Tuesday, February 9, 2016

Labor & Employment Law: Fifth Circuit Takes Another Jab at the NLRB

By Ashley A. Petefish and Nicole Bermel Dunlap

The Fifth Circuit stepped into the ring for another round, knocking down yet another National Labor Relations Board (NLRB) decision that class- and collective-action waivers are unlawful. Recently, in Murphy Oil USA, Inc. v. NLRB, the Fifth Circuit again reversed the NLRB, rejecting the board’s argument that arbitration agreements requiring employees to waive their right to pursue class and collective actions are unlawful. 2015 WL6457613

Previously, the Fifth Circuit, in D.R. Horton, Inc. v. NLRB, reversed the NLRB’s position on this precise issue. D.R. Horton, Inc., v. NLRB, 737 F.3d 344 (5th Cir. 2013). Rather than seeking certiorari review by the United States Supreme Court, the NLRB simply issued its decision in Murphy Oil less than a year later, reaffirming its reasoning and result in D.R. Horton. In Murphy Oil, the NLRB again insisted that the National Labor Relations Act (NLRA) provides a substantive right to engage in collective action and, as such, is a contrary congressional command that precludes application of the Federal Arbitration Act (FAA), thus prohibiting the application of class- and collective-action waivers. 

The Fifth Circuit’s reversal of the NLRB decision in Murphy Oil delivers a hard uppercut to the board. Relying upon its earlier determinations in D.R. Horton that: the NLRA did not contain a congressional command overriding the FAA and that the use of class-action procedures was not a substantive right under the NLRA, the Fifth Circuit simply stated that its decision in D.R. Horton was issued less than two years ago and that the Fifth Circuit would not repeat its analysis. Murphy Oil, 2015 WL6457613, at *3.

Even in the aftermath of the Fifth Circuit’s decision in Murphy Oil decision, the NLRB continues to assert that it is an unfair labor practice for employers to: (1) have employees sign arbitration agreements waiving their right to bring complaints on a class or collective basis, or (2) seek the enforcement of such agreements in any forum. The Fifth’s Circuit’s recent decision and the NLRB’s insistence on its contrary position has labor and employment law practitioners wondering how many rounds this matchup will last before the Supreme Court is given the opportunity to resolve the split between the NLRB and the courts.

In Murphy Oil, the petitioner also requested that the Fifth Circuit sanction the NLRB for its blatant defiance of the Fifth Circuit’s D.R. Horton decision. However, recognizing that the NLRB did not always know which circuit’s law would be applied on a petition for review,* the Fifth Circuit refused to condemn the NLRB’s nonacquiescence with D.R. Horton. Murphy Oil, 2015 WL6457613, at *4. Although the Fifth Circuit’s decision not to sanction the NLRB may appear to give the board the opportunity to bob and weave its argument through the other circuits, the Second, Eighth, Ninth, and Eleventh Circuits have already implicitly or explicitly agreed with the Fifth Circuit’s decision in D.R. Horton. Walthour v. Chipio Windshield Repair, LLC, 745 F.3d 1326, 1336 (11th Cir. 2014), cert. denied 134 S. Ct. 2886 (2014); Richards v. Ernst & Young, LLP, 744 F.3d 1072, 1075 n.3 (9th Cir. 2013); Owen v. Bristol Care, Inc., 702 F.3d 1050, 1053–55 (8th Cir. 2013); Sutherland v. Ernst & Young LLP, 726 F.3d 290, 297 n.8 (2d Cir. 2013). Hopefully, given these circuit court decisions, the NLRB will weigh-in for a final matchup and seek certiorari review by the Supreme Court.

*Note: An employer can seek review of a board decision in the circuit where the unfair labor practice allegedly took place, in the United States Court of Appeals for the District of Columbia, or in any circuit in which it transacts business.  29 U.S.C. § 160(f).