The mid-point of Summer has passed.  Although the NLRB has not issued a major decision in several weeks, the agency has not been slacking off this Summer.  In a typical year, August and September are the busiest months for the NLRB, because the federal government’s fiscal year ends September 30.  During the final weeks of the fiscal year the NLRB attempts to push out as many decisions as it can.  The agency is largely statistically driven, and so more decisions means a greater justification for a renewed or increased budget.

This, of course, is not a typical year.  The current NLRB has a very active, if not activist, agenda.  There not only are a number of potentially far-reaching cases it has yet to decide, but the agency also has proposed rulemaking to drastically upend the current manner in which representation elections are held.  Add into the mix Chairman Liebman’s appointment is set to expire on August 27, one can expect a storm of activity from the NLRB in the coming weeks.  Here is a snapshot of the important cases and the rulemaking initiatives currently pending:

• Specialty Healthcare (NLRB Case No. 15-RC-8773).  In this case, the NLRB wondered aloud whether it could set a presumptive rule for the appropriateness of bargaining units in certain segments of the healthcare industry. The problem, of course, is that anyone who has worked in business environment knows that there is no uniformity to how an employer structures its business, even within industries.  A decision holding otherwise will make it much easier for unions to organize because it will remove Section 9(b) of the Act’s requirement that the NLRB actually decide, on a case by case basis, the appropriateness of a unit.  We posted in detail on this important issue in March after we filed a brief on behalf of Retail Industry Leaders Association.
•  Lamons Gasket Company (NLRB Case No. 16-RD-1597).  In this case the NLRB may revisit (read- overturn) the exception to the voluntary recognition bar set forth in Dana Corp Metaldyne, 351 NLRB 434 (2007).pdf.  In Dana, the NLRB set a rule where employees may challenge voluntary recognition of a union by their employer by filing a petition for an election within a certain period of time.  With all the discussion about the NLRB’s processes, the NLRB in Dana pointed out something that sometimes gets lost in the debate.  “Finally, although critics of the Board election process claim that an employer opposed to union representation has a one-sided advantage to exert pressure on its employees throughout each workday of an election campaign, the fact remains that the Board will invalidate elections affected by improper electioneering tactics, and an employee’s expression of choice is exercised by casting a ballot in private.  There are no comparable safeguards in the voluntary recognition process.”  Id. at 439.
• Hawaii Tribune Herald (NLRB Case No. 37-CA-7043 et al.).  This is another case where the NLRB invited interested parties to file briefs about whether it should it should change its 32 year rule that witness statements made to the employer need not be turned over to the union prior to an arbitration hearing. As noted in the previous post on this issue, the NLRB’s rule is designed to protect the witnesses from intimidation.  A reversal of this decades old rule will change the way arbitration cases are handled.
• D.R. Horton (NLRB Case No. 12-CA-25764).  The NLRB invited briefs on the issue of whether an employer’s requirement that each employee sign an arbitration agreement which expressly waives the right to class action relief violated Section 8(a)(1). We previously posted on this important issue. The issue in this case really comes down to whether “all” group activity, no matter what the nature, is also “protected, concerted” activity under Section 7 of the NLRA.  We filed a Brief for the Retail Industry Leaders Association — Amicus Curiae.pdf on this issue.  While one can certainly see the similarities between Section 7 activity and employees who wish to bring a class action against their employer, there are also important distinguishing factors.  The entire NLRA concept of group activity is designed to have employees acting in concert toward a common goal; there is interaction and cohesiveness. Under the NLRA, the group must achieve majority status before it can act on behalf of the whole.   In many class actions, the opposite is often true.  The vast majority of employees are not even aware the lawsuit is pending.  In many cases the “class representatives,” often a tiny fraction of an overall workforce, can settle the entire matter (for their own benefit, of course), and then notify the rest of the employees what happened.  There are great differences between the two types of activity.
• Rulemaking. Of course, the NLRB has moved forward with its efforts to force “quickie elections” on employers through rulemaking.  The NLRB held hearings on the matter on July 18-19.  The changes, if promulgated, would reduce the amount of time between the filing of a petition and the election from about 42 days now to far fewer days.  The need for such drastic change is mystifying.  The NLRB itself in its own  Performance and Accountability Report FY 2010.pdf stated that it met or exceeded its strategic goals for processing representation petitions, which raises serious questions of the necessity for such drastic changes.  The U.S. Chamber of Commerce has drafted a very good Fact Sheet On Quickie Elections.pdf detailing the proposed rules, and how they would change the current process.  Comments on the rulemaking are due August 22, 2011, so employers who wish to get involved should draft comments to the NLRB (there is a draft letter in the U.S. Chamber’s materials).

As one can see, a storm of NLRB activity is headed this way.  We will certainly be monitoring it as its clouds continue to gather.  Employers need to prepare for the possibility that many areas of NLRB law and process, some decades old, will be changed in the coming weeks.  We will, of course keep you posted on all developments as they occur.

Today’s decision by the U.S. Court of Appeals for the Fifth Circuit in D.R. Horton, Incorporated v. National Labor Relations Board, is a victory for employers who seek to channel work related disputes (other than NLRB charges) into an arbitration system which does not permit class action claims in either the arbitration or in court.  But the decision is not a knock-out punch in the first round.  Instead, the Board and the NLRB General Counsel will very likely continue to apply the Board’s decision in D.R. Horton.

This is because the NLRB follows the doctrine of non-acquiescence.  That is, the Board will not back away from a legal ruling simply because it has been rejected by a single, or perhaps even a group, of circuit courts of appeals.  The Board exercises national jurisdiction over application and enforcement of the National Labor Relations Act.  Circuit courts (unless granting or sustaining a nationwide injunction or some similar circumstance) generally issue decisions that are legally binding only in their respective territorial jurisdictions.  There are twelve general jurisdiction circuit courts of appeals, and the Fifth Circuit is the first one to review the D.R. Horton issue directly on appeal from the Board.  (As the Fifth Circuit panel pointed out, however, there are a few other courts of appeals which have refused to defer to the Board’s D.R. Horton decision in cases involving enforcement of arbitration agreements.)  

It is highly likely that the Board will want this issue to play out in other cases in other courts of appeals.  If a significant number of courts continue to reject the Board’s approach, then the Board may consider overruling or modifying the D.R. Horton doctrine in the future. (It should be noted that an adverse decision from the District of Columbia Circuit may speed up this process, because any charged party respondent who loses before the Board can appeal to the District of Columbia Circuit.)  

A change in Board membership also may trigger the occasion for a decison overruling D.R. Horton.  Or, a split may develop among the circuit courts of appeals and the Supreme Court may have to weigh in.  It is also possible that the Board may seek rehearing from the a panel consisting of all the judges sitting on the Fifth Circuit in an effort to get the court to reverse itself, or — less likely — the Board may seek a writ of certiorari from the Supreme Court now. 

But in any event, as noted, it is safe to expect that the General Counsel and the Board will continue to apply the Board’s decision in D.R. Horton, at least for the foreseeable future. 

A few weeks ago, we posted about the Fifth Circuit’s decision in the D.R. Horton case and the NLRB’s doctrine of non-acquiescence.   As you will recall, in D.R. Horton, the NLRB held that an employer violates the right of employees to engage in concerted activity by maintaining an arbitration program which prohibits employees from pursuing class or collective actions in court or before the arbitrator.  The NLRB’s D.R. Horton decision was reversed on the merits by the Fifth Circuit, but under the NLRB’s policy of not acquiescing in adverse court of appeals decisions, the NLRB General Counsel continues to authorize complaints in these so-called “class action waiver” cases.

Now we have an NLRB administrative law judge’s decision that serves not only as an example of the non-acquiescence doctrine, but takes the NLRB’s ruling in D.R. Horton a significant (and not inconsistent) step further.  In Leslie’s Pool Mart, Case 21-CA-102332 (January 17, 2014), the General Counsel issued a complaint which required the judge to decide whether the employer’s “mandatory arbitration agreement violates . . . the Act even though the agreement does not expressly prohibit employees from engaging in protected concerted activities.”  (Slip op. at 4.)

In a nutshell, here is what had happened:  The employer maintained an arbitration program that required its employees to submit employment related claims to arbitration.  However, the employer did not include a provision requiring employees to waive class and collective actions.  A separated employee filed a class action on behalf of himself and other current employees alleging that the class had been improperly denied certain overtime pay by the employer.  The employer moved to dismiss the suit and compel individual arbitration of each claim, pursuant to the employer’s arbitration program.

The General Counsel maintained that even though the employer’s arbitration program was silent on the “class action waiver” issue, the employer violated the law by seeking an order from the court dismissing the class action and compelling individual arbitration of the claims. The administrative law judge rejected a number of procedural and substantive defenses asserted by the employer and agreed with the General Counsel:

Applying Board precedent to this case, I find that Respondent’s arbitration agreement violates the Act.  While the arbitration agreement does not, on its face, prohibit collective or class action, it has the effect of doing so as evinced when Respondent, in moving to compel arbitration of his claims, sought to preclude . . . a class action lawsuit and maintained that ‘arbitration is the elected and required forum for resolving [Charging Party’s] individual claims.’

(Slip op. at 7, emphasis in original.)

This case well illustrates that the “class action waiver” issue is not only alive and well at the NLRB, but that it is being extended to apply beyond the employer’s written policy to the employer’s actions taken to enforce even a facially lawful policy.

For what it is worth, this is precisely contrary to the memorandum I issued as General Counsel (which was specifically rejected by the NLRB in D.R. Horton).  There, I said that lawful employer arbitration programs could be asserted as a defense to attempted class action court litigation.  In my view, this would allow the courts, as they have traditionally done, to weigh whether a class action was necessary to vindicate substantive rights under the various employment statutes pursuant to which such claims are generally brought.  It is that standard, I maintained, which ought to govern the legality of such class action waivers.

Today’s decision by the U.S. Court of Appeals for the Fifth Circuit in D.R. Horton, Incorporated v. National Labor Relations Board, is a victory for employers who seek to channel work related disputes (other than NLRB charges) into an arbitration system which does not permit class action claims in either the arbitration or in court.  But the decision is not a knock-out punch in the first round.  Instead, the Board and the NLRB General Counsel will very likely continue to apply the Board’s decision in D.R. Horton.

This is because the NLRB follows the doctrine of non-acquiescence.  That is, the Board will not back away from a legal ruling simply because it has been rejected by a single, or perhaps even a group, of circuit courts of appeals.  The Board exercises national jurisdiction over application and enforcement of the National Labor Relations Act.  Circuit courts (unless granting or sustaining a nationwide injunction or some similar circumstance) generally issue decisions that are legally binding only in their respective territorial jurisdictions.  There are twelve general jurisdiction circuit courts of appeals, and the Fifth Circuit is the first one to review the D.R. Horton issue directly on appeal from the Board.  (As the Fifth Circuit panel pointed out, however, there are a few other courts of appeals which have refused to defer to the Board’s D.R. Horton decision in cases involving enforcement of arbitration agreements.)  

It is highly likely that the Board will want this issue to play out in other cases in other courts of appeals.  If a significant number of courts continue to reject the Board’s approach, then the Board may consider overruling or modifying the D.R. Horton doctrine in the future. (It should be noted that an adverse decision from the District of Columbia Circuit may speed up this process, because any charged party respondent who loses before the Board can appeal to the District of Columbia Circuit.)  

A change in Board membership also may trigger the occasion for a decison overruling D.R. Horton.  Or, a split may develop among the circuit courts of appeals and the Supreme Court may have to weigh in.  It is also possible that the Board may seek rehearing from the a panel consisting of all the judges sitting on the Fifth Circuit in an effort to get the court to reverse itself, or — less likely — the Board may seek a writ of certiorari from the Supreme Court now. 

But in any event, as noted, it is safe to expect that the General Counsel and the Board will continue to apply the Board’s decision in D.R. Horton, at least for the foreseeable future. 

A few weeks ago, we posted about the Fifth Circuit’s decision in the D.R. Horton case and the NLRB’s doctrine of non-acquiescence.   As you will recall, in D.R. Horton, the NLRB held that an employer violates the right of employees to engage in concerted activity by maintaining an arbitration program which prohibits employees from pursuing class or collective actions in court or before the arbitrator.  The NLRB’s D.R. Horton decision was reversed on the merits by the Fifth Circuit, but under the NLRB’s policy of not acquiescing in adverse court of appeals decisions, the NLRB General Counsel continues to authorize complaints in these so-called “class action waiver” cases.

Now we have an NLRB administrative law judge’s decision that serves not only as an example of the non-acquiescence doctrine, but takes the NLRB’s ruling in D.R. Horton a significant (and not inconsistent) step further.  In Leslie’s Pool Mart, Case 21-CA-102332 (January 17, 2014), the General Counsel issued a complaint which required the judge to decide whether the employer’s “mandatory arbitration agreement violates . . . the Act even though the agreement does not expressly prohibit employees from engaging in protected concerted activities.”  (Slip op. at 4.)

In a nutshell, here is what had happened:  The employer maintained an arbitration program that required its employees to submit employment related claims to arbitration.  However, the employer did not include a provision requiring employees to waive class and collective actions.  A separated employee filed a class action on behalf of himself and other current employees alleging that the class had been improperly denied certain overtime pay by the employer.  The employer moved to dismiss the suit and compel individual arbitration of each claim, pursuant to the employer’s arbitration program.

The General Counsel maintained that even though the employer’s arbitration program was silent on the “class action waiver” issue, the employer violated the law by seeking an order from the court dismissing the class action and compelling individual arbitration of the claims. The administrative law judge rejected a number of procedural and substantive defenses asserted by the employer and agreed with the General Counsel:

Applying Board precedent to this case, I find that Respondent’s arbitration agreement violates the Act.  While the arbitration agreement does not, on its face, prohibit collective or class action, it has the effect of doing so as evinced when Respondent, in moving to compel arbitration of his claims, sought to preclude . . . a class action lawsuit and maintained that ‘arbitration is the elected and required forum for resolving [Charging Party’s] individual claims.’

(Slip op. at 7, emphasis in original.)

This case well illustrates that the “class action waiver” issue is not only alive and well at the NLRB, but that it is being extended to apply beyond the employer’s written policy to the employer’s actions taken to enforce even a facially lawful policy.

For what it is worth, this is precisely contrary to the memorandum I issued as General Counsel (which was specifically rejected by the NLRB in D.R. Horton).  There, I said that lawful employer arbitration programs could be asserted as a defense to attempted class action court litigation.  In my view, this would allow the courts, as they have traditionally done, to weigh whether a class action was necessary to vindicate substantive rights under the various employment statutes pursuant to which such claims are generally brought.  It is that standard, I maintained, which ought to govern the legality of such class action waivers.