The majority opinion in Iskanian has been discussed at length, both here and in every other employment blog that touches on California law. What has been overlooked, however, is the incredibly eloquent and persuasive dissenting (and concurring in part) opinion written by Justice Kathryn Werdegar.
The fundamental points made by Justice Werdegar are that (1) class actions are a form of collective action; (2) Congress has made it clear for eighty years that contracts that strip employees of the right to engage in collective action are illegal; and (3) therefore class action waivers are illegal and unenforceable.
Justice Werdegar grounds her argument in the indisputable history of our nation’s most fundamental labor laws. During the early part of the twentieth century, workers facing deplorable conditions sought to join together in unions to challenge these conditions. Employers responded by requiring employees to promise not to join unions. These agreements were called “yellow dog contracts.”
Congress and various state legislatures then sought to ban yellow dog contracts. The United States Supreme Court, however, had other ideas. In an argument that calls to mind the ironic words of Anatole France (see below), the Court focused on the workers’ supposed “freedom to contract,”and held that that hollow freedom trumped the right of workers to engage in collective activity.
Congress responded in 1932 with the Norris-LaGuardia Act, 29 U.S.C. § 101, et seq. Section 2 of that act declared in no uncertain terms that employees have the right to engage in collective activity, free from employer restraint or coercion. The act also recognized that a “single laborer, standing alone” could do little to stand up to the “overwhelming concentration of employer power.” The act’s co-sponsor, Senator George Norris, argued that the act was necessary to end a situation in which “the laboring man…must singly present any grievance he has.” For these reasons, the act declared yellow dog contracts to be “contrary to the public policy of,” and unenforceable in any court of, the United States of America.
The Norris-LaGuardia Act was followed three years later by the National Labor Relations Act (NLRA), also known as the Wagner Act, 29 U.S.C. § 151, et seq. The NLRA went further, granting employees the right to engage in concerted activity for the purpose of mutual aid or protection. In the eighty years since the NLRA was passed, numerous decisions have recognized that the right to engage in concerted activity includes employees bringing claims in court.
As Justice Werdegar correctly notes, the class action waivers of today are “the descendants of last century’s yellow dog contracts.” They are meant for one purpose: to prevent workers from joining together to challenge unlawful conduct in the workplace. As such, they violate the NLRA and should be unenforceable.
Justice Werdegar also makes short shrift of the argument that class action waivers are protected by the Federal Arbitration Act (FAA), 9 U.S.C. § 1. The purpose of the FAA is merely to place arbitration agreements on the same footing as other contracts. Accordingly, applying the principle that contracts may not interfere with collective action equally to both arbitration agreements and contracts would not run afoul of the FAA.
Finally, Justice Werdegar dispatches AT&T Mobility v. Concepcion (2011) 563 U.S. 321: Concepcion involved class action waivers in consumer contracts. It did not have occasion or reason to consider federal labor law. Therefore it does not apply to class action waivers in employment contracts.
Justice Werdegar could not be more right or more eloquent. And yet, her dissent was not joined by a single justice. So where does this leave us?
The Norris-LaGuardia Act and the NLRA were the result of decades of struggle. Those laws were passed after setbacks at every level-including at the hands of the Lochner-era Supreme Court. Big corporations probably thought they had won when the pro-business Court struck down earlier bans on yellow dog contracts in Coppage v. Kansas (1915) 236 U.S. 1. But there were justices brave enough to dissent in Coppage, and we are fortunate to have a justice brave enough to dissent in Iskanian.
The struggle to protect the right of workers to engage in concerted activity continues. We look forward to the day when Justice Werdegar’s dissent becomes the law.
“In its majestic equality, the law forbids rich and poor alike to sleep under bridges, beg in the streets and steal loaves of bread.” -Anatole France