• Fifth Circuit Holds that NLRB Erred in Finding that Arbitration Agreements with Class Action Waivers Violate NLRA
  • December 10, 2013
  • Law Firm: Jones Day - Cleveland Office
  • On December 3, the Fifth Circuit, in D.R. Horton, Inc. v. National Labor Relations Board, rejected the National Labor Relations Board's ruling that Horton's mandatory arbitration agreement containing a class action waiver violated § 7 of the National Labor Relations Act. No. 12-60031, 2013 WL 6231617 (5th Cir. Dec. 3, 2013). The court reasoned that the NLRB "did not give proper weight to the Federal Arbitration Act," which made the arbitration agreement enforceable. Id. at *1. And according to the court, the NLRA, which protects the right of employees to engage in concerted activity, "should not be understood to contain a congressional command overriding the application of the FAA." Id. at *13. While this ruling certainly constitutes good news for employers, the Fifth Circuit added one cautionary note. The court found that although the class waiver was enforceable, Horton's arbitration agreement violated §§ 8(a)(1) and (4) of the NLRA because it included language that could lead employees to reasonably believe that they were precluded from filing unfair labor practice charges. Id. at *14. As a result, the court enforced the Board's order that Horton revise the document.