Tag Archives: D.R.Horton

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.

NLRB Continues To Flout Supreme Court on Arbitration Agreements

Contributed by Terry Fox

On April 30, 2012, the NLRB filed a complaint against California-based 24-Hour Fitness, based on the company’s use of employment arbitration provisions.  The 24-Hour Fitness written waiver provided that employees would arbitrate employment disputes in a single-employee arbitration. According to the NLRB, that employer policy violates Section 8(a)(1) of the National Labor Relations Act by interference with employees’ rights to collective action provided in Section 7.

24-Hour Fitness is a union-free workplace. It provided an opt-out from the waiver, if the employee provided a signed company form within 30 days of signing the waiver.  Previously, the NLRB filed a complaint against D.R. Horton, Inc., based on the same theory.  The D.R. Horton decision invalidated the arbitration agreement between the employer and employee. D.R. Horton is currently on appeal.  The NLRB’s position is directly contrary to the United States Supreme Court decision in AT&T Mobility v. Concepcion, issued in 2011, upholding arbitration provisions that prohibit collective and class action claims.

The NLRB continues to aggressively insert itself in the non-union workplace by challenging and attacking employer’s policies on arbitration and social media.  Only 7% of private sector workers are members of a labor union.  Perhaps these latest actions by the NLRB are attempts to keep relevant in order to maintain its funding.  Whatever the reason, employers can expect attempts by the NLRB to expand its influence in the private sector.

Pro-Union NLRB Contradicts U.S. Supreme Court: Declares Employee Class-Action Waivers Violate Labor Law

Contributed by Jeff Risch

On January 3, 2012, the NLRB held that a nationwide home builder committed an unfair labor practice under the National Labor Relations Act (NLRA) by implementing a mandatory arbitration agreement that waived the rights of employees to participate in class or collective actions (D.R. Horton Inc. and Michael Cuda, 357 NLRB 184, 1/3/11). In short, the NLRB held that employers may not compel employees to waive their right to collectively pursue litigation of employment claims in all forums, arbital and judicial.

Michael Cuda, a superintendent for Horton, claimed that he and other similar superintendents for the company were prevented from pursuing a wage and hour class-action/collective-action under the Fair Labor Standards Act (FLSA); alleging that they were misclassified as exempt employees.  Horton required Cuda and other employees to execute an arbitration agreement whereby they individually agreed to forego class-action relief of all types relating to any employee dispute.  NLRB Chairman Mark Gaston Pearce (D) and Member Craig Becker (D) found that this mandatory arbitration procedure violated Section 8(a)(1) of the NLRA because it interfered with the statutory right of employees to engage in “protected concerted activity for their mutual benefit.”

In so holding, the NLRB took issue with the U.S. Supreme Court’s recent decision in AT&T Mobility LLC v. Concepcion, U.S., No. 09-893, 4/27/11.  In Concepcion, the court, in a 5-4 decision, enforced AT&T’s customer cellular telephone contract that provided for mandatory arbitration on an individual basis and prohibited class action proceedings despite conflicting California state law.  The court essentially held that the Federal Arbitration Act (FAA) preempts state laws that prohibit contracts from preventing class-action lawsuits.  In judicial decisions that have since followed Concepcion, courts throughout the U.S. have concluded that employees may waive class-action rights by agreeing to individualized arbitration through employment arbitration agreements.  

In distinguishing Concepcion, the NLRB held that employment arbitration agreements (unlike consumer contracts) cannot prevent employees from waiving their rights protected by the NLRA (i.e. collectively pursue wage/hour claims and/or disputes over terms and conditions of employment). The NLRB also reasoned that Concepcion involved a conflict between the FAA and a California state law, which implicated the U.S. Constitution’s Supremacy Clause; whereas in D.R. Horton the Supremacy Clause was not called into question as the issues involved purely federal statutes (FAA vs. the NLRA).