The NLRB v. The Courts: Showdown over the Right to Collective Action in Workplace Disputes

• Author: Christine Neylon O'Brien,Stephanie Greene
• DOI: http://doi.org/10.1111/ablj.12042
• Date: 01 March 2015
• Published date: 01 March 2015

The NLRB v. The Courts:

Showdown over the Right to

Collective Action in

Workplace Disputes

Stephanie Greene* and Christine Neylon O’Brien**

Do I believe in arbitration? I do. But not in arbitration between the lion and

the lamb, in which the lamb is in the morning found inside the lion.

—Samuel Gompers, Founder and former President of the American Federa-

tion of Labor

The parties to the labor contract must be nearly equal in strength if justice

is to be worked out ....

—Supreme Court Associate Justice Louis Brandeis

INTRODUCTION

Sprouts Farmers Market required employees to sign an agreement that all

employment-related disputes would be resolved by individual arbitration.1

The agreement also required employees to waive any rights they had to

resolve such disputes through collective or class action.2Laura Christensen

refused to sign the agreement, and, consequently, her employment was

*Associate Professor and Chair of Business Law, Carroll School of Management, Boston

College.

**Professor of Business Law, Carroll School of Management, Boston College.

1SF Mkts., LLC, d/b/a/ Sprouts Farmers Mkt., N.L.R.B. No. 21-CA-099065, at *3, *7–8 (A.L.J.

Ira Sandron, Feb. 18, 2014).

2Collective actions include those brought under the Fair Labor Standards Act (FLSA) where

employees have an opportunity to opt-in under 29 U.S.C. § 216(b), and class actions are those

traditionally brought under Rule 23 of the Federal Rules of Civil Procedure, or joinder of

parties under Rule 20. See FED. R. CIV. P. 20, 23; Charles A. Sullivan & Timothy P. Glynn,

Horton Hatches the Egg: Concerted Action Includes Concerted Dispute Resolution, 64 ALA. L. REV.

1013, 1022–23 (2013) (discussing class and collective actions).

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75

terminated, solely on the basis of her failure to sign the agreement.3Does

Christensen have grounds to challenge her termination? The National

Labor Relations Board (NLRB or Board) would find that the agreement is

not enforceable because it violates the employee’s right to engage in

collective action, a right that is protected under the National Labor Rela-

tions Act (NLRA).4Most courts, however, would find that the Federal

Arbitration Act (FAA) requires enforcement of the arbitration agreement.5

The NLRB and the courts disagree on how to interpret the NLRA

and the FAA when the policies and goals of these federal statutes intersect.

In upholding mandatory arbitration agreements, courts have followed the

trend established by the U.S. Supreme Court, which has consistently

emphasized the strong federal policy articulated in the FAA of enforcing

arbitration agreements as written, even when the agreements are thrust

upon employees or consumers.6The NLRB, however, maintains that indi-

vidual employees cannot be required to waive their right to collective

action.7The NLRB’s position is based on section 7 of the NLRA, which

provides in relevant part,

Employees shall have the right to self-organization, to form, join, or assist labor

organizations, to bargain collectively through representatives of their own

3Sprouts Farmers Mkt., No.21-CA-099065, at *8.

4See 29 U.S.C. § 157 (2012) (“Employees shall have the right to . . . engage in other concerted

activities for the purpose of collective bargaining or other mutual aid or protection . . .”). The

National Labor Relations Act (NLRA) covers most private sector employees. Employees not

covered by the NLRA include those covered under the Railway Labor Act, working for

employers not covered by the NLRA, independent contractors, domestic servants in the

home, employed by parents or spouses, agricultural workers, and supervisors. 29 U.S.C. §

152(3). Employees engaging in protected concerted activities are covered by the NLRA

regardless of whether they are union members, thus making employees’ section 7 rights

broadly applicable. See,J

EFFERY M. HIRSCH ET AL., UNDERSTANDING EMPLOYMENT LAW 80 (2d ed.

2013) (noting NLRA section 7 protects union and nonunion employees in the private sector).

5See infra notes 127–225 and accompanying text (discussing overwhelming support for

enforcement of waiver clauses).

6See AT&T Mobility, LLC v. Concepcion, 131 S. Ct. 1740, 1748–49 (2011) (describing the

FAA’s fundamental importance in establishing a liberal federal policy favoring arbitration);

Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 26 (1991) (noting that questions or

doubt of arbitrability are resolved in favor of arbitration); see also Jerett Yan, Recent Case, A

Lunatic’s Guide to Suing for $30: Class Action Arbitration, the Federal Arbitration Act and

Unconscionability After AT&T v. Concepcion, 32 BERKELEY J. EMP.&LAB. L. 551, 552 (2011)

(noting that most contracts are written by the employer and are nonnegotiable).

7D.R. Horton, Inc., 357 N.L.R.B. No. 184, at *6–7 ( Jan. 3, 2012).

76 Vol. 52 / American Business Law Journal

choosing, and to engage in other concerted activities for the purpose of

collective bargaining or other mutual aid or protection....

8

Thus, by definition, section 7 ensures an employee’s right to proceed

collectively. According to the NLRB, employers cannot require employees

to surrender the very rights that a federal statute guarantees.9The NLRB

829 U.S.C. § 157.

9See D.R. Horton, 357 N.L.R.B. 184, at *11. This conclusion is based on section 8(a)(1) of the

NLRA which provides as follows: “It shall be an unfair labor practice for an employer . . . to

interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in

[section 7].” 29 U.S.C. § 158(a)(1).

It should be noted that the constitutionality of the NLRB’s decision in D.R. Horton was in

question due to the composition of the Board membership serving at that time. Chairman

Pearce and Member Hayes were both serving as Senate-confirmed appointees, but the

validity of the third person’s status was in question, because Member Becker was appointed

by the President at a time when Congress was in recess. See http://www.nlrb.gov/who-we-are/

board/members-nlrb-1935 (last visited October 30, 2014). Presidential recess appointment

powers are derived from U.S. Constitution, Article II, Section 2, Clause 2. Decisions made by

Boards composed of some recess appointees were successfully challenged by a number of

circuit court decisions including the District of Columbia, Third, Fourth, Sixth, and Eighth

Circuits. See Noel Canning v. NLRB, 705 F.3d 490, 507 (D.C. Cir. 2013); NLRB v. Enter.

Leasing Co., 722 F.3d 609 (4th Cir. 2013); NLRB v. Relco Locomotives, Inc., 734 F.3d 764

(8th Cir. 2013); GGNSC Springfield LLC v. NLRB, 721 F.3d 403 (6th Cir. 2013); NLRB v.

New Vista Nursing & Rehab., 719 F.3d 203 (3d Cir. 2013). This created a significant problem

with respect to many three-member NLRB decisions where one member was a recess

appointee because without a quorum of three validly appointed members, the NLRB is

without power, and therefore any decisions are invalid until reconsidered by a properly

constituted Board. See New Process Steel, L.P. v. NLRB, 560 U.S. 674, 680–83 (2010). When

the Fifth Circuit considered D.R. Horton on appeal, the court ruled that it had jurisdiction,

regardless of any alleged defect in the Board’s composition, and specifically left the consti-

tutional issue for the Supreme Court to decide in NLRB v. Canning. D.R. Horton, Inc. v.

NLRB, 737 F.3d 344, 351 & n.5 (5th Cir. 2013). The District of Columbia Circuit in Noel

Canning v. NLRB, 705 F.3d 490, 507 (D.C. Cir. 2013) had ruled that NLRB Board member

appointments that took place on January 4, 2012 were unconstitutional as not within the

presidential recess appointment powers because Congress was not officially on an inter session

recess, and the vacancies occurred prior to the recess rather than during it. The Supreme

Court granted certiorari in NLRB v. Canning, 133 S. Ct. 2861, 81 U.S.L.W. 3629 (No.

12-1281) ( June 24, 2013), and held that the appointments made on January 4, 2012, were

invalid. The majority specifically addressed appointments made in other pending cases,

including those NLRB decisions involving Board Member Becker (who was the third and

critical voting member on D.R. Horton), setting criteria regarding recess appointments that

removed all constitutional concerns regarding the composition of the NLRB in its D.R. Horton

decision. See National Labor Relations Board v. Noel Canning, 573 U.S. __ (2014) (No.

12-1281) (slip. op. 4–5), __ WL __, ( June 26, 2014) (Breyer,J., joined by Kennedy, Ginsburg,

Sotomayor, and Kagan, JJ.). The Court noted that Member Becker’s appointment arose

during an intrasession recess “that was not punctuated by pro forma sessions and the vacancy

Becker filled had come into existence prior to that recess.” Id. (citations omitted). The Court

2015 / The NLRB v. The Courts 77