Late last month in this blog, I wrote that the National Labor Relations Board (“NLRB”) was “cruisin’ for a bruisin’” on its arbitration policy. To review, and borrowing heavily from my own work, the NLRB had ruled previously in the D.R. Horton matter that a predispute arbitration agreement (“PDAA”) containing a class action waiver violated the National Labor Relations Act (“NLRA”) and was not enforceable because, among other things, the class action waiver unduly interfered with employees’ right to unionize. This case eventually found its way to the Fifth Circuit, which reversed this part of the Board’s ruling, in D.R. Horton, Inc. v. NLRB, No. 12-60031 (5th Cir., Dec. 3, 2013). “[W]e disagree and conclude that the Board’s decision did not give proper weight to the Federal Arbitration Act….The NLRA should not be understood to contain a congressional command overriding application of the FAA. The burden is with the party opposing arbitration, Gilmer, 500 U.S. at 26, and here the Board has not shown that the NLRA’s language, legislative history, or purpose support finding the necessary congressional command. Because the Board’s interpretation does not fall within the FAA’s ‘saving clause,’ and because the NLRA does not contain a congressional command exempting the statute from application of the FAA, the Mutual Arbitration Agreement must be enforced according to its terms.”

Fifth Circuit Holding Not Followed

But, despite the fact that a federal circuit court, relying heavily on several Supreme Court holdings, had expressly overruled the NLRB’s take on class action waivers, some of the Board’s administrative law judges had apparently not gotten the message. In Leslie’s Poolmart, Inc. and Keith Cunningham, No. 21–CA–102332 (SF Office, Jan. 17, 2014), an ALJ invalidated a PDAA that did not contain a class action waiver. The judge ruled in Poolmart that, by including a PDAA, the employer “violated Section 8(a)(1) of the [National Labor Relations] Act by maintaining and enforcing a mandatory and binding arbitration agreement which required employees to resolve certain employment-related disputes exclusively through individual arbitration and, though not expressly, but in practice, required them to relinquish any right they have to resolve such disputes through collective or class action.” What about the Fifth Circuit’s ruling in Horton? It doesn’t count until the Supreme Court says it does. “I find that the Supreme Court has not expressly overruled [the NLRB’s prior ruling in] D. R. Horton. Although the Court has upheld the enforcement of individual arbitration agreement in employment related matters, see, e.g., Concepcion, supra, and American Express Co. v. Italian Colors Restaurant … the Court has not addressed or resolved the issue of exclusive arbitration over class and/or collective actions. As such, D. R. Horton is the controlling law applicable in this case. Even in the face of other Federal circuit decisions to the contrary, D. R. Horton represents current Board precedent that I must follow.” As I wrote last month, wow!

Petition for Rehearing

Perhaps the full NLRB has rethought its strategy. Late last week it petitioned the Fifth Circuit for a rehearing en banc on Horton, arguing in its petition that the Court got it wrong when it relied on the U.S. Supreme Court’s holdings in Gilmer and Concepcion to uphold the PDAA. See D.R. Horton Inc. v. NLRB, (5th Cir., No. 12-60031, petition for rehearing 3/13/14). Said the NLRB, “Rehearing is warranted on this exceptionally important issue because the panel majority erred in finding Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991), and AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740 (2011), determinative of this case. Neither decision addressed nor decided the distinct NLRA issue presented here.” For those needing a fresher on appellate procedure, what the NLRB is essentially doing here is saying to the Fifth Circuit, “Did you really mean that? And if you did, can we have the entire Court, instead of a divided three-judge panel, decide the issue?” Courts usually decide issue en banc when there is a very important issue involved. And indeed, the NLRB in its petition calls this “exceptionally important issue.”

A Good Approach

I think the NLRB is taking the right approach in trying to get the issue before the full Court. If some NLRB administrative law judges are not going to follow Horton, they might as well know how strongly the Fifth Circuit feels about it.