October 12, 2016 Practice Points

Fifth Circuit Reverses NLRB Again

By Karl Bayer

The Court of Appeals for the Fifth Circuit has once again rejected a National Labor Relations Board’s (NLRB) order stating a class action waiver included in an agreement to arbitrate violates the National Labor Relations Act (NLRA). In Citi Trends Inc. v. NLRB, No. 15-60913 (5th Cir. August 10, 2016), a former Citi Trends employee filed an unfair labor-practices charge against the company over the terms included in its mandatory arbitration agreement.  An administrative law judge ruled that Citi Trends violated the NLRA, and the NLRB later affirmed the judge’s decision. On appeal to the Fifth Circuit, Citi Trends claimed the court’s existing precedent overruled the NLRB’s order. In a brief per curiam opinion, the appellate court agreed with Citi Trends. The court stated:

The Board concedes, as it must, that its order contravenes our published decisions in D.R. Horton, Inc. v. NLRB and Murphy Oil USA, Inc. v. NLRB, which hold that “an employer does not engage in unfair labor practices by maintaining and enforcing an arbitration agreement prohibiting employee class or collective actions and requiring employment-related claims to be resolved through individual arbitration.” Although the Board asks us to reconsider our holdings in D.R. Horton and Murphy Oil, this Court is bound by its prior published decisions.

Ultimately, the Fifth Circuit granted Citi Trends’ petition for review of the NLRB’s order and denied the NLRB’s cross-application for enforcement of the order. Interestingly, the Seventh Circuit sided with the NLRB in a similar case earlier this year. Due to the current split among the circuit courts, it is likely only a matter of time before the issue of class waivers included in an employer’s arbitration agreement is appealed to the Supreme Court of the United States.

Keywords: NLRB, class action waiver, D.R. Horton, arbitration agreement

Karl Bayer is the founder of Karl Bayer Dispute Resolution in Austin, Texas.


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