Employers Resource v. National Labor Relations Board
670 F. App'x 271
| 5th Cir. | 2016Background
- Employers Resource required client employees to sign an Employment Agreement containing an arbitration clause that required "any claim" against Employers to be resolved exclusively by binding individual arbitration (foreclosing class or collective litigation).
- Talina Torres, an employee of an Employers’ client, filed a class-action wage-and-hour suit in California state court against Employers; Employers moved to compel individual arbitration and the state court dismissed Employers from the suit.
- Torres filed an unfair-labor-practice charge; the NLRB General Counsel prosecuted, and an ALJ found Employers violated Section 8(a)(1) of the NLRA by imposing an arbitration provision that effectively barred class/collective action.
- The NLRB panel affirmed the ALJ, relying on its precedents D.R. Horton and Murphy Oil, which held such mandatory individual-arbitration clauses violate the NLRA.
- The Board conceded the Fifth Circuit has rejected those NLRB decisions and sought reversal here to create a circuit split for Supreme Court review.
- Applying the Fifth Circuit rule of orderliness (one panel cannot overrule another absent intervening change), the court granted Employers’ petition for review and denied the Board’s enforcement application.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether an arbitration clause that mandates individual arbitration (no class claims) violates NLRA §8(a)(1) by unlawfully restricting concerted activity | Torres: clause unlawfully prohibits concerted class/collective action, violating NLRA §8(a)(1) | Employers: FAA requires enforcement of the arbitration clause; individual arbitration is enforceable | Board and ALJ found violation, but Fifth Circuit vacated enforcement of Board order based on circuit precedent favoring FAA enforcement |
| Whether the NLRB can rely on its D.R. Horton and Murphy Oil precedents to invalidate such arbitration clauses within the Fifth Circuit | Torres/NLRB: Board precedent controls and supports finding a violation | Employers: Fifth Circuit precedent (D.R. Horton and Murphy Oil as interpreted by the Fifth Circuit) requires enforcement under the FAA | Fifth Circuit held it was bound by its prior decisions rejecting the Board’s view and therefore granted review for Employers |
| Whether this panel may overturn prior Fifth Circuit panels on the FAA/NLRA interplay absent intervening law change | NLRB: urged panel to adopt conflicting sister-circuit views to create a split | Employers: no intervening change; panel must follow existing Fifth Circuit precedents | Court applied rule of orderliness and declined to overturn prior Fifth Circuit decisions |
| Whether the Board’s action should be enforced in the Fifth Circuit | NLRB: sought enforcement of ALJ/Board order declaring violation | Employers: opposed enforcement, relying on circuit precedents requiring FAA enforcement | Court denied the Board’s cross-application for enforcement and granted Employers’ petition for review |
Key Cases Cited
- Jacobs v. Nat’l Drug Intelligence Ctr., 548 F.3d 375 (5th Cir. 2008) (one panel may not overrule another absent intervening change)
- D.R. Horton, Inc. v. NLRB, 737 F.3d 344 (5th Cir. 2013) (Fifth Circuit rejected NLRB’s rule disallowing class/collective arbitration waivers)
- Murphy Oil USA, Inc. v. NLRB, 808 F.3d 1013 (5th Cir. 2015) (Fifth Circuit again enforced FAA preemption over NLRB’s prohibition on individual-arbitration mandates)
- Lewis v. Epic Sys. Corp., 823 F.3d 1147 (7th Cir. 2016) (contrasting circuit view that FAA requires enforcement of individual-arbitration agreements, discussing class/collective waiver tensions)