By Don Wallis.
The Court reaffirms the intended purpose of the Federal Arbitration Act.
The 1925 Federal Arbitration Act (FAA) was crafted to allow litigants with a mechanism for resolving disputes that is less time consuming and less expensive than formal trials.
The Act makes it financially feasible for employees to contest unfair labor practices. Courts, including the U.S. Supreme Court, have continually rejected challenges to the arbitration process and reaffirmed that arbitration decisions are final and cannot be appealed.
These decisions have generally been perceived as pro-labor.
The Supreme Court’s recent decision in Epic Systems v. Lewis, No. 16-285, May 21, 2018 is a reminder that the FAA provides a reasonable alternative to expensive, protracted litigation for businesses as well as employers. It rebukes the National Labor Relations Board for overreaching.
The NLRB sought to create an exception to the FAA that would allow unions to represent multiple employees in what would amount to class action suits. Unions claimed the NLRB ruling would enable employees to litigate cases a single employee could not afford.
The Supreme Court’s 5-4 rejects this argument.
As an editorial in THE WALL STREET JOURNAL notes, “In 2012 the Obama National Labor Relations Board ruled that arbitration clauses in contracts that ban class action violate Section 7 of the 1935 National Labor Relations Act. The novel ruling conflicted with even the board’s own general counsel’s opinion in 2010 that the validity of arbitration agreements ‘does not involve consideration of the policies of the National Labor Relations Act.’”
“A 5-4 ruling the other way would have abrogated hundreds of thousands of employment contracts and sent trial lawyers to the races.”
While no law guarantees that all litigants will always be treated equitably all the time, the Federal Arbitration Act has provides litigants with a comparatively affordable framework in which to air and resolve their grievances.
The Supreme Court ruled correctly in not allowing the NLRB to subvert the intended purpose of the Federal Arbitration Act.
Arbitration Wins at the High Court, THE WALL STREET JOURNAL, May 22, 2108.
Don Wallis has more than 40 years experience in residential and commercial construction, and land development. He also has a law degree and currently teaches Environmental Law at Santa Fe Community College.