Employment Law Daily Justices to hear arguments in October on class arbitration waivers, Trump’s revised travel ban
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Monday, July 24, 2017

Justices to hear arguments in October on class arbitration waivers, Trump’s revised travel ban

By Pamela Wolf, J.D.

The Supreme Court has posted its argument calendar for the session beginning October 2, 2017. Labor and employment practitioners will be closely watching the arguments presented on the first day of the session in a triad of cases that give the Justices an opportunity to make a definitive ruling on the issue of class arbitration waivers in employment agreements. On October 10, the Court will review consolidated cases challenging President Trump’s revised travel ban that applies to the Muslim-majority countries of Iran, Libya, Somalia, Sudan, Syria, and Yemen.

Class arbitration waivers. In NLRB v. Murphy Oil USA, Inc. (No. 16-307), along with two other cases, Epic Systems Corporation v. Lewis (No. 16-285) and Ernst and Young LLP v. Morris (No. 16-300), the Justices will resolve the question of whether arbitration agreements that bar employees from pursuing work-related claims on a collective or class basis in any forum violate the NLRA. The consolidated cases address the intersection of the NLRA and the Federal Arbitration Act.

The Murphy Oil case seeks review of a Fifth Circuit ruling, consistent with the appeals court’s own precedent in D.R. Horton, that an arbitration agreement was enforceable and not unlawful to the extent it required employees to resolve employment-related claims through individual arbitration, not through class or collective actions. The earlier D.R. Horton decision itself rejected the Board’s analysis of arbitration agreements. The Fifth Circuit held: (1) the NLRA does not contain a “congressional command overriding” the FAA; and (2) the “use of class action procedures … is not a substantive right” under Section 7 of the NLRA. This holding meant that an employer does not engage in an unfair labor practice by maintaining and enforcing an arbitration agreement prohibiting employee class or collective actions and requiring employment-related claims to be resolved through individual arbitration.

In Ernst & Young, the Court will scrutinize a Ninth Circuit holding that agreed with the rationale of the NLRB’s position in D.R. Horton and held that under the unambiguous language of the NLRA, it is unlawful to require employees to sign agreements precluding them from bringing, in any forum, concerted legal claims regarding wages, hours, or other terms and conditions of employment.

In the Epic Systems case, the Justices will review the Seventh Circuit’s similar conclusion that a software company violated the NLRA by imposing a mandatory arbitration agreement that barred employees from seeking class, collective, or representative remedies to wage-and-hour disputes. The class waiver interfered with employees’ protected Section 7 rights to engage in concerted activity, and nothing in the FAA justified enforcing the arbitration agreement in the face of its illegality.

DOJ twist. In an interesting twist, the Department of Justice has flip-flopped under the Trump Administration. The Solicitor General represented the NLRB on its petition for certiorari and its reply to Murphy Oil’s response, arguing in favor of the Board’s position on arbitration agreements. The High Court granted certiorari in the case on January 13, 2017. Subsequently, in an amicus brief on the merits, the Solicitor General, on behalf of the United Sates, is now arguing against the Board in the Murphy Oil case, and in support of the employers in Ernst & Young and Epic Systems.

Travel ban. On October 10, the Court will hear arguments in consolidated cases, Trump v. Hawaii (16-1540) and Trump v. International Refugee Assistance Project (16-1436), that have ping-ponged between district and circuit courts. On June 26, the Court granted certiorari to review the Fourth Circuit and Ninth Circuit decisions affirming injunctions against Sections 2(c), 6(a), and 6(b) of President Trump’s second “travel ban,” and, in a victory for President Trump, also granted in part the Government’s request to stay the injunctions in the meantime.

Injunctions. In separate lawsuits, the International Refugee Assistance Project and the State of Hawaii challenged the revised travel ban on constitutional and statutory grounds, arguing that it violated the Establishment Clause of the First Amendment because it was motivated by religious animus, and that it violated the Immigration and Nationality Act (INA) and other statutes. The International Refugee Assistance Project suit, filed in Maryland, included a John Doe plaintiff who is a lawful permanent resident whose Iranian wife is seeking entry. An individual plaintiff also joined the suit in Hawaii, asserting that the Order prevented his mother-in-law (a Syrian national in Syria) from reuniting with family.

The district court in Maryland granted a nationwide preliminary injunction against enforcement of section 2(c), finding the Establishment Clause claim was likely to succeed. On the same basis, the district court in Hawaii granted a temporary restraining order (later converted to a nationwide preliminary injunction) against the Section 2(c) suspension of entry; its injunction also covered the Section 6(a) suspension of refugee admissions and 6(b) reduction in the refugee cap, as well as the provisions in Sections 2 and 6 pertaining only to internal executive review.

To whom does the stay apply? When it granted certiorari in Trump v. International Refugee Assistance Project, the Court also addressed the federal government’s request for a stay pending resolution of the case. Finding that the balance of equities changes depending on whether a foreign national has a relationship to a person or entity in the United States, the High Court narrowed the injunctions, holding that Executive Order 13780 “may not be enforced against foreign nationals who have a credible claim of a bona fide relationship with a person or entity in the United States. All other foreign nationals are subject to the provisions.” The Court also explained that a “close familial relationship” would be sufficient to gain entry.

The High Court later declined to clarify what amounts to a close family relationship after the State of Hawaii challenged federal guidance interpreting that term. Accordingly, the Hawaii court’s interpretation of the term in a modified preliminary injunction (following a trip to the Ninth Circuit and back) stands, pending the Trump Administration’s appeal to the Ninth Circuit. The lower court concluded that a “close family relationship” does not exclude, as the federal guidance contends, grandparents, grandchildren, brothers-in-law, sisters-in-law, aunts, uncles, nieces, nephews, and cousins of persons in the United States—finding that this definition was the “antithesis of common sense” (See Court rejects Trump Administration’s definition of ‘close familial relationship’ for travel ban purposes, July 14, 2017). The guidance had asserted that “close familial relationship” included only parents (including parents-in-law), spouses, fiances, children, adult sons or daughters, sons-in-law, daughters-in-law, and siblings (whole or half or step relationships).

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