The Supreme Court handed down a 5-4 opinion Monday morning in Epic Systems Corp v. Lewis, a case that analyzed whether employment agreements requiring individual arbitration are enforceable under the Federal Arbitration Act.
The two key terms here are “individual” and “arbitration.” Arbitration is a form of alternative dispute resolution that requires the parties to resolve their dispute through a binding decision outside a traditional judicial forum—someone other than a judge in a courtroom. Individual means in this context that more than one person who has the same claim against the same employer cannot band together to minimize the costs of litigation, which usually has an evidentiary bias impact on the employer.
Consider for example the recent cases alleging sexual misconduct against various prominent media personalities. The more individuals come forward with the same or similar claims against one person, the stronger the case appears to be for the validity of that collective group of claims.
Essentially, the issue in this case was whether these kinds of “individual arbitration” agreements are enforceable or whether judicial interference in contract terms is warranted. Should the court step in on behalf of the individual employees in every instance and generally hold that requiring individualized proceedings in the form of arbitration is unfair to employees, when the Federal Arbitration Act requires courts to enforce agreements to arbitrate because the Court presumes that the parties selected the terms of their agreement?
In other words, the employees were asking the Supreme Court to allow them to accept the terms of the employment agreement up front, and then decide to opt out when they don’t like the terms they agreed to, basically solely because it benefits them. To side with the employees in this case would have undermined the freedom of contract principle and allow the judicial branch to step in just because an employee got himself into a bad deal.
That’s not how contract law should work, particularly under a constitutional analysis. This opinion highlights the basic difference in conservative versus liberal thinking of the proper role and function of the judicial branch under Article III.
Liberals believe generally that the government should step in and regulate everything, including intervening and advocating for one party when that party “needs” the government. Conservatives believe generally that government regulation and oversight should be limited to review and not substituting its own judgment for either congressional action (i.e. Chevron deference) or an individual’s action. Part of freedom and liberty we enjoy is the opportunity to make bad decisions and learn from them.
I’m delighted by the fact that Justice Neil Gorsuch is consistently proving that he is the most predictable justice currently sitting on the Supreme Court. He was not willing to set the judicial branch in the position of intervening on behalf of one party’s interests, as sympathetic as we may be to their plight.
“As a matter of policy these questions are surely debatable,” Gorsuch wrote. “But as a matter of law the answer is clear. In the Federal Arbitration Act, Congress has instructed federal courts to enforce arbitration agreements according to their terms — including terms providing for individualized proceedings.”
If you don’t like the terms of employment offered (presuming they are otherwise legal), don’t work for a particular company. We have to remember that companies are, after all, freely associating individuals, which is a constitutionally protected right. They should not be situated disparate to individuals just because they are the employer, and the courts have no business siding generally with employees simply because they’re “the little guy.”
Negative reaction on Twitter has focused on the disparate bargaining power of an individual employee to negotiate the terms of their agreement with bigger employers. Certainly, “contracts of adhesion” or basically contracts that are “take it or leave it” have come under some scrutiny by the courts, but the issue here was not a general contract defense, but rather the employees just not liking their particular terms once they found themselves wanting to litigate.
But collective bargaining should be done at the outset, if employees want to band together and assume the benefits and potential detriments of that method of agreement. The solution is not for the Supreme Court to take sides. In the majority opinion, Gorsuch (joined by the Supreme Court’s conservative justices Roberts, Thomas, Alito, and also Kennedy) holds, “The Arbitration Act requires courts to enforce agreements to arbitrate, including the terms of arbitration the parties select. […] These emphatic directions would seem to resolve any argument here” (emphasis added).
In other words, employees can’t agree to terms that allow them to benefit from employment and then later cry about it because they don’t like what they agreed to.
Jenna Ellis (@jennaellisJDFI) is a contributor to the Washington Examiner’s Beltway Confidential blog. She is Director of Public Policy at the James Dobson Family Institute. She is a constitutional law attorney, radio host, and the author of The Legal Basis for a Moral Constitution.
