Skip to content

Concepcion pushback — does NLRA bar class waivers in arbitration?

June 24, 2011

The ink is barely dry on the US Supreme Court’s AT&T Mobility v. Concepcion decision (discussed here) upholding class action waivers in consumer arbitration agreements, but the pushback has already begun.  The most direct assault has begun in Congress, where both Senate and House are considering the Arbitration Fairness Act, which would void any class waivers in mandatory consumer, employment, and civil rights cases.  Given the political climate it’s not terribly likely the Republican-controlled House would pass the bill, but time will tell.

There’s also a more subtle, flank attack being mounted by the National Labor Relations Board.  In D.R. Horton, Inc., v. Michael Cuda,  an NLRB administrative law judge held that D. R. Horton did not violate the National Labor Relations Act “by maintaining and enforcing a mandatory arbitration agreement with its employees that unlawfully prohibits them from engaging in protected concerted activities, including joint arbitration claims or class action lawsuits.”  The applicable statutes prohibit an employer from “interfer[ing] with, restrain[ing], or coerc[ing] employees in the exercise of [their] rights” to, among other things, “engage in other concerted activities.”  Notably, these statutes apply to virtually all concerted activity by employees, whether they are in a union or not.

The NLRB is reviewing the ALJ’s decision, and recently issued a request for public views on the following question:

Did the Respondent violate Section 8(a)(1) of the Act by maintaining and enforcing its Mutual Arbitration Agreement, under which employees are required, as a condition of employment, to agree to submit all employment disputes to individual arbitration, waiving all rights to a judicial forum, where the arbitration agreement further provides that arbitrators will have no authority to consolidate claims or to fashion a proceeding as a class or collective action?

This is a clear attempt to limit the fallout from Concepcion, which was very poorly received by the plaintiff’s bar.   A determination by the NLRB that class waivers violate the law would certainly be challenged in the courts.  But it would present a real limitation of the rule the Supreme Court laid down in Concepcion.  Moreover, since the Supreme Court didn’t examine the question of class waivers in the context of the NLRA, Concepcion would simply not apply as binding precedent for the NLRB’s or any lower court’s analysis.  (It would likely be persuasive to some, of course, but not all.)  And, since any case will take several years to wind its way through the lower courts, the Supreme Court might look quite different by the time it gets there.

As I mentioned in my writeup of Concepcion, employers considering implementing or enforcing a mandatory employment arbitration agreement should carefully weigh the risks and benefits, including the potential uncertainty the NLRB’s proceedings create in this arena.  Careful drafting by an experienced attorney is also critical.

Employees required to sign a class waiver, and their lawyers, can perhaps take some heart after a clear-cut loss in Concepcion.  Perhaps the door was not shut quite so firmly as was initially thought.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: