Supreme Court hears arguments on whether employers can require employees to waive right to class action lawsuits, and mandate arbitration of disputes
On the first day of its term earlier this month, the Supreme Court took up the very important question of whether employers may require, in employment contracts, that any controversy between the employer and its employees be decided through arbitration, instead of in court. Employers have increasingly been including in written employment contracts a requirement that employees arbitrate any disputes with the company individually, and waive their rights to resolve disputes through class action lawsuits.
This exposes a tension between federal laws — the Federal Arbitration Act on the one hand, and the National Labor Relations Act, which guarantees employees a right to engage in “concerted activities” for “mutual aid or protection.” In the pending cases before the Supreme Court, employers have argued that the Federal Arbitration Act is unequivocal, and that contractual arbitration provisions must be enforced. The employers also argue that the National Labor Relations Act does not expressly prohibit waivers of class action lawsuits. The employees in these pending cases and the National Labor Relations Board, however, argue that there is no need for the justices to harmonize the National Labor Relations Act and the Federal Arbitration Act, because arbitration agreements cannot be enforced by courts when they are illegal. They argue that the National Labor Relations Act’s reference to the right of employees to engage in “concerted activities” for “mutual aid or protection” has long been interpreted by courts to include the right of employees to pursue joint legal claims, which should include class action lawsuits. Contractual limits on asserting class action lawsuits, therefore, should be seen as illegal and unenforceable. Twenty eight amicus curia briefs were filed by non-parties in these cases, suggesting how important this issue is to both employers and employees.
Amy L. Howe of SCOTUSblog.com reports that, during the Supreme Court’s oral arguments on October 2, a majority of the justices appeared inclined to come down on the side of employers, and uphold employment agreements that require an employee to resolve a dispute through individual arbitration, waiving class action lawsuits. Chief Justice Roberts, in a back-and-forth with a law professor representing one of the employees in the case, observed that a decision in favor of the employees would invalidate employment agreements covering 25 million people – a step that several of the justices would be reluctant to take, particularly given the court’s strong support of arbitration in recent years. Justice Breyer, on the other hand, told an attorney representing employers that he did not see a path for the employers to win without “undermining and changing radically” the labor laws that are the “entire heart of the New Deal.” An attorney representing employers was pressed repeatedly by the court’s four more liberal justices to explain how the employers’ position could be reconciled with the National Labor Relations Act, but the attorney argued that the NLRA was only intended to protect collective action in the workplace, and to allow employees to get to a forum in which to raise their grievances with employers. Once an employee arrives at that forum, the attorney argued, the employer can raise any defenses that it may have, such as the fact that the employee had agreed to arbitrate any disputes individually. Justice Kagan pointed out that another federal statute, the Norris-La Guardia Act, in her view bars courts from enforcing any waiver of an employee’s right to concerted activity.
The U.S. Government initially filed a brief with the National Labor Relations Board asking the justices to review these cases, but with the change of administrations the Government thereafter sided with the employers in briefs and argument. Based on questioning during argument, Ms. Howe of SCOTUSblog believes that employers can be assured of the votes of Justices Roberts, Kennedy and Alito, but the two remaining conservative justices – Thomas and Gorsuch – were silent during oral argument and gave no indication of their thinking. Justice Thomas has voted in favor of a broader reading of the Federal Arbitration Act, however, and Justice Gorsuch generally interpreted arbitration clauses broadly while he was a judge prior to appointment to the Supreme Court. Both sides now wait with anticipation for the Supreme Court’s ruling, which will probably be handed down next spring.
More details of the briefs and oral arguments in these cases may be read at SCOTUSblog.
Local government ordered to pay attorneys’ fees for failing to adequately respond to request for access to public records
The town of Chevy Chase, Maryland, was recently ordered to pay $92,000 in attorneys’ fees to parties that sued the town seeking access to public records under the Maryland Public Information Act (“MPIA”). This litigation demonstrates both the breadth of public access rights under the MPIA, and the danger to political subdivisions of being hostile to such requests.
The controversial Purple Line light rail system planned for the Maryland suburbs of Washington, if constructed, will extend from Bethesda to New Carrolton. Plans call for part of the Purple Line to run along a former railroad right-of-way through Chevy Chase, along what is now the Capital Crescent Trail. Local groups have organized in opposition to the project, and the Town of Chevy Chase has been active in opposition. As part of its opposition to construction of the Purple Line, the town retained the law firm of Sidley Austin to review the Maryland Transit Administration’s Draft Environmental Impact Statement. The town thereafter also retained another law firm, which in turn contracted with two lobbying firms. In early 2014, the Washington Post and other news organizations published articles about the town’s relationship with these firms, and fees the town paid for these services. After reading these articles, an organization that supports public transportation, along with a local blogger, sought access to town records pertaining to the town’s relationship with the firms under the MPIA. For some of these MPIA requests, they requested a fee waiver under the Act. The town denied this waiver of fees.
The MPIA was enacted in 1970, four years after Congress enacted the federal Freedom of Information Act. Its principal purpose is to provide the public a right to inspect records of state or local governments. The Act states that it is to be construed in favor of allowing inspection of public records, with the least cost and least delay to the person that requests the inspection. Under the Act, the government entity that is the custodian of a record is ordinarily entitled to charge a reasonable fee to cover its costs in searching and compiling records. The government may not charge a fee for the first two hours that are needed to search public records in response to a request, however, and it may waive all fees if the applicant and is indigent, or if the government determines that a waiver would be in the public interest.
In early 2015, the blogger and the organization filed a complaint in the Circuit Court for Montgomery County, challenging the town’s denial of their fee waiver requests. The town argued that the organization and the blogger had a prior “history of attacks on the town,” and that previous requests by the organization and the blogger “demonstrated that Plaintiffs sought the fee waiver for their own personal interests in retaliating against the town for its opposition to the Purple Line project.” The town further alleged that they had “engaged in a smear campaign…to retaliate against the town for its position on the proposed Purple Line project.” The Circuit Court ruled in favor of the town, and rejected the challenge to the town’s denial of the fee request. The organization and the blogger appealed.
In a decision handed down in September 2016 (Action Committee for Transit v. Town of Chevy Chase), the Maryland Court of Special Appeals overturned the decision of the Circuit Court, ruling that when presented with a waiver request, a government custodian of records must consider the ability of the applicant to pay the fee, and other relevant factors, in deciding whether the fee waiver would be in the public interest. On appeal from a denial of such a request, the appellate court needs to have sufficient information to satisfy it that the government custodian’s decision was not arbitrary and capricious. In this case, the town informed the applicants of its denial of the fee request without providing any explanation for the basis of its denial. The appellate court found that this type of a bald and conclusory statement provides no insight into the actual considerations that motivated the town to deny the request, thereby preventing the appellate court from adequately considering the actual decision-making process followed, and considering whether the custodian gave appropriate consideration to all factors that it was required to consider under the statute. Even though the town failed to set forth its reasoning in its written denial, the court held that the town still could have done so before the Circuit Court, but its submissions to the court also did not satisfy its burden. Based on the town’s submissions to the Circuit Court, the appellate court found that a significant factor, if not the primary factor, in the town’s decision to deny the fee waiver was that the applicants previously criticized town officials for their opposition to the Purple Line. The appellate court found that the First Amendment’s guarantee of free expression of speech protects persons from the imposition of financial burdens based upon the content of their speech. Therefore, a government custodian cannot deny a fee waiver request under the MPIA simply because the government is upset that the requesters made life difficult for town officials, or because the officials would have preferred the requesters not oppose government policies.
The appellate court remanded the case back to the Circuit Court, with instructions that the court direct the town to respond to the information requests without charge to the requestors, and further directing the Circuit Court to re-consider the request for attorneys’ fees under MPIA. On remand, the Circuit Court in September 2017 awarded the organization and the blogger $92,000 in attorneys’ fees, which was less than the total amount of attorneys’ fees incurred.
The case is interesting because the appellate court took what appears to be a broad statutory grant of discretion to government officials in determining whether a fee waiver is in the public interest, and limited that discretion by requiring the government to clearly articulate reasons for denial of a fee request. The articulated reasons must be unrelated to the content of the applicant’s motivation in asking for access to the public records. The 2016 Court of Special Appeals opinion provides guidance to government officials on how to properly support a denial of a fee request, but it also articulates a clear bias toward allowing public access to government records, and toward waiving fees if the request can be seen as supporting a public interest. The subsequent award of $92,000 by the Circuit Court illustrates the perils of local governments failing to be cooperative in responding to public record access requests.