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Lewis v. Epic Systems Corp.

United States Court of Appeals, Seventh Circuit

May 26, 2016

JACOB LEWIS, Plaintiff-Appellee,

         Argued February 12, 2016.

          Appeal from the United States District Court for the Western District of Wisconsin. No. 15-cv-82-bbc -- Barbara B. Crabb, Judge.

         For Jacob Lewis, Plaintiff - Appellee: Daniel A. Rottier, Attorney, Jason J. Knutson, Attorney, Breanne L. Snapp, Attorney, Habush, Habush & Rottier, Madison, WI; Caitlin M. Madden, Attorney, William E. Parsons, Attorney, Katelynn M. Williams, Attorney, David C. Zoeller, Attorney, Hawks Quindel, S.C., Madison, WI.

         For Epic Systems Corporation, Defendant - Appellant: Noah A. Finkel, Attorney, Andrew L. Scroggins, Attorney, Seyfarth Shaw LLP, Chicago, IL.

         For Labor Law Scholars, Amicus Curiae: Barry M. Bennett, Attorney, Dowd, Bloch, Bennett, Cervone, Auerbach & Yokich, Chicago, IL.

         For National Labor Relations Board, Amicus Curiae: Joel A. Heller, Attorney, National Labor Relations Board, Washington, DC; Jeffrey William Burritt, Attorney, National Labor Relations Board, Contempt Litigation & Compliance Branch, Washington, DC.

         Before WOOD, Chief Judge, ROVNER, Circuit Judge, and BLAKEY, District Judge.[*]


         Wood, Chief Judge.

         Epic Systems, a health care software company, required certain groups of employees to agree to bring any wage-and-hour claims against the company only through individual arbitration. The agreement did not permit collective arbitration or collective action in any other forum. We conclude that this agreement violates the National Labor Relations Act (NLRA), 29 U.S.C. § § 151, et seq., and is also unenforceable under the Federal Arbitration Act (FAA), 9 U.S.C. § § 1, et seq. We therefore affirm the district court's denial of Epic's motion to compel arbitration.


         On April 2, 2014, Epic Systems sent an email to some of its employees. The email contained an arbitration agreement mandating that wage-and-hour claims could be brought only through individual arbitration and that the employees waived " the right to participate in or receive money or any other relief from any class, collective, or representative proceeding." The agreement included a clause stating that if the " Waiver of Class and Collective Claims" was unenforceable, " any claim brought on a class, collective, or representative action basis must be filed in a court of competent jurisdiction." It also said that employees were " deemed to have accepted this Agreement" if they " continue[d] to work at Epic." Epic gave employees no option to decline if they wanted to keep their jobs. The email requested that recipients review the agreement and acknowledge their agreement by clicking two buttons. The following day, Jacob Lewis, then a " technical writer" at Epic, followed those instructions for registering his agreement.

         Later, however, Lewis had a dispute with Epic, and he did not proceed under the arbitration clause. Instead, he sued Epic in federal court, contending that it had violated the Fair Labor Standards Act (FLSA), 29 U.S.C. § § 201, et seq. and Wisconsin law by misclassifying him and his fellow technical writers and thereby unlawfully depriving them of overtime pay. Epic moved to dismiss Lewis's claim and compel individual arbitration. Lewis responded that the arbitration clause violated the NLRA because it interfered with employees' right to engage in concerted activities for mutual aid and protection and was therefore unenforceable. The district court agreed and denied Epic's motion. Epic appeals, arguing that the district court erred in declining to enforce the agreement under the FAA. We review de novo a district court's decision to deny a motion to compel arbitration. Gore v. Alltel Commc'ns, LLC, 666 F.3d 1027, 1033 (7th Cir. 2012).



         Section 7 of the NLRA provides 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. Section 8 enforces Section 7 unconditionally by deeming that it " 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 7]." Id. § 158(a)(1). The National Labor Relations Board is " empowered ... to prevent any person from engaging in any unfair labor practice ... affecting commerce." Id. § 160(a).

          Contracts " stipulat[ing] ... the renunciation by the employees of rights guaranteed by the [NLRA]" are unlawful and may be declared to be unenforceable by the Board. Nat'l Licorice Co. v. NLRB, 309 U.S. 350, 365, 60 S.Ct. 569, 84 L.Ed. 799 (1940) (" [I]t will not be open to any tribunal to compel the employer to perform the acts, which, even though he has bound himself by contract to do them, would violate the Board's order or be inconsistent with any part of it[.]" ); J.I. Case Co. v. NLRB, 321 U.S. 332, 337, 64 S.Ct. 576, 88 L.Ed. 762 (1944) (" Wherever private contracts conflict with [the Board's] functions, they obviously must yield or the [NLRA] would be reduced to a futility." ). In accordance with this longstanding doctrine, the Board has, " from its earliest days," held that " employer-imposed, individual agreements that purport to restrict Section 7 rights" are unenforceable. D. R. Horton, Inc., 357 N.L.R.B. No. 184 at *5, 357 N.L.R.B. 2277 at 2280 (2012) (collecting cases as early as 1939), enf'd in part and granted in part, D.R. Horton, Inc. v. NLRB, 737 F.3d 344 (5th Cir. 2013). It has done so with " uniform judicial approval." Id. (citing as examples NLRB v. Vincennes Steel Corp., 117 F.2d 169, 172 (7th Cir. 1941), NLRB v. Jahn & Ollier Engraving Co., 123 F.2d 589, 593 (7th Cir. 1941), and NLRB v. Adel Clay Products Co., 134 F.2d 342 (8th Cir. 1943)).

         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. No. 184, at *2 n.4, 357 N.L.R.B. 2277, at 2278 (collecting cases). This precedent is in line with the Supreme Court's rule recognizing that even when an employee acts alone, she ...

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