Earlier this week, the Ninth Circuit Court of Appeals issued a ruling in Morris v. Ernst & Young and aligned itself with the Seventh Circuit[1] in holding that an employer cannot compel individual arbitration of an employee’s class and collective action claims.
In Morris, Plaintiffs Stephen Morris and Kelly McDaniel (“Plaintiffs”) worked for the accounting firm Ernst & Young. As a condition of their employment, Plaintiffs were required to sign an agreement that the Ninth Circuit determined Plaintiffs could only “(1) pursue legal claims against Ernst & Young exclusively through arbitration and (2) arbitrate only as individuals and in ‘separate proceedings.’” In a relatively surprising move and 2-1 decision, the Ninth Circuit found that the employer violated Sections 7 and 8 of the National Labor Relations Act (NLRA)[2] by “requiring employees to sign an agreement precluding them from bringing, in any forum, a concerted legal claim regarding wages, hours, and terms and conditions of employment.” In doing so, the Ninth Circuit overruled the lower court’s ruling in favor of Ernst & Young in its motion to compel individual arbitration and held that the agreements in question precluded Plaintiffs from “initiat[ing] concerted legal claims against the company in any forum—in court, in arbitration proceedings, or elsewhere.”