The Board’s D.R. Horton decision, though controversial, should surprise no one who has watched this agency try time and time again to assert its relevancy. From “notice of rights” posters to “ambush election” rules, the Board has called attention to itself by flexing its administrative muscle, only to have its actions and authority called into question by the courts. Now, the Board’s decision in D.R. Horton effectively to invalidate class action waivers in arbitration agreements faces the scrutiny of the Fifth Circuit. Who is the Board to interpret the concept of protected “concerted activity” so broadly that it essentially overrides the FAA and its protection for class action waivers in arbitration agreements? A recent decision of the California Court of Appeals asks that question (in so many words) and answers it in a way that will give relief to employers in California and a good roadmap for employers in California and elsewhere to challenge D.R. Horton.
In Iskanian v. CLS Transportation L.A., LLC, the plaintiff in a putative class action in state court challenged the class waiver in his employment arbitration agreement. He argued, in part, that the class action waiver could not be enforced in light of D.R. Horton. The court of appeals was not persuaded by the Board’s reasoning in D.R. Horton. The court observed that the usual deference given to the Board when it interprets the National Labor Relations Act was not called for, as the Board’s decision went beyond merely interpreting the NLRA to an analysis of the Federal Arbitration Act (“FAA”) and the Supreme Court’s decision in AT&T Mobility v. Concepcion. The court held that D.R. Horton could not be reconciled with Concepcion or with CompuCredit Corp. v. Greenwood, a Supreme Court decision issued one week after D.R. Horton. Simply put, the NLRA was not a “contrary congressional command” that overrode the FAA’s broad mandate.
Now that the Board has again insinuated itself into the national discussion, the courts must decide whether the Board has acted legitimately. The Fifth Circuit no doubt will consider in the D.R. Horton appeal whether the Board acted within its authority to interpret the National Labor Relations Act in such a way as to override the FAA and Concepcion. The decision in Iskanian is a resounding repudiation of the Board’s decision, and, perhaps, a harbinger of decisions to come.