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In a much awaited decision, the United States Supreme Court ruled 5 to 4 in EPIC SYSTEMS CORP. v. LEWIS, decided May 21, 2018, (available at: https://www.supremecourt.gov/opinions/17pdf/16-285_q8l1.pdf.) that:

 

  1. There exists “a liberal federal policy favoring arbitration agree­ments.”The Federal Arbitration Act (FAA) “requires courts “rigor­ously” to “enforce arbitration agreements according to their terms”. The FAA reflects an “ unmistakably clear congressional purpose that the arbitration procedure, when selected by the par­ties to a contract, be speedy and not subject to delay and obstruction in the courts.”
  2. Contracting parties may craft and structure their arbitration agreement to suit their needs. Courts will give general deference to the enforceability of arbitration agreements.
  3. Where contractual arbitration clauses are silent as to class action, the court will not infer that the parties agreed to engage in class actions where it is not expressly so provided.
  4. Where contractual arbitration clauses are silent or expressly waive participation in class actions, such agreement does not violate an employee’s right to engage in collective or concerted actions under the National Labor Relations Act (NLRA).

 

 

                  In addition to answering a hotly contested issue in the field of employment contracts and class actions, the decision is also notable as one of the first major decisions authored by Justice Gorsuch, the Supreme Court’s newest justice, and gives new insight into how Justice Gorsuch might affect the delicate balance between “liberals” and “conservatives” on the court.

                  Important considerations in ramifications from the Court’s decision include the following:

  1. Arbitration agreements will likely become more prevalent in the private (non-collective bargaining) sector;
  2. Class-action waivers will become more common not only in employment contracts but also in franchise, consumer, residential subdivision development and condominium contracts.
  3. For parties in collective bargaining relationships, some CBAs by express provisions or past practice permit class-action proceedings. Many CBA’s however are silent on this matter. Collective bargaining parties will need to expressly negotiate and address their agreement with regard to the availability of class actions in the scope of claims (contractual and statutory) that will be subject to class-action treatment.
  4. The court speaks approvingly of contractual defenses to the enforcability of arbitration agreements based upon state law principles of unconscionability and illegality.
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