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  • WisBar News
    January 17, 2017

    U.S. Supreme Court Will Hear Epic Systems Case on Arbitration Agreements

    Joe Forward

    employment contract

    Jan. 17, 2017 – The U.S. Supreme Court will hear a Wisconsin-based employment case involving Epic Systems Corp., the giant health care software company that required employees to sign arbitration agreements as a condition of continued employment.

    Epic’s arbitration agreements, sent via email, mandated individual arbitration for wage and hour claims. That is, employees could not collectively sue the company in a class action lawsuit. Employees accepted the agreement if they continued working at Epic.

    Jacob Lewis, a technical writer, continued his employment at Epic after receiving the email. But Lewis did not pursue individual arbitration when a dispute on overtime pay arose. Instead, he filed a collective action on behalf of himself and other employees.

    Epic appealed when the U.S. District Court for the Western District of Wisconsin, Judge Barbara Crabb, denied the company’s motion to dismiss. And a three-judge panel for the U.S. Court of Appeals for the Seventh Circuit affirmed in May 2016.

    The panel concluded that Epic’s arbitration agreements violated the National Labor Relations Act (NLRA), which says employees have a right to self-organize, join unions, and “engage in concerted activities for the purpose of collective bargaining or other mutual aid or protection.” The panel said collective actions are “concerted activity.”

    Joe ForwardJoe Forward, Saint Louis Univ. School of Law 2010, is a legal writer for the State Bar of Wisconsin, Madison. He can be reached by email or by phone at (608) 250-6161.

    “Collective, representative, and class legal remedies allow employees to band together and thereby equalize bargaining power,” wrote Judge Diane Wood for the three-judge panel. “Given Section 7’s intentionally broad sweep, there is no reason to think that Congress meant to exclude collective remedies from its compass.”

    U.S. Supreme Court Accepts Case

    Last week, the U.S. Supreme Court granted Epic’s petition for writ of certiorari. The Court consolidated the case with two others on the same issue, one from the U.S. Court of Appeals for the Ninth Circuit and another from the Fifth Circuit Court of Appeals.

    The question presented: “Whether an agreement that requires an employer and an employee to resolve employment-related disputes through individual arbitration, and waive class and collective proceedings, is enforceable under the Federal Arbitration Act, notwithstanding the provisions of the National Labor Relations Act.”

    The panel for the Seventh Circuit Court of Appeals had ruled that the Federal Arbitration Act (FAA) allows arbitration agreements, but only if they do not violate the NLRA.

    Epic’s petition notes that federal and state courts are divided on this issue.

    Three federal courts of appeals and two state supreme courts have concluded that employment agreements mandating individual arbitration are fully enforceable, according to Epic’s petition. But the National Labor Relations Board and two other federal courts of appeals, including the Seventh Circuit, have ruled that such agreements are not enforceable under the NLRA, regardless of the FAA.

    “This divergence in authority renders the dispute resolution process in employer-employee relationships unpredictable, to the detriment of employers and employees alike,” counsel for Epic wrote in the petition for writ of certiorari.

    Neal Katyal is Epic’s counsel of record. According to his law firm bio, he has argued 30 cases before the U.S. Supreme Court and is a former U.S. Acting Solicitor General.

    David Zoeller of Hawks Quindel S.C.’s Madison office is counsel of record for the respondent, Jacob Lewis. Toby Heytens of the Virginia School of Law’s Supreme Court Litigation Clinic is also listed as counsel for Lewis. Heytens, a former U.S. Assistant Solicitor General and law clerk to Justice Ruth Bader Ginsberg, is a native of Superior.

    The case has not yet been scheduled for oral argument.

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