Nlra Case Notes

• Jurisdiction: United States,Federal
• Citation: Vol. 28 No. 2
• Publication year: 2014
• Author: By Jeff Bosley
• topic: Contracts,Constitutional Law,Labor Law,Employment Law,Civil Procedure

NLRA Case Notes

By Jeff Bosley

Jeffrey S. Bosley is a partner in the Labor and Employment Department of Winston & Strawn LLP, and represents employers and management in labor and employment law matters. He can be reached by email at jbosley@winston.com.

Fifth Circuit Rejects Board's D.R. Horton Decision Invalidating Collective and Class Action Waivers in Arbitration Agreements

D.R. Horton, Inc., v. N.L.R.B., 737 F.3d 344 (5th Cir. 2013)

On December 3, 2013, a divided Fifth Circuit panel refused to enforce the controversial National Labor Relations Board (NLRB or the Board) decision in D.R. Horton banning class and collective action waivers in arbitration agreements. The case arose from a challenge to arbitration agreements implemented by homebuilder D.R. Horton. Chairman Pearce and then-member Becker found that the company's arbitration agreement with its employees violated the National Labor Relations Act (NLRA or Act) because the agreement prohibited employees from filing joint, class, or collective claims. Member Hayes recused himself from the case. The panel held that class or collective action waivers impermissibly restricted the right of employees to engage in protected and concerted activity for mutual aid or protection as provided by § 7 of the Act.

The Fifth Circuit rejected the NLRB's decision, and found that the Board did not give proper weight to the Federal Arbitration Act (FAA), which was enacted to prevent courts from treating arbitration agreements less favorably than other contracts. The court specifically held that the availability of class or collective action is not a substantive right, and that under the FAA, arbitration agreements must be enforced according to their terms with two exceptions: (1) the agreement may be invalidated on any ground that would invalidate a contract under the FAA's savings clause; and (2) application of the FAA may be precluded by another statute's contrary congressional command. Citing the Supreme Court's decision in AT&T Mobility LLC v. Concepcion, 563 U.S. 321 (2011), the court found that the NLRB's rule mandating access to collective and class action disfavored arbitration and, therefore, violated the FAA. Just as with the state law at issue in Concepcion, the Fifth Circuit found that the FAA's savings clause did not apply to the NLRB's rule and was not a basis for invalidating a class action waiver.

The Fifth Circuit then considered whether the NLRA contained a congressional command that would preclude...