California Labor and Employment Law Review

From California Labor and Employment Law Review, Vol. 27, No. 6, November 2013

Jeff Bosley

Jeffrey S. Bosley is a partner in the Labor and Employment Department of Winston & Strawn LLP, and represents employers and management in labor and employment law matters. He can be reached by email at

NLRA Case Notes

By Jeff Bosley

Ninth Circuit Rejects NLRB Decision in D.R. Horton and Enforces Arbitration Agreement Containing Class-Action Waiver

Richards v. Ernst & Young, LLP, No. 11-17530, 2013 U.S. App. LEXIS 17488, 2013 WL 4437601 (9th Cir., Aug. 21, 2013)

In a per curiam opinion, a three-judge Ninth Circuit panel rejected the NLRB rule invalidating class-action waivers set forth in D.R. Horton,1 and enforced an arbitration agreement containing a class-action waiver. The Ninth Circuit is the third United States Court of Appeals to reject the D.R. Horton rule, joining the Second and Eighth Circuits.

In Richards, a former employee who was covered by an arbitration agreement containing a class-action waiver brought state wage and hour claims against Ernst & Young (the employer). The employer delayed filing a motion to compel arbitration until after the United States Supreme Court issued its decision in AT&T Mobility LLC v. Concepcion, in which the Court held that California state contract law that had deemed class-action waivers in arbitration agreements unenforceable when certain criteria are met was preempted by the Federal Arbitration Act (FAA).2 The district court denied the employer's motion to compel arbitration, concluding the employer had waived the right to arbitration by failing to assert that right as a defense in a consolidated action. The Ninth Circuit reversed, finding that because there had been no prejudice to the plaintiff, there was no waiver. The Ninth Circuit was not persuaded by the plaintiff's claim that she was prejudiced because some of her claims had been dismissed, and because she had incurred discovery costs. The Ninth Circuit held that the dismissals were non-prejudicial because neither dismissal was on the merits: one claim had been voluntarily dismissed without prejudice, and the other had been dismissed for lack of standing. The court further reasoned that the discovery costs had been "self-inflicted expenses." The court wrote, "[plaintiff] was a 'part[y] to an agreement making arbitration of disputes mandatory,' and therefore '[a]ny extra expense incurred as a result of [her] deliberate choice of improper forum, in contravention of their contract, cannot be charged to' [the Employer]."

The Ninth Circuit then addressed the plaintiff's invocation of the NLRB's D.R. Horton decision, in which the Board invalidated class-action waivers. The Ninth Circuit noted that a majority of courts that had considered arbitration agreements containing class waivers had rejected D.R. Horton, because its holding conflicted with the Supreme Court's direction mandating strict enforcement of arbitration agreements under the FAA. The Ninth Circuit held that Congress had not expressly overridden "any provision in the FAA when it enacted the NLRA or the Norris-LaGuardia Act." The court noted the Supreme Court had recently reiterated that arbitration agreements must be "rigorously" enforced according to their terms, including agreements that "allege a violation of a federal statute, unless the FAA's mandate has been overridden by a contrary [c]ongressional command."3 Because no such statement of contrary congressional intent was provided by the NLRA or Norris-LaGuardia Act, the Ninth Circuit found that the arbitration agreement should be enforced.

Sixth Circuit Enforces NLRB's Controversial Unit Determination Rule

Kindred Nursing Centers East, LLC v. N.L.R.B., 727 F.3d 552 (6th Cir. 2013)

A unanimous three-judge panel of the United States Court of Appeals for the Sixth Circuit denied the petition for review of Kindred Nursing Centers East LLC, formerly Specialty Healthcare (the employer), and upheld the Board's heightened "community of interest" standard for employers challenging narrow collective bargaining units. Circuit Judge Rogers and District Judge Tarnow, sitting by designation, joined Circuit Judge Martin in finding the Board acted within its broad discretion to determine appropriate bargaining units when it certified the unit at issue. As such, the Board's finding that the employer's refusal to bargain violated § 8(a)(1) and (5) of the Act was enforced.

The employer had initially challenged a union's petition to represent a 53-nurse unit consisting of full- and part-time Certified Nursing Assistants (CNAs) at a non-acute healthcare facility. The employer alleged that the smallest appropriate unit should also include 33 service and maintenance employees. The Regional Director concluded that the 53-nurse unit sought was appropriate, and the union won the subsequent election. On review, the Board sought the opinion of the parties and amici concerning the appropriate community of interest standard for unit determinations in the non-acute healthcare industry. In upholding the unit determination and affirming the election, the Board first overruled Park Manor Care Center,4 a test the Board had applied to determine the appropriateness of a bargaining unit in a nursing home, and stated it was returning to the "traditional community-of-interest approach" for nursing homes. The Board then stated:

in cases in which a party contends that a petitioned-for unit containing employees readily identifiable as a group who share a community of interest is nevertheless inappropriate because it does not contain additional employees, the burden is on the party so contending to demonstrate that the excluded employees share an overwhelming community of interest with the included employees.

The employer and amici argued that the Board's adoption of a standard requiring an employer to prove that an "overwhelming community of interest" existed to support a larger unit was a material change in the law and an abuse of discretion. The Sixth Circuit affirmed the Board's decision, and rejected the employer's argument that the Board had overstepped its bounds. The court stated that the Board appropriately "adopted a communityof- interest test based on some of the Board's prior precedents, and . . . did explain its reasons for doing so." The court was further persuaded that by promulgating the test, the Board had clarified an ambiguity in the Act's mandate that bargaining units must be "appropriate."

The employer also argued that the Board's new test was inconsistent with the limits on the Board's authority provided by § 9(c)(5) of the Act. Specifically, the employer argued that the new test essentially prevented an employer from establishing a unit broader than the group organized by a union at the time the petition is filed. The court disagreed, stating, "[a]s long as the Board applies the overwhelming community of interest standard only after the proposed unit has been shown to be prima facie appropriate, the Board does not run afoul of the statutory injunction that the extent of the union's organization not be given controlling weight."

Finally, the court rejected the employer's argument that the Board had engaged in improper rulemaking by announcing a new policy through adjudication rather than through notice-and-comment rulemaking. The court noted that the Board had solicited public comment on this issue, thus providing a forum for comments before making its decision.

Board Finds Employer's Withdrawal of Recognition Was Unlawful

Enterprise Leasing Co. of Florida, LLC d/b/a Alamo Rent A Car, 359 N.L.R.B. No. 149 (July 2, 2013)

In a 3-0 decision, the Board ruled that Alamo Rent A Car (the employer) violated the Act by withdrawing recognition from a local union that represented workers at the Miami International Airport. The Board's decision largely upheld the Administrative Law Judge's (ALJ's) determination that the employer's actions violated § 8(a)(1) and (5) of the Act because the decertification petition had been tainted by the employer's unfair labor practices. The Board also adopted the ALJ's determination that post-withdrawal unilateral changes to wages and benefits violated the Act.

In December 2009, Alamo held a series of voluntary meetings with union-represented employees at its Miami International Airport facility. At these meetings, the employer announced its intention to withdraw short-term disability benefits for employees just before workers signed a petition decertifying the union, telling employees that it was ending the benefit "because of their union contract." However, the employer also stated that the benefits would continue under a new time-off policy for nonunion employees at other locations. On January 1, 2010, the employer unilaterally eliminated the benefit for the union employees.

The NLRB found that employees could reasonably believe the benefit was taken away because of their union representation. The Board rejected the employer's argument that those statements were lawful because they truthfully informed the employees that their benefits were governed by a collective bargaining agreement giving the employer the power to eliminate the short-term disability benefit. To the contrary, the Board found that the collective bargaining agreement did not contain a clear and unmistakable waiver of the union's right to bargain over the elimination of this benefit.

The NLRB further found a causal connection existed between the employer's unfair labor practices and the union's loss of majority support. Specifically, an employee began circulating a petition to decertify the union on the same day the benefits change was announced. The Board further found the employer had impermissibly promoted the petition. While the Board rejected the ALJ's finding that a supervisor had impermissibly asked an employee how many signatures had been obtained, it agreed with the ALJ that the supervisor's direction to gather more signatures was coercive, and impermissibly tainted the petition.

Board Finds Employer Unlawfully Solicited Employee Grievances, Even Though No Specific Grievances Were Offered by Employee in Meeting

Albertson's, LLC, 359 NLRB No. 147 (July 2, 2013)

The Board upheld an ALJ's finding that Albertson's LLC (the employer), a retail food store, had impermissibly solicited grievances in violation of § 8(a)(1) of the Act through a meeting between the Employer's labor relations director and an employee during a union organizing campaign. (Settled Board precedent prohibits employers from soliciting grievances during union campaigns where the solicitation carries with it an implicit or explicit promise to remedy the grievances and impresses upon employees that union representation is unnecessary.) The Board also overturned the ALJ and found that the employer had violated § 8(a)(1) of the Act in connection with employee-witness interviews in an investigation.

As to the impermissible solicitation charge: An employee was working at her cash register when the labor relations director arrived at her store. The employee had never seen the labor relations director before, and did not know who he was. The employee was directed to an upstairs break room where the labor relations director waited. Her supervisor had previously told her "H&R's [sic] up there; they're your friends, not ours. If you have any problems with your schedule or if you guys want to complain, now is the time."

The labor relations director introduced himself and informed the employee that it was open enrollment season with respect to company insurance. He then asked if she had any questions about the insurance, and if she "had any [other] concerns. . . ." The record did not indicate that the employee answered the labor relations director's question, or volunteered any concerns.

The employee testified that she was uncomfortable in the meeting, and that she had never been invited to such a meeting previously. She also indicated that she was not going to share any concerns with the labor relations director because her store manager was standing nearby.

The employer contended that there could be no finding of unlawful solicitation of grievances because the employee did not voice any complaint to the labor relations director. Expressly overruling a prior Board decision,5 the Board found that under all of the circumstances presented, the employer's conduct had a reasonable tendency to interfere with, restrain or coerce the employee in the exercise of rights guaranteed under the Act, even though she had remained silent in response to the labor relations director's inquiry. The Board characterized the employee's silence as potentially reflecting a "fear of reprisal for speaking up or being identified as a union supporter[.]"

Contrary to the ALJ, the Board then found that the employer violated § 8(a)(1) of the Act when on two occasions, its counsel did not provide assurances to a witness against reprisals as required by Johnnie's Poultry Co.6 Johnnie's Poultry states that when an employer needs to interview employees to investigate an unfair labor practice charge or prepare for a hearing, certain safeguards must be provided to the employee interviewed. Specifically, an employer is required to:

  1. communicate to the employee, before the interview begins, the purpose of the questioning;
  2. assure the employee that no reprisals will take place for refusing to answer any question or for the substance of any answer given; and
  3. obtain the employee's participation in the interview on a voluntary basis.

The Board concluded that in this case, Johnnie's Poultry had not been complied with in several respects. First, although Johnnie's Poultry assurances had been given to the interview subject in two prior meetings in April and May, the Board found that these assurances should also have been given in the third and fourth meeting with the employee in September and November. The first two meetings at issue had been conducted by inside and outside counsel, and the third and fourth interviews were conducted by an attorney who had not conducted the first two interviews.

Second, while the employer contended that the subject matter of these meetings was the same as in prior meetings, the Board determined that a new subject had been introduced at one of the later meetings which supported reiteration of Johnnie's Poultry assurances. Further, the Board determined that the subject matter of the new inquiry was coercive, in that it sought information which would reveal whether the employee had been an active opponent of the organizing of his coworkers. Specifically, the employee was asked to reveal whether he had reported to management the fact that a non-employee union organizer had been soliciting employees in the store. Finally, the Board found that one of the meetings had not been voluntary as required by Johnnie's Poultry, because the employee had been told by the store manager that he "had to go" to a meeting with counsel. Although the employee had also been assured that no retaliation or rebuttal would occur for being present at the meeting, the Board found that this assurance was insufficient to comply with the Johnnie's Poultry requirements.


1. 357 N.L.R.B. No. 184 (2012).Back

2. 131 S. Ct. 1740 (2011). Back

3. American Express v. Italian Colors Rest., 133 S. Ct. 2304, 2309 (2013). Back

4. 305 N.L.R.B. No. 135 (1991). Back

5. Wm. T. Burnett & Co., 273 N.L.R.B. 1084, 1086 (1984). Back

6. 146 N.L.R.B. 770 (1964), enf. denied, 344 F.2d 617 (8th Cir. 1965). Back

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