Our colleagues at the Employment Law Worldview blog have written a new post analyzing the U.S. Supreme Court’s recent decision in Epic Systems v. Lewis:

United States Supreme Court Issues “Epic” Decision for Employers

By Daniel Pasternak and Laura Lawless Robertson on May 21, 2018 Posted in Arbitration, Class Action, Collective, News, NLRB, Recent Cases, Wage and Hour
For the past six years, employers have challenged the National Labor Relations Board’s (“NLRB”) position that the National Labor Relations Act (“NLRA”) prohibits employers from requiring employees to forego class and collective action and instead individually litigate their employment-related claims.  (Our prior coverage on this issue has been extensive – see here.)  After a long battle, the United States Supreme Court resolved the question in a highly anticipated decision on May 21, holding that employers can require employees to bring claims in arbitration, and to do so only on an individual basis, without violating employees’ NLRA-protected right to engage in concerted activity for their mutual aid or protection.

The Court’s decision came in the context of three consolidated cases (Epic Systems v. Lewis; Ernst & Young v. Morris; and NLRB v. Murphy Oil USA, Inc.) in which employees challenged their employers’ arbitration agreements that required them 1) to use arbitration as the sole forum for their employment disputes; and 2) prohibited them from joining other employees in a class or collective litigation action.   The employees in these cases (and the NLRB in Murphy Oil) argued that the arbitration agreements were unenforceable to the extent they prohibited them from bringing claims on a class or collective basis because Section 7 of the NLRA protects the right of employees to engage in concerted activity, which, they contended, includes litigating in a class or collective manner to seek redress for an employer’s alleged unlawful act.  Although the employees and NLRB recognized that the Federal Arbitration Act (“FAA”) encourages the enforcement of most arbitration agreements and provides that arbitration agreements ordinarily should be enforced on their terms, the employees and NLRB argued that the FAA’s savings clause – which exempts from enforcement contracts that are unlawful under other laws – applied and the agreements were invalid because they offend the NLRA.

The employers in these cases responded that a reasoned interpretation and the history of the NLRA did not support the employees’ and NLRB’s position, that the FAA’s strong presumption of enforcement of arbitration agreements should apply, and that the NLRB has no expertise in interpreting the FAA or otherwise enforcing arbitration agreements, therefore its interpretation of the lawfulness of class waivers in arbitration agreements was not entitled to deference.As expected, the Supreme Court split along ideological lines, with the five conservative justices forming a majority and the four liberal judges dissenting.  The majority opinion, authored by Justice Gorsuch, recognized that the FAA liberally protects arbitration agreements, including parties’ choice of arbitral forums and rules, and that the Court’s precedent firmly supported that interpretation.  The Court rejected the position that the FAA savings clause could be used to invalidate the agreements, largely because neither the text nor context of the NLRA suggests that class or collective actions were intended to fall within the scope of NLRA “concerted activity.”  The Court was persuaded that class and collective litigation procedures are not created by the NLRA, but rather by the Federal Rules of Civil Procedure and the Fair Labor Standards Act.  The Court concluded that Section 7 of the NLRA applies to actions and conduct that employees “just do themselves,” and does not cover when employee disputes “leave the workplace and enter a courtroom or arbitral forum.”  The Court’s opinion tacitly criticized the NLRB for attempting to create an inconsistency between the NLRA and the FAA when, for nearly 70 years, and as recently as 2010, the NLRB never asserted any such conflict existed.

After years of uncertainty on the continued viability of class and collective action waivers in arbitration agreements, employers now have the clarity they have been seeking.  Employers may lawfully condition employment on an employee’s agreement to resolve any dispute in arbitration and solely on an individual, non-class, non-collective action basis.  Recognizing that the issue has been finally resolved, the NLRB issued a news release shortly after the decision issued, stating that it “respects the Court’s decision” and confirming that “arbitration agreements providing for individualized proceedings, and waiving the right to participate in class and collective actions, are lawful and enforceable.”

Employers should now consider whether to adopt arbitration programs as a strategy to reduce the risk of costly class and collective employment-related litigation, particularly in the context of alleged wage and hour violations, without any lingering concerns about the validity of such agreements.  Though now undisputedly lawful, such agreements are not beyond criticism (i.e., that they are designed to shield employment disputes from view and keep disputes such as those involving claims of harassment or underpayment of wages secret) and may not be consistent with all companies’ corporate culture.  Employers are urged to consult with counsel about whether and, if so, how to structure arbitration programs to best meet their cultural and risk management goals.

DC Circuit Vacates Key Aspects of FCC’s 2015 Order Interpreting the Telephone Consumer Protection Act

On March 16, 2018, in a long-awaited and much-anticipated decision, a unanimous panel of the US Court of Appeals for the District of Columbia Circuit vacated two important rulings from the Federal Communication Commission’s 2015 declaratory ruling and order (FCC Order) concerning the Telephone Consumer Protection Act (TCPA): (1) the Commission’s “clarification” of the types of calling equipment that fall within the TCPA’s definition of “automatic telephone dialing system” (ATDS); and (2) the Commission’s treatment of reassigned wireless numbers for purposes of TCPA liability. On two other rulings, the Commission’s approach to revocation of consent and the scope of its exemption for time-sensitive healthcare calls, the Court upheld the FCC. Continue Reading

Dismissal of Landmark UK Class Action Against MasterCard Appealed; MasterCard Awarded £289,280 in Interim Costs

British Flag Judge's GavelTwo major developments in Walter Hugh Merricks CBE v. MasterCard Inc. – one of the UK’s first-ever opt-out class actions – have occurred in the past several weeks.  First, the proposed class representative Merricks appealed the dismissal of his application for a collective proceedings order (“CPO”) to both the Court of Appeal and the Administrative Court of the High Court.  Second, the Competition Appeal Tribunal (the “CAT”) – the body that dismissed Merricks’s CPO application – awarded interim costs to MasterCard in the amount of £289,280.  Continue Reading

Google Sued in UK “Class Action” Over Unlawfully Collecting iPhone User Data

Yesterday, a consumer watchdog in the UK filed an unprecedented representative action against Google for allegedly misusing personal data.  According to the group Google You Owe Us, between June 2011 and February 2012, Google bypassed the default privacy settings on over 5 million users’ iPhones in the UK to collect user data unlawfully.

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Senate Votes to Overturn CFPB Arbitration Rule

Credit CardsLate last night, the US Senate voted 51 to 50 to repeal a Consumer Financial Protection Bureau (CFPB) rule prohibiting class action waivers in arbitration agreements.  All but two Republicans (Senators Lindsey Graham (SC) and John Kennedy (LA)) voted to repeal the CFPB’s arbitration rule while all Democrats voted against repeal.  Vice President Mike Pence broke the 50-50 tie.  In July, the House also voted to repeal the CFPB arbitration rule.  President Trump is expected to sign the resolution.  In a statement following the Senate vote, the President said:  “By repealing this rule, Congress is standing up for everyday consumers and community banks and credit unions, instead of the trial lawyers, who would have benefitted the most from the CFPB’s uninformed and ineffective policy.”

The Senate vote came on the heels of a report from the U.S. Treasury finding that the CFPB’s arbitration rule would bring little benefit to consumers at great cost.  Earlier this fall, a review by the Office of the Comptroller of the Currency also determined that the CFPB’s arbitration would likely cause significant increase in credit costs to consumers.

The House and Senate voted to repeal the CFPB rule under the Congressional Review Act (“CRA”), which allows Congress to overturn a recently finalized agency rule by a majority vote.  Significantly, the CRA does not just repeal the rule.  Under the CRA, the rule cannot be “reissued in the same form” nor can a “new rule” that is “substantially the same” as the disapproved resolution be issued unless such action is specifically authorized by a law enacted subsequent to the disapproval of the original rule.

In light of these recent developments in Congress and the continued enforcement of arbitration agreements in the courts, it is more important now than ever to review your use of arbitration agreements and ensure that your agreements are up to date, include the latest guidance from courts, and contain the provisions you need, such as class action waivers.  Squire Patton Boggs has seasoned and experienced regulatory, litigation, and policy lawyers who can ensure that your arbitration agreements will be enforceable and effective in reducing litigation costs.

Ninth Circuit Splits From Other Circuits, Rules That 14-Day Deadline To Appeal Class Certification Order May Be Tolled by Motion for Reconsideration Filed After Deadline

Extended DeadlineAs regular class action litigators are aware, Rule 23(f) provides a potential safety valve in case of an adverse class certification order:  within 14 days, a party may file a petition to the applicable court of appeals seeking interlocutory appeal of the order.  However, if a litigant first files a motion for reconsideration after the 14-day time limit, and then – after the motion is denied months later – files a Rule 23(f) petition, is the appellate court without jurisdiction to consider the petition?  In Lambert v. Nutraceutical Corp., the Ninth Circuit answered that question in the negative, finding that the 14-day deadline is not jurisdictional, and therefore may be equitably tolled by such a motion.  Practitioners are advised, however, not to assume that other courts (particularly the Third Circuit, and likely the Tenth and Eleventh Circuits as well) would allow the Rule 23(f) deadline to be so tolled.

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Spokeo on Remand: The Ninth Circuit Finds Plaintiff’s FCRA Injury Is Concrete

Fifteen months after the U.S. Supreme Court’s landmark decision in Spokeo, Inc. v. Robins (Spokeo II), 136 S. Ct. 1540 (2016), the Ninth Circuit issued its opinion on remand.  The only question before the Ninth Circuit was whether the plaintiff’s allegations regarding his injuries – resulting from Spokeo’s alleged violation of the Fair Credit Reporting Act (the “FCRA”) – were sufficiently concrete to confer Article III standing.  In Spokeo III, the Ninth Circuit answered that question in the affirmative, finding that (1) the relevant provisions of the FCRA were established to protect the concrete interests of consumers like plaintiff, and (2) plaintiff alleged actual harm to his concrete interests resulting from Spokeo’s publication of an inaccurate report about him.

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Federal Communications Commission Tackles the “Reassigned Number Problem”

Reassigned numbers have been at the center of the surge in litigation under the Telephone Consumer Protection Act (“TCPA”) during the last few years.  By now the story is well known to businesses that actively communicate with their customers: the customer consents to receive telemarketing and/or informational robocalls[1] at a wireless telephone number, but months or years later the customer changes his or her wireless telephone number and—unbeknownst to the business—the telephone number is reassigned to a different person.  When the recipient of the reassigned number starts receiving calls or messages from the business, a lawsuit often ensues under the TCPA because that party has not consented to receive such calls.  The FCC adopted on July 13 a Second Notice of Inquiry (“Second NOI”) that promises to address this problem in a meaningful way.  Specifically, the Second NOI focuses on the feasibility of “using numbering information to create a comprehensive resource that businesses can use to identify telephone numbers that have been reassigned from a consumer who has consented to receiving calls to a consumer who has not.” Continue Reading

BREAKING: U.K. Tribunal Denies Certification in Merricks v. MasterCard, Dismisses Application for Collective Proceedings Order

Credit CardsThe U.K.’s Competition Appeal Tribunal has just issued its judgment dismissing the application for a Collective Proceedings Order in Walter Hugh Merricks CBE v. MasterCard Inc., holding that the claims asserted “should not be certified under rule 79 as eligible for inclusion in collective proceedings.”  Stay tuned for our analysis of this landmark decision.

Update:  Our colleagues at the UK Finance Disputes and Regulatory Investigations Blog have summarized the judgment here.