Supreme Court Employment Cases to Watch

Class Action Waivers – Prepared by Jessica G. Kelly

In 2012, the National Labor Relation Board held that employers cannot enforce class action waivers in arbitration agreements with employees covered by the National Labor Relations Act.  The Seventh Circuit in Lewis v. Epic Systems, agreed, holding that the Federal Arbitration Act does not override Sections 7 and 8 of the National Labor Relations Act, which together make contracts that restrain the employee’s right to engage in “concerted activities” for the purpose of collective bargaining unenforceable.  Rather, the FAA and the NLRA must be read together and to the extent an employer attempts to enforce an individual arbitration clause, it must be deemed “illegal” and unenforceable under the FAA.

The Ninth Circuit in Ernst & Young LLP v. Morris followed the Seventh Circuit rationale.  Other circuits, however, have disagreed. For example, the Fifth Circuit in NLRB v. Murphy Oil, said that the NLRB provisions do not override the FAA because the use of class action procedures is a procedural, rather than a substantive right.  Although the employer had to allow employees to seek relief for unfair labor practices before the NLRB, the employer could enforce an arbitration clause that waived the employee’s right to collective action.

Given this split, the Supreme Court agreed to resolve the issue by accepting certiorari (appeal) of and consolidating the three cases.  Oral argument was held in October.  In an interesting twist, the Solicitor General’s Office, which had originally filed a brief with the NLRB, switched sides after the change in administration and argued in support of the employers.

The Scope of Whistleblower Protections under Dodd Frank – Prepared by Brian J. MacDonough

In Somers v. Digital Realty Trust, Inc., the Supreme Court will likely resolve a split that has developed among the Circuit Courts regarding the scope of whistleblower protections under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, 15 U.S.C. § 78U-6) (Dodd Frank).  Specifically, the Court will address whether the anti-retaliation provision of Dodd Frank applies to internal whistleblower or, rather, is limited to those who disclose information externally to the Securities and Exchange Commission (SEC).

At one end of the spectrum is the Fifth Circuit, which has strictly applied the definition of “whistleblower” (i.e., external disclosure to the SEC) from one subsection of Dodd Frank to its anti-retaliation section.  At the other end are the Second and Ninth Circuits, which have held, consistent with the broader interpretation adopted by the SEC through its own regulations,  that Dodd Frank affords protections to those who report internally as well as those who report to SEC.

Here in Massachusetts, we do not have an appellate decision from First Circuit on this issue.  However, the U.S. District Court for Massachusetts has addressed this matter, agreeing with the broader interpretation adopted by the Second and Ninth Circuits.  In  Ellington v. Giacoumakis, 977 F. Supp. 2d 42, 42 (D. Mass. 2013), Judge Stearns denied an employer’s motion for judgement on pleadings, finding that the employee’s internal complaints to the company’s compliance officer about violations of securities law were sufficient to state a claim for retaliation under Dodd Frank.

Stay tuned to see if the Supreme Court agrees.

Anti-Discrimination Laws and First Amendment Rights – Prepared by Nancy S. Shilepsky

From the 1960s when first enacted by Congress, the laws against discrimination have been challenged as abridging First Amendment rights – both free exercise of religion and freedom of speech.  The Supreme Court has balanced arguably competing interests and, by and large, upheld anti-discrimination laws.   Such laws are being tested again in Masterpiece Cakeshop, Inc. v. Colorado Civil Rights Commission where a baker refused to sell a wedding cake to a same-sex couple to whose marriage he asserted religious objection.   The issues to be decided by the Supreme Court include in what circumstances is commercial expression protected by the First Amendment and whether the balancing applied by the Court to a prohibition against sexual orientation discrimination will be less favorable than that applied to a prohibition against other types of discrimination.

The Supreme Court heard oral argument on December 5, 2017.  As expected, Justice Anthony Kennedy, who expressed concern for the rights of both the couple and the baker, likely holds the deciding vote.