The ink was barely dry on Neil Gorsuchâs opinion inÂ Epic Systems v. MorrisÂ before Ogletree Deakins â a management-side employment law firm that earned nearlyÂ three-quarters of a million dollars in profits per equity partnerÂ last year â started hawking an âinnovative new productâ that would enable employers to enrich themselves at the expense of their most vulnerable workers.
Epic SystemsÂ held that employers may force their employees, under pain of termination, to sign away their right to bring a class action lawsuit against their employers. It is anÂ invitation â if not an incentive â for wage theft, as class actions are often the only recourse available to someone robbed of a few hundred, or even a few thousand, dollars by their boss.
Employment lawyers have known this decision was coming for months. And many of them are going to cash in.
Yet, while thisÂ Epic SystemsÂ decisionÂ became inevitable the minute Gorsuch claimed ownership of a Supreme Court seat that Senate Republicans held open more than a year until Donald Trump could fill it, the Courtâs decision would shock the lawmakers who actually enacted the laws at issue in this case.
Gorsuchâs opinion is a mix of willful historical ignorance, ideological blindness, and a smug insistence that he has a special window into the law that many of his more experienced colleagues lack. Now, it threatens to revive one of the Supreme Courtâs most disgraceful chapters.
The newÂ Lochnerism
The conceit of GorsuchâsÂ Epic SystemsÂ opinion is that workers and their bosses sit down like equal bargaining partners to hash out their terms of employment. âShould employees and employers be allowed to agree that any disputes between them will be resolved through one-on-one arbitration?â Gorsuch begins his opinion with a question framed as if it could only have one answer. âOr should employees always be permitted to bring their claims in class or collective actions, no matter what they agreed with their employers?â
In reality, the facts ofÂ Epic SystemsÂ bear little resemblance to the civilized negotiation presented by Gorsuch. Workers at one of the companies at issue in this case received an email one day informing them that they must give up their right to bring class actions. Employees whoÂ âcontinue[d] to work at Epic,â according to the email,Â would âbe deemed to have acceptedâ this agreement. A similar email was sent to the employees of one of the other companies that prevailed inÂ Epic Systems.
These employees, in other words, only âagreedâ to the terms proposed by their bosses in the same sense that a person accosted by a gunman in a dark alley âagreesâ to give up their wallet. Their choice was to give up their rights or to immediately lose their jobs.
This is not the first time the Supreme Court ignored the fairly basic fact that employers typically have far more bargaining power than their workers â and can use this greater share of power to exploit their employees.
In itsÂ anti-canonicalÂ decision inÂ Lochner v. New York, the Supreme Court struck down a late nineteenth century law prohibiting bakeries from overworking their bakers. Such a law, Justice Rufus Peckham wrote for the Court, âinterferes with the right of contract between the employer and employes [sic],â adding that âthere is no contention thatâ bakery workers were unable âto assert their rights and care for themselves without the protecting arm of the State.â
In reality, bakers facedÂ horrific working environmentsÂ before the âprotecting arm of the Stateâ intervened to improve these conditions.
At the time, the overwhelming majority of New York City bakeries were basement operations located in the same tenements in which their customers lived. ââFilth, cobwebs and verminâ filled these basements,â according to a city inspectorâs report. Sewer pipes ran through many such bakeries, leaking their raw contents onto the workers, their workplaces, and the dough. In one such bakery,Â ââthe water closet walls were literally blackâ with roachesÂ from floor to ceiling.â
Bakeries often had no windows and little ventilation, filling the air with irritating flour dust and fumes. Ovens heated the workplaces into infernos. Low ceilings required many workers to crouch, and the floors were typically either dirt or rotten wood filled with rat holes.
The average bakery worker labored at least 13 hours a day in these conditions, though some worked as much as 126-hours a week. Workers, moreover, were often required to sleep on the very same tables where they prepared the dough, and the cost of these makeshift beds were then deducted from their wages.
These were the sorts of conditions that the free market offered workers who, without the law to protect them, were forced to bargain alone with their employers. Perhaps, in some narrow sense, these workers âagreedâ to work countless hours among the roaches, the heat, and the raw sewage. But only a judge blinded by their own ideology could conclude that these workers had any real choice in the matter.
By the mid 1930s, Congress understood what men like Peckham and Gorsuch refused to see. As Justice Ruth Bader Ginsburg explains in herÂ Epic Systemsdissenting opinion, Congress enacted the National Labor Relations Act (NLRA) on the premise that âemployees must have the capacity to act collectively in order to match their employersâ clout in setting terms and conditions of employment.â
The law may not have the power to equalize bargaining power between workers and their bosses, but, by enabling those workers to join together, it could give them a fighting chance.
One provision of the NLRA â a provision that Gorsuch refused to honor in hisÂ Epic SystemsÂ opinion â provides that âemployees shall have the right to self-organization, to form, join, or assist laborÂ organizations, to bargain collectively through representatives of their own choosing, andÂ to engage in other concerted activitiesÂ for the purpose of collective bargaining or other mutual aid or protection.â Class actions are precisely this â a form of âconcerted activityâ that workers may use for their own âmutual aid or protection.â
The idea behind a class action is that multiple workers with the same legal claim against their employer can join together under a single lawsuit. Such concerted activity is necessary for the simple reason that litigation is often prohibitively expensive. As Ginsburg notes in her dissent, employers at one of the companies at issue inÂ Epic Systems âwould likely have to spend $200,000 to recover only $1,867.02 in overtime pay and an equivalent amount in liquidated damages.â
Only a truly fanatical worker â and one with very deep pockets â might be willing to spend such an exorbitant sum for such a small amount of money. The only real hope for such a worker is to join a class action lawsuit with colleagues who were also cheated out of their fair pay.
Except that workers will soon be unable to seek this remedy. An estimated â23.1% of nonunionized employees are now subject to express class-action waivers in mandatory arbitration agreements,â according to Ginsburgâs dissent. Now that the Supreme Court has endorsed such illegal agreements, this number will skyrocket. Law firms are already lining up to show employers how to draft such agreements, and workers throughout the country will soon be left powerless against wage theft.
Gorsuch concludes hisÂ Epic SystemsÂ opinion with a flourish. âThe policy may be debatable but the law is clear,â Trumpâs Supreme Court nominee claims. âCongress has instructed that arbitration agreements like those before us must be enforced as written.â
As it turns out, Gorsuch is half correct. The law is, indeed, clear. It just doesnât say what he wants it to say.
The contracts at issue inÂ Epic SystemsÂ are âforced arbitrationâ contracts, meaning that they not only strip employees of their right to bring a class action, they also require employment disputes to be resolved in a privatized arbitration system thatÂ tends to favor employers more than real courts of law. Though a law known as the Federal Arbitration Act protects arbitration agreements in certain contexts, that very same lawÂ explicitly exempts employment contracts.
Nevertheless, in its 2001 decision inÂ Circuit City v. Adams, the Supreme Court wrote this safeguard for workers out of the law.
Circuit CityÂ turned on two interlocking provisions of the Federal Arbitration Act. The first provides that âA written provision in any maritime transaction or a contract evidencing aÂ transaction involvingÂ commerceÂ to settle by arbitration a controversy thereafter arising out of such contract or transaction . . . shall be valid, irrevocable, and enforceableâ except under limited circumstances. The second exempts âcontracts of employment of seamen, railroad employees, orÂ any other class of workers engaged in foreign or interstate commerce.â
To understand the scope of these two provisions, itâs important to understand some of the history surrounding the Federal Arbitration Act, which was enacted in 1925.
In the late nineteenth and early twentieth century â the same period when the Court handed downÂ LochnerÂ â the Supreme Court also imposed strict limits on Congressâ constitutionally granted power to âregulate commerce with foreign nations, and among the several states.â During this period, the Court defined the word âcommerceâ narrowly, to encompass little more than the transit of goods across state lines. Manufacture of goods to be sold, mining of raw materials, and the farming of commodities were all deemed to be beyond Congressâ power to regulate.
Among other things, the Court relied on this stingy definition of the word âcommerceâ to strike down a federal law banning the interstate sale of goods manufactured byÂ child labor.
In the 1930s, a little more than a decade after the Federal Arbitration Act became law, the Supreme Court abandoned this narrow understanding of Congressâ power to regulate commerce. Under modern precedents, Congressâ power over âcommerceâ now includesÂ broad authority to regulate economic matters of nearly all kinds.
Which brings us back to the text of the Federal Arbitration Act. When Congress wrote this law, it understood phrases like âa transaction involving commerceâ or âany other class of workers engaged in foreign or interstate commerceâ to use the narrow, pre-New Deal understanding of the word âcommerce.â As the law was originally understood, it only protected arbitration agreements involving the transit of goods for sale.
Contracts involving manufacture, mining, or agriculture were beyond the scope of Congressâ authority, according to the Supreme Court at the time, and therefore beyond the scope of the Arbitration Act. Similarly, when the Act exempts âseamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce,â Congress sought to exemptÂ allÂ employment contracts that it believed that it had the power to regulate at the time.
Of course, the Arbitration Act could also be read anachronistically. If the modern definition of the word âcommerceâ is inserted into the law, that would mean that nearly all contracts are governed by the law, butÂ allÂ employment contracts are exempt. Thus, under either plausible reading of the statute, contracts between workers and their employers are exempt.
Circuit City, however, read the statute a third way. It reads the phrase âa transaction involving commerceâ using the modern definition, while reading the phraseÂ âany other class of workers engaged in foreign or interstate commerceâ using the 1925 definition. Thus, the policy favoring forced arbitration is given the broadest scope, while the exemption favoring workers is read exceedingly narrowly.
Itâs a sick double-standard â the kind that should make anyone who reads the CourtâsÂ Circuit CityÂ opinion doubt the good faith of the justices in the majority.
WithoutÂ Circuit City, there could not be a decision likeÂ Epic Systems. Gorsuchâs opinion buildsÂ uponÂ Circuit Cityâs holding that the word âcommerceâ can mean one thing in one provision of the law and something completely different in another provision of the same law.Â Circuit CityÂ is one of the Supreme Courtâs greatest sins against the English language, and the text of the law itself is entirely at odds with Gorsuchâs claim inÂ Epic SystemsÂ thatÂ âCongress has instructed that arbitration agreements like those before us must be enforced as written.â
So the law, as Gorsuch condescendingly asserts, is indeed clear. The Federal Arbitration Act exempts all employment contracts, and any claim to the contrary requires the Court to turn a blind eye to history.
Which, of course, is exactly what Gorsuch did inÂ Epic Systems. He ignored the way the law was originally understood, ignored the text of the National Labor Relations Act, ignored the lawâs hard-won understanding that employees and employers do not have equal bargaining power, and ignored Congressâ explicit efforts to strike a different balance of power between workers and their bosses.
It is a great day for law firms that profit off the exploitation of workers. And it is an even greater day for their clients.
The rest of us can either sign away our rights or lose our jobs.
About the Author:Â Ian Millhiser is the Justice Editor for ThinkProgress, and the author ofÂ Injustices: The Supreme Court’s History of Comforting the Comfortable and Afflicting the Afflicted.