Tuesday, May 22, 2018

Epic Systems Corp. v. Lewis: Do agreements to resolve discrimination claims through individualized arbitration proceedings conflict with EEO law?

On May 21, 2018, in Epic Systems Corp. v. Lewis, the Supreme Court held that arbitration agreements providing for individualized proceedings do not conflict with the National Labor Relations Act. Grasping at straws in her dissent, Justice Ginsburg explained that she did "not read the Court's opinion to place in jeopardy discrimination complaints asserting disparate-impact and pattern-or-practice claims that call for proof on a group-wide basis." Although Ginsburg was apparently trying to limit the impact of the decision, it seems doubtful that federal EEO law can be so readily distinguished.

Indeed, the majority relied heavily on its decision in Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991), which upheld an agreement requiring individualized arbitration proceedings to resolve claims under the Age Discrimination in Employment Act. Like Title VII of the Civil Rights Act of 1964, the ADEA permits disparate-impact claims and pattern-or-practice claims, so if ADEA claims can be subject to individualized arbitration proceedings, there's no obvious reason that Title VII should be any different.

Doing little to further her cause, Ginsburg cited Chin v. Port Authority, 685 F.3d 135 (2d Cir. 2012), which held that the pattern-or-practice method of proof is limited to class actions. That decision, however, also notes that referring to the pattern-or-practice framework as a "claim" is misleading because it is not a "freestanding cause of action." Thus, in Parisi v. Goldman, Sachs & Co., 710 F.3d 483 (2d Cir. 2013), the court relied on Chin in upholding an arbitration agreement requiring individualized proceedings to resolve Title VII claims. The court concluded that an employee has no substantive right to pursue a pattern-or-practice "claim," since that is merely a means of establishing disparate treatment, which is a freestanding cause of action. If an employee is free to pursue a disparate-treatment claim on an individualized basis in arbitration, then the employee has not relinquished any substantive rights in being required to forgo a collective action.

Unlike a pattern-or-practice claim, a disparate-impact claim is a freestanding cause of action. However, contrary to Ginsburg's suggestion, there is no bar to an employee pursuing a disparate-impact claim as an individual. And in fact in Chin the court allowed the private, non-class plaintiffs to proceed with their disparate-impact claims, even though it rejected their attempt to rely on the pattern-or-practice method of proof to establish disparate treatment. To be sure, a disparate-impact claim generally requires proof of discrimination on a group-wide basis, but statistical evidence can also be probative in an individual case of disparate treatment. An agreement to resolve EEO claims through individualized arbitration proceedings does not preclude an employee from presenting evidence of systemic and group-wide discrimination that affects him. It merely prevents him from proceeding with his claim as part of a class. 

If anything, the argument for having a right to bring a collective action is stronger under the NLRA than under federal EEO law. Under the NLRA, some lower courts had relied on the substantive right to engage in "concerted activities for the purpose of . . .  mutual aid or protection" in invalidating agreements to engage in individualized arbitration proceedings. Federal EEO laws, by contrast, may permit collective actions to enforce underlying substantive rights to be free from discrimination, but a collective action is not itself a substantive right.

This blog reflects the views solely of its author. It is not intended, and should not be regarded, as legal advice on how to analyze any particular set of facts.