Ernst & Young LLP v. Morris

Case Updates

The Supreme Court issued its long-awaited decision addressing whether the National Labor Relations Act (NLRA) bars arbitration provisions in employment contracts that include class action waivers. By a 5-4 vote, the Court ruled in favor of employers, affirming the validity of employment agreements that require individual arbitration. The Chamber has been a staunch advocate for this result, filing over a dozen briefs on the issue in the federal courts of appeals and filing briefs at both the certiorari and merits stages.

Section 7 of the NLRA guarantees employees “the right to self-organization, to form, join, or assist labor organizations, to bargain collectively . . . , and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.” In a 2012 case called D.R. Horton, the NLRB (for the first time in its history) took the position that class actions are “concerted activities” under the NLRA, and that any arbitration agreement that waives the ability of employees to participate in a class action therefore violates Section 7. If the NLRB were correct, the vast majority of arbitration agreements used by employers outside of collective bargaining agreements would have been unlawful.

In a decision authored by Justice Gorsuch, the Court rejected the NLRB’s approach. The Court explained that the Federal Arbitration Act (FAA) includes a clear command that courts must enforce arbitration agreements as written, and nothing in the NLRA overrides that requirement. Rather, the phrase “concerted activities” in the NLRA simply refers to the ability of employees to “exercis[e] their right to free association in the workplace.”

The Supreme Court’s decision restores the status quo in place before the NLRB’s D.R. Horton decision and affirms the general ability of employers to use arbitration agreements that include class waivers.

Click here to view the Chamber's amicus brief on the merits.

This case is part of a series of cases in which parties, including the NLRB as a party or amicus, continue to press the NLRB’s position, first announced in the D.R. Horton matter, that agreements between employers and employees to arbitrate disputes on an individual basis violate the NLRA.

Andrew J. Pincus, Evan M. Tager, Archis A. Parasharami, and Matthew A. Waring of Mayer Brown LLP served as co-counsel for the U.S. Chamber of Commerce on behalf of the U.S. Chamber Litigation Center.

The U.S. Chamber filed an amicus brief urging the U.S. Supreme Court to review the question whether individual arbitration agreements protected by the Federal Arbitration Act (“FAA”) are, nonetheless, prohibited in the employment context under the National Labor Relations Act (“NLRA”). Adoption of the anti-arbitration view by a few courts—a view first embodied in the National Labor Relations Board's (“NLRB”) D.R. Horton decision—has produced an untenable split among the lower courts and is of broad national importance, implicating employment contracts involving millions of employees.

The issue is now presented in multiple certiorari petitions before the Court. The Chamber urged the Court, regardless of whether it grants the NLRB’s petition, to grant employers’ petitions to get a full airing of the issues. The Chamber also explained three distinct issues that the Court must address to fully resolve the conflict among the lower courts:

(1) Does the NLRA contain a “contrary congressional command” overriding the FAA?

(2) Does enforcing the arbitration agreement waive a right to pursue statutory remedies under the NLRA?

(3) Is the D.R. Horton rule a basis “at the law or in equity for the revocation of any contract”?

This case is part of a series of cases in which parties, including the NLRB as a party or amicus, continue to press the NLRB’s position, first announced in the D.R. Horton matter, that agreements between employers and employees to arbitrate disputes on an individual basis violate the NLRA.

Andrew J. Pincus, Evan M. Tager, Archis A. Parasharami and Matthew A. Waring of Mayer Brown LLP served as counsel for the U.S. Chamber of Commerce on behalf of the U.S. Chamber Litigation Center.