Contractual Obligation – Arbitration

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7^th Circuit Court of Appeals

Case Name: Jacob Lewis v. Epic Sytems Corporation

Case No.: 15-2997

Officials: WOOD, Chief Judge, ROVNER, Circuit Judge, and BLAKEY, District Judge.*

Focus: Contractual Obligation – Arbitration

Agreement requiring certain employees to bring wage-and-hour claims against the company only through arbitration violated National Labor Relations Act and Federal Arbitration Act and is unenforceable.

“Epic pushes back with three arguments, but none changes the result. It points out the Federal Rule of Civil Procedure 23 simply creates a procedural device. We have no quarrel with that, but Epic forgets that its clause also prohibits the employees from using any collective device, whether in arbitration, outside of any tribunal, or litigation. Rule 23 is not the source of the collective right here; Section 7 of the NLRA is. Epic also notes that courts have held that other employment statutes that provide for Rule 23 class actions do not provide a substantive right to a class action. See, e.g., Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 26 (1991) (Age Discrimination in Employment Act (ADEA)); D.R. Horton, 737 F.3d at 357 (citing court of appeals cases for FLSA). It bears repeating: just as the NLRA is not Rule 23, it is not the ADEA or the FLSA. While the FLSA and ADEA allow class or collective actions, they do not guarantee collective process. See 29 U.S.C. §§ 216(b), 626. The NLRA does. See id. § 157. Epic’s third argument is that because Section 7 deals with how workers pursue their grievances—through concerted action—it must be procedural. But just because the Section 7 right is associational does not mean that it is not substantive. It would be odd indeed to consider associational rights, such as the one guaranteed by the First Amendment to the U.S. Constitution, nonsubstantive. Moreover, if Congress had meant for Section 7 to cover only “concerted activities” related to collective bargaining, there would have been no need for it to protect employees’ “right to … engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.” 29 U.S.C. § 157 (emphasis added).”

Affirmed

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Attorney Derek A. Hawkins is the managing partner at Hawkins Law Offices LLC, where he heads up the firm’s startup law practice. He specializes in business formation, corporate governance, intellectual property protection, private equity and venture capital funding and mergers & acquisitions. Check out the website at www.hawkins-lawoffices.com or contact them at 262-737-8825.