After successive defeats at the hands of the U.S. Court of Appeals for the Fifth Circuit, the National Labor Relations Board (NLRB) has taken its crusade against class-action arbitration agreements to California. In a recent decision, Bristol Farms, the NLRB once again held that an arbitration agreement that would require individual arbitration violated the National Labor Relations Act (NLRA).
Over a strong dissent, the NLRB reasoned that an agreement requiring individual arbitration—even if the agreement was optional—prevents employees from engaging in protected activities (collective action) and thus is an unfair labor practice in violation of NLRA § 8(a)(1): “[A]n arbitration agreement that precludes collective action in all forums is unlawful even if entered into voluntarily, because it requires employees to prospectively waive their Section 7 right to engage in concerted activity.”
But as the dissent pointed out, this finding flies directly in the face of two recent Fifth Circuit decisions, which overruled the very NLRB decisions the Bristol Farms majority cited as support. First, in D.R. Horton, Inc. v. NLRB, the court clarified that “the use of class action procedures . . . is not a substantive right.” Instead, it is a procedural right that does not automatically fall within the NLRA. Further the Fifth Circuit held that the Federal Arbitration Act’s (FAA) savings clause did not require invalidation of the arbitration agreement, citing the U.S. Supreme Court’s AT&T Mobility LLC v. Concepcion decision. Finally, the Fifth Circuit found nothing in the NLRA’s statutory history indicating that Congress intended that law to trump the FAA.
Despite the Fifth Circuit’s holding in D.R. Horton, the NLRB pursued an enforcement action against Murphy Oil for a similar arbitration agreement. Ten months after the Fifth Circuit announced its decision, the NLRB again ruled that a voluntary agreement that required individual arbitration violated the NRLA. Murphy Oil appealed to the Fifth Circuit. In its 2015 decision, Murphy Oil, U.S.A. v. NLRB, the court’s analysis was pithy:
Our decision [in D.R. Horton] was issued not quite two years ago; we will not repeat its analysis here. Murphy Oil 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 here.
The disregard of D.R Horton reflects that the NLRB majority holds the federal circuit courts and their rulings in considerable contempt. Apparently hoping that another appellate court will hold differently from D.R. Horton and Murphy Oil, the NLRB is pushing full steam ahead with its campaign against class-action arbitration agreements. Even if another appellate court ultimately sides with the Fifth and finds that such agreements do not violate the NLRA, one suspects that the NLRB will only admit defeat on the steps of the Supreme Court—if then.