With the World Series getting underway in New York, Yogi Berra’s famous quote seemed like the appropriate headline for our latest update in the National Labor Relations Board’s (NLRB) D.R. Horton/Murphy Oil saga. As we have discussed in previous blog entries, in 2012, the NLRB issued its decision in D.R. Horton, Inc., in which it held that an employer’s requirement that, as a condition of employment, employees enter into an agreement that requires employees to bring any claims against the employer in an arbitration proceeding (as opposed to a court-filed lawsuit), and which precludes the employee from asserting claims on a class or collective action basis, violates employees’ right under Section 7 of the National Labor Relations Act (NLRA) to engage in protected concerted activity. D.R. Horton appealed that decision to the U.S. Court of Appeals for the Fifth Circuit, which in December 2013, rejected the NLRB’s decision, holding that the NLRA does not confer on employees a substantive right to pursue claim on a class or collective action basis (see our post here).
Rather than seek Supreme Court review of the Fifth Circuit’s decision, the NLRB instead “doubled down” on D.R. Horton, issuing in October 2014 its decision in Murphy Oil USA, Inc.. In that case, the NLRB effectively thumbed its nose at the Fifth Circuit and stood by its position in D.R. Horton, once again holding that an employer that requires employees to agree to arbitrate claims on an individual basis, and thereby waive the right to litigate claims on a class or collective action basis, violates Section 8(a)(1) of the NLRA (see our post here). To no one’s surprise, Murphy Oil appealed the NLRB’s ruling to the Fifth Circuit.
The NLRB knew it was in trouble when Murphy Oil appealed to the Fifth Circuit, as one panel of an appellate court generally cannot reverse a decision of a prior panel. The NLRB attempted to get around this by asking for the all of the Fifth Circuit judges to review the case (what is called en banc review). The Fifth Circuit denied that request in June 2014 (see our post here), taking us now to the latest development in this continuing story.
On October 26, 2015, a Fifth Circuit panel, following the D.R. Horton panel’s earlier decision on this exact issue, reversed the NLRB’s finding of a violation in Murphy Oil. Although the court would not go so far as to sanction the NLRB for its disregard of its decision in D.R. Horton, the court explained that its decision in that case was controlling, and held that Murphy Oil “committed no unfair labor practice by requiring employees to relinquish their right to pursue class or collective claims in all forums by signing the arbitration agreements at issue” in that case.
It will be interesting to see what the NLRB does next. Every court that has examined and ruled on this issue has soundly rejected the NLRB’s position on waivers of class and collective action procedures in arbitration agreements as interfering with employees’ right to engage in class and collective litigation. This includes, in addition to the Fifth Circuit, the Eighth, Ninth, and Eleventh Circuits. Nevertheless, the NLRB continues to prosecute employers for alleged D.R. Horton/Murphy Oil violations, based on its position that it does not acquiesce to appellate court decisions, and only applies Supreme Court or existing NLRB precedent. What makes the NLRB’s continuing prosecution of D.R. Horton/Murphy Oil allegations even more troubling is that in the face of the extensive number of decisions unequivocally rejecting its rationale, the NLRB not only continues to adheres to its myopic position, but also has, to date, refused to take the action necessary to either bring its own jurisprudence in line with those cases by issuing a new decision that overrules its decisions in D.R. Horton and Murphy Oil, and has (to date) refused to seek a Supreme Court ruling that would settle the issue once and for all.
With the Fifth Circuit’s decision in Murphy Oil, however, the NLRB may be left with no option but to seek certiorari from the Supreme Court. Continuing to put employers through expensive NLRB litigation that the employer can thereafter simply undo by appealing to a federal appellate court that has already ruled on this issue (or if it has not, is likely to follow the lead of those that have) reflects more than being isolated in a position or agency hubris, and instead bespeaks abusive and rogue action undertaken by an administrative agency (or at least the majority of its Members and its General Counsel) that apparently believes that, on this issue, it can turn a blind eye to the resounding chorus of judicial opinions that have thoroughly rejected its rationale, and that somehow, everyone else is wrong and only it is right. Hopefully, with this latest defeat, the NLRB will come around and either concede the issue and fix the mess it has created, or at a minimum, seek a ruling from the Supreme Court to finally resolve it.