For employees, the National Labor Relations Board's decision
last year in the D.R. Horton case has turned out to be a hollow
promise indeed. The NLRB, in what was widely regarded as a
response to the U.S. Supreme Court's most recent endorsement of
mandatory arbitration clauses in AT&T Mobility v. Concepcion,
said that employers cannot compel employees to waive their right
to collective action under the National Labor Relations Act
through private arbitration clauses. We've already told you that
most of the federal district judges who have had to weigh D.R.
Horton against Supreme Court precedent have disregarded the
NLRB's reasoning and concluded that employers can bar class actions via arbitration clauses. On Monday, a three-judge panel
of the 8th Circuit Court of Appeals delivered the first federal
appellate assessment of D.R. Horton -- and the news is not good
for opponents of mandatory arbitration.
In Owen v. Bristol Care, Judges Lavenski Smith, Arlen Beam
and Raymond Gruender were utterly dismissive of the NLRB's
decision, overturning one of the few U.S. district judges to
have held that Horton prohibits employers from enforcing
arbitration agreements that bar classwide actions. (I should
note here that the NLRB's Horton decision is itself on appeal at
the 5th Circuit.) The 8th Circuit held that the NLRB ruling
addressed only situations in which employees were required to
sign away all of their collective rights; by contrast, Bristol
Care's mandatory arbitration agreement, according to the appeals
court, did not waive employees' right to file complaints with
the Equal Employment Opportunity Commission or other state and
federal employment administrators, which could then sue on
behalf of more than one employee.
Moreover, the 8th Circuit said, even if Horton were
applicable, the appeals court owes the NLRB no deference. The
Supreme Court, the panel wrote, has consistently endorsed
arbitration and the Federal Arbitration Act, in the context of
both consumer and employment mandatory agreements. Most federal
courts to have considered challenges to arbitration clauses in
the year since the Horton decision have followed the Supreme
Court's reasoning, not the NLRB's, the appeals court said. "D.R.
Horton carries little persuasive authority in the circumstances
presented here," the panel concluded. (The judges also said that
Congress has not created any employee right to litigate
classwide claims that would override the FAA.)
There's not much solace for employees in the 8th Circuit
opinion, except perhaps that the appellate judges didn't address
a Manhattan federal court case that offers a more subtle
argument against mandatory arbitration than the underlying Owen
decision. The trial judge in Owen's case, which asserted
wage-and-hour claims, had cited a 2011 decision by U.S.
Magistrate Judge James Francis of Manhattan, who ruled that
female managing directors at Goldman Sachs had a federally
protected right to litigate as a class to establish Goldman's
alleged pattern or practice of discrimination. But Owen's
lawyers at The Simon Law Firm didn't rely on the New York ruling
in briefs at the 8th Circuit, so the panel didn't opine on the
Goldman ruling. Goldman's appeal, which has attracted voluminous
amicus briefing, is under deliberation at the 2nd Circuit, which
heard oral arguments last November.
Bristol Care, which operates nursing homes, was represented
at the 8th Circuit by Lathrop & Gage. The firm didn't return a
call requesting comment. Owen counsel Ryan Keane also didn't
respond to my phone message.
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