In D.R. Horton, Inc. and Michael Cuda, 357 NLRB No. 184 (2012), a three-member panel of the National Labor Relations Board (NLRB)has issued a farreaching decision that immediately affects arbitration provisions and the rights of unorganized individuals at the workplace.1
The ruling, essentially, holds that arbitration agreements in the workplace are valid as long as they affect individuals only and do not preclude class activity in any forum.
One of the fundamental problems with the decision is that it was decided based upon several premises not necessarily accurate. For example, commenting on the Supreme Court's decision in 14 Penn Phzfl LLC v. Pyett, 129 S.Ct. 1456 (2009), the Board concluded that the right to waive judicial class actions, clearly endorsed by the Supreme Court of the United States, does not impact Horton because the Horton waiver occurred through the collective bargaining process - where employees were represented by a labor organization.2 In other words, the Board has tacitly endorsed collective bargaining through labor organizations as a means to achieve workplace resolution, but has suggested that any modification in individual workplace rights would be problematic without the imprimatur of a majority organization.
The two voting members of the panel, acting for the full Board, held that its decision would not preclude individuals not otherwise defined as employees under §2(3) of the Act from waiving their right to pursue class or collective claims and was narrowly tailored.3 Thus, the Board suggested that executives or other exempt individuals were not covered. But, those individuals who might otherwise be - or perhaps should properly be - represented by organized labor can only have those workplace rights circumscribed through a collective bargaining process.
The Board discussed the interplay between the Federal Arbitration Act, 9 U.S.C. §1, and the National Labor Relations Act (NLRA,) 29 U.S.C. §150, and the historical context of each. However, the Board ruled that, in this instance, any interference with rights under the Federal Arbitration Act was justified, appropriate, and complementary.
The Board concluded that its decision did not adversely impact rights in the workplace. Rather, it enhanced them by requiring that individuals' rights to collective action in any forum be preserved. However, companies could still require individuals to pursue arbitration but could not preclude them from participating in class claims.
Thus, a question to ponder is the affect of precluding individuals from lawsuits who might later participate in a class claim. In other words, if Mary Sue lost at arbitration with the Widget Company, could she subsequently join a class claim by the Widget Workers of Wisconsin? I do not think the Board panel resolved such an issue. My reading of the decision suggests no finality by the Sue arbitration; rather, merely another effort for her and the WWW to re-litigate claims. At least on this point further clarity is needed.
The Horton decision must also call into question the implication of a panel limited to two voting members of an already politicized Board making a decision of first impression - by its own admission. It is true that Board decisions often wax and wane depending upon the party in control of the White House. However, such a significant review of the clash between arbitral rights and individual rights could have been deferred. Once member Hayes recused, his two colleagues should have waited for a new complement on the Board. Perhaps such a regulation should be considered, at least on cases of first impression.
II. Background Facts
The Horton company was a home builder with operations in more than twenty states. On a corporate-wide basis, beginning in 2006, it began to require each employee to execute a mutual arbitration agreement (MAA) as a condition of employment. The key …