Lewis Morris / May 22, 2018

SCOTUS: Contracts Mean What They Say

The Left-Right divide on the Court was once again the theme of a case that shouldn’t have been hard.

The Supreme Court handed down a decision Monday stating that companies have the right to require workers to settle employment disputes though individual arbitration if their contracts stipulate it. In the case Epic Systems Corp v. Lewis (to which similar cases Ernst & Young LLP et al. v. Morris et al. and National Labor Relations Board v. Murphy Oil USE, et al. were joined), the Court ruled that employees who agree to arbitration standards upon accepting a job must follow those same standards should a dispute arise. It was a solid ruling that also shows the importance of the current 5-4 divide.

In Epic, employees were seeking to forego arbitration and form a class action case against their employer rather than follow the individual arbitration standard they agreed to upon accepting their jobs and as outlined in the long-standing Federal Arbitration Act. In other words, the employees wished to throw out the rules because they had changed their minds.

The Wall Street Journal notes some history in the dispute: “In 2012 the Obama National Labor Relations Board ruled that arbitration clauses in contracts that ban class actions violate Section 7 of the 1935 National Labor Relations Act. The novel ruling conflicted with even the board’s own general counsel’s opinion in 2010 that the validity of arbitration agreements ‘does not involve consideration of the policies of the National Labor Relations Act.’”

Justice Neil Gorsuch framed the case in two basic questions. Can employers insist that workplace disputes be handled through individual arbitration? Should employees always have an option of bringing claims in collective actions through the courts?

“As a matter of policy these questions are surely debatable,” Gorsuch wrote for the majority, which included Chief Justice John Roberts and Justices Anthony Kennedy, Clarence Thomas and Samuel Alito. “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.”

On the other side of the 5-4 ruling were leftist Justices Stephen Breyer, Sonia Sotomayor, Elena Kagan and Ruth Bader Ginsburg. It was Ginsburg who wrote the particularly shrill dissent, and she insisted on reading it from the bench.

“The court today holds enforceable these arm-twisted, take-it-or-leave-it contracts — including the provisions requiring employees to litigate wage and hours claims only one-by-one,” Ginsburg complained. “Federal labor law does not countenance such isolation of employees.”

Ginsburg’s dissenting opinion supports the idea that workers can accept terms of employment that include individual arbitration, but then opt out of those terms down the line if the worker believes that the terms are no longer suitable for whatever reason.

While the idea of following the rules only when they suit you is a typical component of the leftist worldview, it does not (or should not) hold in contract law or in business. As Gorsuch noted, the law is very clear on this issue. Ginsburg’s belief that this ruling will lead to an erosion of workers’ rights is overstated and misguided, as is the belief that the courts exist to weigh every single dispute between companies and their workers. Moreover, the notion that courts should always side with employees is another component of the leftist outlook that is simply false.

Gorsuch’s ruling was refreshing in that it demonstrated precisely how the Supreme Court should always operate — by examining a case on the merits and respecting the Rule of Law. Ginsburg’s dissent clearly demonstrated all that is wrong with the judiciary. She chose to engage in speculation and tried to create a ruling not based on what the law is but what she believes it should be.

Indeed, Gorsuch addressed this, writing, “This Court is not free to substitute its preferred economic policies for those chosen by the people’s representatives.”

Hopefully, Gorsuch’s ruling in this case will be just one of many level-headed rulings we can expect from the Court as this term comes to a close. There are some blockbuster cases yet to come.

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