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Volume XIII, Number 39

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Fifth Circuit Triples Down on the Legality of Class Action Waivers in Arbitration Agreements

On August 10, the Fifth Circuit Court of Appeals – for the third time – rejected the National Labor Relations Board’s (NLRB) position that class action waivers in arbitration agreements are invalid under the National Labor Relations Act. In a short opinion, the Circuit said it was bound by its two previous published opinions directly addressing this issue and ruling that such waivers are valid pursuant to the Federal Arbitration Act. 

The ruling last Wednesday was the first time the Fifth Circuit has spoken on the issue since the Seventh Circuit recently held that employers cannot lawfully include class action waivers in arbitration agreements (adopting the NLRB’s rationale). If you’re keeping track at home, the Second, Fifth, and Eighth Circuits have all upheld class action waivers in arbitration agreements, while the Seventh Circuit struck them down. This disagreement among the federal appellate court sets up a classic circuit split that will surely need to be decided by the Supreme Court.

While the NLRB could petition the Supremes to take up the case, the guess here is that the Board will want to wait until a ninth judge is seated on the High Court (taking the late Justice Scalia’s position), hoping to get the most favorable bench possible, as that final Justice may very well decide the fate of this powerful tool favored by employers. Tune in next week (or next year) for the exciting conclusion.

© 2023 BARNES & THORNBURG LLPNational Law Review, Volume VI, Number 228
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About this Author

R. Holtzman Hedrick, Labor and Employment, Barnes Thornburg, Law firm
Associate

Holt Hedrick is an associate in the Indianapolis office of Barnes & Thornburg, where he is a member of the firm's Labor & Employment Law Department. Mr. Hedrick's practice focuses on a wide range of issues within the scope of labor and employment law, including discrimination suits, trade secrets, restrictive covenants, and employer consultations. Mr. Hedrick also has extensive experience as a commercial litigator, including defending companies against class actions, mass torts, federal privacy statutory claims, and breach of contract/warranty claims. Mr. Hedrick practices before...

317-231-6438
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