NLRB Standing (read “Expanding”) Ground on D.R. Horton

By Lori Phillips

In the controversial 2012 decision D.R. Horton, Inc., the NLRB held that mandatory arbitration agreements requiring all employment disputes to be resolved through individual (as opposed to class) arbitration violate NLRA § 8(a)(1).  That statute forbids an employer “to interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in section 7.”  The D.R. Horton decision has since been rejected by the Ninth Circuit and the Second Circuit Courts of Appeals.  The Eighth Circuit declined to follow it, and Fifth Circuit finally overturned it.

Despite all of these decisions, as well as the Supreme Court’s decision upholding an arbitration agreement’s class waiver provision, the NLRB is not only holding fast to its reasoning in D.R. Horton, it is expanding it.  On January 17, 2014, in Leslie’s Poolmart, Inc., No. 21-CA-102332, an NLRB administrative law judge held than an arbitration agreement violates § 8(a)(1) even though the agreement does not expressly prohibit employees from bringing class or collective actions.  The judge reasoned that the very act of enforcing the agreement leads employees to reasonably believe they cannot engage in concerted activity.  Meanwhile, on January 21, 2014, the Ninth Circuit denied a plaintiff’s motion to reconsider its decision rejecting the NLRB’s reasoning in D.R. Horton.  Suffice it to say, the NLRB’s distaste for arbitration agreements is at odds with federal courts’ strong policy of enforcing them.  Could this dichotomy be an issue taken up by the Supreme Court?  Stay tuned.

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