D.R. Horton has petitioned the U.S. Court of Appeals, Fifth Circuit—whose jurisdiction includes Horton’s home state of Texas—to overturn a Jan. 3, 2012 ruling against the home builder by the National Labor Relations Board (NRLB). The ruling asserted that employer-imposed arbitration agreements that prevent workers from making class or collective claims against a company violate a section of the National Labor Relations Act because such agreements impede an employee’s right to engage in protected “concerted” activity.
In support of Horton’s opening brief, which it filed in early June, the Pacific Legal Foundation and National Federation of Independent Business Small Business Legal Center have filed an amicus brief with the court, stating the NRLB’s ruling runs counter to the Federal Arbitration Act.
That’s pretty much the builder’s argument, too, in D.R. Horton v. Michael Cuda, in which Horton argued that individual waivers of collective claims are “legally enforceable.” That view was lent support last year by the U.S. Supreme Court’s landmark decision in AT&T Mobility v. Concepcion, which held that the Federal Arbitration Act supersedes state laws when arbitration is at issue. Earlier this year, the Supreme Court upheld a relevant consumer arbitration agreement within a class-action waiver in CompuCredit Corp. v. Greenwood.
Nevertheless, NRLB determined in the Horton case that a class action waiver in a mandatory employment arbitration agreement is illegal. Cuda, a company employee, had filed a collective action in arbitration, which the builder rejected. He then filed an unfair labor practice complaint against Horton with NRLB, claiming his actions were protected under the National Labor Relations Act and, by disavowing his claim, Horton violated the law.
For decades, private arbitration agreements have helped employers avoid expensive and protracted employment-related litigation. “One of the most attractive of the multiple benefits of this is the elimination of collective or class-action lawsuits,” states Jim Redeker, a partner with the Philadelphia-based firm Duane Morris, which represents companies in labor and personnel disputes.
In an essay he posted last week on Human Resources Executive Online, Redeker ominously casts NRLB’s ruling against Horton as more evidence of the Board’s larger power play to “tilt the workplace steeply toward employee rights, thereby radically changing the way Americans conduct business.”
Posting on the Employer Labor Relations website, Joshua Henderson of the law firm Seyfarth Shaw sees the Horton ruling as another example of the Board “flexing its administrative muscle,” inappropriately in Henderson’s opinion.
Both Redeker and Henderson suggest NRLB’s ruling against Horton could be overturned on appeal, and point specifically to Iskanian v. CLS Transportion L.A., in which the California Court of Appeals, Second District, last week rejected NRLB’s argument in Horton and upheld the Supreme Court’s ruling about the validity of arbitration waivers in AT&T Mobility. “The decision in Iskanian is a resounding repudiation of the Board’s decision, and, perhaps, a harbinger of decisions to come,” writes Henderson.
John Caulfield is senior editor for Builder magazine.