5th Circuit Once Again Upholds Class Waiver Absent an Arbitration Agreement

The United States Court of Appeals for the Fifth Circuit has once again overturned a National Labor Relations Board (“NLRB”) decision stating an employer’s collective action waiver that is not included in an arbitration agreement violates Section 8(a)(1) of the National Labor Relations Act (“NLRA”).  In LogistiCare Solutions, Inc. v. NLRB, No. 16-60029 (5th Cir., August 9, 2017), a company, LogistiCare, required all job applicants and employees to sign a “Class Action and Collective Action Waiver” as a condition of employment. After a job applicant signed the waiver, the applicant brought a charge against LogistiCare before the NLRB.  Because the waiver was not included in an arbitration agreement, the NLRB distinguished the Fifth Circuit’s holdings in D.R. Horton and Murphy Oil before ultimately finding LogistiCare violated the NLRA.  After that, LogistiCare filed an appeal with the nation’s Fifth Circuit.  Likewise, the NLRB sought enforcement of its order through a cross-application.

On appeal, the court first cited its decision in Convergys Corp. v. NLRB (more information about the Convergys case is available in a prior Disputing blog post.):

The Board first determined that the waiver violates Section 8(a)(1) “explicitly.” In particular, it concluded that an employee’s right under Section 7 “to engage in other concerted activities” includes participation in class or collective action litigation, and so the waiver’s prohibition of this activity “interfere[s]” with this right in violation of Section 8(a)(1). See 29 U.S.C. § 158(a)(1).

We addressed this precise issue in Convergys Corporation v. NLRB, No.15-60860 (5th Cir. Aug. 7, 2017). In that case, we held that our binding decision in D.R. Horton holds that Section 7 does not confer a substantive right to participate in class or collective action litigation and therefore forecloses the Board’s argument. Convergys, No.15-60860, slip op. at 3–8. Because we are bound by our decision in D.R. Horton, we hold that the Board erred in concluding that the waiver violates Section 8(a)(1) explicitly.

Next, the appellate court dismissed the NLRB’s claim “that the waiver independently violates Section 8(a)(1) because employees would reasonably interpret the waiver to restrict their right to file charges with the Board.”  According to the Fifth Circuit:

As LogistiCare argues, the waiver’s language in this case is far less expansive than the provisions in D.R. Horton and Murphy Oil. It refers to “trial lawyers,” “trial by jury,” and “lawsuits.” It does not contain generic references to “claims” or “disputes” as did the provisions in Murphy Oil and D.R. Horton. Cf. Murphy Oil, 808 F.3d at 1019; D.R. Horton, 737 F.3d at 348. Nor does the waiver reference an “agency,” “other civil proceeding,” or anything else that would suggest that it is intended to prohibit employees from bringing charges to the Board. Cf. D.R. Horton, 737 F.3d at 363–64. The absence of such capacious language in LogistiCare’s waiver strongly suggests that a reasonable layperson would not construe the waiver’s references to “lawsuits” or “suits” to preclude bringing charges to the Board.

After that, the Court of Appeals stated none of the NLRB’s asserted “reasons for why the waiver violates Section 8(a)(1)” were convincing before ultimately granting LogistiCare’s petition for review and denying the NLRB’s cross-petition for enforcement.

As also occurred in Convergys, Judge Higginbotham authored a dissent stating “I would hold that a bare class and collective action waiver outside of an arbitration agreement violates the Act.”  Despite this, Judge Higginbotham concurred in the majority opinion:

However, I agree with the majority’s analysis and conclusion that the waiver does not violate § 8(a)(1) for the independent reason that employees could reasonably interpret it to restrict their right to bring charges with the Board. On this issue, I concur in the majority opinion.

It would seem the NLRB and the Fifth Circuit are doing their best to remain at odds despite that the Supreme Court finally agreed to consider class and collective action waivers included in an employer’s arbitration agreement during the upcoming term.

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