Case 1:17-cv-01502-MJG Document 18 Filed 08/16/17 Page 1 of 19 · 1:17-cv-01502-MJG PLAINTIFFS’ BRIEF ... Plaintiffs Lina Abdul-Hasib and Aliyah Smith (collectively “Plaintiffs”)1

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MARYLAND

LINA ABDUL-HASIB, on behalf of herself

and others similarly situated

Plaintiff,

v.

AEROTEK, INC.,

Defendant.

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1:17-cv-01502-MJG

PLAINTIFFS’ BRIEF IN OPPOSITION

TO DEFENDANT’S MOTION TO DISMISS

Dated: August 16, 2017 Nicholas A. Migliaccio, Esq.

Jason Rathod, Esq.

Migliaccio & Rathod LLP

412 H Street NE, Suite 302

Washington, DC 20002

(202) 470-3520

Peter Winebrake, Esq.*

R. Andrew Santillo, Esq.*

Mark J. Gottesfeld, Esq.*

Winebrake & Santillo, LLC

715 Twining Road, Suite 211

Dresher, PA 19025

(215) 884-2491

Plaintiffs’ Counsel

* Pro Hac Vice Admission Anticipated

Case 1:17-cv-01502-MJG Document 18 Filed 08/16/17 Page 1 of 19

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I. INTRODUCTION AND SUMMARY OF ARGUMENT

This is a collective action lawsuit brought on behalf of employees of Aerotek, Inc.

(“Aerotek”) who worked at its call centers handling customer service phone calls on behalf of

Aerotek’s client CVS Health Corporation. Plaintiffs Lina Abdul-Hasib and Aliyah Smith

(collectively “Plaintiffs”)1 allege that Aerotek violated the Fair Labor Standards Act (“FLSA”)

by requiring phone operators to arrive early to their assigned work station to perform integral and

indispensible “start-up activities” before their paid shift began. These activities include, inter

alia, booting-up an assigned computer, checking emails, and accessing various computer

systems, databases, and programs. According to Plaintiffs, these “off-the-clock” start-up

activities can take an average of 15 to 20 minutes to complete each day.

Aerotek has filed a motion asking the Court to dismiss Plaintiffs’ claims based on an

arbitration agreement Plaintiffs entered into as part of their employment. See Docs. 8-9 (the

“Motion”). Notably absent from Aerotek’s Motion is any mention of the fact at the arbitration

agreement contains a mandatory class/collective action waiver requiring Plaintiffs to arbitrate

their claims strictly on an individual basis. See Doc. 9-2 at p. 1 (“No Covered Claims may be

initiated or maintained on a class action, collective action, or representative action basis either in

court or arbitration”); id. (“All claims must be brought in a party’s individual capacity and unless

the parties expressly agree in writing, Covered Claims may not be joined or consolidated in court

or in arbitration with other individuals’ claims, and no damages or penalties may be sought or

recovered on behalf of other individuals”).

Federal courts are irreconcilably split on whether class/collective action waivers in

1 Beverly McGunigal also joined this lawsuit pursuant to 29 U.S.C. § 216(b). See Doc. 6.

However, in response to Aerotek’s Motion, her consent to join form has been withdrawn. See

Doc. 17.


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employment agreements, such as Aerotek’s here, are legal and enforceable. The Seventh, Ninth,

and Sixth Circuits have each held that these provisions are invalid and unenforceable because

they impermissibly waive employees’ substantive rights under the Nation Labor Relations Act

(“NLRA”). The Second, Fifth and Eighth Circuits have ruled otherwise. While our Court of

Appeals has yet to directly address the legality of class/collective action waivers under the

NLRA, this issue is presently before the U.S. Supreme Court in a case titled National Labor

Relations Board v. Murphy Oil USA, Inc., 16-307 (U.S.)2 and scheduled for oral arguments on

October 2, 2017.

Due to this current uncertainty, Plaintiffs would respectively suggest that the Court

should deny the Motion without prejudice to allow the U.S. Supreme Court to address the

legality of Aerotek’s class/collective action waivers in the next few months. At that time,

Aerotek can renew their Motion should they so choose. See Doc. 9-2 at p. 1 (“If, for any reason,

the class action, collective action, or representative action waiver is held unenforceable or invalid

in whole or in part, then a court of competent jurisdiction, not an arbitrator, will decide the type

of claim as to which the waiver was held unenforceable or invalid”)

However, if the Court concludes that it must resolve this issue now, it should deny the

Motion and hold that Aerotek’s class/collective action waiver as unenforceable based on the

recent federal appellate and district court authority finding similar class/collective action waivers

to be illegal under the NLRA.

II. ARGUMENT

A. Standard.

This Court has observed:

2 Two other appeals concerning this issue (Epic Systems Corp. v. Lewis, 16-285 and Ernst &

Young LLP v. Morris, 16-300) have been consolidated with the Murphy Oil appeal.


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“[M]otions to compel arbitration exist in the netherworld between a motion to

dismiss and a motion for summary judgment.” Shaffer v. ACS Gov’t Servs., Inc.,

321 F. Supp. 2d 682, 683 (D. Md. 2004). Where, as here, the formation or

validity of the arbitration agreement is in dispute, a motion to compel arbitration

is treated as one for summary judgment. Id. at 684 n.1; Rose v. New Day Fin.,

LLC, 816 F. Supp. 2d 245, 251 (D. Md. 2011). Rule 56 of the Federal Rules of

Civil Procedure provides that a court “shall grant summary judgment if the

movant shows that there is no genuine dispute as to any material fact and the

movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c). A

material fact is one that “might affect the outcome of the suit under the governing

law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 2505, 91 L.

Ed. 2d 202 (1986). A genuine issue over a material fact exists “if the evidence is

such that a reasonable jury could return a verdict for the nonmoving party.” Id.

In considering a motion for summary judgment, a judge’s function is limited to

determining whether sufficient evidence exists on a claimed factual dispute to

warrant submission of the matter to a jury for resolution at trial. Id. at 249.

Caire v. Conifer Value Based Care, LLC, 982 F. Supp. 2d 582, 589 (D. Md. 2013).

B. Recent court opinions have created an irreconcilable split on the question of

whether Aerotek’s class/collective action waiver is illegal and unenforceable

under the NLRA.

Prior to 2016, the majority of courts that had examined the legality of class/collective

action waivers in arbitration agreements held that the NLRA did not preclude their enforcement.

This authority includes a divided Fifth Circuit, see D.R. Horton, Inc. v. NLRB, 737 F.3d 344 (5th

Cir. 2013) (“Horton II”), and the Eighth Circuit, see Owen v. Bristol Care, Inc., 702 F.3d 1050

(8th Cir. 2013). In addition, the Second Circuit dedicated a footnote in Sutherland v. Ernst &

Young LLP to adopt the Eighth Circuit’s holding in Owen. See 726 F.3d 290, 297 n.8 (2d Cir.

2013).

However, within the last 15 months, the Seventh, Ninth and Sixth Circuits have each

issued opinions refusing follow this authority and holding that class/collective action waivers

similar to Aerotek’s are unenforceable because they violate the NLRA. See Lewis v. Epic

Systems Corp., 823 F.3d 1147 (7th Cir. 2016) (Wood, C.J.), cert. granted, __ S.Ct. __, 2017 U.S.

LEXIS 691 (Jan.13, 2017); Morris v. Ernst & Young, LLP, 834 F.3d 975 (9th Cir. 2016)


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(Thomas, C.J.), cert. granted, __ S.Ct. __, 2017 U.S. LEXIS 689 (Jan.13, 2017); NLRB v.

Alternative Entertainment, Inc., 858 F.3d 393 (6th Cir. 2017) (Moore, J.).3

Several other federal district courts have followed the lead of the Lewis, Morris and

Alternative Entertainment courts and found class/collective action waivers to be illegal. See,

e.g., Curtis v. Contract Mgmt. Servs., 2016 U.S. Dist. LEXIS 134129 (D. Me. Sept. 29, 2016)

(Torresen, C.J.); Tigges v. AM Pizza, Inc., 2016 U.S. Dist LEXIS 100366 (D. Mass. July 29,

2016) (Young, J.); Totten v. Kellogg Brown & Root, LLC, 152 F. Supp. 3d 1243 (C.D. Cal. 2016)

(Gee, J.); see also Herrington v. Waterstone Mortgage Corporation, 993 F. Supp. 2d 940 (W.D.

Wis. 2014) (Crabb, J.).4 These holdings are also consistent with the NLRB’s determination that

class/collective action waivers violate the NLRA. See, e.g., D. R. Horton, Inc., 357 NLRB 184

(2012) (“Horton I”); Murphy Oil USA, Inc., 361 NLRB (2014).

C. If the Court decides to address the legality Aerotek’s class/collective action

waiver now, it should follow recent federal appellate and district court authority

to hold that similar provisions are invalid and unenforceable because they

violate the NLRA.

As discussed below, if the Court chooses to decide the legality of Aerotek’s

class/collective action waiver now, it should find that this provision violates the NLRA and is

unenforceable.

3 Last fall, the Second Circuit was asked to re-examine its prior holding in Sutherland on this

issue in a case titled Patterson v. Raymours Furniture Co., 659 Fed. Appx. 40 (2d Cir. 2016).

After summarizing the conflicting authority discussed above, Judge Gerald Lynch suggested that

were it not bound by its prior holding in Sutherland, it would probably follow the Lewis and

Morris opinions. Id. at 43 (“If we were writing on a clean slate, we might well be persuaded, for

the reasons forcefully stated in Chief Judge Wood’s and Chief Judge Thomas’s opinions in Lewis

and Morris, to join the Seventh and Ninth Circuits and hold that the EAP’s waiver of collective

action is unenforceable.”). 4 Two district courts within the Fourth Circuit have addressed this issue and held that similar

class/collective action waivers do not run afoul of the NLRA. See CarMax Auto Superstores,

Inc. v. Sibley, 215 F. Supp. 3d 430, 435-36 (D. Md. 2016) (Titus, J.); Green v. Zachry Industrial,

Inc., 36 F. Supp. 3d 669, 674-75 (W.D. Va. 2014) (Conrad, J.).


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1. The Section 7 right to engage in “concerted activities” includes

participation in class and collective action lawsuits concerning wages

and work conditions.

Section 7 of the NLRA states that “[e]mployees shall have the right to self-organization,

to form, join, or assist labor organizations, to bargain collectively through representatives of their

own choosing, and to engage in other concerted activities for the purpose of collective

bargaining or other mutual aid or protection.” 29 U.S.C. § 157. Both federal courts and the

NLRB have interpreted Section 7 as protecting the concerted pursuit of work-related legal claims

such as this lawsuit. See Lewis, 826 F.3d at 1154; Morris, 834 F.3d at 981-82; Alternative

Entertainment, 858 F.3d at 402; Fresh & Easy, 2016 Bankr. LEXIS 3690, at *12-17; Curtis,

2016 U.S. Dist. LEXIS 134129, at *11-12; Totten, 152 F. Supp. 3d at 1254-55; Herrington, 2012

U.S. Dist. LEXIS 36220, at *10-11; Harco Trucking, LLC, 344 NLRB 478, 478-79 (2005); Le

Madri Rest., 331 NLRB 269, 275 (2000); United Parcel Serv., Inc., 252 NLRB 1015, 1018, 1026

& n.26 (1980), enforced, 677 F.2d 421 (6th Cir. 1982); Trinity Trucking & Materials Corp., 221

NLRB 364, 365 (1975), enforced mem., 567 F.2d 391 (7th Cir. 1977).

Chief Judge Wood of the Seventh Circuit addressed this very issue in Lewis and held that

Section 7 gives workers the right to file and participate in class and collective action lawsuits:

Section 7’s “other concerted activities” have long been held to include “resort to

administrative and judicial forums.” Eastex, Inc. v. NLRB, 437 U.S. 556, 566, 98

S. Ct. 2505, 57 L. Ed. 2d 428 (1978) (collecting cases). Similarly, both courts and

the Board have held that filing a collective or class action suit constitutes

“concerted activit[y]” under Section 7. See Brady v. Nat’l Football League, 644

F.3d 661, 673 (8th Cir. 2011) (“[A] lawsuit filed in good faith by a group of

employees to achieve more favorable terms or conditions of employment is

‘concerted activity’ under § 7 of the National Labor Relations Act.”); Altex Ready

Mixed Concrete Corp. v. NLRB, 542 F.2d 295, 297 (5th Cir. 1976) (same);

Leviton Mfg. Co. v. NLRB, 486 F.2d 686, 689 (1st Cir. 1973) (same); Mohave

Elec. Co-op., Inc. v. NLRB, 206 F.3d 1183, 1189, 340 U.S. App. D.C. 391 (D.C.

Cir. 2000) (single employee’s filing of a judicial petition constituted “concerted

action” under NLRA where “supported by fellow employees”); D. R. Horton, 357

N.L.R.B. 2277, at 2278 n.4 (collecting cases). This precedent is in line with the


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Supreme Court’s rule recognizing that even when an employee acts alone, she

may “engage in concerted activities” where she “intends to induce group activity”

or “acts as a representative of at least one other employee.” NLRB v. City

Disposal Systems, Inc., 465 U.S. 822, 831, 104 S. Ct. 1505, 79 L. Ed. 2d 839

(1984).

***

The NLRA does not define “concerted activities.” The ordinary meaning of the

word “concerted” is: “jointly arranged, planned, or carried out; coordinated.”

Concerted, NEW OXFORD AMERICAN DICTIONARY 359 (3d ed. 2010).

Activities are “thing[s] that a person or group does or has done” or “actions taken

by a group in order to achieve their aims.” Id. at 16. Collective or class legal

proceedings fit well within the ordinary understanding of “concerted activities.”

The NLRA’s history and purpose confirm that the phrase “concerted activities” in

Section 7 should be read broadly to include resort to representative, joint,

collective, or class legal remedies. (There is no hint that it is limited to actions

taken by a formally recognized union.) Congress recognized that, before the

NLRA, “a single employee was helpless in dealing with an employer,” and “that

union was essential to give laborers opportunity to deal on an equality with their

employer.” NLRB v. Jones & Laughlin Steel Corp., 301 U.S. 1, 33, 57 S. Ct. 615,

81 L. Ed. 893 (1937). In enacting the NLRA, Congress’s purpose was to “to

equalize the bargaining power of the employee with that of his employer by

allowing employees to band together in confronting an employer regarding the

terms and conditions of their employment.” City Disposal Systems, 465 U.S. at

835. Congress gave “no indication that [it] intended to limit this protection to

situations in which an employee's activity and that of his fellow employees

combine with one another in any particular way.” Id.

Collective, representative, and class legal remedies allow employees to band

together and thereby equalize bargaining power. See Phillips Petrol. Co. v.

Shutts, 472 U.S. 797, 809, 105 S. Ct. 2965, 86 L. Ed. 2d 628 (1985) (noting that

the class action procedure allows plaintiffs who would otherwise “have no

realistic day in court” to enforce their rights); Harry Kalven, Jr. & Maurice

Rosenfield, The Contemporary Function of the Class Suit, 8 U. CHI. L. REV. 684,

686 (1941) (noting that class suits allow those “individually in a poor position to

seek legal redress” to do so, and that “an effective and inclusive group remedy” is

necessary to ensure proper enforcement of rights). Given Section 7’s

intentionally broad sweep, there is no reason to think that Congress meant to

exclude collective remedies from its compass.

Lewis, 823 F.3d at 1152-53; see also id. at 1154 (“Congress was aware of class, representative,

and collective legal proceedings when it enacted the NLRA. The plain language of Section 7

encompasses them, and there is no evidence Congress intended them to be excluded.”). The


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Ninth and Sixth Circuits reached similar conclusions. See Morris, 834 F.3d at 982 (“The pursuit

of a concerted work-related legal claim “clearly falls within the literal wording of § 7 that

‘[e]mployees shall have the right . . . to engage in . . . concerted activities for the purpose of . . .

mutual aid or protection.’” NLRB v. J. Weingarten, Inc., 420 U.S. 251, 260, 95 S. Ct. 959, 43 L.

Ed. 2d 171 (1975) (quoting 29 U.S.C. § 157). The intent of Congress in § 7 is clear and

comports with the Board’s interpretation of the statute.”); Alternative Entertainment, 858 F.3d at

402 (“The core right that § 7 of the NLRA protects is the right to engage in . . . concerted

activities for the purpose of collective bargaining or other mutual aid or protection. Concerted

activity includes resort to administrative and judicial forums.”) (internal citations and quotations

omitted).

Consistent with the above authority, Plaintiffs’ filing of, and participation in, this

class/collective action lawsuit is a “concerted activity” protected by Section 7 of the NLRA.

2. Employees’ rights under Section 7 of the NLRA to engage in concerted

activities through good faith collective litigation are substantive in

nature and not merely procedural.

In Horton II, the Fifth Circuit relied on its characterization of Section 7’s right to

participate in collective litigation as “procedural” in nature rather than “substantive” to hold that

that class/collective action waivers were permissible. See 737 F.3d at 357. However, as

discussed by the Seventh, Ninth and Sixth Circuits, the protections provided under Section 7 are

substantive because they advance the fundamental purpose of the NLRA.

In Morris, the Ninth Circuit cogently described the difference between the “substantive”

and “procedural” rights provided by the statute:

The Supreme Court has often described rights that are the essential, operative

protections of a statute as “substantive” rights. Gilmer v. Interstate/Johnson Lane

Corp., 500 U.S. 20, 29, 111 S. Ct. 1647, 114 L. Ed. 2d 26 (1991) (quoting

Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 628, 105


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S. Ct. 3346, 87 L. Ed. 2d 444 (1985)). In contrast, procedural rights are the

ancillary, remedial tools that help secure the substantive right. See id.;

CompuCredit Corp. v. Greenwood, 565 U.S. 95, 132 S. Ct. 665, 671, 181 L. Ed.

2d 586 (2012) (describing difference between statute’s “guarantee” and

provisions contemplating ways to enforce the core guarantee).

834 F.3d at 985.

Based on this distinction, the Morris court concluded that Section 7 was the core

substantive right provided by the NLRA:

The rights established in § 7 of the NLRA—including the right of employees to

pursue legal claims together—are substantive. They are the central, fundamental

protections of the Act, so the FAA does not mandate the enforcement of a

contract that alleges their waiver. The text of the Act confirms the central role of

§ 7: that section establishes the “Right of employees as to organization.” 29

U.S.C. § 157 (emphasis added). No other provision of the Act creates these sorts

of rights. Without § 7, the Act’s entire structure and policy flounder. For

example, § 8 specifically refers to the “exercise of the rights guaranteed in section

157.” 28 U.S.C. § 158; Bighorn Beverage, 614 F.2d at 1241 (“Section 8(a)(1) of

the Act implements [§ 7's] guarantee”).

The Act’s other enforcement sections are similarly confused without the rights

established in § 7. See, e.g., 29 U.S.C. § 160 (providing powers of the Board to

prevent interference with rights in § 7). There is no doubt that Congress intended

for § 7 and its right to “concerted activities” to be the “primary substantive

provision” of the NLRA. See Gilmer, 500 U.S. at 24.

Id. at 986; see also id. at 980 (“Concerted activity–the right of employees to act together–is the

essential, substantive right established by the NLRA.”).

The Seventh Circuit reached a similar conclusion in Lewis, repeatedly rejecting

the employer’s argument that Section 7 protections are simply procedural:

The right to collective action in section 7 of the NLRA is not, however, merely a

procedural one. It instead lies as the heart of the restructuring of

employer/employee relationships that Congress meant to achieve in the statute.

***

That Section 7’s rights are “substantive” is plain from the structure of the NLRA:

Section 7 is the NLRA’s only substantive provision. Every other provision of the

statute serves to enforce the rights Section 7 protects. Compare 29 U.S.C. § 157

with id. §§ 151-169.


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***

But just because the Section 7 right is associational does not mean that it is not

substantive. It would be odd indeed to consider associational rights, such as the

one guaranteed by the First Amendment to the U.S. Constitution, non-substantive.

823 F.3d at 1160, 1161.

These sentiments were also echoed by the Sixth Circuit in Alternative Entertainment:

[T]he Fifth Circuit relied on its determination that “[t]he use of [Rule 23] class

action procedures . . . is not a substantive right.” D.R. Horton, 737 F.3d at 357.

This determination is correct, but irrelevant. Rule 23 is not a substantive right,

but the Section 7 right to act concertedly through Rule 23, arbitration, or other

legal procedures is. The right to concerted activity is “a core substantive right

protected by the NLRA and is the foundation on which the Act and Federal labor

policy rest.” SolarCity Corp., 2015 NLRB LEXIS 936, 2015 WL 9315535, at *2;

see also NLRB v. Jones & Laughlin Steel Corp., 301 U.S. 1, 33, 57 S. Ct. 615, 81

L. Ed. 893 (1937) (“That [§ 7 right] is a fundamental right. Employees have as

clear a right to organize and select their representatives for lawful purposes as the

[employer] has to organize its business and select its own officers and agents.”).

The NLRB’s position is not that there is a substantive right to utilize a particular

procedure, such as Rule 23, or to bring a legal action in a particular forum; it is

that “employers may not compel employees to waive their NLRA right to

collectively pursue litigation of employment claims in all forums, arbitral and

judicial.” D. R. Horton, Inc., 357 N.L.R.B. 2277, 2012 WL 36274, at *16. The

NLRB has acknowledged that “arbitration must be treated as the equivalent of a

judicial forum.” SolarCity Corp., 2015 NLRB LEXIS 936, 2015 WL 9315535, at

*5 n.15 (citing Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 111 S. Ct.

1647, 114 L. Ed. 2d 26 (1991)).

The best indication that the right to concerted activity is a substantive right is the

structure of the NLRA. See Lewis, 823 F.3d at 1160. In fact, “Section 7 is the

NLRA’s only substantive provision.” Id. Section 7 establishes the right to

concerted activity, and “[e]very other provision of the statute serves to enforce the

rights Section 7 protects.” Id. Section 8, for example, specifies that it is an unfair

labor practice to interfere with § 7 rights. 29 U.S.C. § 158. Section 11 specifies

the procedures the NLRB follows in investigating unfair labor practices, 29

U.S.C. § 161, and § 10 specifies the procedures the NLRA follows in preventing

unfair labor practices, 29 U.S.C. § 160. Section 9 establishes procedures for

collective bargaining and presenting grievances. 29 U.S.C. § 159. The structure

of the NLRA, in which the other sections establish procedures for protecting the

right established in § 7, does not make sense unless the right established in § 7 is a

substantive right.

858 F.3d at 403-04.


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The Lewis, Morris, and Alternative Entertainment opinions are not only consistent with

the NLRB, which has repeatedly interpreted Section 7 as providing workers with substantive

protections to concerted activity, see Murphy Oil USA, Inc., 361 NLRB 72 (2014); D.R. Horton,

357 NLRB 184 (2012),5 but also with several district courts that have reached the same

conclusion, see, e.g., Fresh & Easy, 2016 Bankr. LEXIS 3690, at *19-21 (“The ability to act

collectively is the fundamental right of the NLRA and ‘guarantees employees the most basic

rights of industrial self-determination.’”) (quoting Emporium Capwell Co. v. Western Addition

Community Org., 420 U.S. 50, 61 (1975)); Curtis, 2016 U.S. Dist. LEXIS 134129, at *12 (“The

text and structure of the NLRA demonstrate that the rights protected by Section 7 are

substantive.”); Tigges v. AM Pizza, Inc., 2016 U.S. Dist. LEXIS 100366, *43 (D. Mass. July 29,

2016) (“‘the very essence of labor right[s] under the . . . National Labor Relations Act is

collective action.”); see also Totten, 152 F. Supp. 3d at 1257-58.

3. Aerotek’s class/collective action waiver interferes with employees’

substantive right to engage in concerted legal activity in violation of

Section 8(a)(1) of the NLRA.

An employer violates Section 8(a)(1) of the NLRA by “interfere[ing] with, restrain[ing],

or coerc[ing] employees in the exercise of the rights guaranteed in section 7.” 29 U.S.C. §

158(a)(1). As the Seventh Circuit observed in Lewis: “A contract that limits Section 7 rights

that is agreed to as a condition of continued employment qualifies as ‘interfer[ing] with’ or

‘restrain[ing] . . . employees in the exercise’ of those rights in violation of Section 8(a)(1).” 823

F.3d at 1155; see also Morris, 834 F.3d at 984; Alternative Entertainment, 858 F.3d at 404-05.

Again, the Seventh, Ninth and Sixth Circuits are not alone in reaching this conclusion.

The NLRB and several district courts agree that arbitration agreements precluding

5 The Supreme Court has previously held that the NLRB’s interpretations of the NLRA are to be

given considerable deference. See ABF Freight System, Inc. v. NLRB, 510 U.S. 317, 324 (1994).


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class/collective litigation violate Section 8(a)(1). See, e.g., ZEP, Inc., 363 NLRB 192 (2016);

Securitas Sec. Servs. USA, Inc., 363 NLRB 182 (2016); CVS RX Servs., 363 NLRB 180 (2016);

Bloomingdale’s, Inc., 363 NLRB 172 (2016); UnitedHealth Group, Inc., 363 NLRB 134 (2016);

24 Hour Fitness USA, Inc., 363 NLRB 84 (2015); Kmart Corp., 363 NLRB 66 (2015);

Chesapeake Energy Corp., 362 NLRB 80 (2015); Herrington, 993 F. Supp. 2d at 943-46; Fresh

& Easy, 2016 Bankr. LEXIS 3690, at * 21; Curtis, 2016 U.S. Dist. LEXIS 134129, at *12;

Tigges, 2016 U.S. Dist. LEXIS 100366, at *44-45; Totten, 152 F. Supp. 3d at 1260-66.

Moreover, according to the Sixth Circuit, regardless of whether the NLRA’s right

characterized as “procedural” or “substantive” in nature, the class/collective action waiver’s

limitation on this right would still violate the NLRA:

[E]ven if the right to concerted legal action is procedural, rather than

substantive, it is still a right guaranteed by § 7 of the NLRA. And under § 8 of

the NLRA, “[i]t shall be an unfair labor practice for an employer . . . to interfere

with, restrain, or coerce employees in the exercise of the rights guaranteed in

section 157 of this title [§ 7 of the NLRA].” 29 U.S.C. § 158. Thus, § 8 makes it

illegal to force workers, as a condition of employment, to give up the right to

concerted legal action, whether that right is substantive or procedural. Nat’l

Licorice Co., 309 U.S. at 355-61 (holding that requiring employees to sign

individual contracts waiving their rights to self-organization and collective

bargaining violates § 8 of the NLRA). An employer cannot avoid this core tenet

of federal labor law simply by nesting a waiver of the right to collective legal

action in an arbitration provision. Id. at 364 (“Obviously employers cannot set at

naught the [NLRA] by inducing their workmen to agree not to demand

performance of the duties which it imposes.”).

Alternative Entertainment, 858 F.3d at 407-08 (emphasis supplied).

Aerotek’s mandatory class/collective action waiver clearly impinges on Plaintiffs’

Section 7 rights to participate in concerted legal activity by requiring that they, as a condition of

their employment, assert work related claims in arbitration strictly on an individual basis. Thus,

the class/collective action waiver is illegal under Section 8(a)(1) of the NLRA and

unenforceable.


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4. Because Aerotek’s mandatory class/collective action waiver violates the

NLRA, it is unenforceable under the FAA’s savings clause.

Employers defending the legality of their class/collective action waivers frequently argue

that the Federal Arbitration Act’s (“FAA”) purportedly pro-arbitration edict trumps their

employees’ NLRA rights and requires that their provisions be enforced in totality. This

argument, however, ignores the FAA’s express savings clause in addition to the Supreme Court’s

instruction that arbitration agreements waiving substantive rights (such as those under Section 7

of the NLRA) are unenforceable.

The FAA was enacted to ensure that “courts [] place arbitration agreements on an equal

footing with other contracts, and enforce them according to their terms.” AT&T Mobility LLC v.

Concepcion, 563 U.S. 333, 339 (2011). However, the Supreme Court has specifically held that

that FAA is not limitless. See Proma Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395,

404 n.12 (1967) (FAA’s purpose is “to make arbitration agreements as enforceable as other

contracts, but not more so.”) (emphasis supplied); see also Fresh & Easy, 2016 Bankr. LEXIS

3690, at *25 (“the FAA was not meant to make arbitration agreements more enforceable than

other contracts”). As Judge Young of the District of Massachusetts observed: “The FAA does

not place arbitration agreements on a ‘pedestal’ on which all other legal rights are to be

sacrificed.” Tigges, 2016 U.S. Dist. LEXIS 100366, at *46.

Section 2 of the FAA states that arbitration agreements are “valid, irrevocable, and

enforceable, save upon such grounds as exist at law or in equity for the revocation of any

contract.” 9 U.S.C. § 2. The FAA’s enforcement requirement combined with the savings-clause

“reflect[s] both a liberal policy favoring arbitration and the fundamental principle that arbitration

is a matter of contract.” Concepcion, 563 U.S. at 339.

In essence, “[t]he FAA’s savings clause permits agreements to arbitrate to be invalidated


13

by generally applicable contract defenses, … but not by defenses that apply only to arbitration or

that derive their meaning from the fact that an agreement to arbitrate is at issue.” Lewis, 823

F.3d at 1156 (quoting Concepcion, 563 U.S. at 339). “Illegality is one of those grounds.” See

id. at 1157 (emphasis supplied); accord Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440,

444 (2006); see also Kaiser Steel Corp. v. Mullins, 455 U.S. 72, 83-84 (1982) (“a federal court

has a duty to determine whether a contract violates federal law before enforcing it.”).

As the Ninth Circuit observed in Morris: “When an illegal provision not targeting

arbitration is found in an arbitration agreement, the FAA treats the contract like any other; the

FAA recognizes a general contract defense of illegality. The term may be exercised, or the

district court may decline enforcement of the contract altogether.” 834 F.3d at 985 (internal

citations omitted).

Aerotek’s mandatory class/collective action waiver falls squarely within the FAA’s

savings clause. As discussed above, this provision is illegal under the NLRA because it infringes

on employees’ Section 7 rights in violation of section 8(a)(1). See section III.C.3, supra. The

Seventh Circuit reached this same conclusion in Lewis, holding:

The NLRA prohibits the enforcement of contract provisions like [the employer’s],

which strip away employees’ rights to engage in “concerted activities.” Because

the provision at issue is unlawful under Section 7 of the NLRA, it is illegal, and

meets the criteria of the FAA’s saving clause for nonenforcement.

***

Illegality is a standard contract defense contemplated by the FAA’s savings

clause. See Buckeye Check Cashing, 546 U.S. at 444. If the NLRA does not

render an arbitration provision sufficiently illegal to trigger the savings clause, the

savings clause does not mean what it says.

823 F.3d at 1157, 1159; see also id. at 1159-60 (“To immunize an arbitration agreement from

judicial challenge on a traditional ground such as illegality would be to elevate it over other

forms of contract-a situation inconsistent with the savings clause.’”) (internal quotations


14

omitted); Morris, 834 F.3d at 987 (“[W]e join the Seventh Circuit in treating the interaction

between the NLRA and the FAA in a very ordinary way: when an arbitration contract professes

to waive a substantive federal right, the savings clause of the FAA prevents the enforcement of

that waiver”); Alternative Entertainment, 858 F.3d at 405 (“Mandatory arbitration provisions that

permit only individual arbitration of employment-related claims are illegal pursuant to the NLRA

and unenforceable pursuant to the FAA’s savings clause.”); Totten, 152 F. Supp. 3d at 1263 (a

class action waiver that violates the NLRA “falls squarely within the ambit of the FAA’s savings

clause.”).

Consistent with the FAA’s savings clause the Supreme Court has held that arbitration

agreements are invalid and unenforceable if they require a party to waive substantive federal

rights. See Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 26 (1991) (“‘[B]y agreeing to

arbitrate a statutory claim, a party does not forgo the substantive rights afforded by the statute; it

only submits to their resolution in an arbitral, rather than a judicial, forum.’”) (quoting

Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, 473 U.S. 614, 628 (1985)); see also Lewis,

823 F.3d at 1160 (“Arbitration agreements that act as a ‘prospective waiver of a party’s right to

pursue statutory remedies’—that is, of a substantive right—are not enforceable.”) (quoting

American Express Co. v. Italian Colors Restaurant, __ U.S. __, 133 S. Ct. 2304, 2310 (2013));

Totten, 152 F. Supp. 3d at 1262 (“The Supreme Court has already established that a valid

arbitration agreement cannot require a party to waive a substantive federal right.”).

Under this principle, federal courts have not hesitated to invalidate contractual provisions

(including those in arbitration agreements) that interfere with substantive statutory rights

provided under federal laws such as the NLRA. See Kaiser, 455 U.S. at 86 (“While only the

[NLRB] may provide affirmative remedies for unfair labor practices, a court may not enforce a


15

contract provision which violates [the NLRA]. Were the rule otherwise, parties could be

compelled to comply with contract clauses, the lawfulness of which would be insulated from

review by any court.”); see also Lewis, 823 F.3d at 1160 (citing examples).

5. The FAA’s savings clause eliminates the potential for conflict with the

NLRA.

The Horton II court also relied on a perceived lack of a congressional command in the

NLRA to override the FAA as further proof that the FAA’s pro-arbitration provisions trump the

NLRA’s right to collective action. See 737 F.3d at 360-61. However, “this argument puts the

cart before the horse” because it automatically assumes that the FAA and NLRA cannot co-exist.

See Lewis, 823 F.3d at 1156. As Chief Judge Wood observed in Lewis, the FAA’s savings

clause prevents these statues from conflicting:

[The employer] must overcome a heavy presumption to show that the FAA

clashes with the NLRA. “[W]hen two statutes are capable of co-existence ... it is

the duty of the courts, absent a clearly expressed congressional intention to the

contrary, to regard each as effective.” Moreover, “[w]hen two statutes

complement each other”—that is, “each has its own scope and purpose” and

imposes “different requirements and protections”—finding that one precludes the

other would flout the congressional design. Courts will harmonize overlapping

statutes “so long as each reaches some distinct cases.” Implied repeal should be

found only when there is an “‘irreconcilable conflict’ between the two federal

statutes at issue.”

[The employer] has not carried that burden, because there is no conflict between

the NLRA and the FAA, let alone an irreconcilable one. As a general matter,

there is “no doubt that illegal promises will not be enforced in cases controlled by

the federal law.” The FAA incorporates that principle through its saving clause: it

confirms that agreements to arbitrate “shall be valid, irrevocable, and enforceable,

save upon such grounds as exist at law or in equity for the revocation of any

contract.” Illegality is one of those grounds. The NLRA prohibits the

enforcement of contract provisions … which strip away employees’ rights to

engage in “concerted activities.” Because the provision at issue is unlawful under

Section 7 of the NLRA, it is illegal, and meets the criteria of the FAA’s saving

clause for nonenforcement. Here, the NLRA and FAA work hand in glove.

Lewis, 823 F.3d at 1157 (internal citations omitted); see also id. at 1157-58 (criticizing Horton II


16

for making “no effort to harmonize the FAA and NLRA” and holding that there is “no conflict

between the NLRA and the FAA, let alone an irreconcilable one”); Morris, 834 F.3d at 987

(“The dissent and [the employer] insist that we must effectively ignore the [FAA’s] savings

clause and first search to see which of two statutes will “trump” the other. But this is not the

way the Supreme Court has instructed us to approach statutory construction.”); Alternative

Entertainment, 858 F.3d at 402 (“The NLRA and FAA are compatible because the FAA’s

savings clause addresses precisely the scenario before us. The NLRA prohibits the arbitration

provision on grounds that would apply to any contractual provision, and thus triggers the FAA’s

saving clause. Because of the FAA’s saving clause, the statutes work in harmony.”).

Since the FAA and NLRA are able to co-exist through the FAA’s savings clause, a

congressional command that the NLRA trumps the FAA is not needed to find that Aerotek’s

class/collective action waiver is unenforceable.

6. The FAA does not provide parties with the limitless ability to waive

class/collective action arbitration.

The Supreme Court’s decisions in Concepcion, Italian Colors, and Gilmer are often cited

in support of the argument that the FAA somehow provides parties with the unbridled ability to

waive the use of class/collective action procedures because they interfere with fundamental

attributes of arbitration. This argument was also soundly rejected by the Seventh, Ninth and

Sixth Circuits and should receive the same treatment here.

As Chief Judge Wood detailed in Lewis:

Neither Concepcion nor Italian Colors goes so far as to say that anything that

conceivably makes arbitration less attractive automatically conflicts with the

FAA, nor does either case hold that an arbitration clause automatically precludes

collective action even if it is silent on that point. In Concepcion, the Supreme

Court found incompatible with the FAA a state law that declared arbitration

clauses to be unconscionable for low-value consumer claims. See Concepcion,

563 U.S. at 340. The law was directed toward arbitration, and it was hostile to the


17

process. Here, we have nothing of the sort. Instead, we are reconciling two

federal statutes, which must be treated on equal footing. The protection for

collective action found in the NLRA, moreover, extends far beyond collective

litigation or arbitration; it is a general principle that affects countless aspects of

the employer/employee relationship.

This case is actually the inverse of Italian Colors. There the plaintiffs argued that

requiring them to litigate individually “contravene[d] the policies of the antitrust

laws.” 133 S. Ct. at 2309. The Court rejected this argument, noting that “the

anti-trust laws do not guarantee an affordable procedural path to the vindication of

every claim.” With regard to the enforcement of the antitrust laws, the Court

commented that “no legislation pursues its purposes at all costs.” Id. (quoting

Rodriguez v. United States, 480 U.S. 522, 525-526, 107 S. Ct. 1391, 94 L. Ed. 2d

533 (1987) (per curiam)). In this case, the shoe is on the other foot. The FAA

does not “pursue its purposes at all costs”—that is why it contains a saving clause.

Id. If these statutes are to be harmonized—and according to all the traditional

rules of statutory construction, they must be—it is through the FAA’s saving

clause, which provides for the very situation at hand. Because the NLRA renders

Epic’s arbitration provision illegal, the FAA does not mandate its enforcement.

We add that even if the dicta from Concepcion and Italian Colors lent itself to the

Fifth Circuit’s interpretation [in Horton II], it would not apply here: Sections 7

and 8 do not mandate class arbitration. Indeed, they say nothing about class

arbitration, or even arbitration generally. Instead, they broadly restrain employers

from interfering with employees’ engaging in concerted activities. See 29 U.S.C.

§§ 157, 158. Sections 7 and 8 stay Epic’s hand. (This is why, in addition to its

being waived, Epic’s argument that Lewis relinquished his Section 7 rights fails.)

Epic acted unlawfully in attempting to contract with Lewis to waive his Section 7

rights, regardless of whether Lewis agreed to that contract. The very formation of

the contract was illegal. See Italian Colors, 133 S. Ct. at 2312 (Thomas, J.,

concurring) (noting, in adopting the narrowest characterization of the FAA’s

saving clause of any Justice, that defenses to contract formation block an order

compelling arbitration under FAA).

Lewis, 823 F.3d at 1158-59; see also Morris, 834 F.3d at 988 (“The dissent and [the employer]

attempt to read Concepcion for the proposition that concerted claims and arbitration are

fundamentally inconsistent. But Concepcion makes no such holding.”) (emphasis supplied); id.

at 989 (“[N]othing in the Supreme Court’s recent arbitration case law suggest that a party may

simply incant the acronym ‘FAA’ and receive protection for illegal contract terms anytime the

party suggest it will enjoy arbitration less without those illegal terms.”); Alternative


18

Entertainment, 858 F.3d at 405 (“[Defendant] and amicus also point to Supreme Court cases that

they say control the outcome of this case, most importantly [Italian Colors Restaurant],

[Concepcion], and Gilmer. None of these cases, nor any other Supreme Court case, compels

the conclusion that it is lawful to forbid employees from pursuing collective legal action

regarding their employment-related claims.”) (emphasis supplied).

III. CONCLUSION

For the reasons discussed above, Plaintiffs respectfully request that Defendants’ Motion

be denied.

Dated: August 17, 2017 Respectfully submitted,

/s/ Jason S. Rathod

Nicholas A. Migliaccio, Esq.

Jason Rathod, Esq.

Migliaccio & Rathod LLP

412 H Street NE, Suite 302

Washington, DC 20002

/s/ R. Andrew Santillo

Peter Winebrake, Esq.*

R. Andrew Santillo, Esq.*

Mark J. Gottesfeld, Esq.*

Winebrake & Santillo, LLC

715 Twining Road, Suite 211

Dresher, PA 19025

Plaintiffs’ Counsel

* Pro Hac Vice Admission Anticipated


Documents

Case 1:17-cv-01502-MJG Document 18 Filed 08/16/17 Page 1 of 19 · 1:17-cv-01502-MJG PLAINTIFFS’ BRIEF ... Plaintiffs Lina Abdul-Hasib and Aliyah Smith (collectively “Plaintiffs”)1