Cellular Sales of Missouri LLC v. NLRB

United States Court of Appeals
For the Eighth Circuit
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No. 15-1620
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Cellular Sales of Missouri, LLC
lllllllllllllllllllllPetitioner
v.
National Labor Relations Board
lllllllllllllllllllllRespondent
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Labor Law Scholars
lllllllllllllllllllllAmicus on Behalf of Respondent
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No. 15-1860
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Cellular Sales of Missouri, LLC
lllllllllllllllllllllRespondent
v.
National Labor Relations Board
lllllllllllllllllllllPetitioner
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Labor Law Scholars
lllllllllllllllllllllAmicus on Behalf of Petitioner
____________
National Labor Relations Board
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Submitted: January 13, 2016
Filed: June 2, 2016
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Before WOLLMAN, MELLOY, and COLLOTON, Circuit Judges.
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WOLLMAN, Circuit Judge.
The National Labor Relations Board (Board) found that Cellular Sales of
Missouri, LLC (Cellular Sales) had violated sections 7 and 8(a)(1) of the National
Labor Relations Act (NLRA), 29 U.S.C. §§ 157, 158(a)(1), by maintaining and
enforcing a mandatory arbitration agreement under which employees waived their
rights to pursue class or collective action to redress employment-related disputes in
any forum. The Board also found that employees of Cellular Sales would reasonably
understand the arbitration agreement to waive or impede their rights to file unfair
labor practice charges with the Board. Cellular Sales petitions for review, arguing that
the Board’s order should not be enforced, and the Board cross-applies for
enforcement. We enforce the order in part and decline to enforce the order in part.
John Bauer, formerly an independent contractor for Cellular Sales, was hired
by the company as an employee in January 2012. As a condition of his employment,
Bauer entered into an employment agreement that included a provision under which
he agreed to arbitrate individually “[a]ll claims, disputes, or controversies” related to
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his employment and to waive any class or collective proceeding (arbitration
agreement). The arbitration agreement provided in relevant part:
All claims, disputes, or controversies arising out of, or in relation to this
document or Employee’s employment with Company shall be decided
by arbitration . . . . Employee hereby agrees to arbitrate any such claims,
disputes, or controversies only in an individual capacity and not as a
plaintiff or class member in any purported class, collective action, or
representative proceeding. . . . The decision of the arbitrator shall be
final, binding, and enforceable in any court of competent jurisdiction and
the parties agree that there shall be no appeal from the arbitrator’s
decision. . . . Except for the exchange of documents that the parties
intend to use to support their claims and defend against the other parties’
claims, there shall be no interrogatories, depositions or other discovery
in any arbitration hereunder.
Bauer’s employment with Cellular Sales ended in late May 2012.
Approximately five months later he filed a putative class-action lawsuit against the
company in federal court, alleging violations of the Fair Labor Standards Act (FLSA),
29 U.S.C. §§ 201-219. Cellular Sales moved to dismiss the lawsuit and compel
arbitration. The district court1 granted the motion, concluding that the arbitration
agreement—including the class-action waiver—was enforceable. Bauer then
commenced an arbitration proceeding against Cellular Sales. The parties eventually
settled, and the district court granted their joint motion to approve the settlement and
to dismiss Bauer’s lawsuit with prejudice.
While his lawsuit was pending, Bauer filed an unfair labor practice charge with
the Board, claiming that Cellular Sales violated his right to engage in protected
concerted activity in violation of sections 7 and 8(a)(1) of the NLRA when it required
him to sign an arbitration agreement that included a class-action waiver. The Board
1
The Honorable Beth Phillips, United States District Judge for the Western
District of Missouri.
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issued a complaint, and an administrative law judge (ALJ) ruled in favor of the Board,
concluding that Cellular Sales’s arbitration agreement violated the NLRA because of
its individual arbitration requirement and because employees would reasonably
interpret the arbitration agreement as barring or restricting their rights to file unfair
labor practice charges with the Board. The ALJ also concluded that Cellular Sales had
violated the NLRA by moving to dismiss Bauer’s putative class-action lawsuit and
compel enforcement of the arbitration agreement.
The Board affirmed and adopted the ALJ’s rulings and findings. The Board
ordered Cellular Sales to either rescind the arbitration agreement or revise it to clarify
that, by signing the agreement, employees do not waive their rights to pursue
employment-related class or collective actions in all forums and are not restricted in
their rights to file charges with the Board. It also ordered Cellular Sales to notify all
of its current and former employees of these changes; to notify the district court that
these changes were made and that the company no longer opposed Bauer’s lawsuit
(even though the lawsuit had been dismissed over a year earlier); and to reimburse
Bauer for legal fees and expenses incurred in opposing Cellular Sales’s motion to
dismiss and compel arbitration (even though Cellular Sales had prevailed on its
motion, Bauer had not appealed, and the parties had ultimately settled). This petition
for review and cross-application for enforcement followed.
We review the Board’s findings of fact for substantial evidence on the record
as a whole, that is, for such relevant evidence as “‘a reasonable mind might accept as
adequate to support’ a finding.” NLRB v. Am. Firestop Sols., Inc., 673 F.3d 766,
767-68 (8th Cir. 2012) (quoting Universal Camera Corp. v. NLRB, 340 U.S. 474, 477
(1951)). We review the Board’s conclusions of law de novo. Id. at 768. We will
defer to the Board’s interpretation of the NLRA “so long as it is rational and
consistent with that law,” id. (citations omitted), but we need not defer to the Board’s
interpretation of other federal statutes, see, e.g., Owen v. Bristol Care, Inc., 702 F.3d
1050, 1054 (8th Cir. 2013); see also Hoffman Plastic Compounds, Inc. v. NLRB, 535
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U.S. 137, 144 (2002) (“[W]e have . . . never deferred to the Board’s . . . preferences
where such preferences potentially trench upon federal statutes and policies unrelated
to the NLRA.”).
Cellular Sales first argues that the Board erred in finding that because the class-
action waiver restricted employees’ substantive rights under section 7 to engage in
protected concerted activity, the arbitration agreement violated section 8(a)(1) of the
NLRA. Cellular Sales notes that in reaching this conclusion, the Board relied on two
of its prior decisions, D.R. Horton, Inc., 357 N.L.R.B. No. 184, 2012 WL 36274 (Jan.
3, 2012), and Murphy Oil USA, Inc., 361 N.L.R.B. No. 72, 2014 WL 5465454 (Oct.
28, 2014), each of which concluded that arbitration agreements imposing similar
class-action waivers violated section 8(a)(1). Cellular Sales points out that the
Board’s reasoning in those decisions was directly rejected by the Fifth Circuit. See
D.R. Horton, Inc. v. NLRB, 737 F.3d 344, 362 (5th Cir. 2013) (denying enforcement
in relevant part, rejecting Board’s position that use of class-action procedure was a
“substantive right” under section 7 of the NLRA, and concluding that “[b]ecause the
Board’s interpretation does not fall within the [Federal Arbitration Act’s (FAA)]
‘saving clause,’ and because the NLRA does not contain a congressional command
exempting the statute from application of the FAA,” the arbitration agreement,
including the class-action waiver, “must be enforced according to its terms”); Murphy
Oil USA, Inc. v. NLRB, 808 F.3d 1013, 1018 (5th Cir. 2015) (denying enforcement
in relevant part and concluding that the employer “committed no unfair labor practice
by requiring employees to relinquish their right to pursue class or collective claims in
all forums by signing the arbitration agreements at issue”). Cellular Sales also points
to our court’s decision rejecting the Board’s reasoning—albeit in a case that was not
on review from a Board decision. Owen v. Brisol Care, Inc., 702 F.3d 1050, 1053-55
(8th Cir. 2013) (rejecting the Board’s position in D.R. Horton and joining “fellow
circuits that have held that arbitration agreements containing class waivers are
enforceable in claims brought under the FLSA”).
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The Board acknowledges that its position has twice been rejected by the Fifth
Circuit, and it concedes that our holding in Owen is fatal to its argument “that a
mandatory agreement requiring individual arbitration of work-related claims” violates
the NLRA. Consequently, in addition to filing its brief in this matter, the Board filed
a motion for initial hearing en banc and requested that we reconsider our holding in
Owen. The Board’s motion was denied, and thus, in accordance with Owen, we
conclude that Cellular Sales did not violate section 8(a)(1) by requiring its employees
to enter into an arbitration agreement that included a waiver of class or collective
actions in all forums to resolve employment-related disputes. Accordingly, we grant
the petition for review and decline to enforce the Board’s order with respect to this
issue. See Owen, 702 F.3d at 1053-55; see also D.R. Horton, 737 F.3d at 362;
Murphy Oil, 808 F.3d at 1018.
Cellular Sales next argues that the Board erred when it found that the company
violated section 8(a)(1) by seeking to enforce the arbitration agreement through a
motion to dismiss and compel arbitration in Bauer’s putative class-action lawsuit. The
Board determined that “an employer’s enforcement of an unlawful rule . . .
independently violates [s]ection 8(a)(1)” and concluded that Cellular Sales’s motion
to dismiss and compel arbitration sought to enforce an unlawful contract and thereby
interfere with or restrain employees from exercising their rights under the NLRA. The
Board specifically noted that in finding this separate violation of the NLRA, it was
“rely[ing] solely on the principle that the enforcement of an unlawful provision is, in
itself, an independent violation of [section] 8(a)(1).” As a remedy for this violation,
the Board ordered Cellular Sales to reimburse Bauer “for all reasonable expenses and
legal fees, with interest, incurred in opposing [Cellular Sales’s] unlawful motion to
compel individual arbitration.” It also ordered Cellular Sales to notify the district
court “that it no longer oppose[d Bauer’s class-action lawsuit] on the basis of the
arbitration agreement.”
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Because the class-action waiver did not violate section 8(a)(1), Cellular Sales’s
attempt to enforce the class-action waiver likewise did not violate section 8(a)(1).
Accordingly, we grant the petition for review and decline to enforce the Board’s order
with respect to this issue. We also decline to enforce the Board’s remedies related to
this issue. See Murphy Oil, 808 F.3d at 1021 (declining to enforce Board’s award of
legal fees and expenses in similar circumstances).
Cellular Sales next argues that the Board erred when it found that the company
violated section 8(a)(1) because its employees would reasonably construe the
arbitration agreement to bar or restrict their rights to file charges with the Board or
seek access to the Board’s processes. The NLRA prohibits an employer from entering
into an agreement with employees that circumscribes the Board’s authority to prevent
unfair labor practices. See 29 U.S.C. § 160(a). Thus, an arbitration agreement
violates section 8(a)(1) if it expressly prohibits employees from filing unfair labor
practice charges with the Board or if it would be reasonably construed by employees
to restrict or preclude such activity. See D.R. Horton, 737 F.3d at 363 (“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.” (quoting Cintas Corp. v. NLRB, 482 F.3d 463, 467 (D.C.
Cir. 2007) (internal quotation marks omitted)).
As set forth above, Cellular Sales’s arbitration agreement included a broad
requirement that “[a]ll claims, disputes, or controversies arising out of, or in relation
to” employment with the company “shall be decided by arbitration.” Given “the
absence of any limits to this broadly worded provision,” the Board concluded that the
arbitration agreement violated section 8(a)(1) “because employees would reasonably
believe [the agreement] waived or limited their rights to file Board charges or to
access the Board’s processes.”
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Cellular Sales contends that the specific language of the arbitration agreement,
read as a whole and in context, could not be reasonably construed by employees to
preclude or restrict their rights to file charges with the Board. It argues that because
the arbitration agreement does not expressly prohibit employees from filing charges
with the Board and makes no reference to agency or administrative proceedings,
employees could not read the agreement as having any bearing on their rights to file
charges with the Board. It also contends that because the agreement states that an
arbitration decision is “final, binding and enforceable in any court of competent
jurisdiction,” and refers to interrogatories, depositions, and other discovery-related
matters that do not generally apply in Board proceedings, the “implication” is that the
arbitration agreement prohibits only court proceedings.2 We are not persuaded.
The Board has held that an arbitration agreement violates section 8(a)(1) when
it provides that the agreement does not constitute a waiver of an employee’s obligation
to file a timely charge with the Board. In Bill’s Electric, Inc., 350 N.L.R.B. 292, 296
(2007), the agreement provided that arbitration was the exclusive method of dispute
resolution, but also stated that it “shall not be a waiver of any requirement for the
Employee to timely file any charge with the NLRB, EEOC, or any State Agency . . .
as may be required by law to present and preserve any claimed statutory violation in
a timely manner.” This provision was not sufficient to alert employees that they
retained rights to file charges with the Board because, “[a]t the very least, the
mandatory . . . arbitration policy would reasonably be read by . . . employees as
substantially restricting, if not totally prohibiting, their access to the Board’s
2
Cellular Sales contends that the fact that Bauer actually filed an unfair labor
practice charge with the Board establishes that the arbitration agreement cannot be
reasonably construed by employees as limiting or precluding that activity. But the
“‘actual practice of employees is not determinative’ of whether an employer has
committed an unfair labor practice.” Murphy Oil, 808 F.3d at 1019 (citation omitted).
Instead, the question is whether the employer’s action is “likely to have a chilling
effect” on its employees’ exercise of their rights under the NLRA. D.R. Horton, 737
F.3d at 357.
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processes.” Id.; see also D.R. Horton, 737 F.3d at 364 (noting that references to
“court,” “judge,” and “jury” in mandatory arbitration agreement were “insufficient to
counter the breadth of the waiver created by the phrase ‘right to file a lawsuit or other
civil proceeding’”). The Board has also found a violation of section 8(a)(1) when an
agreement required arbitration of “any other legal or equitable claims and causes of
action recognized by local, state or federal law or regulations” because, although the
language did not explicitly restrict proceedings before the Board, “the breadth of the
policy language” would result in employees reasonably interpreting the agreement to
prohibit those proceedings. U-Haul Co. of Cal., 347 N.L.R.B. 375, 377-78 (2006),
enforced, 255 F. App’x 527 (D.C. Cir. 2007) (mem.). Similarly, the Board affirmed
an ALJ’s finding of a section 8(a)(1) violation when an arbitration agreement stated
that “all disputes” and “legal claims” were required to be arbitrated, Board charges
were not included in a list of exceptions, and the agreement provided that “such claims
shall not be filed or pursued in court.” Utility Vault Co., 345 N.L.R.B. 79, 81 (2005).
And in Murphy Oil, the Fifth Circuit enforced the Board’s finding that an arbitration
agreement requiring employees to arbitrate “any and all disputes or claims” related in
any manner to employment and to waive class or collective action “in any other
forum” could “create ‘[t]he reasonable impression . . . that an employee [was] waiving
not just [her] trial rights, but [her] administrative rights as well.’” 808 F.3d at 1019
(quoting D.R. Horton, 737 F.3d at 363-64).
Although the language used by Cellular Sales in its arbitration agreement is not
identical to the language used in Bill’s Electric, U-Haul, Utility Vault, or Murphy Oil,
it is similar in both its breadth and its generality, and thus we find those cases
instructive. Moreover, the Board’s construction of the NLRA is “entitled to
considerable deference, and must be upheld if it is reasonable and consistent with the
policies of the [NLRA].” St. John’s Mercy Health Sys. v. NLRB, 436 F.3d 843, 846
(8th Cir. 2006) (citations omitted). The Board’s finding that Cellular Sales violated
section 8(a)(1) because its employees would reasonably interpret the arbitration
agreement to limit or preclude their rights to file unfair labor practice charges with the
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Board is reasonable and is consistent with the NLRA. Accordingly, we deny the
petition for review and enforce the Board’s order with respect to this issue, including
corrective action with respect to any employees who remain subject to the arbitration
agreement. See Murphy Oil, 808 F.3d at 1019.
Finally, Cellular Sales argues that the Board’s order is unenforceable in its
entirety because Bauer’s unfair labor practices charge was untimely under section
10(b) of the NLRA, 29 U.S.C. § 160(b), and because Bauer was no longer an
“employee” under section 2(3) of the NLRA, id. § 152(3), when the charge was filed.
Again, we disagree.
Section 10(b) provides that “no complaint shall issue based upon any unfair
labor practice occurring more than six months prior to the filing of the charge with the
Board.” 29 U.S.C. § 160(b). Cellular Sales argues that Bauer entered into the
arbitration agreement “on or about January 1, 2012,” but did not file his unfair labor
practice charge until December 2012, well after the six-month limitation period under
section 10(b) had expired. The Board rejected Cellular Sales’s argument that the
charge was time-barred, noting that the parties had stipulated that “[s]ince about
January 1, 2012, [Cellular Sales] has promulgated, maintained, and enforced” the
arbitration agreement—a stipulation that included the relevant six-month period
preceding the unfair labor practice charge Bauer filed on December 11, 2012. The
Board found a violation because, it noted, “the maintenance of an unlawful rule is a
continuing violation, regardless of when the rule was first promulgated.” We agree.
The violation found here is not related exclusively to the circumstances that
existed when Bauer signed the arbitration agreement in January 2012. Rather, at issue
is the legality of Cellular Sales’s continued maintenance of the agreement. The Board
has repeatedly held that an employer commits a continuing violation of the NLRA
throughout the period during which an unlawful agreement is maintained. See, e.g.,
Gamestop Corp., 363 N.L.R.B. No. 89, 2015 WL 9592400, at *1 (Dec. 31, 2015)
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(rejecting argument that complaint was time-barred by section 10(b) where employer
continued to maintain the unlawful agreement during the six-month period preceding
the charge, and noting that maintenance of an unlawful workplace rule constitutes a
continuing violation that is not time-barred by section 10(b)); The Pep Boys, 363
N.L.R.B. No. 65, 2015 WL 9460022 (Dec. 23, 2015) (same); Register-Guard, 351
N.L.R.B. 1110, 1110 n.2 (2007) (noting that “[t]he maintenance during the 10(b)
period of a rule that transgresses employee rights is itself a violation of [section]
8(a)(1)”), enforced in part, 571 F.3d 53 (D.C. Cir. 2009). We have determined that
employees would reasonably interpret the arbitration agreement to bar or interfere
with their rights to file unfair labor practice charges with the Board. Cellular Sales
stipulated to the fact that it maintained the arbitration agreement during the relevant
period. Having been filed during the period in which Cellular Sales maintained the
unlawful arbitration agreement, Bauer’s unfair labor practice charge was thus not
time-barred. See, e.g., Gamestop, 363 N.L.R.B. No. 89, 2015 WL 9592400, at *1.
Cellular Sales also argues that Bauer was not an “employee” within the
meaning of section 2(3) of the NLRA because he was not employed by the company
during the six-month period preceding his unfair labor practice charge. Section 2(3)
provides that “[t]he term ‘employee’ shall include any employee,” a definition the
Board has interpreted in the “broad generic sense” to “include members of the
working class generally.” Briggs Mfg. Co., 75 N.L.R.B. 569, 571 (1947) (“This broad
definition covers, in addition to employees of a particular employer, also employees
of another employer, or former employees of a particular employer, or even applicants
for employment.”). The Board has long held that a former employee continues to be
an “employee” within the meaning of the NLRA. See Little Rock Crate & Basket Co.,
227 N.L.R.B. 1406, 1406 (1977) (noting that “employee” under section 2(3) of the
NLRA means “members of the working class generally” and includes “former
employees of a particular employer”); see also Haynes Bldg. Servs. LLC, 363
N.L.R.B. No. 125, 2016 WL 737040 (Feb. 23, 2016) (noting that “a discharged
employee remains a statutory employee entitled to the full protection of the
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[NLRA]”). Given the NLRA’s broad definition of “employee” and the considerable
deference we owe to the Board’s reasonable construction of the NLRA, we conclude
that the Board did not err in finding that Bauer was an “employee” under the NLRA.
See Allied Chem. & Alkali Workers, Local No. 1 v. Pittsburgh Plate Glass Co., 404
U.S. 157, 166 (1971) (noting that “the task of determining the contours of the term
‘employee’ has been assigned primarily” to the Board). In sum, because Cellular
Sales’s unlawful arbitration agreement remained in effect and governed Bauer both
as a current and as a former employee during the section 10(b) limitations period, his
unfair labor practice charge was not time-barred.
The petition for review is granted in part and denied in part, and the Board’s
order is denied in part and enforced in part.
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