaning of the statute" and "the unmistakably clear congressional purpose that the arbitration procedure, when selected by the parties to a contract, be speedy and not subject to delay and obstruction in the courts").

Not only...