NLRB Continues to Challenge Class Action Waivers

By Stephen R. McCutcheon, Jr., Attorney at Law

Now that the National Labor Relations Board (NLRB) has a quorum, it is pushing the boundaries of its powers under the National Labor Relations Act (NLRA).  It has reintroduced regulations to implement “quickie” or “ambush” elections, and the “persuader rule” to limit the right of employers to seek legal or other advice, and signaled that it intends to take other actions such as requiring employers to open up their e-mail systems for union organizing activities.

The NLRB’s aggressive in assertion of authority was shown by recent decisions strikingdown arbitration agreements that are favored under the Federal Arbitration Act (FAA).  This includes decisions in the last few weeks against Sprouts Farmers Markets LLC and Leslie Poolmart Inc. finding that their arbitration agreements ran afoul of the Board’s D.R. Horton decision – notwithstanding that the 5th Circuit Court of Appeals struck down the D.R. Horton decision in December of 2013.  NLRB judges are continuing to find arbitration agreements that preclude class treatment of claims to be unlawful under the NLRA.  In these decisions, judges have indicated that they will continue to do so, citing the NLRB’s policy of “nonacquiescense,” until the Supreme Court expressly rules that the NLRA does not override Congress’ clear command in the FAA.

This claim of supremacy of the NLRA over the FAA is troubling in light of the Supreme Court’s rulings to the contrary.  In a number of decisions over the last few years the United States Supreme Court has upheld the enforceability of arbitration agreements that included class action waivers.  For example, in AT&T Mobility v. Concepcion, the Supreme Court held that the FAA preempts state laws that prohibit class action waivers in arbitration agreements, and in Stolt-Nielsen S.A. v. AnimalFeeds Int. Corp., held that unless an arbitration agreement provides for class arbitration, class arbitration is not permitted.

Since then, the Supreme Court has continued to uphold the application of class action waivers in arbitration agreements, such as in American Express Co. v. Italian Colors Restaurant, andCompucredit v. Greenwood, holding that arbitration agreements may preclude class action treatment of federal statutory claims.  The Supreme Court reiterated in Compucredit that Congress enacted the FAA to address judicial hostility to arbitration, and establish a “liberal policy favoring arbitration agreements,” and that this policy in favor of arbitration applies to other federal claims, unless “overridden by a contrary congressional command.”  The NLRB’s hostility to arbitration agreements in the face of this authority is indication that it has no inclination to acknowledge the FAA until expressly ordered by the Supreme Court, and undermines its credibility and neutrality in implementing the NLRA.

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