Stephen Morris v. Ernst & Young

In this case, we consider whether an employer violates the National Labor Relations Act by requiring employees to sign an agreement precluding them from bringing, in any forum, a concerted legal claim regarding wages, hours, and terms and conditions of employment. We conclude that it does, and vacate the order of the district court compelling individual arbitration.

I

Stephen Morris and Kelly McDaniel worked for the accounting firm Ernst & Young. As a condition of employment, Morris and McDaniel were required to sign agreements not to join with other employees in bringing legal claims against the company. This “concerted action waiver” required employees to (1) pursue legal claims against Ernst & Young exclusively through arbitration and (2) arbitrate only as individuals and in “separate proceedings.” The effect of the two provisions is that employees could not initiate concerted legal claims against the company in any forum — in court, in arbitration proceedings, or elsewhere.

Nonetheless, Morris brought a class and collective action against Ernst & Young in federal court in New York, which McDaniel later joined. According to the complaint, Ernst & Young misclassified…

dissenting:

Today the majority holds that § 7 of the National Labor Relations Act (NLRA) precludes employees from waiving the right to arbitrate their disputes collectively, thus striking at the heart of the Federal Arbitration Act’s (FAA) command to enforce arbitration agreements according to their terms. This decision is breathtaking in its scope and in its error; it is directly contrary to Supreme Court precedent and joins the wrong side of a circuit split. I dissent.

I

The plaintiffs in this case, Stephen Morris and Kelly McDaniel, entered into an agreement with Ernst & Young that included a program for resolving covered disputes. The parties agreed that the program was “the sole method for resolving disputes within its coverage.” Under the program, the parties agreed they would first try to resolve a covered dispute by mediation. If that failed, either party could choose to proceed to binding arbitration. The agreement set forth the applicable procedures. Subparagraph K provided:

As the Supreme Court has explained, such a waiver of class actions is typical in the arbitration context because the class procedural mechanism “interferes with fundamental attributes of…

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

STEPHEN MORRIS; KELLY No. 13-16599 MCDANIEL, on behalf of themselves and all others D.C. No. similarly situated, 5:12-cv-04964-RMW Plaintiffs-Appellants,

v. OPINION

ERNST & YOUNG, LLP; ERNST

& YOUNG U.S., LLP, Defendants-Appellees.

Appeal from the United States District Court for the Northern District of California Ronald M. Whyte, Senior District Judge, Presiding

Argued and Submitted November 17, 2015 San Francisco, California

Filed August 22, 2016

Before: Sidney R. Thomas, Chief Judge and Sandra S. Ikuta and Andrew D. Hurwitz, Circuit Judges.

Opinion by Judge Thomas; Dissent by Judge Ikuta MORRIS V. ERNST & YOUNG

SUMMARY*

Labor Law

The panel vacated the district court’s order compelling individual arbitration in an employees’ class action alleging that Ernst & Young misclassified employees to deny overtime wages in violation of the Fair Labor Standards Act and California labor laws.

As a condition of employment, the employees were required to sign agreements that contained a “concerted action waiver”…