The National Labor Relations Board erred in determining that a company violated the National Labor Relations Act by maintaining and enforcing a mandatory arbitration agreement which prohibited employees from bringing or participating in class or collective actions to redress employment-related disputes in any forum, the U.S. Court of Appeals for the Eighth Circuit, in St. Louis, has held.
Arbitration Of Claims
An employee handbook is a necessary and familiar workplace fixture. A recent trend among employers is the inclusion of a mandatory arbitration clause, to avoid a jury trial in the event of employment-related litigation. Both state and federal courts have recently grappled with the validity of arbitration clauses in the employment litigation realm, and have both concluded that such clauses are not enforceable. These cases serve as a reminder that an employer must be vigilant should it wish to make such a clause part of its employment policies.
Despite recent U.S. Supreme Court decisions strongly upholding the enforceability of class action waivers in arbitration agreements, opposition to class action waivers on both the political and legal fronts persists, especially in California.
Today the U.S. Supreme Court issued its opinion in DirectTV v. Imburgia, reversing a California Court of Appeal’s refusal to enforce a consumer arbitration agreement containing a class action waiver. The case involves a service agreement between DirectTV and its consumers, stating that any dispute between DirectTV and the consumer will be resolved by binding, individual arbitration and that the consumer waives the right to pursue any claim on a class basis. However, the agreement further provided that if the class waiver is unenforceable under “the law of your state” (the state where the consumer resides), then the entire arbitration provision will be deemed unenforceable.
The latest of a line of recent cases in which the U.S. Supreme Court has weighed the enforceability of class action waivers in arbitration agreements was before the Court on October 6, 2015, when the Supreme Court heard oral argument in DirecTV, Inc. v. Imburgia, et al., No. 14-462. These decisions almost uniformly have favored arbitration, and many employers have adopted and successfully utilized arbitration agreements containing class action waivers.
The U.S. Supreme Court’s denial of certiorari in Iskanian v. CLS Transportation Los Angeles, LLC leaves intact (for now) the California Supreme Court’s decision holding that neither Supreme Court precedent nor the Federal Arbitration Act (FAA) preempt an employee’s right to bring a “representative” action under California’s Private Attorneys General Act (PAGA), even where the right to do so is expressly waived by the employee and employer in an arbitration agreement governed by the FAA.
Is an arbitration clause enforceable if it is in an expired contract and the parties omitted it from the contract’s survival clause? Yes, said the Sixth Circuit in Huffman v. The Hilltop Companies, noting “whether the strong presumption in favor of arbitration applies postexpiration when an arbitration clause is not listed in a survival clause appears to be one of first impression among the circuit courts.”
Congress passed the Federal Arbitration Act (FAA) in 1925 to place arbitration agreements on the same footing as other contracts.1 Under the FAA, an arbitration provision “shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C.A. § 2. This simple idea has, of course, spawned considerable controversy and litigation, and the tension between the FAA and State laws continues to appear on many fronts.
On December 3, 2013, in D.R. Horton, Inc. v. National Labor Relations Board, the U.S. Court of Appeals for the Fifth Circuit found that class action waiver provisions contained in mandatory, pre-dispute arbitration agreements governed by the Federal Arbitration Act (FAA) are enforceable, notwithstanding the right employees have to engage in concerted activities under the National Labor Relations Act (NLRA). On a separate but related issue, the Fifth Circuit found, however, that D.R. Horton violated the NLRA because its arbitration agreement could be reasonably interpreted to prohibit employees from filing unfair labor practice charges with the National Labor Relations Board (the “Board”).
Executive Summary: In a long awaited decision, D.R. Horton v. National Labor Relations Board, (Case. No. 12-60031, Dec. 3, 2013), the Fifth Circuit Court of Appeals vacated the January 2012 ruling of the National Labor Relations Board (“NLRB”) that invalidated an employee’s arbitration agreement containing a class action waiver.