February 12, 2017 feature

Class Action Waivers Hang in the Balance

A deep circuit split over class action waivers is poised for Supreme Court review

By Sara E. Costello

Many employers require their employees to agree to arbitration to address potential legal claims arising from the workplace.

Agreeing to these type of mandatory arbitration agreements is often a condition to hiring and the terms also include an employee's waiver of the right to file a class action. Certain federal circuit courts are split on the validity of the class action waiver provisions setting up the likelihood for Supreme Court review, say ABA Section of Litigation leaders.

The U.S. Court of Appeals for the Ninth Circuit is the most recent federal appellate court holding that a class action waiver in an arbitration agreement was unenforceable. In Morris v. Ernst & Young, the Ninth Circuit concluded that such a waiver prevented employees' concerted activity and violated the National Labor Relations Act (NLRA). Three federal circuit courts have reached the opposite conclusion and enforced individual arbitration.

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