Thursday, March 15, 2012

Federal District Court Expresses Skepticism Regarding D.R. Horton: Horton Hears a Wu



GERTRUDE, HORTON
I was just a no one only yesterday.
You showed up and showed me something more.
Now I've become a someone
Who has someone to believe in
And to be there for...

“Notice Me Horton”
Lyrics by Lynn Ahrens & Stephen Flaherty
Based on the writings of Theodor Geisel (Dr. Seuss)

            In Johnmohammadi v. Bloomingdale’s, Inc., No. 11-cv-6434 (C.D. Cali. Jan. 26, 2012) (tentative ruling), Judge Wu issued a Tentative Ruling with regard to Bloomingdale’s motion to compel arbitration and Plaintiff’s contention that Bloomingdale’s internal dispute resolution program, which precludes class action arbitrations, is unenforceable in light of the NLRB’s decision in D.R. Horton and Michael Cuda, NLRB Case No. 12-CA-25764 (Jan. 3, 2012) (online).  Judge Wu tentatively held that D.R. Horton is only applicable where the arbitration agreement was a condition of employment.  Judge Wu notes that the NLRB, in D.R. Horton, considered “whether an employer violates Section 8(a)(1) of the [NLRA] when it requires employees covered by the Act, as a condition of their employment, to sign an agreement that precludes them from filing joint, class, or collective claims addressing their wages, hours, or other working conditions against the employer in any forum, arbitral or judicial[,]” and found “that such an agreement unlawfully restricts employees’ Section 7 right to engage in concerted action for mutual aid or protection, notwithstanding the [FAA], which generally makes employment-related arbitration agreements judicially enforceable.”  Id. at 1.  Judge Wu noted that the NLRB had expressly limited the reach of its decision, and that it had not decided “the more difficult question[] of…whether, if arbitration is a mutually beneficial means of dispute resolution, an employer can enter into an agreement that is not a condition of employment with an individual employee to resolve either a particular dispute or all potential employment disputes through non-class arbitration rather than litigation in court.”  Id. at 13 n.28 (emphasis added).  Further, Judge Wu noted that the Board recognized that, in certain circumstances, an employee can voluntarily waive otherwise-protected substantive Section 7 rights.  Id. at 10.  

            The defense additionally had argued that “concerted activity” under the NLRA does not encompass class actions in pursuit of wage and hour labor rights.  Judge Wu, in his tentative ruling, declined to opine on that issue.  

            Judge Wu indicated that the Court “would find that a voluntary waiver of class representation in an employee arbitration agreement where the waiver does not function as a condition of employment would not run afoul of the NLRA.”  See Webster v. Perales, No. 3:07-cv-00919, 2008 U.S. Dist. LEXIS 7503 (N.D. Tex. Feb. 1, 2008) (employer required its employees to sign a waiver and arbitration agreement not as a condition of employment but in order to participate in an employee injury benefit plan).  

            Judge Wu found that the plaintiff in the instant case could not establish that enforcement of the representative/class action waiver in this case would violate her Section 7 rights, as plaintiff mades no argument that she was coerced into entering into the arbitration agreement.  


            So, Judge Wu’s decision, albeit tentative, leaves open the question of what or who is in the egg that Horton is hatching.  With apologies to Judge Wu, I just couldn’t resist.

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