Epic Systems Corp. v. Lewis, 138 S. Ct. 1612

Background

Employees at Epic, Ernst & Young, and Murphy Oil signed arbitration agreements requiring individualized (one-on-one) arbitration and waiving class/collective procedures; employees sued under the FLSA and state-law analogues seeking collective/class relief.
Employers moved to compel arbitration under the Federal Arbitration Act (FAA); some courts compelled arbitration, while others (and the NLRB in D.R. Horton) held the waivers unlawful under the National Labor Relations Act (NLRA).
The key statutory tension: FAA's directive to enforce arbitration agreements as written (9 U.S.C. §§2–4, including the §2 “saving clause”) versus NLRA §7’s protection of employees’ “concerted activities for . . . mutual aid or protection.”
The NLRB (2012) concluded employer-imposed class/collective-action waivers unlawfully interfere with §7 rights; several circuits deferred to or followed that view, creating a circuit split.
The Supreme Court granted certiorari to resolve whether the FAA requires enforcement of individualized-arbitration clauses notwithstanding NLRA §7 and the NLRB’s position.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the FAA’s §2 "saving clause" permits invalidating arbitration agreements that bar class/collective procedures	Lewis/Morris: §2 saves defenses (including statutory illegality under NLRA) so class/collective waivers are unenforceable	Epic/Ernst & Young: §2 preserves only generally applicable defenses (fraud, duress, unconscionability); defenses that target arbitration’s fundamental attributes (e.g., banning individualized arbitration) are barred	FAA §2 does not save defenses that single out arbitration or undermine arbitration’s fundamental attributes; class/collective-waiver defense fails under Concepcion reasoning; arbitration agreements enforceable as written
Whether NLRA §7 ("concerted activities") displaces or renders unlawful FAA-governed arbitration agreements that bar class/collective actions	Plaintiffs: §7 protects collective legal action as a form of concerted activity and thus §7 manifests a clear congressional intent to override FAA enforcement of class waivers	Employers: §7 focuses on union organization/collective bargaining and does not address judicial/arbitral procedural rules or override the FAA; implied repeal disfavored	No clear and manifest congressional intent in §7 to displace the FAA; courts must harmonize statutes; NLRA does not render class/collective waivers unlawful
Whether Chevron deference requires courts to follow NLRB’s contrary interpretation	Plaintiffs/NLRB: courts should defer to the NLRB’s interpretation that §7 forbids class/collective waivers	Employers/majority: Chevron inapplicable because the Board is interpreting NLRA in a way that alters the scope of the FAA (a statute it does not administer); Executive Branch lacks a single position here	Chevron deference not warranted; courts must resolve the statutory tension using traditional tools of construction

Key Cases Cited

AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011) (holding the FAA’s saving clause does not permit state-law rules that disfavor arbitration’s fundamental attributes, such as mandating classwide arbitration)
Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991) (arbitration agreements can require individual arbitration of statutory employment claims)
American Express Co. v. Italian Colors Restaurant, 570 U.S. 228 (2013) (refusing to find FAA conflict with Sherman Act where class relief was unavailable in arbitration)
Moses H. Cone Mem. Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (1983) (describing the FAA’s liberal federal policy favoring enforcement of arbitration agreements)
Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395 (1967) (FAA applies and arbitration agreements are generally enforceable, subject to §2 defenses)
Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662 (2010) (arbitration procedures, including class arbitration, depend on party agreement and arbitrators cannot infer class procedures absent clear contractual basis)
Circuit City Stores, Inc. v. Adams, 532 U.S. 105 (2001) (construing the FAA’s employment-contract exemption narrowly)
Boys Markets, Inc. v. Retail Clerks, 398 U.S. 235 (1970) (reconciling labor statutes and arbitration/enforcement in the context of collective-bargaining agreements)