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

Contributed by Jill Cheskes

Several months ago, a California Court of Appeal upheld a class action waiver and compelled arbitration of an employee’s wage and hour claim following the Supreme Court’s AT&T Mobility case.  In doing so, the court rejected the NLRB’s determination in D.R. Horton Inc. that such a class action waiver violates the NLRA.  A second California appeals court has followed suit in Nelsen v. Legacy Partners Residential Inc.   

The court called the Horton ruling a novel interpretation of the NLRA and held that absent specific statutory language or clear legislative history of Congress’ intent, the NLRA would not override an arbitration agreement entered into between two parties – even one that included a class waiver. 

In this case, the plaintiff worked as a property manager for the employer and about a year after her employment ended, she filed a putative wage and hour class action against the employer under the California Labor Code as well as the California Unfair Competition Law and Business and Professions Code. After the court granted the employer’s motion to compel arbitration, the plaintiff appealed. 

The Court of Appeal rejected the argument that the agreement was unconscionable and violated California public policy.  The court found that the agreement precluded the plaintiff from filing a class action and also from pursuing class arbitration. 

In speaking of Horton and the NLRB’s holding that a class arbitration waiver violated the NLRA, the court declined to follow it “for a number of reasons.”  First, the court noted that only two board members had approved the decision.  Additionally, the court found that the NLRB stepped outside its “core expertise” when deciding on the interplay between class action litigation, the Federal Arbitration Act and the NLRA. Finally, the court found that the board offered no precedent to support its decision. 

Once again, while Horton may hold some precedential value for NLRB matters, the courts seem to have little regard for its reasoning or precedential value.