5th Circuit Upholds Arbitration Agreement Prohibiting Employee Class Action, Overturns NLRB Decision
The US Court of Appeals for the Fifth Circuit on Wednesday ruled that employers can require their employees to sign an arbitration agreement prohibiting them to pursue claims in courts or in a class action. The ruling overturned a prior decision by the National Labor Relations Board which held that requiring employees to sign an arbitration agreement violated the National Labor Relations Act. The case involved a Texas-based home builder that required its employees to sign an arbitration agreement as a condition of employment. The three-judge panel, in a 2-1 decision, stated that pursuant to case law addressing the Federal Arbitration Act the use of class action procedure is not a substantive right. It further noted that the general language of the NLRA is insufficient to override the application of the FAA which favors arbitration. Thus, the court held that the employer's arbitration agreement containing class-action waivers are enforceable under the FAA. However, the court noted that the agreement must clarify that the employee does not waive his right to file a claim with the NLRB. Under the current version the employee would reasonably interpret the agreement as prohibiting such a right. . . .
On June 10, 2013, The Supreme Court announced its decision in Oxford Health Plans LLC v. Sutter. The question in the case was whether an arbitrator exceeds his powers under the Federal Arbitration Act in determining, by consent of the parties, whether the parties’ contract authorized class arbitration. In a unanimous decision, the Court held that the arbitrator did not exceed his powers under the Federal Arbitration Act and affirmed the judgment of the lower courts, which had refused to vacate that arbitrator’s decision. Justice Kagan delivered the opinion of the Court. Justice Alito filed a concurring opinion, which Justice Thomas joined. To discuss the case, the Federalist Society produced a post-decision podcast with Peter “Bo” Rutledge, the Herman E. Talmadge Chair of Law at the University of Georgia School of Law. You can listen to it here.