By Nate Raymond
The National Labor Relations Board threw a wild card at
employment lawyers in January when it held companies couldn't require workers to sign away their rights to bring collective
actions. The NLRB's administrative decision against homebuilder
D.R. Horton was regarded as a response to the U.S. Supreme
Court's blockbuster 2011 decision in AT&T Mobility v.
Concepcion, which held that a consumer arbitration agreement
could bar class actions. With employment lawyers poised to cite
Concepcion to justify similar bars in employment agreements, the
NLRB's D.R. Horton ruling appeared to give federal and state
judges cover for resisting the Supreme Court's ruling.
More than seven months later, though, the D.R. Horton
decision has been overwhelmingly disregarded by the courts.
While the 5th Circuit Court of Appeals has yet to rule on
Horton's appeal of the NLRB's administrative decision, judges
across the country -- and the political spectrum -- have
rejected arguments that the NLRB ruling justifies the
invalidation of class action waivers in employment arbitration
The most recent example came Friday, when U.S. District
Judge Gene Pratter in Philadelphia sided with a subsidiary of Tenet Healthcare in confirming an arbitrator's finding that a
nurse could not bring classwide wage-and-hour claims in
arbitration. The nurse's lawyer, Justin Cordello of Thomas &
Solomon, had cited D.R. Horton in arguing that the arbitrator
had erred. But Pratter said he wasn't swayed by that argument.
"Although the NLRB's construction of the [National Labor
Relations Act] is entitled to deference, the NLRB has no special
competence or experience interpreting the [Federal Arbitration
Act]," the judge wrote. (Neither Cordello nor Tenet counsel
James Boudreau of Greenberg Traurig responded to requests for
comment. Greenberg Traurig had co-counsel at Littler Mendelson.)
A few weeks earlier, in a putative class action of guards
suing Securitas Services Inc, U.S. District Judge D.P. Marhsall in Little Rock, Arkansas, on Aug. 1 compelled individual arbitration after concluding that the FAA trumped the NLRA.
Marshall said that accepting the NLRB's reasoning would mean
favoring litigation over arbitration, in contrast to the federal
policy of favoring arbitration. It would also result in a
"patchwork" legal system in which one employee might agree to
arbitrate claims individually, but as soon as a second employee
entered the case, individual arbitration ceded to collective
action. "This quilt of possibilities introduces uncertainty and
complexity," Marshall wrote. The judge did, however, certify his
decision for review by the 8th Circuit Court of Appeals.
(Neither plaintiffs' counsel Joshua Sanford of the Sanford Law
Firm nor Securitas counsel Eva Madison of Littler Mendelson
responded to requests for comment.)
Employees at Waffle House Inc also struck out when they
cited D.R. Horton in an effort to convince U.S. District Judge
Carlos Murguia of Kansas City, Kansas, to not compel individual
arbitration. Murguia preferred to rely on Concepcion. "Although
Concepcion may not speak directly to the issue before the
court," he wrote, "it does illustrate a guiding principle:
arbitration agreements are enforceable even when they prohibit
the use of a class action." (Plaintiffs counsel Patrick Reavey
of Reavey Law was unavailable for comment, and Waffle House
counsel Daniel Turner of Ogletree, Deakins, Nash, Smoak &
Stewart did not respond to a request for comment.)
Judges in New York, California, Pennsylvania, Florida and
Georgia have similarly refused to allow employee class actions
to move forward on the basis of the NLRB's holding, in cases
against Jenny Craig, Citigroup, P.F. Chang's and UBS, among
others. The NLRB's repudiation hasn't just been in the federal
courts either. To date, state appeals courts in California in
Los Angeles, San Diego and San Francisco have rejected the NLRB's reasoning, most recently on Aug. 13, in a case against
pest control company Truly Nolen of America. When the D.R.
Horton decision came down, "people were a little worried," said
Daniel Chammas of Venable, who secured the Jenny Craig opinion
in May. "But so far, it's almost been universal that courts have
said that's gone too far."
"Almost" is the key word. D.R. Horton has been cited by at
least three judges -- in New York, Missouri and Wisconsin -- in
rejecting arbitration agreements that waived collective action.
In February, for instance, U.S. District Judge Fernando Gaitan
in Jefferson City, Missouri, stated flatly in a case against Bristol Care Inc, that Concepcion was "not controlling" in
employment cases. "In the employment context, waivers of class
arbitration are not permissible," Gaitan wrote, citing D.R.
Horton. (Bristol's lawyers at Lathrop & Gage have since appealed
the decision to the 8th Circuit.)
In a ruling a few weeks later, in a case against Waterstone
Mortgage Corp, U.S. District Judge Barbara Crabb in Madison,
Wisconsin, agreed with the NLRB that Concepcion "is not on point
because the class action waiver in that case did not conflict
with the substantive right of a federal statute." Crabb
invalidated a class action waiver, but compelled arbitration,
allowing Waterstone employees to pursue claims collectively
outside of court. Waterstone has since moved to reopen the case.
Its counsel, Ari Karen of Offit Kurman, did not respond to
requests for comment.
Still, that's three decisions for the employees -- and at
least 13 for employers. It's also significant, according to
Gerald Maatman of Seyfarth Shaw, that the pro-employee decisions
came soon after the NLRB's D.R. Horton decision, while more
recent rulings favor employers. "I'm unaware of any recent
strong significant decisions where a judge hangs his hat on D.R.
Horton," Maatman said.
Plaintiffs' lawyer Ryan Keane of The Simon Law Firm, who
represents employees in the Bristol case, said the problem may
be that his brethren don't really understand how to deploy the
D.R. Horton decision, so they can't convince judges of its
significance. "It's frustrating," he conceded, "that judges
aren't following DR Horton."
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