• The NLRB Takes On Arbitration and Class Action Waivers, Ordering Employer to Withdraw Motion to Dismiss In Federal Court
  • September 2, 2013 | Author: Jed L. Marcus
  • Law Firm: Bressler, Amery & Ross A Professional Corporation - Florham Park Office
  • We want to alert you to a new decision issued by an Administrative Law Judge (“ALJ”) on August 21, 2013 in which he held that JP Morgan’s class action waiver provision violated the National Labor Relations Act (“NLRA”). JP Morgan Chase & Co., 02-CA-088471 (Aug. 21, 2013.) Perhaps more importantly, the ALJ ordered the employer to withdraw a motion to dismiss the employees’ wage and hour class action lawsuit filed in the U.S. District Court for the Southern District of New York, Ryan v. JP Morgan Chase & Co. Please review the case and this email and call me with any questions you might have.

    The procedure in the case is relatively straight forward. The former employees filed an unfair labor practice charge against their employer (because it required them to sign on to an arbitration agreement containing a class action waiver) and also brought a wage and hour class action in the Southern District of New York. After the employer filed a motion to dismiss the lawsuit because of the arbitration agreement, the employees amended the charge, claiming that the motion to dismiss was also a violation of the NLRA. The ALJ held that JP Morgan’s arbitration agreement with the class action waiver violated the NLRA. In reaching his decision, he relied on D.R. Horton, 357 NLRB No. 184 (2012), a case in which the National Labor Relations Board (“NLRB”) struck down an employer’s unilaterally imposed arbitration agreement. D.R. Horton is on appeal to the Fourth Circuit. Requiring JP Morgan to withdraw its motion to dismiss may be difficult since the district court had already granted its motion and dismissed the former employees’ case. Ryan v. JP Morgan Chase, No. 12-cv-4844, 2013 U.S. Dist. LEXIS 24628 at *15-16 (S.D.N.Y. Feb. 22, 2013.)

    We cannot predict whether the Fourth Circuit will affirm or reverse D.R. Horton. We do know that several circuit courts have enforced arbitration agreements with class action waivers in statutory employment cases, including those alleging violations of the FLSA. Richards v. Ernst & Young, No 11-17530 (9th Cir. Aug. 21, 2013); Sutherland v. Ernst & Young, LLP, Docket No. 12-304-cv; 2013 U.S. App. LEXIS 16513 (2d Cir. Aug. 9, 2013); Parisi v. Goldman Sachs, 710 F. 3d 483 (2d Cir. Mar. 21, 2013), affirming in relevant part but reversing in part, 785 F. Supp. 2d 394 (S.D.N.Y. 2011); Owen v. Bristol Care, Inc., 702 F.3d 1050 (8th Cir. 2013); Quilloin v. Tenet HealthSystem Philadelphia, Inc., 673 F.3d 221 (3d Cir. 2012.) I doubt, however, that district and circuit courts will have much patience for the NLRB’s interference in the court’s handling of arbitration and class actions. Recently, the U.S. District Court for the Eastern District of New York dismissed an FLSA lawsuit and ordered individual arbitration, rejecting D.R. Horton as having any relevance in court. The district court observed, “the NLRB’s interpretation of the FAA (or other “statutes outside its expertise”) is not entitled to any particular deference by this Court.” Additionally, the Court “is ‘not obligated to defer to the [the Board’s] interpretation of Supreme Court precedent under Chevron or any other principle.’” (citations and quotes omitted.) Torres v. United Healthcare Services, Inc., No. 12-cv-923, 2013 WL 387922 at *4 (E.D.N.Y. Feb. 1, 2013).

    The bottom line is that the tension between the NLRB and the federal courts will remain until the Fourth Circuit rules on D.R. Horton. Even then, and assuming the Fourth Circuit reverses, we expect that the NLRB will continue to apply its holding in D.R. Horton to cases in every Circuit other than the Fourth based on its doctrine of non-acquiescence until the Supreme Court rules. Still, district and circuit courts have rejected D.R. Horton as having any applicability to the Federal Arbitration Act (“FAA.”) For that reason, we would not recommend abandoning corporate arbitration agreements just yet.