January 05, 2016 Practice Points

NLRB Stands Its Ground

By Karl Bayer

The National Labor Relations Board (NLRB) has once again found that an employer’s mandatory class-action arbitration waiver violates the National Labor Relations Act (NLRA). Citigroup Technology, Inc. and Citicorp Banking Corporation, Case 12–CA–130742 (December 1, 2015).

In December 2012, Citigroup Technology, Inc. and Citicorp Banking Corporation (collectively, Citi) began requiring workers at its Tampa, Florida, facility to sign an employment arbitration policy (EAP) included in its handbook for United States employees. The Citi EAP states that workers are required to engage in arbitration over certain employment-related disputes solely through individual arbitration.

In January 2013, Darlene Echevarria, signed the agreement when she was hired. About the same time, Citi hired Andrea Smith. Smith’s offer letter included an agreement to follow the company’s arbitration procedure for any disputes with the company as a condition of her employment. Smith signed the offer letter and digitally signed the company’s EAP policy. Echevarria left her position with Citi in August 2013 and Smith left in March 2014.

Later, Echevarria, Smith, and a number of other former Citi employees filed a demand for class arbitration over purported wage and hour violations committed by Citi with the American Arbitration Association (AAA). The AAA refused to administer the matter because the EAP required individual arbitration. The workers then filed a charge with the NLRB.

In their case, the former Citi employees accused the company of violating Section 8(a)(1) of the NLRA by maintaining the EAP which required workers to engage in individual arbitration and by enforcing the EAP against a former worker. An administrative law judge ruled that the NLRB’s decisions in D.R. Horton and Murphy Oil controlled the dispute. The judge also distinguished the United States Supreme Court’s holding in American Express Co. v. Italian Colors Restaurant, 133 S.Ct. 2304 (2013) by stating:

Although the Supreme Court has upheld the enforcement of individual mutual arbitration agreements in these and other cases, the Board recognizes that the Court has never addressed or resolved the issue of exclusive individual arbitration over class and/or collective actions under the Act. The Board understands that the FAA establishes a liberal policy favoring arbitration agreements. D.R. Horton, 357 NLRB No. 184, slip op. at 8. However, as noted in D.R. Horton, the Supreme Court has “repeatedly emphasized” that the FAA protects agreements to arbitrate federal statutory claims “so long as ‘a party does not forgo the substantive rights afforded by the statute.’” Id. at 9–10, citing Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 26 (1991) (quoting Mitsubishi Motors Corp., supra at 628).

Respondent further contends that the Supreme Court in American Express makes clear that it is improper to find a congressional command where none exists, and therefore, since none exists in the language or legislative history of the NLRA, there should be no such finding here. However, as stated, the Board decisions in D.R. Horton and Murphy Oil establish that such a command exists in that Section 7 substantively guarantees employees the right to engage in collective action, including collective legal action, for mutual aid and protection concerning wages, hours, and working conditions. For the same reasons, the Supreme Court’s decision in CompuCredit, supra, and other cases cited by Respondent are distinguishable. Further, these general consumer litigation and commercial cases do not address the central questions of how and to what extent the FAA may be used to interfere with, by way of private agreements, the fundamental substantive right of workers to engage in concerted activity established and protected by the NLRA—the gravamen of the violation here and in D.R. Horton.

Ultimately, the administrative law judge relied on the Board’s prior decisions in D.R. Horton and Murphy Oil to rule that Citi “violated Section 8(a)(1) of the Act by maintaining the EAP, and by enforcing that policy by moving to compel individual arbitration of the Charging Party’s class action submission before the AAA.” The judge also determined that the company “engaged in unfair labor practices.” As a result, the administrative law judge ordered Citi to stop maintaining or enforcing the class-action arbitration prohibition included in the EAP.

On appeal, an NLRB panel ruled in a 2–1 decision:

Applying the Board’s decisions in D.R. Horton, 357 NLRB No. 184 (2012), enf. denied in rel. part, 737 F.3d 344 (5th Cir. 2013), and Murphy Oil USA, 361 NLRB No. 72 (2014), enf. denied, –F.3d– (5th Cir. Oct. 26, 2015), the judge found that the Respondent violated Section 8(a)(1) of the Act by maintaining the EAP. We adopt that finding.

The Board also found that Citi’s “conduct did not amount to enforcement of the EAP in violation of Section 8(a)(1).”

Given the many recent NLRB decisions adhering to D.R. Horton, it appears that the Board will continue to rule in favor of class arbitration in the employment dispute context. The Board’s apparent disinclination to follow Fifth Circuit precedent also suggests its ultimate goal may be to create a circuit split that would require the U.S. Supreme Court to review the issue.

Key words: alternative dispute resolution, litigation, adr, NLRB, D.H. Horton, class arbitration, employment

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


Copyright © 2016, American Bar Association. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or downloaded or stored in an electronic database or retrieval system without the express written consent of the American Bar Association. The views expressed in this article are those of the author(s) and do not necessarily reflect the positions or policies of the American Bar Association, the Section of Litigation, this committee, or the employer(s) of the author(s).