Disputing Blog by Karl Bayer, Victoria VanBuren, and Holly Hayes
The issue of mandatory arbitration of employment and consumer disputes continues to be controversial. The principal bone of contention appears to be the requirement that the employee or consumer waive the right to participate in class or collective actions, so that his or her sole recourse is the pursuit of individual claims in arbitration. No matter how employee- or consumer-friendly the arbitration provision is, if it contains a class action waiver, neither the plaintiffs’ bar nor consumer advocacy groups will like it.
But such provisions have survived judicial scrutiny in cases governed by the Federal Arbitration Act. In AT&T Mobility v. Concepcion, the Supreme Court held the California rule that a class-action waiver is per seunconscionable could not be used to avoid an agreement to arbitrate because it discriminated against arbitration and was thus contrary to the public policy in favor of arbitration enacted in the FAA. 563 U.S. 333 (2011). Thus, the opponents of employment and consumer arbitration were pushed into other avenues, legislative and regulatory, to voice their displeasure.
They have not had much success in Congress. Numerous bills to preclude pre-dispute consumer and employment arbitration agreements have been introduced in Congress but have not advanced very far. The Dodd-Frank Act, passed in 2010, however, did command both the SEC the consumer protection agency it created to study the issue of mandatory arbitration and enact appropriate regulations. The Act also moved prohibits pre-dispute arbitration provisions in mortgage agreements. 15 U.S.C.A. § 1639c(e). Possibly other regulations are forthcoming.
By Executive Order, President Obama has restricted the award of federal contracts to companies that have mandatory arbitration plans for employees. Exec. Order No. 13673, 79 FR 45309 (July 31, 2014).
Neither of these measures has so far made much of a dent in employment and consumer arbitration.
The National Labor Relations Board got into the act in 2012. In the case of D.R. Horton, Inc., 357 N.L.R.B. 184 (2012), the NLRB held that the adoption of a mandatory arbitration plan for employees containing a class and collective action waiver was unlawful because such provisions are an unfair labor practice under Section 7 of the National Labor Relations Act, which protects the right of employees to act in concert.
D.R. Horton petitioned for review of this ruling by the United States Court of Appeals for the Fifth Circuit, which overturned the Board in 2013. D.R. Horton, Incorporated v. National Labor Relations Board, 737 F.3d 344 (5th Cir. 2013). The Court held the FAA and the Supreme Court’s decisions interpreting it prevailed because the NLRA was not intended to repeal the application of the FAA by implication.
The NLRB did not accept the Fifth Circuit’s decision. It struck down a similar dispute resolution plan in Murphy Oil USA, Inc. and Sheila M. Hobson. Case
10–CA–038804 (October 28, 2014). Murphy Oil asked the Fifth Circuit to review the ruling, and the Board petitioned for hearing en banc, hoping to change the Court’s mind. But the Fifth Circuit did not budge. It granted the petition for review, denied the en banc hearing, and overturned the Board’s decision. Murphy Oil USA, Incorporated v. National Labor Relations Board, No. 14-60800 2015 WL 6457613 (2015).
But the NLRB is not going away quietly, although it does appear to have given up on the Fifth Circuit. It decided a similar case in Arizona consistently with its previous holdings in D.R. Horton and Murphy Oil. Amex Card Services Company, Case 28-CA-123865 (Nov. 10, 2015). Doubtless the Board is hoping its reasoning will fare better with the Court of Appeals for the Ninth Circuit than it did with the Fifth.
The Ninth Circuit is one of three circuits that have cited the Fifth Circuit’s decision in D.R. Horton favorable in dicta. Richards v. Ernst & Young, 744 F.3d 1072, 1075 n. 3 (Ct. App. 9th Cir. 2013). See also, Sutherland v. Ernst & Young, LLP, 726 F.3d 290, 297 n. 8 (2d Cir. 2013) and Owen Bristol Care, Inc., 702 F.3d 1050, 1055 (8th Cir. 2013.) Still, there is the possibility of a split in the circuits, which will mean the issue will ultimately reach the Supreme Court.
In the meantime, and probably thereafter, the debate will continue.
Stop and ask yourself: what's the one thing I'd like to accomplish this year? Are You Full of It? It's a tough question. Answering requires courage, vision, and most of...By Dina Beach Lynch
Mediation is not something people are excited to be involved in, but it is necessary sometimes. Your mediation summary can make the process easier both for yourself, but also the...By Grace Carter
The biggest concerns when couples decide to divorce are the kids. They will suddenly face a different situation and this is not what they are used to. If they are...By Tracee McCole