D.R. Horton, Inc. v. National Labor Relations Board , 737 F.3d 344 ( 2013 )

Case: 12-60031 Document: 00512458150 Page: 1 Date Filed: 12/03/2013
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
December 3, 2013
No. 12-60031 Lyle W. Cayce
Clerk
D.R. HORTON, INCORPORATED,
Petitioner/Cross-Respondent
v.
NATIONAL LABOR RELATIONS BOARD,
Respondent/Cross-Petitioner
Petitions for Review of an Order of the
National Labor Relations Board
Before KING, SOUTHWICK, and GRAVES, Circuit Judges.
LESLIE H. SOUTHWICK, Circuit Judge:
The National Labor Relations Board held that D.R. Horton, Inc. had
violated the National Labor Relations Act by requiring its employees to sign an
arbitration agreement that, among other things, prohibited an employee from
pursuing claims in a collective or class action. On petition for review, we
disagree and conclude that the Board’s decision did not give proper weight to the
Federal Arbitration Act. We uphold the Board, though, on requiring Horton to
clarify with its employees that the arbitration agreement did not eliminate their
rights to pursue claims of unfair labor practices with the Board.
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FACTS AND PROCEDURAL HISTORY
Horton is a home builder with operations in over twenty states. In 2006,
Horton began requiring all new and existing employees to sign, as a condition
of employment, what it called a Mutual Arbitration Agreement. Three of its
provisions are at issue in this appeal. First, the agreement provides that Horton
and its employees “voluntarily waive all rights to trial in court before a judge or
jury on all claims between them.” Second, having waived their rights to a
judicial proceeding, Horton and its employees agreed that “all disputes and
claims” would “be determined exclusively by final and binding arbitration,”
including claims for “wages, benefits, or other compensation.” Third, Horton and
its employees agreed that “the arbitrator [would] not have the authority to
consolidate the claims of other employees” and would “not have the authority to
fashion a proceeding as a class or collective action or to award relief to a group
or class of employees in one arbitration proceeding.”
These provisions meant that employees could not pursue class or collective
claims in an arbitral or judicial forum. Instead, all employment-related disputes
were to be resolved through individual arbitration.
Michael Cuda worked for Horton as a superintendent from July 2005 to
April 2006; he signed a Mutual Arbitration Agreement. In 2008, Cuda and a
nationwide class of similarly situated superintendents sought to initiate
arbitration of their claims that Horton had misclassified them as exempt from
statutory overtime protections in violation of the Fair Labor Standards Act
(“FLSA”). Horton responded that the arbitration agreement barred pursuit of
collective claims, but invited Cuda and the other claimants to initiate individual
arbitration proceedings. Cuda then filed an unfair labor practice charge,
alleging that the class-action waiver violated the National Labor Relations Act
(“NLRA”).
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On January 3, 2011, an administrative law judge held that the Mutual
Arbitration Agreement violated Sections 8(a)(1) and (4) of the NLRA1 because its
language would cause employees reasonably to believe they could not file unfair
labor practice charges with the Board. On January 3, 2012, the Board issued a
decision by two of its members – Chairman Mark Gaston Pearce and Member
Craig Becker. Their order upheld the ALJ’s determination that the Mutual
Arbitration Agreement violated Section 8(a)(1) because employees would
reasonably interpret its language as precluding or restricting their right to file
charges with the Board.2 The panel also determined, contrary to the ALJ’s
decision, that the agreement violated Section 8(a)(1) because it required
employees to waive their right to maintain joint, class, or collective employment-
related actions in any forum. The panel ordered Horton to rescind or revise the
agreement to clarify that employees were not prohibited from filing charges with
the Board, nor were they prohibited from resolving employment-related claims
collectively or as a class. Horton filed a timely petition for review of the panel’s
decision, and the Board cross-applied for enforcement of the panel’s order.
DISCUSSION
This court will uphold the Board’s decision “if it is reasonable and
supported by substantial evidence on the record considered as a whole.” Strand
Theatre of Shreveport Corp. v. NLRB, 493 F.3d 515, 518 (5th Cir. 2007); see also
29 U.S.C. § 160(e). “Substantial evidence is such relevant evidence as a
reasonable mind would accept to support a conclusion.” J. Vallery Elec., Inc. v.
1
It shall be an unfair labor practice for an employer–
(1) to interfere with, restrain, or coerce employees in the exercise of the rights
guaranteed in [Section 7];
...
(4) to discharge or otherwise discriminate against an employee because he has filed
charges or given testimony under this subchapter . . . .
29 U.S.C. § 158(a)(1) & (4).
2
Brian Hayes, while listed as a panel member, recused himself.
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NLRB, 337 F.3d 446, 450 (5th Cir. 2003) (quotation marks omitted). In light of
the Board’s expertise in labor law, “we will defer to plausible inferences it draws
from the evidence, even if we might reach a contrary result were we deciding the
case de novo.” Id. This deference extends to both the Board’s “findings of facts
and its application of the law.” Id. While the Board’s legal conclusions are
reviewed de novo, Strand, 493 F.3d at 518, its interpretation of the NLRA will
be upheld “so long as it is rational and consistent with the Act.” Litton Fin.
Printing Div., a Div. of Litton Bus. Sys., Inc. v. NLRB, 501 U.S. 190, 201 (1991)
(quotation marks omitted).
I. Issues Regarding Composition of Board
A. Validity of Recess Appointment of Board Member
Late in the process for our review of these rulings, a sister circuit issued
an opinion that, were we to adopt its reasoning, might result in our holding that
the Board’s rulings are of no effect because one of its members was improperly
appointed. See Noel Canning v. NLRB, 705 F.3d 490 (D.C. Cir. 2013), cert.
granted 133 S. Ct. 2861 (U.S. June 24, 2013) (No. 12-1281).3 The D.C. Circuit
vacated the order of a three-member panel of the Board based on its
determination that the recess appointments of the panel members were invalid.
Id. at 499. The Recess Appointments Clause of the Constitution empowers the
President to “fill up all Vacancies that may happen during the Recess of the
3
The Supreme Court granted certiorari to consider: (1) “Whether the President’s
recess-appointment power may be exercised during a recess that occurs within a session of the
Senate, or is instead limited to recesses that occur between enumerated sessions of the
Senate” and (2) “Whether the President’s recess-appointment power may be exercised to fill
vacancies that exist during a recess, or is instead limited to vacancies that first arose during
that recess.” Petition for Writ of Certiorari, NLRB v. Canning, 2013 WL 1771081, at *1 (No.
12-1281). In addition to the questions presented in the petition for writ of certiorari, the Court
directed the parties to brief and argue a third question: “Whether the President’s recess-
appointment power may be exercised when the Senate is convening every three days in pro
forma sessions.” Order Granting Certiorari, NLRB v. Canning, 133 S. Ct. 2861 (No. 12-1281)
(June 24, 2013).
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Senate.” U.S. CONST. art. II, § 2, cl. 3. The court held that the clause applies
only to recesses that occur between the two annual sessions of Congress, not
recesses within a session. Noel Canning, 705 F.3d at 503. Because the
appointments were not made during an intersession recess, they were invalid.
Id. at 507.
The court also addressed whether the vacancies were invalid because they
did not “happen” during a Senate recess. Id. Examining different possible
definitions of “happen,” the court held that a vacancy happens “only when it first
arises, demonstrating that the Recess Appointments Clause requires that the
relevant vacancy arise during the recess.” Id. Consequently, the court held that
the appointments were also invalid because the vacancies pre-existed the recess
in which the appointments were made. Id. at 514.
Although Noel Canning is not binding on this court, it calls into question
the constitutionality of Member Becker’s recess appointment and the resulting
validity of the Board’s order. Horton, though, has never challenged the
constitutionality of Member Becker’s appointment. It has argued instead that
Member Becker’s appointment expired before the decision was issued. In light
of Noel Canning, we asked the parties to submit new briefing regarding whether,
for jurisdictional reasons, we must consider the constitutionality of Member
Becker’s appointment. We conclude that we do not.
First, the NLRA’s jurisdictional statement supports the conclusion that we
are not deprived of appellate jurisdiction because of defects in a Board order:
The Board shall have power to petition any court of appeals of the
United States . . . for the enforcement of such order . . . . Upon the
filing of such petition, the court . . . shall have jurisdiction of the
proceeding and of the question determined therein, and shall have
power . . . to make and enter a decree enforcing, modifying and
enforcing as so modified, or setting aside in whole or in part the
order of the Board.
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29 U.S.C. § 160(e) (emphasis added). This court’s jurisdiction is derived from the
Board’s filing of a petition, not from the validity of the Board’s underlying
decision.
Second, challenges under the Appointments Clause are “nonjurisdictional
structural constitutional objections” that are within a court’s discretion to
consider. Freytag v. Commissioner, 501 U.S. 868, 878-79 (1991). In Freytag, the
Supreme Court considered a belated challenge to a special trial judge’s
appointment, but made clear that doing so was a discretionary exercise
appropriate only in “rare cases.” Id. at 879. Applying that decision, both the
Sixth and the Eighth Circuits have determined that challenges to the Board’s
composition are nonjurisdictional. See NLRB v. RELCO Locomotives, Inc., –
F.3d — , 2013 WL 4420775, at *26-28 (8th Cir. 2013); GGNSC Springfield LLC
v. NLRB, 721 F.3d 403, 406-07 (6th Cir. 2013); see also Intercollegiate Broad.
Sys., Inc. v. Copyright Royalty Bd., 574 F.3d 748, 755-56 (D.C. Cir. 2009)
(declining to consider constitutional challenge to copyright royalty judges’
appointment).4
Third, the Noel Canning court itself did not hold that the constitutional
issues implicated subject matter jurisdiction. Rather, it first resolved the
appellant’s statutory arguments. See Noel Canning, 705 F.3d at 493. Had the
court considered the appellant’s constitutional arguments as affecting the court’s
jurisdiction, it would have had to consider those arguments first before ruling
on the merits of the petition. See Steel Co. v. Citizens for a Better Env’t, 523 U.S.
83, 94-95 (1998) (providing federal courts must resolve issues of subject matter
4
The Third Circuit has resolved the issue differently, holding found that the Board’s
three-member-composition requirement is jurisdictional. See NLRB v. New Vista Nursing &
Rehab., 719 F.3d 203, 212 (3d Cir. 2013). But as the RELCO court observed, the court in New
Vista was partly constrained by prior Third Circuit precedent that “the overall authority of the
Board to hear [a] case under the NLRA is a jurisdictional question that may be raised at any
time.” New Vista, 719 F.3d at 210 (alteration in original) (quoting NLRB v. Konig, 79 F.3d
354, 360 (3d Cir. 1996)) (internal quotation marks omitted).
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jurisdiction before considering merits of a lawsuit).
Accordingly, the validity of Member Becker’s recess appointment is not a
matter we must address for jurisdictional reasons. It also is not an issue
presented to us in the initial briefing. Further, a circuit-split now exists. See
Noel Canning, 705 F.3d at 509. We find that the D.C. Circuit has explored the
relevant sources, leaving little for us to add to the percolation of the issue other
than to declare which side of the split we take. Finally, as our analysis will
reveal, answering this newly-raised question would have only a marginal effect
on this case. We leave the constitutional issue for the Supreme Court.5
We turn to Horton’s other challenges to the Board’s decision.
B. Expiration of Board Member’s Recess Appointment
Horton contends that Member Becker’s recess appointment expired before
the Board issued its decision, which left the Board without authority to act
because it lacked the necessary quorum of three members.6 See 29 U.S.C. § 153.
The terms of those serving under recess appointments expire at the end
of the next Senate session after the appointment. U.S. CONST. art. II, § 2, cl. 3.
The President appointed Member Becker on March 27, 2010, during the second
5
In its supplemental brief, Horton urges that, in the event we enforce the Board’s
order, we allow Horton to raise its constitutional challenges because of “extraordinary
circumstances.” Pursuant to 29 U.S.C. § 160(e), “[n]o objection that has not been urged before
the Board . . . shall be considered by the court, unless the failure or neglect to urge such
objection shall be excused because of extraordinary circumstances.” In Horton’s view, such
circumstances exist because if the Board’s composition was unconstitutional, it lacked the
authority to act when it issued the order under review; further, Noel Canning constitutes new
authority that could not have been raised before the Board. The Eight Circuit recently
rejected similar arguments in RELCO Locomotives. See 2013 WL 4420775, at *28-31. We
follow that court’s reasoning here. Horton has not explained why it failed or neglected to raise
its constitutional challenge before the Board. The mere fact that Noel Canning, a decision not
binding on us, had not yet been decided is irrelevant because all the legal arguments raised
in that case were available to Horton from the outset.
6
As mentioned, Member Haynes recused. Therefore, if Member Becker’s recess
appointment had expired prior to the issuance of the Board’s decision, Chairman Pearce would
be the only member voting in support of the decision.
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session of the 111th Congress. Accordingly, if Member Becker was validly
appointed, his term expired at the end of the first session of the 112th Congress.
Horton argues that the session ended when the Senate adjourned on
December 17, 2011 or, alternatively, when it held its last pro forma session on
December 30, 2011. Either date would mean that Member Becker’s appointment
expired before the Board issued its decision on January 3, 2012. A simple
adjournment, though, does not end a session. The end of a session is caused
either by the affirmative act of the Senate’s adjourning sine die7 or by the
inactivity of no sine die vote prior to the commencement of the next session: “In
the absence of a concurrent resolution, adjournment sine die is determined by
the arrival of the constitutionally mandated convening of the new session on
January 3.” Henry B. Hogue, Congressional Research Service, Recess
Appointments: Frequently Asked Questions, pg. 2 n.8 (June 7, 2013). A new
session begins at noon on January 3 of each year. See U.S. CONST., amend. XX,
§ 2. Because there was no sine die adjournment on an earlier date, one Senate
session ended on January 3, 2012, immediately before the next session began at
noon. See 158 CONG. REC. S1 (daily ed. Jan. 3, 2012).
Whether the Board’s decision was entered prior to noon is unclear from the
record. This time-of-day question is supported by very little argument in the
briefing and no evidence in the record. If the order was effectively entered in the
afternoon after the next congressional session had begun, a new issue would
arise. Nonetheless, because of the state of the record and the briefing, we
consider the absence of proof about exactly when on January 3 the Board acted
to constitute a waiver of the issue.
We rely, to this limited extent only, on the de facto officer doctrine. The
Supreme Court has summarized the doctrine by saying it “confers validity upon
7
Sine die means “without day.” BLACK’S LAW DICTIONARY 1418 (8th ed. 2004). An
“adjournment sine die” ends a session “without setting a time to reconvene.” Id. at 44.
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acts performed by a person acting under the color of official title even though it
is later discovered that the legality of that person’s appointment or election to
office is deficient.” Ryder v. United States, 515 U.S. 177, 180 (1995). The Court
reviewed some of its precedents on the Appointment Clause and held that the
de facto officer doctrine generally is inapplicable to a timely constitutional
challenge to the appointment of an officer:
We think that one who makes a timely challenge to the
constitutional validity of the appointment of an officer who
adjudicates his case is entitled to a decision on the merits of the
question and whatever relief may be appropriate if a violation
indeed occurred.
Id. at 182-83.
The timely challenge here was that Member Becker’s appointment expired
long before January 3. We have resolved that issue. Absent more being made
of the contingencies that apply to January 3 itself, we conclude that no timely
challenge to that aspect of the appointment has been presented.
We do not imply a similar conclusion about the relevance of the de facto
officer doctrine to the more fundamental Appointments Clause issues addressed
in Noel Canning which we have concluded need not be addressed today. We
apply the doctrine here very much on the margins of the issue. Those margins
are an unraised, specific issue that after all the presentation the parties desired
to bring to the question, has no factual support nor meaningful legal argument.
The Board issued its decision within Member Becker’s recess term, and
Horton’s argument that the Board lacked a quorum is without merit.
C. Delegation of Authority to Three-Member Panel
Horton also argues that the Board lacked authority to issue its decision
because it had not been delegated authority to act as a three-member panel.
“The Board is authorized to delegate to any group of three or more members any
or all of the powers which it may itself exercise.” 29 U.S.C. § 153(b). The statute
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further states that “three members of the Board shall, at all times, constitute a
quorum of the Board, except that two members shall constitute a quorum of any
group designated pursuant to [the delegation clause].” Id.
Under Section 153(b), four members of the Board can properly delegate
authority to a three-member panel, and two members of that panel may decide
a case “if, for example, the third member had to recuse himself from a particular
matter.” New Process Steel, L.P. v. NLRB, 130 S. Ct. 2635, 2639 (2010). In New
Process Steel, the issue was whether a four-member Board could delegate
authority to three of its members, intending that when two of its members’
recess appointments expired, the remaining two members could carry on the
Board’s business. Id. at 2638. The Court held that the statute required that the
group consist of three members for the duration of the delegation. Id. at 2640.
It is clear, then, that the Board could validly issue its decision through two of its
members, provided that the Board delegated authority to a three-member panel
and that such a panel still existed when the two members acted.
Though there is no other explicit statutory description of the mechanics of
a delegation, “the Board quorum requirement and the three-member delegation
clause should not be read as easily surmounted technical obstacles of little to no
import.” Id. at 2644. Horton argues that such a delegation did not occur, as
there is no order or other evidence of an express delegation. No authority is
cited explaining how the requisite delegation is to be made. One amici, the
Council on Labor Law Equality, identifies several Board decisions that referred
to a delegation of authority. For example, in one case, issued on December 30,
2011 – four days before the panel issued the order in this case – the panel’s order
stated that “[p]ursuant to the provisions of Section 3(b) of the [NLRA], as
amended, the [Board] has delegated its authority in this proceeding to a three-
member panel.” New Vista Nursing & Rehab., LLC, Case 22-CA-29988, 2011
WL 6936391, at *1 (Dec. 30, 2011). The New Vista order suggests that some
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other act caused the delegation, and the later order recognized it.
Regardless of how a delegation of authority is achieved or recognized, no
party or amicus has provided authority that an express, written delegation is
required before a three-member panel may act. Despite the Supreme Court’s
language in New Process Steel that delegation should not be treated as an
inconsequential technical matter, we will not establish for the first time that an
express order is required. There is no indication that the Board deviated from
its customary practice of delegating authority to the three-member panel and
allowing two members to decide the case when Member Hayes recused. We
conclude it is particularly inappropriate to require an express delegation here
because the Board only had three members. An express delegation would have
been by three members to themselves as three members. We will infer that
when the entire three-member Board decided to act, it gave itself authority to
act as three members. On these facts, an express delegation would have been a
semantical tying up of loose ends, without significance.
It might well be a good practice that the Board not treat delegation as an
inconsequential technical matter and establish some practice for delegation.
Such a practice might avoid a contrary ruling one day by a court.
II. Pending Motions
Another preliminary matter involves the composition of the record on
appeal. While its petition was pending, Horton moved that this court take
judicial notice of the arbitration demand Cuda submitted to the American
Arbitration Association and Cuda’s letter to the Board’s Regional Director,
seeking to withdraw his unfair labor practice charge. In the alternative, Horton
asked the court to supplement the record with the withdrawal letter. The Board
opposed Horton’s motion, and moved to strike references to these documents in
Horton’s brief and require Horton to file a corrected brief. This court ordered
these cross-motions carried with the case.
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On April 8, 2008, Cuda, through his attorney, submitted an arbitration
demand as a single plaintiff, not as a member of a purported class. Cuda’s
attorney later sent a letter to the Board’s Regional Director, stating that he
“would like to withdraw the charge filed against” Horton. Horton’s interest in
these documents stems from its belief that the Board’s decision created the novel
presumption that “an individual who files a class or collective action complaint
or arbitration demand necessarily seeks to initiate group action with others.”
According to Horton, the Board’s decision conflicts with the “procedural history”
of the case because Cuda’s arbitration demand named him as a single plaintiff
and his withdrawal letter referred only to himself.
This court has “generally declined to supplement the appellate record with
materials not presented to the district court, though [it has] the discretion to do
so.” Bd. of Miss. Levee Comm’rs v. EPA, 674 F.3d 409, 417 n.4 (5th Cir. 2012).
It is undisputed that these documents were never before the Board, so it is
impossible to know what impact, if any, they would have had on the Board’s
decision. Furthermore, Horton’s argument that these documents reveal some
sort of inconsistency in the Board’s decision, is factually inaccurate. Although
Cuda’s arbitration demand referenced only himself, it included a complaint that
clearly described the parties as including “all other similarly situated
employees.” Therefore, it would be incorrect to say that, as a matter of
procedural history, Cuda acted individually, and not with the intent to initiate
a collective action. Furthermore, Horton makes no argument that these
documents would deprive this court of jurisdiction.
We decline to take judicial notice of these documents or supplement the
record. Because Horton’s appellate brief contains only insignificant references
to these documents, we decline to order Horton to file a corrected brief as
requested by the Board.
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III. NLRA Sections 7 & 8(a)(1) and the Federal Arbitration Act
The Board concluded that Horton violated Sections 7 and 8(a)(1) of the
NLRA by requiring its employees to sign the Mutual Arbitration Agreement,
which “precludes them from filing joint, class, or collective claims addressing
their wages, hours or other working conditions against the employer in any
forum, arbitral or judicial.” In reaching this conclusion, the Board first
determined that the agreement interfered with the exercise of employees’
substantive rights under Section 7 of the NLRA, which allows employees to act
in concert with each other:
Employees shall have the right to self-organization, to form, join, or
assist labor organizations, to bargain collectively through
representatives of their own choosing, and to engage in other
concerted activities for the purpose of collective bargaining or other
mutual aid or protection, and shall also have the right to refrain
from any or all of such activities except to the extent that such right
may be affected by an agreement requiring membership in a labor
organization as a condition of employment as authorized in section
158(a)(3) of this title.
29 U.S.C. § 157 (emphasis added). The Board deemed it well-settled that the
NLRA protects the right of employees to improve their working conditions
through administrative and judicial forums.
Taking this view of Section 7, the Board held that the NLRA protects the
right of employees to “join together to pursue workplace grievances, including
through litigation” and arbitration. The Board concluded that an “individual
who files a class or collective action regarding wages, hours or working
conditions, whether in court or before an arbitrator, seeks to initiate or induce
group action and is engaged in conduct protected by Section 7 . . . central to the
[NLRA’s] purposes.” In the Board’s opinion, by requiring employees to refrain
from collective or class claims, the Mutual Arbitration Agreement infringed on
the substantive rights protected by Section 7.
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The other statutory component of the Board’s analysis is Section 8(a)(1)
of the NLRA. It defines unfair labor practices by an employer: “It shall be an
unfair labor practice for an employer – (1) to interfere with, restrain, or coerce
employees in the exercise of the rights guaranteed in section 157 of this title
. . . .” 29 U.S.C. § 158(a). In light of the Board’s interpretation of Section 7, it
held that Horton had committed an unfair labor practice under Section 8 by
requiring employees to agree not to act in concert in administrative and judicial
proceedings.
Horton and several amici disagree with this interpretation of Section 7.
According to Horton, the NLRA does not grant employees the substantive right
to adjudicate claims collectively. Additionally, Horton argues that the Board’s
interpretation of Sections 7 and 8(a)(1) impermissibly conflicts with the FAA by
prohibiting the enforcement of an arbitration agreement.
We give to the Board “judicial deference when it interprets an ambiguous
provision of a statute that it administers.” Lechmere, Inc. v. NLRB, 502 U.S.
527, 536 (1992). “[T]he task of defining the scope of § 7 is for the Board to
perform in the first instance as it considers the wide variety of cases that come
before it . . . .” NLRB v. City Disposal Sys., Inc., 465 U.S. 822, 829 (1984)
(quotation marks omitted). Where “an issue . . . implicates its expertise in labor
relations, a reasonable construction by the Board is entitled to considerable
deference.” Id. “Deference to the Board ‘cannot be allowed to slip into a judicial
inertia which results in the unauthorized assumption . . . of major policy
decisions properly made by Congress.’” NLRB v. Fin. Inst. Emps. of Am., Local
1182, 475 U.S. 192, 202 (1986) (alteration in original) (quoting Am. Ship Bldg.
Co. v. NLRB, 380 U.S. 300, 318 (1965)). Particularly relevant to this dispute is
that “the Board has not been commissioned to effectuate the policies of the Labor
Relations Act so single-mindedly that it may wholly ignore other and equally
important Congressional objectives.” Southern S.S. Co. v. NLRB, 316 U.S. 31,
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47 (1942). “Frequently the entire scope of Congressional purpose calls for careful
accommodation of one statutory scheme to another, and it is not too much to
demand of an administrative body that it undertake this accommodation without
excessive emphasis upon its immediate task.” Id. “[W]e have accordingly never
deferred to the Board’s remedial preferences where such preferences potentially
trench upon federal statutes and policies unrelated to the NLRA.” Hoffman
Plastic Compounds, Inc. v. NLRB, 535 U.S. 137, 144 (2002).
Section 7 effectuated Congress’s intent to equalize bargaining power
between employees and employers “by allowing employees to band together in
confronting an employer regarding the terms and conditions of their
employment,” and that “[t]here is no indication that Congress intended to limit
this protection to situations in which an employee’s activity and that of his fellow
employees combine with one another in any particular way.” City Disposal, 465
U.S. at 835. On the other hand, no court decision prior to the Board’s ruling
under review today had held that the Section 7 right to engage in “concerted
activities for the purpose of . . . other mutual aid or protection” prohibited class
action waivers in arbitration agreements.
Board precedent and some circuit courts have held that the provision
protects collective-suit filings. “It is well settled that the filing of a civil action
by employees is protected activity . . . [and] by joining together to file the lawsuit
[the employees] engaged in concerted activity.” 127 Rest. Corp., 331 N.L.R.B.
269, 275-76 (2000). “[A] lawsuit filed in good faith by a group of employees to
achieve more favorable terms or conditions of employment is ‘concerted activity’
under Section 7” of the NLRA. Brady v. Nat’l Football League, 644 F.3d 661, 673
(8th Cir. 2011). An employee’s participation in a collective-bargaining
agreement’s grievance procedure on behalf of himself and other employees is
similarly protected. City Disposal, 465 U.S. at 831-32, 835-36.
These cases under the NLRA give some support to the Board’s analysis
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that collective and class claims, whether in lawsuits or in arbitration, are
protected by Section 7. To stop here, though, is to make the NLRA the only
relevant authority. The Federal Arbitration Act (“FAA”) has equal importance
in our review. Caselaw under the FAA points us in a different direction than the
course taken by the Board. As an initial matter, arbitration has been deemed
not to deny a party any statutory right. See Mitsubishi Motors Corp. v. Soler
Chrysler-Plymouth, Inc., 473 U.S. 614, 627 (1985). Courts repeatedly have
rejected litigants’ attempts to assert a statutory right that cannot be effectively
vindicated through arbitration.8 To be clear, the Board did not say otherwise.
It said the NLRA invalidates any bar to class arbitrations.
The use of class action procedures, though, is not a substantive right. See
Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 612-13 (1997); Deposit Guar. Nat’l
Bank v. Roper, 445 U.S. 326, 332 (1980) (“[T]he right of a litigant to employ Rule
23 is a procedural right only, ancillary to the litigation of substantive claims.”).
This court similarly has “characterized a class action as ‘a procedural device.’”
Reed v. Fla. Metro. Univ., Inc., 681 F.3d 630, 643 (5th Cir. 2012), abrogated on
other grounds by Oxford Health Plans LLC v. Sutter, 133 S. Ct. 2064 (2013)
(quoting Blaz v. Belfer, 368 F.3d 501, 505 (5th Cir. 2004)). “Thus, while a class
action may lead to certain types of remedies or relief, a class action is not itself
8
“In every case the Supreme Court has considered involving a statutory right that does
not explicitly preclude arbitration, it has upheld the application of the FAA.” Walton v. Rose
Mobile Homes LLC, 298 F.3d 470, 474 (5th Cir. 2002) (citing cases); see also CompuCredit v.
Greenwood, 132 S. Ct. 665, 673 (2012) (considering in the context of the Credit Repair
Organization Act)).
Although the Board is correct that none of those cases considered a Section 7 right to
pursue legal claims concertedly, they nevertheless emphasize the barrier any statute faces
before it will displace the FAA. The Board presents no cases that have overcome that barrier,
and our research reveals very limited exceptions. See In re Nat’l Gypsum Co., 118 F.3d 1056,
1069 (5th Cir. 1997) (finding exception to mandatory arbitration necessary to preserve
Bankruptcy Code’s purpose of creating centralized and efficient bankruptcy court system);
Clary v. Helen of Troy, L.P., No. EP-11-CV-284-KC, 2011 WL 6960820, at *7 (W.D. Tex. Dec.
20, 2011) (finding inherent conflict between Jury Act and FAA).
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a remedy.” Id. The Board distinguished such caselaw on the basis that the
NLRA is essentially sui generis. That act’s fundamental precept is the right for
employees to act collectively. Thus, Rule 23 is not the source of the right to the
relevant collective actions. The NLRA is.
Even so, there are numerous decisions holding that there is no right to use
class procedures under various employment-related statutory frameworks. For
example, the Supreme Court has determined that there is no substantive right
to class procedures under the Age Discrimination in Employment Act, 29 U.S.C.
§ 621 et seq. (“ADEA”), despite the statute providing for class procedures.
Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 32 (1991). Similarly,
numerous courts have held that there is no substantive right to proceed
collectively under the FLSA, the statute under which Cuda originally brought
suit. Carter v. Countrywide Credit Indus., Inc., 362 F.3d 294, 298 (5th Cir.
2004); see also Adkins v. Labor Ready, Inc., 303 F.3d 496, 506 (4th Cir. 2002);
Kuehner v. Dickinson & Co., 84 F.3d 316, 319-20 (9th Cir. 1996).
The Board determined that invalidating restrictions on class or collective
actions would not conflict with the FAA. The Board reached this conclusion by
first observing that when private contracts interfere with the functions of the
NLRA, the NLRA prevails. The Board then noted that the FAA was intended
to prevent courts from treating arbitration agreements less favorably than other
private contracts, but the FAA allows for the non-enforcement of arbitration
agreements on any “grounds as exist at law or in equity for the revocation of any
contract.” 9 U.S.C. § 2. It then reasoned that “[t]o find that an arbitration
agreement must yield to the NLRA is to treat it no worse than any other private
contract that conflicts with Federal labor law.” The Board argues that any
employee-employer contract prohibiting collective action fails under Section 7,
and arbitration agreements are treated no worse and no better.
In so finding, the Board relied in part on its view that the policy behind
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the NLRA trumped the different policy considerations in the FAA that supported
enforcement of arbitration agreements. The Board considered its holding to be
a limited one, remarking that the only agreements affected by its decision were
those between employers and employees. The Board recognized that “a party
may not be compelled under the FAA to submit to class arbitration unless there
is a contractual basis for concluding that the party agreed to do so.” Stolt-
Nielsen S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662, 684 (2010). Even so, the
Board concluded that it was not requiring parties to engage in class arbitration:
“So long as the employer leaves open a judicial forum for class and collective
claims, employees’ NLRA rights are preserved without requiring the availability
of class-wide arbitration,” and “[e]mployers remain[ed] free to insist that arbitral
proceedings be conducted on an individual basis.”
The Board explained its interpretation of the NLRA as appropriately
weighing the public policy interests involved and, to the extent the NLRA and
FAA might conflict, suitably accommodating those statutes’ interests. Had it
found the two enactments to conflict, the Board believed the FAA would have to
yield for also being in conflict with the Norris-LaGuardia Act of 1932, which
prohibits agreements that prevent aiding by lawful means a person participating
in a lawsuit arising out of a labor dispute, and which was passed seven years
after the FAA.
We now evaluate the Board’s reasoning. We start with the requirement
under the FAA that arbitration agreements must be enforced according to their
terms. CompuCredit, 132 S. Ct. at 669. Two exceptions to this rule are at issue
here: (1) an arbitration agreement may be invalidated on any ground that would
invalidate a contract under the FAA’s “saving clause,” AT&T Mobility LLC v.
Concepcion, 131 S. Ct. 1740, 1746 (2011); and (2) application of the FAA may be
precluded by another statute’s contrary congressional command, CompuCredit,
132 S. Ct. at 669.
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The Board clearly relied on the FAA’s saving clause. Less clear is whether
the Board also asserted that a contrary congressional command is present. We
consider each exception.
The first exception to enforcing arbitration agreements is set out in this
language found in the FAA, which we will refer to as the “saving clause”:
A written provision in any maritime transaction or a contract
evidencing a transaction involving commerce to settle by arbitration
a controversy thereafter arising out of such contract or transaction
. . . shall be valid, irrevocable, and enforceable, save upon such
grounds as exist at law or in equity for the revocation of any contract.
9 U.S.C. § 2 (emphasis added).
The Board found that the Mutual Arbitration Agreement violated the
collective action provisions of the NLRA, making the saving clause applicable.
A detailed analysis of Concepcion leads to the conclusion that the Board’s rule
does not fit within the FAA’s saving clause. A California statute prohibited class
action waivers in arbitration agreements. Concepcion, 131 S. Ct. at 1746, 1753.
The Court considered whether the fact that California’s prohibition on class-
action waivers applied in both judicial and arbitral proceedings meant the
prohibition fell within the FAA’s saving clause. Id. at 1746. The Court said the
saving clause was inapplicable. “The overarching purpose of the FAA . . . is to
ensure the enforcement of arbitration agreements according to their terms so as
to facilitate streamlined proceedings,” and “[r]equiring the availability of
classwide arbitration interferes with fundamental attributes of arbitration and
thus creates a scheme inconsistent with the FAA.” Id. at 1748. The Court
found numerous differences between class arbitration and traditional
arbitration. These included that “the switch from bilateral to class arbitration
sacrifices the principal advantage of arbitration – its informality – and makes
the process slower, more costly, and more likely to generate procedural morass
than final judgment.” Id. at 1751. Class arbitration also “requires procedural
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formality” because “[i]f procedures are too informal, absent class members would
not be bound by the arbitration.” Id. Finally, class arbitration “greatly increases
risks to defendants” by removing “multilayered review,” resulting in defendants,
who might have been willing to accept such risks in individual arbitrations as
the cost of doing business, being “pressured into settling questionable claims.”
Id. at 1752. Taken together, the effect of requiring the availability of class
procedures was to give companies less incentive to resolve claims on an
individual basis. Id. at 1750.
Like the statute in Concepcion, the Board’s interpretation prohibits class-
action waivers. While the Board’s interpretation is facially neutral – requiring
only that employees have access to collective procedures in an arbitral or judicial
forum – the effect of this interpretation is to disfavor arbitration. As the
Concepcion Court remarked, “there is little incentive for lawyers to arbitrate on
behalf of individuals when they may do so for a class and reap far higher fees in
the process. And faced with inevitable class arbitration, companies would have
less incentive to continue resolving potentially duplicative claims on an
individual basis.” Id.
It is no defense to say there would not be any class arbitration because
employees could only seek class relief in court. Regardless of whether employees
resorted to class procedures in an arbitral or in a judicial forum, employers
would be discouraged from using individual arbitration. Further, as Concepcion
makes clear, certain procedures are a practical necessity in class arbitration. Id.
at 1751 (listing adequate representation of absent class members, notice,
opportunity to be heard, and right to opt-out). Those procedures are also part
of class actions in court. As Concepcion held as to classwide arbitration,
requiring the availability of class actions “interferes with fundamental attributes
of arbitration and thus creates a scheme inconsistent with the FAA.” Id. at
1748. Requiring a class mechanism is an actual impediment to arbitration and
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violates the FAA. The saving clause is not a basis for invalidating the waiver of
class procedures in the arbitration agreement.
We examine next whether the NLRA contains a congressional command
to override the FAA. The FAA establishes “a liberal federal policy favoring
arbitration agreements.” Id. at 1749. The FAA’s purpose is “to ensure the
enforcement of arbitrations agreements according to their terms.” Id. at 1748.
“That is the case even when the claims at issue are federal statutory claims,
unless the FAA’s mandate has been ‘overridden by a contrary congressional
command.’” CompuCredit, 132 S. Ct. at 669 (quoting Shearson/American
Express Inc. v. McMahon, 482 U.S. 220, 226 (1987)). If such a command exists,
it “will be discoverable in the text,” the statute’s “legislative history,” or “an
‘inherent conflict’ between arbitration and the [statute’s] underlying purposes.”
Gilmer, 500 U.S. at 26. “[T]he relevant inquiry [remains] whether Congress . .
. precluded ‘arbitration or other nonjudicial resolution’ of claims.” Garrett v.
Circuit City Stores, Inc., 449 F.3d 672, 679 (5th Cir. 2006) (quoting Gilmer, 500
U.S. at 28).
When considering whether a contrary congressional command is present,
courts must remember “that questions of arbitrability must be addressed with
a healthy regard for the federal policy favoring arbitration.” Gilmer, 500 U.S. at
26 (quotation marks and citation omitted). The party opposing arbitration bears
the burden of showing whether a congressional command exists. Id. Any doubts
are resolved in favor of arbitration. Moses H. Cone Mem’l Hosp. v. Mercury
Const. Corp., 460 U.S. 1, 24-25 (1983).
There is no argument that the NLRA’s text contains explicit language of
a congressional intent to override the FAA. Instead, it is the general thrust of
the NLRA – how it operates, its goal of equalizing bargaining power – from
which the command potentially is found. For example, one of the NLRA’s
purposes is to “protect[ ] the exercise by workers of full freedom of association . . .
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for the purpose of negotiating the terms and conditions of their employment or
other mutual aid or protection.” 29 U.S.C. § 151. Such general language is an
insufficient congressional command, as much more explicit language has been
rejected in the past. Indeed, the text does not even mention arbitration. By
comparison, statutory references to causes of action, filings in court, or allowing
suits all have been found insufficient to infer a congressional command against
application of the FAA. See CompuCredit, 132 S. Ct. at 670-71. Even explicit
procedures for collective actions will not override the FAA. See Gilmer, 500 U.S.
at 32 (ADEA); Carter, 362 F.3d at 298 (FLSA). The NLRA does not explicitly
provide for such a collective action, much less the procedures such an action
would employ.9 29 U.S.C. § 157. Thus, there is no basis on which to find that
the text of the NLRA supports a congressional command to override the FAA.
We next look for evidence in legislative history of a disavowal of
arbitration. We find none. As amicus Chamber of Commerce observes, the
legislative history of the NLRA, and its predecessor, the National Industrial
Recovery Act of 1933, only supports a congressional intent to “level the playing
field” between workers and employers by empowering unions to engage in
collective bargaining. The Chamber of Commerce draws attention to the fact
that Congress did not discuss the right to file class or consolidated claims
against employers, although such a discussion would admittedly have occurred
prior to the existence of Rule 23 or the FLSA. Therefore, the legislative history
also does not provide a basis for a congressional command to override the FAA.
Neither the NLRA’s statutory text nor its legislative history contains a
congressional command against application of the FAA. Therefore, the Mutual
9
Also relevant is that there is no private cause of action against employers to prevent
and remedy unfair labor practices under the NLRA; enforcement is left, instead, to the Board.
See Hobbs v. Hawkins, 968 F.2d 471, 478-79 (5th Cir. 1992). Accordingly, outside of the Board
taking action, there would be no conflict between, for example, an employee’s FLSA claim and
the FAA.
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Arbitration Agreement should be enforced according to its terms unless a
contrary congressional command can be inferred from an inherent conflict
between the FAA and the NLRA’s purpose. See Gilmer, 500 U.S. at 26. As
explained below, we do not find such a conflict.
First, courts repeatedly have understood the NLRA to permit and require
arbitration. See 14 Penn Plaza LLC v. Pyett, 556 U.S. 247, 257-58 (2009)
(finding that a collective-bargaining agreement’s arbitration provision must be
honored unless ADEA removes such claims from NLRA’s scope); Blessing v.
Freestone, 520 U.S. 329, 343 (1997) (“[W]e discern[] in the structure of the
[NLRA] the very specific right of employees to complete the collective-bargaining
process and agree to an arbitration clause.” (internal quotation marks and
citation omitted)); Richmond Tank Car Co. v. NLRB, 721 F.2d 499, 501 (5th Cir.
1983) (holding that NLRA’s policy favors arbitration of labor disputes). As the
Board itself acknowledged, “arbitration has become a central pillar of Federal
labor relations policy and in many different contexts the Board defers to the
arbitration process both before and after the arbitrator issues an award.”
Having worked in tandem with arbitration agreements in the past, the NLRA
has no inherent conflict with the FAA.
Second, there are conceptual problems with finding the NLRA in conflict
with the FAA. We know that the right to proceed collectively cannot protect
vindication of employees’ statutory rights under the ADEA or FLSA because a
substantive right to proceed collectively has been foreclosed by prior decisions.
See Gilmer, 500 U.S. at 32 (ADEA); Carter, 362 F.3d at 298 (FLSA). The right
to collective action also cannot be successfully defended on the policy ground that
it provides employees with greater bargaining power. “Mere inequality in
bargaining power . . . is not a sufficient reason to hold that arbitration
agreements are never enforceable in the employment context.” Gilmer, 500 U.S.
at 33. The end result is that the Board’s decision creates either a right that is
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hollow or one premised on an already-rejected justification.
We find no clear answer to the validity of the Board’s use of the NLRA and
FAA’s respective enactment dates. Where statutes irreconcilably conflict, the
statute later in time will prevail. See Chi. & N. W. Ry. Co. v. United Transp.
Union, 402 U.S. 570, 582 n.18 (1971); see also Lockhart v. United States, 546
U.S. 142, 148 (2005) (Scalia, J., concurring). The Board determined that the
NLRA was the later statute. The FAA was enacted in 1925, then reenacted on
July 30, 1947. The NLRA was enacted on July 5, 1935, and reenacted on June
23, 1947. The reenactments were part of a recodification of federal statutes that
apparently made no substantive changes. An Act to codify and enact into
positive law, Title 9 of the United States Code, entitled “Arbitration”, Pub. L. No.
80-282, 61 Stat. 669 (1947). The relevance of the date of enactment is whether
a repeal by implication arises. S. Scrap Material Co., LLC., v. ABC Ins. Co. (In
re Southern Scrap Materials Co., LLC.), 541 F.3d 584, 593 n.14 (5th Cir. 2008).
The implication is based on the assumption that Congress is fully aware of prior
enactments as it adopts new laws. Id. It is unclear whether that assumption
has the same force for a recodification.
Of some importance is that the NLRA was enacted and reenacted prior to
the advent in 1966 of modern class action practice. See Ortiz v. Fibreboard
Corp., 527 U.S. 815, 832-33 (1999). We find limited force to the argument that
there is an inherent conflict between the FAA and NLRA when the NLRA would
have to be protecting a right of access to a procedure that did not exist when the
NLRA was (re)enacted.10 The dates of enactment have no impact on our
decision.
10
The Board also relied on the Norris-LaGuardia Act (“NLGA”) to support its view that
the FAA must give way to the NLRA. It is undisputed that the NLGA is outside the Board’s
interpretive ambit. See Lechmere, 502 U.S. at 536. We also conclude that the Board’s
reasoning drawn from the NLGA is unpersuasive.
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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.
We do not deny the force of the Board’s efforts to distinguish the NLRA
from all other statutes that have been found to give way to requirements of
arbitration. The issue here is narrow: do the rights of collective action embodied
in this labor statute make it distinguishable from cases which hold that
arbitration must be individual arbitration? See Concepcion, 131 S. Ct. at 1750-
53. We have explained the general reasoning that indicates the answer is “no.”
We add that we are loath to create a circuit split. Every one of our sister circuits
to consider the issue has either suggested or expressly stated that they would
not defer to the NLRB’s rationale, and held arbitration agreements containing
class waivers enforceable. See Richards v. Ernst & Young, LLP, – F.3d — , No.
11-17530, 2013 WL 4437601, at *2 (9th Cir. Aug. 21, 2013); Sutherland v. Ernst
& Young LLP, 726 F.3d 290, 297-98 n.8 (2d Cir. 2013); Owen v. Bristol Care,
Inc., 702 F.3d 1050, 1055 (8th Cir. 2013).11
IV. Mutual Arbitration Agreement’s Violation of NLRA Section 8(a)(1)
The ALJ found that the Mutual Arbitration Agreement violated Section
11
A thorough explanation of the strongest arguments in favor of the Board’s decision,
which embraces the Board’s distinctions from earlier Supreme Court pronouncements on
arbitrations and adding some of its own, appears in a recent law review article. Charles A.
Sullivan & Timothy P. Glynn, Horton Hatches the Egg: Concerted Action Includes Concerted
Dispute Resolution, 64 ALA. L. REV. 1013 (2013). We do not adopt its reasoning but note our
consideration of its advocacy.
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8(a)(1) and (4) for including language that would lead employees to a reasonable
belief that they were prohibited from filing unfair labor practice charges. The
ALJ reached this conclusion by analyzing the Board’s decisions in Bill’s Electric,
Inc., 350 N.L.R.B. 292 (2007) and U-Haul Co. of California, 347 N.L.R.B. 375
(2006), enforced 255 F. App’x 527 (D.C. Cir. 2007), both of which found broad and
ambiguous judicial waivers unlawful. The Board affirmed the ALJ’s
Section 8(a)(1) holding on the same grounds.12 The Board also relied on
language in the agreement that all disputes would be resolved by arbitration,
without listing any exception for unfair labor practice charges, and that
employees waived the right to file a “lawsuit or other civil proceeding.”
The arbitration agreement would violate the NLRA if it prohibited
employees from filing unfair labor practice claims with the Board. Even “in the
absence of express language prohibiting section 7 activity, a company
nonetheless violates section 8(a)(1) if ‘employees would reasonably construe the
language to prohibit section 7 activity.’” Cintas Corp. v. NLRB, 482 F.3d 463,
467 (D.C. Cir. 2007) (citation omitted).
The agreement clearly provides that employees agree to arbitrate “without
limitation[:] claims for discrimination or harassment; wages, benefits, or other
compensation; breach of any express or implied contract; [and] violation of public
policy.” It also provides for four exceptions to arbitrations. None of these
exclusions refer to unfair labor practice claims.
Horton emphasizes that the agreement refers to “court actions” and “rights
to trial in court before a judge or jury,” implying that administrative proceedings
before the Board are unaffected. The agreement gives different indications too,
as it provides that an “arbitrator will not have the authority to order any remedy
that a court or agency would not be authorized to order.” (emphasis added). The
12
Because the Board affirmed the ALJ’s holding under Section 8(a)(1), it did not reach
Section 8(a)(4).
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agreement also states that each party shall pay costs “that each party would
incur if the claim(s) were litigated in a court or agency” and that “[t]he arbitrator
may award reasonable fees and costs . . . to the prevailing party to the same
extent a court or agency would be entitled to do.” (emphases added).
Most importantly, the Mutual Arbitration Agreement concludes with an
employee’s acknowledgment that he or she “knowingly and voluntarily waiv[es]
the right to file a lawsuit or other civil proceeding relating to Employee’s
employment with [Horton] as well as the right to resolve employment-related
disputes in a proceeding before a judge or jury.” (emphases added). The
reasonable impression could be created that an employee is waiving not just his
trial rights, but his administrative rights as well.
The ALJ and the Board cite some Board precedents that assist in our
analysis. In one, the employer changed an application form to include a
requirement that applicants resolve through grievance and arbitration
procedures “any legal claims . . . in connection with [the applicant’s] rights under
Federal or State law.” Bill’s Electric, 350 N.L.R.B. at 295-96 (omission in
original). An accompanying alternate dispute resolution form was entitled
“Arbitration to be Exclusive Procedure for Resolution of All Disputes.” Id. at
296. While that form also stated that it did not constitute a waiver of an
employee’s right to file a charge with the Board, this was not enough to save it:
“At the very least, the mandatory grievance and arbitration policy would
reasonably be read by affected applicants and employees as substantially
restricting, if not totally prohibiting, their access to the Board’s processes.” Id.
Another Board decision invalidated an arbitration agreement that
provided for arbitration of “any other legal or equitable claims and causes of
action recognized by local, state, or federal law or regulations.” U-Haul, 347
N.L.R.B. at 377. The Board “recognize[d] that the language in the arbitration
policy [did] not explicitly restrict employees from resorting to the Board’s
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remedial procedures” but that “the breadth of the policy language” would result
in employees “reasonably constru[ing] the remedies for violations of the [NLRA]
as included among the legal claims . . . covered by the policy.” Id. The panel
rejected the argument that the phrase “court of law” cured the agreement’s
deficiencies because decisions by the Board could always be appealed to a United
States court of appeals. Id. at 377-78.
As in U-Haul, the Mutual Arbitration Agreement refers to “court,” “judge,”
and “jury,” but these references are insufficient to counter the breadth of the
waiver created by the phrase “right to file a lawsuit or other civil proceeding.”
Further, as in Bill’s Electric, the agreement’s use of seemingly incompatible
language that refers to court actions in one sentence and agency actions in
another, means an employee would reasonably read the agreement as also
precluding unfair labor practice charges. Horton distinguishes Bill’s Electric and
U-Haul as occurring in the context of union activity, but neither opinion’s
reasoning was premised on such activity. The Board’s finding that the Mutual
Arbitration Agreement could be misconstrued was reasonable and the need for
Horton to take the ordered corrective action was valid.
IV. Conclusion
All outstanding motions are DENIED. Horton’s petition for review of the
Board’s decision invalidating the Mutual Arbitration Agreement’s waiver of class
procedures is GRANTED. The Board’s order that Section 8(a)(1) has been
violated because an employee would reasonably interpret the Mutual Arbitration
Agreement as prohibiting the filing of a claim with the Board, is ENFORCED.
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GRAVES, Circuit Judge, concurring in part and dissenting in part.
Because I would deny the petition for review, thus affirming the
Board’s decision in toto, I respectfully concur in part and dissent in part.
Specifically, I disagree with the majority’s finding that the Board’s
interpretation of sections 7 & 8(a)(1) of the National Labor Relations Act
(NLRA) conflict with the Federal Arbitration Act (FAA).
The Mutual Arbitration Agreement (MAA) precludes employees from
filing joint, class or collective claims in any forum. I agree with the Board
that the MAA interferes with the exercise of employees’ substantive rights
under Section 7 of the NLRA, which provides, in relevant part, that
employees have the right “to engage in other concerted activities for the
purpose of collective bargaining or other mutual aid or protection . . . .” 29
U.S.C. § 157.
Further, as the Board specifically found, holding that the MAA violates
the NLRA does not conflict with the FAA for several reasons: (1) “the purpose
of the FAA was to prevent courts from treating arbitration agreements less
favorably than other private contracts.” In re D.R. Horton, Inc., 357 N.L.R.B.
No. 184, *11 (2012). “To find that an arbitration agreement must yield to the
NLRA is to treat it no worse than any other private contract that conflicts
with Federal labor law.” Id.; (2) “the Supreme Court’s jurisprudence under
the FAA, permitting enforcement of agreements to arbitrate federal statutory
claims, including employment claims, makes clear that the agreement may
not require a party to ‘forgo the substantive rights afforded by the statute.’”
Id. at *12. “The right to engage in collective action – including collective legal
action – is the core substantive right protected by the NLRA and is the
foundation on which the Act and Federal labor policy rest.” Id. (emphasis
original); (3) “nothing in the text of the FAA suggests that an arbitration
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agreement that is inconsistent with the NLRA is nevertheless enforceable.”
Id. at *14. “To the contrary, Section 2 of the FAA . . . provides that
arbitration agreements may be invalidated in whole or in part upon any
‘grounds as exist at law or in equity for the revocation of any contract.’” Id.;
and (4) “even if there were a direct conflict between the NLRA and the FAA,
there are strong indications that the FAA would have to yield under the
terms of the Norris-LaGuardia Act.” Id. at *16.
I also agree with the Board’s holding that Horton “violated Section
8(a)(1) by requiring employees to waive their right to collectively pursue
employment-related claims in all forums, arbitral and judicial.” Id. at *17.
The Board made it clear that it was not mandating class arbitration in order
to protect employees’ rights under the NLRA, but rather was holding that
employers may not compel employees to waive their NLRA right to
collectively pursue litigation of employment claims in all forums, judicial and
arbitral.
As acknowledged by the majority, we give the Board judicial deference
in interpreting an ambiguous provision of a statute that it administers.
Lechmere, Inc. v. NLRB, 502 U.S. 527, 536 (1992). Further, as acknowledged
by the majority, there is authority to support the Board’s analysis.
For the reasons set out herein, I would deny the petition for review and
affirm the Board’s decision in toto. Therefore, I respectfully concur in part
and dissent in part.
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