D.R. Horton, Inc. v. National Labor Relations Board
2013 U.S. App. LEXIS 24073
| 5th Cir. | 2013Background
- D.R. Horton required employees to sign a Mutual Arbitration Agreement (MAA) that waived jury trial, required arbitration of "all disputes and claims," and barred arbitrators from consolidating or conducting class/collective proceedings.
- Michael Cuda, a former Horton superintendent, signed the MAA and later sought collective arbitration under the FLSA; Horton insisted on individual arbitration and invited individual claims.
- Cuda filed an unfair labor practice charge with the NLRB alleging the MAA's class/collective waiver violated the NLRA; an ALJ found the MAA could reasonably be read to bar filing charges with the Board and thus violated § 8(a)(1).
- The NLRB panel affirmed: (1) the MAA violated § 8(a)(1) because employees could reasonably think it prohibited filing charges with the Board, and (2) the MAA’s blanket ban on class/collective actions (in any forum) violated the NLRA.
- The Fifth Circuit (majority) enforced the Board’s ruling that Horton must clarify the MAA did not bar filing unfair labor practice charges, but rejected the Board’s conclusion that the NLRA invalidated the MAA’s class/collective-action waiver as preempting the FAA.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the NLRA forbids arbitration agreements that waive class/collective claims (i.e., whether Board can invalidate class-action waivers under §7/§8) | Board/Cuda: NLRA protects concerted activity including collective litigation; class/collective waivers unlawfully restrict §7 rights and are invalid | Horton: FAA requires enforcement of arbitration terms; class-waiver is enforceable and NLRA does not override FAA | Court: FAA governs; Board erred to invalidate class-waiver under NLRA — class procedures are procedural, saving-clause and congressional-command exceptions do not apply; MAA's class waiver enforceable |
| Whether the MAA would reasonably be construed to bar filing unfair labor practice charges with the NLRB (violation of §8(a)(1)) | Cuda/Board: The MAA’s broad language ("right to file a lawsuit or other civil proceeding") and cross-references to courts/agencies would reasonably be read to preclude filing Board charges | Horton: References to "court" and trial-by-jury show administrative rights unaffected; language ambiguous but not misleading | Court: Agrees with ALJ/Board that employees could reasonably interpret the MAA as barring Board charges; enforces Board order requiring Horton to rescind/revise and clarify employees retain right to file charges |
| Validity of NLRB panel decision given Member Becker’s recess appointment (appointments/quorum) | Horton: Becker’s recess appointment was invalid/expired; Board lacked quorum so decision void | Board: Horton failed to timely raise appointment challenge before Board; circuit need not reach constitutional issue; de facto officer doctrine and timing issues | Court: Declines to reach Appointments Clause question; finds no timely challenge and applies de facto officer reasoning to uphold Board's action (no jurisdictional defect) |
| Whether Board properly acted via delegation to a three-member panel and two-member decision | Horton: No express written delegation, so panel lacked delegated authority | Board: Delegation to three-member panel was customary; no requirement of express written order; three-member Board effectively delegated to itself | Court: Infers valid delegation (three-member Board delegated authority to panel); decision valid despite lack of explicit written delegation |
Key Cases Cited
- NLRB v. Noel Canning, 705 F.3d 490 (D.C. Cir. 2013) (addressing validity of recess appointments)
- New Process Steel, L.P. v. NLRB, 560 U.S. 674 (2010) (statutory limits on Board delegation and quorum/delegation mechanics)
- AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011) (class-action waivers in arbitration agreements conflict with FAA policy favoring streamlined bilateral arbitration)
- CompuCredit Corp. v. Greenwood, 565 U.S. 95 (2012) (FAA applies to federal statutory claims absent contrary congressional command)
- Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991) (arbitration of federal statutory employment claims and limits on finding congressional intent to preclude arbitration)
- Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp., 559 U.S. 662 (2010) (arbitrators cannot infer consent to class arbitration; class arbitration differs materially from bilateral arbitration)
- City Disposal Sys., Inc. v. NLRB, 465 U.S. 822 (1984) (deference to Board in defining scope of §7 but courts must accommodate other federal policies)
- U.S. Steel v. NLRB, 602 F.2d 154 (5th Cir. 1979) (illustrative of deference to Board where appropriate)
(Parentheticals summarize each authority's relevance to the opinion.)