A Huge Win for Employers: Q&A With Horton's Lead Lawyer About Today's D.R. Horton v. NLRB Decision

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...the Court went out of its way to remind the NLRB that, while it has the authority to interpret the NLRA, it cannot trample on other statutes when doing so.

Today, the 5th U.S. Circuit Court of Appeals issued their much anticipated decision in D.R. Horton v. NLRB, overturning an earlier National Labor Relations Board ruling on worker arbitration agreements that was at the heart of this closely watched case.

To help employers make sense of today's ruling, here's a quick Law Matters Q&A with Ron Chapman, Jr. of Ogletree Deakins, lead lawyer representing D.R. Horton:

1.  What did the 5th Circuit decide today in D.R. Horton v. NLRB?

The Fifth Circuit ruled employers can have arbitration agreements that contain class action waivers without violating the NLRA. Previously, the NLRB had ruled that a class action waiver violates employees’ right under the NLRA to engage in concerted activity. The Fifth Circuit disagreed, finding that nothing in the NLRA trumps the congressional mandate of the Federal Arbitration Act requiring arbitration agreements to be enforced according to their terms.

2.  What stood out the most in the Fifth Circuit’s opinion?

I thought the Court went out of its way to remind the NLRB that, while it has the authority to interpret the NLRA, it cannot trample on other statutes when doing so. That’s an important reminder that has ramifications on other issues, not just class action waivers.

This is an enormous victory for employers because a class action waiver can defeat a class or collective action at the outset...

3.  Why is this important for employers?

This is an enormous victory for employers because a class action waiver can defeat a class or collective action at the outset. The cost of defending even one class or collective action can be tens of millions of dollars, and aggressive plaintiffs’ lawyers frequently use the risk of such costs to extort large settlements. Class action waivers can even the playing field and allow the parties to focus on the merits of the actual dispute rather than the procedural morass that accompanies class and collective actions.

4.  Will the NLRB appeal the Fifth Circuit’s decision to the United States Supreme Court?

Possibly. The NLRB has the right to seek Supreme Court review, just as it has the right to accept the determination of the Fifth Circuit and change its interpretation of the law to conform with that of the Fifth Circuit and almost every other court that has considered the issue.

5.  What should employers do now in the wake of the decision?

For those employers that do not have an arbitration agreement, they should consider or reconsider adding one.  While there are pros and cons to having an arbitration agreement, the Fifth Circuit’s decision changes that analysis. For those employers that do have an arbitration agreement, they need to update it to make sure it is in compliance with the latest nuances in this evolving area of the law. The precise wording is very important.

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[JD Supra's new Law Matters series asks experts for their quick take on legal developments of the day, and specifically how such matters affect people in their personal and professionals lives. Stay tuned for other posts in the series.]

Read or download the court's decision in full here.

Topics:  Arbitration, Class Action, Class Action Arbitration Waivers, D.R. Horton, D.R. Horton v NLRB, Law Matters, Legal Perspectives, NLRA, NLRB

Published In: Administrative Agency Updates, Alternative Dispute Resolution (ADR) Updates, General Business Updates, Labor & Employment Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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