NLRB Loses in the Fifth Circuit, But the Controversy Continues

For reasons not entirely clear to legal experts, the NLRB opted to not appeal a Fifth Circuit ruling in D.R. Horton, Inc. v. NLRB reversing their stance that a company cannot require its employees to consent to mandatory arbitration and class action waivers.  The Fifth Circuit is not alone; other federal and state courts have also disfavored the NLRB’s viewpoint.  Despite this trend and although the NLRB allowed the deadline to pass without requesting certiorari, attorneys involved in the controversial issue expect the that the agency will not change its position.

When the case entered federal court, the NAM filed an amicus brief. on June 6, 2012 arguing that prohibiting mandatory arbitration and class action waivers upon employment will increase costs for companies and result in unnecessary litigation.  Furthermore, the NAM challenged the NLRB’s authority to regulate individual contracts dealing with rights not covered by the National Labor Relations Act.  The court agreed and determined that the NLRB’s decision went beyond its statutory authority.

As the landscape now stands, companies will likely prevail in federal court on the issue, but will still battle the NLRB at the agency level.  It is possible that the NLRB refused to appeal the case to the high court because it feared an adverse ruling.  If this clash between agency and federal court continues, the Supreme Court will likely have to review the issue.  The NAM will continue to weigh in on this issue and take whatever steps appropriate to prohibit the NLRB from stepping outside its statutory authority.

Ryan Sims is a Law Clerk for the Manufacturing Center for Legal Action

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