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The National Whistleblowers Center (NWC) joined with 24 other organizations to submit an amicus brief to the Fifth Circuit U.S. Court of Appeals. The D.R. Horton company has appealed a major decision of the National Labor Relations Board (NLRB) holding that employees have an inalienable right to bring collective and class action lawsuits.

At stake is the right of employees to join together for collective and class actions. This long-recognized right is under attack by forced arbitration agreements in which companies demand that all their employees give up these rights as a condition of employment.

The D.R. Horton company is attempting to use a recent Supreme Court decision to block collective actions by employees. In AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740 (2011), a 5-4 majority held that companies can use the Federal Arbitration Act (FAA) to block consumers from bringing class action arbitrations. However, the Supreme Court was looking at California's attempt to hold such arbitration agreements unconscionable. The Supreme Court did not consider the effect of the National Labor Relations Act (NLRA), 29 U.S.C. § 157, which specifically protects the right of covered employees to act in concert for their mutual aid and protection. Courts have long held that this federal right specifically protects the right of employees to join together in legal actions against their employer. Eastex Inc. v. NLRB, 437 U.S. 556, 566 (1978). No union is necessary for employees to be protected when they act in concert. Brady v. NFL, 644 F.3d 661, 673 (8th Cir. July 8, 2011). Still, it would be good if Congress would enact the Arbitration Fairness Act (AFA) to prohibit companies from forcing any arbitration agreements on consumers or employees.

 

The NLRB explained its decision saying:

It is well settled that “mutual aid or protection” includes employees’ efforts to “improve terms and conditions of employment or otherwise improve their lot as employees through channels outside the immediate employe-eemployer relationship.” Eastex, Inc. v. NLRB, 437 U.S.556, 565–566 (1978). The Supreme Court specifically stated in Eastex that Section 7 “protects employees from retaliation by their employer when they seek to improve their working conditions through resort to administrative and judicial forums.” Id. at 565-566. The same is equally true of resort to arbitration.

The NLRB adopted this argument suggested by our prior amicus brief:

Modern Federal labor policy begins not with the NLRA, but with earlier legislation, the Norris-LaGuardia Act of 1932, which aimed to limit the power of Federal courts both to issue injunctions in labor disputes and to enforce “yellow dog” contracts prohibiting employees from joining labor unions. Thus, Congress has aimed to prevent employers from imposing contracts on individual employees requiring that they agree to forego engaging in concerted activity since before passage of the NLRA. [Footnotes omitted.]

This decision applies only to those employees who work for private companies in the United States and have a right to organize a union. However, it will apply to these employees whether or not they actually have a union.  Additionally, NLRB decisions often lead other agencies to adopt the same policies. In the past, some NLRB policies have been overturned once a new president appoints Board members who have different philosophies.

Many thanks to attorneys Hal K. Gillespie, Yona Rozen and Joseph H. Gillespie of Gillespie, Rozen and Watsky in Dallas, Texas, and to Michael C. Subit (of Frank Freed Subit & Thomas LLP in Seattle, Washington), Victoria W. Ni (of Public Justice in Oakland, California) and Rebecca M. Hamburg (of the National Employment Lawyers Association in San Francisco) for leading the organizing and writing for this brief.

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This week, the National Labor Relations Board (NLRB) issued a major decision holding that employees have an inalienable right to bring collective and class action lawsuits. The National Whistleblowers Center (NWC) joined with the National Employment Lawyers Association (NELA) and other groups in an amicus brief to urge the NLRB to reach this decision.

This long-recognized right of employees to bring collective and class actions is under attack by forced arbitration agreements. Sophisticated companies demand that all their employees give up these rights as a condition of employment. "An employer’s requirement that its employees prospectively waive their rights to engage in concerted legal activity about their conditions of employment is as much a violation of section 8(a)(1) as a 'yellow dog contract' prohibiting unionization altogether," the amicus brief argued.

In this case, the D.R. Horton company attempted to use a recent Supreme Court decision to block collective actions by employees. In AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740 (2011), a 5-4 majority held that companies can use the Federal Arbitration Act (FAA) to block consumers from bringing class action arbitrations. However, the Supreme Court was looking at California's attempt to hold such arbitration agreements unconscionable. The Supreme Court did not consider the effect of the National Labor Relations Act (NLRA), 29 U.S.C. § 157, which specifically protects the right of covered employees to act in concert for their mutual aid and protection. Courts have long held that this federal right specifically protects the right of employees to join together in legal actions against their employer. Eastex Inc. v. NLRB, 437 U.S. 556, 566 (1978). No union is necessary for employees to be protected when they act in concert. Brady v. NFL, 644 F.3d 661, 673 (8th Cir. July 8, 2011). Still, it would be good if Congress would enact the Arbitration Fairness Act (AFA) to prohibit companies from forcing any arbitration agreements on consumers or employees.

The NLRB explained its decision saying:

It is well settled that “mutual aid or protection” includes employees’ efforts to “improve terms and conditions of employment or otherwise improve their lot as employees through channels outside the immediate employe-eemployer relationship.” Eastex, Inc. v. NLRB, 437 U.S.556, 565–566 (1978). The Supreme Court specifically stated in Eastex that Section 7 “protects employees from retaliation by their employer when they seek to improve their working conditions through resort to administrative and judicial forums.” Id. at 565-566. The same is equally true of resort to arbitration.

The NLRB adopted this argument suggested by our amicus brief:

Modern Federal labor policy begins not with the NLRA, but with earlier legislation, the Norris-LaGuardia Act of 1932, which aimed to limit the power of Federal courts both to issue injunctions in labor disputes and to enforce “yellow dog” contracts prohibiting employees from joining labor unions. Thus, Congress has aimed to prevent employers from imposing contracts on individual employees requiring that they agree to forego engaging in concerted activity since before passage of the NLRA. [Footnotes omitted.]

This decision applies only to those employees who work for private companies in the United States and have a right to organize a union. However, it will apply to these employees whether or not they actually have a union.  Additionally, NLRB decision often lead other agencies to adopt the same policies. In the past, some NLRB policies have been overturned once a new president appoints Board members who have different philosophies.

Special thanks go to attorneys Michael C. Subit (of Frank Freed Subit & Thomas LLP in Seattle, Washington), Victoria W. Ni (of Public Justice in Oakland, California) and Rebecca M. Hamburg (of the National Employment Lawyers Association in San Francisco) for leading the organizing and writing for this brief.

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Forced arbitration is when employees faced with an issue at work are forced to have an arbitration instead of being able to go to court with a fair judge and jury. Often times, as a condition of employment, employers will not hire a worker, or could possibly fire a worker, unless they “consent” to an arbitration clause. Other times it is just assumed that employees agreed to it if they continue to work for their employer after an arbitration policy is announced.

Arbitrators are not judges. They do not need to know the law or have any relevant experience. Even though the arbitrators are not judges, their decisions are final. Also, there are no appeals for arbitrator decisions. They do not have to justify their decisions and the process takes place behind closed doors with no public record. The arbitrators charge parties for their services and often work for the same employer numerous times, tipping the odds significantly in the favor of the employer. One arbitrator and retired trial judge even stated, “You would have to be unconscious not to be aware that if you rule a certain way, you can compromise your future business.”

The main problems with forced arbitration is that the system is in favor of employers, it is not voluntary, there is no informed consent, it can be expensive and important legal protections are undermined.  
 
Nobody claims there is any problem with truly voluntary “post-dispute” arbitration however. It is a legitimate and sometimes effective way to solve disputes between employers and employees as long as the employee agrees to it after the dispute has arisen. Then the arbitrator will know that the prospect of future business depends on the consent of both the employer and the employee.
 
This does not just affect whistleblowers. About one of every six United States employers requires forced arbitration. It can be used in any type of case, from sexual harassment to fair benefits and pensions.
 
The Arbitration Fairness Act would make it illegal for employers to force arbitration on their employees. Congressional action is the only way to fix this problem. It would also prohibit forced arbitration in consumer contracts. So support the Arbitration Fairness Act to end forced arbitration. Contact your representative to urge him or her to co-sponsor H.R. 1873. Ask senators to co-sponsor S. 987. This would be a significant help to whistleblowers by allowing their cases to be heard, as well as improving the effectiveness of other employment rights.

For more information on the AFA, follow this link.

This blog post was written by NWC intern Regan Moore.

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The National Whistleblowers Center (NWC) joined with 26 other organizations to submit an amicus brief to the National Labor Relations Board (NLRB). At stake is the right of employees to join together for collective and class actions. This long-recognized right is under attack by forced arbitration agreements in which companies demand that all their employees give up these rights as a condition of employment. "An employer’s requirement that its employees prospectively waive their rights to engage in concerted legal activity about their conditions of employment is as much a violation of section 8(a)(1) as a 'yellow dog contract' prohibiting unionization altogether," the brief argues.

In this case, the D.R. Horton company is attempting to use a recent Supreme Court decision to block collective actions by employees. In AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740 (2011), a 5-4 majority held that companies can use the Federal Arbitration Act (FAA) to block consumers from bringing class action arbitrations. However, the Supreme Court was looking at California's attempt to hold such arbitration agreements unconscionable. The Supreme Court did not consider the effect of the National Labor Relations Act (NLRA), 29 U.S.C. § 157, which specifically protects the right of covered employees to act in concert for their mutual aid and protection. Courts have long held that this federal right specifically protects the right of employees to join together in legal actions against their employer. Eastex Inc. v. NLRB, 437 U.S. 556, 566 (1978). No union is necessary for employees to be protected when they act in concert. Brady v. NFL, ____F.3d ____, 2011 WL 2652323 at *10 (8th Cir. July 8, 2011). Still, it would be good if Congress would enact the Arbitration Fairness Act (AFA) to prohibit companies from forcing any arbitration agreements on consumers or employees.

Special thanks go to attorneys Michael C. Subit (of Frank Freed Subit & Thomas LLP in Seattle, Washington), Victoria W. Ni (of Public Justice in Oakland, California) and Rebecca M. Hamburg (of the National Employment Lawyers Association in San Francisco) for leading the organizing and writing for this brief.

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On Wednesday, March 16, 2011, the U.S. Court of Appeals for the Tenth Circuit in Denver, Colorado, issued a decision that reaffirms the rights of union members to sue under federal law. The issue most frequently affects the right of union members to bring claims under Title VII for discrimination on the basis of race, gender, religion and national origin. However, it could also affect claims under federal whistleblower laws. The issue had long been settled that when Congress creates individual rights, then workers could not lose those rights merely because they belong to a union that can pursue grievances through arbitration. The Supreme Court settled this issue in Alexander v. Gardner-Denver Co., 415 U.S. 36 (1974). In 2009, however, the Supreme Court unsettled this issue with its decision in 14 Penn Plaza LLC v. Pyett, 129 S. Ct. 1456 (2009).

In Alexander v. Gardner-Denver Co., the Court said that when a union member pursues a grievance to arbitration under a collective bargaining agreement (CBA), that is not a waiver of any rights the member has under federal law.  415 U.S. at 52. If the arbitrator's power to arbitrate comes only from the CBA, then the arbitrator's decision has no effect on employee's statutory rights, even if the CBA bars the same type of discrimination as covered by the statute. 415 U.S. at 53-54. The Supreme Court reached the same conclusion for rights to minimum wages and overtime compensation under the Fair Labor Standards Act (FLSA). Barrentine v. Arkansas-Best Freight Sys., Inc., 450 U.S. 728, 737 (1981). See also, McDonald v. City of West Branch, 466 U.S. 284, 289 (1984) (denying preclusive effect to unsuccessfully arbitrated contractual “just cause” claims in subsequent litigation under 42 U.S.C. § 1983).

In Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 26 (1991), the Court held that individually negotiated arbitration agreement could include statutory claims and would be enforceable when they do.

In 14 Penn Plaza LLC v. Pyett, 129 S. Ct. 1456 (2009), the Court held that a CBA could waive the employees’ right to go to court for statutory claims whenever the waiver was “clear and unmistakable.” 14 Penn Plaza's CBA said that, "All such [statutory] claims shall be subject to the grievance and arbitration procedures ... as the sole and exclusive remedy for violations." The Supreme Court said this was "clear and unmistakable." This opens the door for companies to push unions to agree to give up their members' right to go to court.

This week, in Mathews v. Denver Newspaper Agency, LLP, Case No. 09-1233 (10th Cir. 03-16-2011), the Tenth Circuit considered a case where the CBA prohibits violations of the law, but does not contain the sentence used in 14 Penn Plaza. The Tenth Circuit explains:

Although the parties acknowledged that violations of statutory law would also constitute violations of the contract, this does not mean that the CBA covered statutory claims or that the parties believed it to do so. Indeed, the district court’s conclusion ignores the “distinctly separate nature” of contractual and statutory rights, which is “not vitiated merely because both were violated as a result of the same factual occurrence.” Gardner-Denver, 415 U.S. at 50.

The Tenth Circuit went on to hold that Mathews was estopped from pursuing a discriminatory demotion claim because he he asserted that he was no longer able to perform the duties of that position when he applied for disability benefits. The DC Circuit took a different view on this issue in Solomon v. Vilsack, Case No. 09-5319 (DC Cir. 12-21-2010). However, the Tenth Circuit concluded that this estoppel issue did not apply to Mathews' retaliation claim. The Court sent that claim back to the district court for further proceedings.

Myself, I am not satisfied that courts have properly considered that in labor-management arbitration, the grievance is owned by the union and not by the employee.  If the union decides not to spend money on necessary discovery, or decides not to arbitrate at all, what is to happen to a union member who was fired and claims the discharge violated federal law? Future cases may help answer this question. I suggest that the better policy is to recognize that employees own their statutory claims, and unions own their contractual claims.  Unions could then pursue development of their members' rights under the CBA and individual members could still further the public interest by enforcing their individual statutory rights in court.

Pactitioners in this area should also be aware of Hill v. Ricoh Americas. Corp., 603 F.3d 766, 772 (10th Cir. 2010). There, the Tenth Circuit held that an arbitration agreement forced onto an employee as a condition of employment must be enforced, thus barring the employee from going to Court to pursue a claim under the Sarbanes-Oxley Act (SOX). Speaking of SOX, it should be noted that whistleblowers with claims under SOX, USERRA or the Dodd-Frank Act, are no longer affected by forced arbitration agreements. The Dodd-Frank Act and USERRA amendments included specific provisions barring any enforcement of pre-dispute arbitration agreements for whistleblower claims under those laws. Hopefully, Congress will pass the Arbitration Fairness Act (AFA) and bar forced arbitration in all consumer and employment agreements.

Congratulations to my friend Barry Roseman of Denver, Colorado, for successfully representing Mathews in this challenging arena.

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U.S. District Court Judge Douglas Woodlock issued an order yesterday that applies a ban on arbitration agreements retroactively. Congress enacted the ban as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act.  Section 922 of the Dodd-Frank Act amends the Sarbanes-Oxley Act (SOX) to say that, "No predispute arbitration agreement shall be valid or enforceable, if the agreement requires arbitration of a dispute arising under this section." 18 U.S.C. § 1514A(e)(2). Judge Woodlock considered Dodd-Frank's remedial purpose, and the procedural nature of arbitration, to conclude that Congress intended that any present arbitration of SOX claims must be based on post-dispute agreements to arbitrate. If the employer required the arbitration agreement as a condition of employment, then that agreement cannot compel a whistleblower to use arbitration now, even though the agreement was legal when it was signed. The order has a nice analysis of arbitration agreements, statutory interpretation, and the purposes of SOX and Dodd-Frank.

To use this holding and pursue a SOX claim without being forced into arbitration, the whistleblower must still file the initial written complaint with OSHA on time (now 180 days of the first notice of any adverse action). If you have a SOX claim that arose within the last 180 days, I would urge you to consult a lawyer soon about how to meet this time limit.  You can get a referral to a whistleblower lawyer from the Attorney Referral Service of the National Whistleblower Legal Defense and Education Fund.

Congratulations to Massachusetts attorney Alan Crede who successfully defeated a motion to compel arbitration. The case is Pezza v. Investors Capital Corp., Case No. 10-10113-DPW (D. Mass. 03/01/2011).

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The Sixth Circuit Court of Appeals in Cincinnati has issued a remarkable non-published decision reinstating retaliation claims by Alan and Kimberly Alonso against Huron Valley Ambulance (HVA) of Ann Arbor, Michigan.  The decision is remarkable no so much for what it holds as for its break from the prevailing judicial trend favoring arbitration. The Court's precise holding is that the Alonsos did not make a "knowing and intelligent waiver" of their right to go to court when they signed HVA's form employment agreement incorporating a "grievance review board" that was based on documents HVA did not provide until weeks after the Alonsos started work.

HVA hired the Alonsos in July 2005. Before hiring them, HVA asked them to fill out an employment application.  The last page contained a notice of an internal grievance procedure for employment-related disputes, and a six-month limitations period for any employment-related claims. Both Alonsos signed it. Only after they were hired did the Alonsos receive HVA's policy manual that provided the details of the grievance process. HVA then had them each sign a receipt for the policy manual.

Two years later, Alan Alonso joined the Army National Guard. Although HVA approved his request for leave to attend training, it checked with the National Guard and learned that he did not attend one of the trainings. Alan also filed a health and safety complaint with the Michigan Occupational Safety and Health Administration (“MIOSHA”). When Alan suffered a medical emergency while taking prescribed medication, HVA fired him, allegedly for misrepresenting his training schedule and for working while medicated. HVA's grievance review board upheld the termination. Meanwhile, Kimberly Alonso asked for leave under the Family and Medical Leave Act (FMLA) for her pregnancy. After she returned to work, she claimed she suffered a hostile work environment, and retaliation for filing a complaint with the Equal Employment Opportunity Commission (EEOC). Alan and Kimberly filed suit together claiming that Alan's termination violated the Uniformed Services Employment and Reemployment Rights Act (“USERRA”), 38 U.S.C. § 4323, and related Michigan laws, and that Kimberly suffered retaliation in violation of FMLA.

From the text of the opinion, I think the Court was moved by the fundamental unfairness of HVA's grievance review board policy. It provides that the final step is an arbitration before a board of five people.  The company picks two, and the employee picks two, but one of the employee's two selections must be a manager or supervisor at HVA. The company and the employee would pick the fifth member together, but the policy already guarantees that three of the five members were HVA managers.

Still, the decision is remarkable for recognizing a limit on how far companies can push their employees to give up their rights to go to court.  Too often, whistleblower claims are lost because crafty employers have required all their employees to sign agreements giving up their right to sue in exchange for some management-selected arbitration process. We need a national law to forbid such clauses, such as the Arbitration Fairness Act (AFA), currently pending as HR 1020 and S 931. It is curious, though, that the Court chose to make its opinion unpublished.  Without publication, it will be harder for employees to use it as authority in other cases.

HVA's attorney told the National Law Journal that HVA is prepared to contest the Alonso's claims on the merits, and that there was case law saying waivers were valid. The case is Alonso v. Huron Valley Ambulance Inc., 2010 WL 1644233 (6th Cir. April 26, 2010) (unpublished). Congratulations to attorney Heidi Sharp of Clinton, Michigan, for achieving this precedent-setting legal victory.

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Last week the U.S. Senate boldly voted 68-30 to include Sen. Al Franken's amendment to the Department of Defense Appropriations Act. Ten Republicans voting in favor of it. This amendment, SA 2588 to H.R. 3326, would bar defense contractors from imposing forced arbitration clauses on their employees for Title VII violations and sexual assault tort claims. It would be a big improvement for the rights of defense contract workers, and provide meaningful pressure on the likes of Halliburton to be more respectful of the rights of their employees. 

Now the Franken Amendment is heading to a House-Senate conference committee.  All of the members of the Defense Appropriations Subcommittees in both the House and Senate will be the ones to decide whether this amendment stays in the bill or is stripped out. They could make this decision early next week. Please contact the Senators and Representatives from your state and urge them to make sure this important amendment stays in the bill. Here is a possible script for you to use when you make your calls:

Good morning my name is ___________ and I'm calling on behalf of ________________. I am calling to ask for Sen./Rep. _____________'s support of Amendment 2588, sponsored by Senator Al Franken and co-sponsored by Senator Mary Landrieu, to H.R. 3326, the Department of Defense Appropriations Act. This is an important amendment because it would bar defense contractors from imposing forced arbitration clauses on their employees for only Title VII violations and sexual assault claims. The amendment passed the Senate with a bipartisan vote of 68-30 and now must be protected in conference.

If the amendment survives conference committee, companies like Halliburton will no longer be able to get federal defense contracts if they deny employees their day in court when they are subjected to rape, sexual assault, or a hostile working environment. We need your boss's help to ensure that the amendment isn't taken out of the bill in conference.

Jon Stewart did a great segment on the Franken Amendment.  You can watch it by following this link.

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The full Senate voted 68-30 to adopt an amendment proposed by Sen. Al Franken (D-MN). The Franken Amendment to the Defense Appropriation bill will prohibit contractors or subcontractors from requiring their employees to resolve Title VII and sexual assault tort claims by forced arbitration. If this amendment is included in the final appropriation, it would block most of America's largest employers from using one of the most common methods of squashing employee discrimination claims. It would also add momentum to the Arbitration Fairness Act (AFA), H.R. 1020 and S. 931. The AFA would protect the right to trial by jury for all employees in America. The Senate has posted the record on how Senators voted on S.Amdt. 2588 so you can see how your Senators voted.

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