Academic journal article Harvard Law Review

The Substantive Waiver Doctrine in Employment Arbitration Law

Academic journal article Harvard Law Review

The Substantive Waiver Doctrine in Employment Arbitration Law

Article excerpt

The Supreme Court will soon decide whether the National Labor Relations Act (1) (NLRA) prohibits the enforcement of mandatory, predispute agreements to individually arbitrate statutory employment claims. (2) Two circuits and the National Labor Relations Board (NLRB) have held that the NLRA does just that (3): they maintain that employees' section 7 right "to engage in other concerted activities for the purpose of ... mutual aid or protection" (4) includes the right to resolve employment disputes through at least some form of concerted action, such as collective arbitration, class action, or joinder. (5) According to these rulings, section 7 rights are "substantive," and substantive statutory rights are nonwaivable under the Federal Arbitration Act (6) (FAA). (7) Three other circuits disagree, holding that class and collective actions are instead waivable "procedural device[s]." (8) Even if section 7 rights were substantive, these courts would reject the legal relevance of the procedure-substance distinction. They argue that collective action waivers do not fall into the FAA's "saving clause" (9) and that the NLRA contains no clear "contrary congressional command" (10) to enforce individual arbitration agreements.

For employers and employees alike, the stakes of the question are high. Individual arbitration clauses risk undermining the role of private attorneys general in enforcing employment statutes. (11) By requiring employees to waive their right to join together to resolve workplace disputes with employers, such agreements prevent employees from overcoming collective action problems endemic to nonunion workplaces and thereby kill off certain classes of claims. (12)

The circuits' confusion over the reach of the procedure-substance distinction in arbitration law is understandable. For decades, the Court has supplemented many of its consistently pro-arbitration decisions with statements of what this Note terms the "substantive waiver doctrine": the principle that while parties to arbitration agreements may contractually waive most procedural rights granted to them by federal statutes, courts will not enforce waivers of substantive statutory rights. (13) At the same time that the Court enunciated the substantive waiver doctrine, it also developed a prophylactic corollary to the doctrine meant to foreclose end runs around its protections. Known as the "effective vindication of statutory rights" rule, the Court declared that waivers of procedural rights that prevent litigants from "effectively ... vindicat[ing]" their substantive rights are also unenforceable. (14) The Court has since narrowed the effective vindication rule in ways that cast doubt on its continued vitality. (15) But for all the contention over the effective vindication rule, the substantive waiver doctrine has proved relatively noncontroversial, frequently asserted by the Court but rarely challenged or justified. Having escaped extensive analysis in commentary and case law, the precise meanings of "substance" and "procedure" in arbitration law are not clearly defined--nor is the very purpose of the distinction.

In an effort to clarify the doctrine's role in deciding the enforceability of employment collective action waivers, this Note takes up the task of evaluating the doctrinal and normative basis of the substantive waiver doctrine in arbitration law. It finds that the doctrine serves to reconcile the FAA with equally binding federal statutes by expressing two separate theories of statutory interpretation, one pertaining to the scope of the FAA's mandate and the other interpreting the competing employment statute. The doctrine skews underprotective of employment laws, since even the waiver of certain procedural rights in nonunion workplaces through boilerplate contracts of adhesion may systematically privilege the FAA above statutes like the NLRA. Even so, it better effectuates congressional policies than its alternative--a presumption in favor of waivability of all statutory rights absent an especially clear textual statement to the contrary. …

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