President Trump’s Department of Justice Reverses Stance on Class Action Waivers – to the Benefit of Employers

In a rare move, the U.S.  Department of Justice (“DOJ”) reversed its Obama-Era position in a significant pending Supreme Court case that is expected to resolve a growing circuit split over whether an employment contract that requires an employee to waive his or her right to bring or participate in a class action violates the National Labor Relations Act (“NLRA”).[1] In an amicus curiae brief filed on Friday, June 16, 2017, the DOJ sided with employers, expressly acknowledging that it had “previously filed a petition…on behalf of the NLRB, defending the Board’s view” that class action waivers should be invalidated, but stating that “[a]fter the change in administration, the [DOJ] reconsidered the issue and has reached the opposite conclusion.” In stating that its previous position did not give “adequate weight to the congressional policy favoring enforcement of arbitration agreements that is reflected in the Federal Arbitration Act (“FAA”),” the DOJ argued in its amicus brief that enforcing arbitration agreement with class waivers does not deprive employees under the NLRB, and that enforcement is required under the FAA with certain limited exceptions.

Although the DOJ’s new position on this hotly contested legal issue does not guarantee that the Supreme Court will ultimately find class action waivers to be enforceable, it does make the outcome more likely, particularly because President Trump recently appointed Justice Gorsuch to the Court, giving the conservative-leaning justices a 5-4 advantage on the current Court. 

Campbell Litigation will provide updates on the Supreme Court’s decision concerning class action waivers in arbitration agreements.

[1] The case before the Supreme Court is a consolidation of three cases - Epic Systems Corp. v. Lewis, No. 16-285; Ernst & Young LLP, et al. v. Morris, et al., No. 16-300; National Labor Relations Board v. Murphy Oil USA, Inc., et al., No. 16-307