Co-authored by Joshua Seidman and Nadia Bandukda

D.R. Horton Who?  Who is not the question here, it is why and what is going on with the NLRB saga?  Last week, the NLRB filed a petition for rehearing with the Fifth Circuit seeking reconsideration and reversal of the appellate court’s December 2013 decision regarding employee class action waivers. 

The Board’s petition seeks an answer to a simple question:  can employers require employees, as a condition of their employment, to agree to an arbitration provision that limits their ability to file class or collective actions in court?   The petition once again highlights the Board’s unwavering belief that the NLRA prohibits employees from entering into arbitration agreements that limit their ability to file class or collective actions because, in the NLRB’s view, it prohibits employees’ right to “engage in concerted activity for mutual aid or protection.”

Despite the Fifth Circuit’s decision, which found that an employer’s arbitration policy containing class and collective action waivers does not run afoul of the NLRA, the Board apparently now hopes to huff and puff and blow D.R. Horton’s house down by gaining momentum against the string of recent pro-arbitration Supreme Court and appellate decisions. 

Whether the Board’s rehearing campaign prevails will largely depend on the strength of its argument that the Fifth Circuit’s reliance on two Supreme Court decisions—Gilmer v. Interstate/Johnson Lane Corp. (1991) and AT&T Mobility LLC v. Concepcion (2011)—was misplaced.  The petition repeatedly points out that neither decision discussed or decided the issue presented in D.R. Horton—whether the NLRA “guarantees” the right to pursue a class or collective action.  Specifically, the petition argues that Gilmer and Concepcion did not touch upon the NLRA rights at stake in D.R. Horton and instead addressed “a strictly procedural forum waiver agreement that did not impair any substantive federal right and a law that conditioned enforcement of an arbitration agreement on the availability of class action procedures.”

With respect to Gilmer, the NLRB’s petition notes that the Fifth Circuit’s purported misinterpretation of the case caused it to improperly view the NLRA in the same light as other federal statutes, such as the ADEA or FLSA.  The NLRB argues that statutes such as the ADEA and FLSA are “individual rights” statutes, and thus cannot be appropriately compared to the NLRA, which “does vest employees with a substantive right to act in concert.”  The petition then draws parallels between class or collective lawsuits, on the one hand, and strikes and “other disruptive protests,” on the other hand, arguing that the former is “an alternative” to the latter.  The NLRB finally alleges that unified action by workers “of this sort” lays the groundwork for stronger collective bargaining.

Turning to Concepcion, the NLRB claims that the Fifth Circuit erred by not distinguishing between situations where procedural forum waivers are at issue, as in Concepcion, and situations where a party seeks to waive substantive rights.  Since the waiver in D.R. Horton “extinguishes its employees’…substantive right to litigate employment claims,” the NLRB alleges that the Fifth Circuit should have affirmed the Board’s decision invalidating the waiver.

Despite unfavorable decisions in multiple U.S. Courts of Appeals, as we reported, until the Supreme Court intervenes, employers must expect the D.R. Horton saga to remain in full effect and the NLRB to continue seeking new ways to advance its position.