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Article: July 2018: Class Action Litigation Update

July 01, 2018
Business Litigation Reports

Justice Gorsuch’s Opinion in Epic Systems Suggests Justice Scalia-Like Hostility to Class Actions. A professor at Vanderbilt Law School, Brian T. Fitzpatrick, a former law clerk for Justice Antonin Scalia, wrote in a law review article in 2017 that “No Act of Congress, no amendment to the Rules, and no administrative regulation has undercut the class action more than [Justice Scalia’s] FAA [Federal Arbitration Act] opinions.” Brian T. Fitzpatrick, Justice Scalia and Class Actions: A Loving Critique, 92 Notre Dame L. Rev. 1977, 1983 (2017). In light of Justice Scalia’s death, the Senate Democrats’ inability to force a vote on Judge Merrick Garland, President Obama’s nominee to replace Justice Scalia, and the nomination and Senate confirmation of Justice Neil Gorsuch, there is widespread interest in whether Justice Gorsuch will continue Justice Scalia’s hostile treatment of class actions. A May 2018 five-to-four decision written by Justice Gorsuch, Epic Systems Corporation v. Lewis, – S. Ct. – (2018), 2018 WL 2292444 (May 21, 2018), provides a rather strong indication that he will.

The Supreme Court’s decision in Epic Systems arose from three different lawsuits. Justice Gorsuch, writing for the five member majority of Chief Justice Roberts and Justices Kennedy, Thomas and Alito, phrased the issues the three cases presented as: “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?” Id. at *3. In light of how Justice Gorsuch phrased the issues, it is not surprising the five member majority held that employers can insist as a condition to employment that the employee agrees to resolve any labor dispute in individual, one-on-one arbitration.

Justice Ginsburg in a dissent joined by Justices Breyer, Sotomayor and Kagan, viewed the issue presented rather differently: “Does the Federal Arbitration Act . . . permit employers to insist that their employees, whenever seeking redress for commonly experienced wage loss, go it alone, never mind the right secured to employees by the National Labor Relations Act (NLRA) . . . ‘to engage in . . . concerted activities’ for their ‘mutual aid or protection’?” Id. at *18 (quoting NLRA, 29 U.S.C. § 157) (emphasis added). As Justice Ginsburg’s phrasing suggests, at least one hurdle Justice Gorsuch faced in answering that question in the positive (viz., the FLRA does not prohibit employers insisting on one-on-one arbitration of labor disputes) was the quotation emphasized above that Justice Ginsburg included in her question.

Justice Gorsuch solved the issue of why the NLRB’s statutory protection for “concerted actions” for their “mutual aid or protection” did not protect the right to bring class or collective action in arbitration by resort to the interpretative canon of ejusdem generis, Latin for “of the same kind.” The canon instructs that when a statute lists certain rights of a similar type, and then includes more general language which could reasonably imply rights of a different type, the only additional rights that should be found are rights of the same type as those specifically enumerated. See Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 115 (2001). The language that the NLRA guarantees workers “to engage in other concerted activities for the purpose of collective bargaining or other mutual aid and protection” follows protections relating to union organization and collective bargaining, hence Justice Gorsuch limited the emphasized language to other union organization or collective bargaining activities, not to banding together in class or collective actions seeking wage claims common to each of them. See Epic Systems, WL 2292444, at * 9. In her dissent, Justice Ginsburg characterized Justice Gorsuch’s ejusdem genersis analysis as “conspicuously flawed.” Id. at *23.

Justice Gorsuch had hurdles to mount beyond the broad language of the NLRB, including over 75 years of decisions by the NLRB Board, affirmed by the federal courts, that the NLRB protects employees from employers’ demand they give up rights of class or collective action, see id. at *22 (Justice Ginsburg cites NLRB and federal decisions so holding from 1942, 1943, 1964, 1973, 1980, 1982, 2005 and 2011), as well as language from a Supreme Court decision that the “mutual aid” language reached employees seeking “to improve working conditions through resort to administrative and judicial forums,” which Justice Gorsuch dismissed as “dicta,” id. at *13 (quoting Eastex, Inc. v. NLRB, 437 U.S. 556, 565-566 (1978)).

Justice Gorsuch’s decision in Epic Systems follows the path of Justice Scalia’s class action jurisprudence not only in reaching a result limiting the scope of class actions, but also in his confident, fluent and combative tone. Like Justice Scalia, Justice Gorsuch obviously enjoys a good turn of phrase (“the savings clause still can’t save their cause,” id. at *6) and pugilistic jabs at the plaintiffs’ argument (“This argument faces a stout uphill climb,” id. at *8) and the dissenting opinion (“like most apocalyptic warnings, this one proves a false alarm” id. at *15). The decision in Epic Systems indicates that Justice Scalia’s class action jurisprudence is alive and well with Justice Gorsuch as his replacement on the court.