Court Order Trumps Board

By Bill Wright

What happens when the NLRB says an arbitration agreement is illegal, but a court enforces the agreement anyway? Four plaintiffs recently found out. In Hobson et al. v. Murphy Oil USA, Inc., No. CV-10-S-1486-S (N. D. Ala. July 8, 2015), the plaintiffs brought a collective action, for themselves and others, seeking unpaid overtime. The employer raised the arbitration agreement, and the court ordered the plaintiffs to bring their individual claims in arbitration, effectively killing the plaintiffs’ attempt to bring the claims on behalf of other employees.

Instead of arbitrating, one of the plaintiffs filed an unfair labor practice charge with the NLRB, and the plaintiffs waited. And waited. Two and a half years they waited without ever starting the arbitration. Eventually, the NLRB ruled that the arbitration agreement illegally prohibited employees from engaging in protected, concerted activities, such as filing collective actions. (See our previous posts concerning DR Horton.) With the Board ruling in hand, the plaintiffs asked the court to reconsider its order on arbitration, but the court found the plaintiffs had failed to comply with its earlier order. The plaintiffs could have asked the court to stay the arbitration pending Board action, or they could have appealed the order, but instead, they just waited for over 2 years. Despite the Board’s ruling, the court called the plaintiffs’ behavior a “clear record of delay and willful misconduct” and dismissed the plaintiffs’ overtime claims as a sanction.

If you’re going to be in court, it is best to follow the court’s orders.