California Court Flat Out Rejects the NLRB’s Holding in Horton and Enforces a Class Action Waiver

Contributed by Jill Cheskes

It was only a matter of time before a court was faced with a class action waiver in an arbitration agreement following the conflicting rulings on the issue by the US Supreme Court in AT&T Mobility v. Concepcion and the NLRB in Horton.  In the Supreme Court Concepcion case, the court found class action waivers in arbitration agreements to be valid under the Federal Arbitration Act (FAA).  On the other hand, in Horton, the NLRB ruled that such class action prohibitions violated the NLRA and were, therefore, unenforceable notwithstanding the Supreme Court’s decision in Concepcion.

California was perhaps not the location that was expected to side with the US Supreme Court, and yet that has come to pass in the case of Iskanian v. CLS Transp. Los Angeles LLC.  The California Court of Appeals upheld a lower court’s decision to require a California driver to arbitrate his wage and hour claims and its dismissal of his class claims against his employer based on the AT&T Mobility v. Concepcion case. 

Iskanian worked for CLS as a limousine driver and, during his employment, signed an agreement to arbitrate “any and all claims” arising out of his employment and a waiver of class claims.  Nevertheless, Iskanian filed a lawsuit and, after a long procedural history, the trial court found that the Concepcion case required that the class claims be dismissed and the case be arbitrated. 

While this case was on appeal, the Horton case was decided by the NLRB. The California appeals court decision stated that “If Horton only involved application of the NLRA, we would most likely defer to it,” but the court noted that Horton went “well beyond an analysis of the relevant sections of the NLRA.” 

Further, the court held that since the “FAA is not a statute the NLRB is charged with interpreting; we are under no obligation to defer to the NLRB’s analysis.” The court also pointed to the fact that the U.S. Supreme Court issued another ruling enforcing arbitration agreements a week after Horton was decided, holding that arbitration agreements should be enforced under the FAA absent a showing that this mandate was “overridden by a contrary congressional command”  (CompuCredit v. Greenwood, 132 S. Ct. 665).

Noting that the NLRB’s decision did not identify any such congressional command, the California Court of Appeals found that the NLRB elevated “its interpretation of federal labor law over the FAA.” In short, the court found that Horton did not “withstand scrutiny” in light of the Supreme Court’s decisions and upheld the trial court’s decision.

Time will tell how other courts view this conflict but the California court certainly limits the precedential value of Horton to NLRB cases only.