Class Action Update: U.S. Supreme Court to Address Circuit Split on Whether Class-Action Waivers in Employment Arbitration Agreements are Enforceable

In our December 16, 2016, post, we reported that petitions for certiorari to the U.S. Supreme Court were filed with respect to five U.S. Circuit Courts of Appeals opinions concerning whether arbitration clauses requiring individual arbitration in lieu of class or collective lawsuits (class-action waivers) are invalid under federal labor law. There is a clear circuit divide on this issue, the resolution of which will impact thousands of employers and potentially millions of American workers.

The Supreme Court granted certiorari on January 13, 2017, as to opinions rendered by the 5^th, 7^th, and 9^th Circuits. As we previously reported, the petition for review of the 2^nd Circuit decision did not seek plenary review. The court consolidated these appeals and granted one hour for oral argument.

A key question is whether a ninth justice will be confirmed by the time this consolidated appeal is considered by the Supreme Court. If not, it will be interesting to see how the court handles the appeal administratively. For example, might a court action to hold over a decision until next term indicate that it does not believe it can decide the issue without a 4/4 split?

Briefing by the parties should be complete by mid-April 2017, unless extensions are granted. Most likely, and under normal circumstances, the case will be held over until October 2017 for oral argument, which is the start of the court’s next term. It certainly is possible that a ninth justice will be confirmed by that time but this is by no means assured. A Trump appointee might tip the scales in favor of upholding class-action waivers in private employment agreements. Given that the cost of defense of a significant employment class action can be steep—and that is without yet considering any settlement payment to the plaintiff class and a payment of attorney fees to its counsel—curbing the prevalence of class-action employment litigation may have a meaningful financial impact on American businesses. We will keep you posted.