On January 22, 2016 U.S. District Judge for the Central District Dolly Gee issued long-awaited decision on defendant Kellogg Brown & Root’s motion to dismiss class claims in Totten v. Kellogg Brown & Root, a complaint alleging, inter alia, numerous California Labor Code violations. While the court granted defendants’ motion to compel arbitration of Totten’s individual claims, it denied the motion to dismiss class claims under the authority of the National Labor Relations Board’s decision in In re D.R. Horton, Inc., 357 NLRB No. 84 (2012) (so-called Horton I, while the Fifth Circuit Court of Appeals’ decision denying enforcement of the Board’s order, 737 F3d 344 (2013), is Horton II.) As the court summarized, Horton I held that (i) “the coming together by employees to bring a class proceeding to address workplace issues like wages constitutes a form of concerted activity under Section 7 [of the National Labor Relations Act (NLRA)]; (ii) “employers cannot demand that employees waive their substantive rights to act collectively to improve workplace conditions;” and; (iii) the impermissible class action waiver falls within the Federal Arbitration Act’s savings clause. The court further approved Horton I’s holding that the Norris-LaGuardia Act renders the class action waiver unenforceable, as an undertaking that prevents employees from acting in concert with coworkers to vindicate workplace rights in court or in arbitration.
The court distinguished recent SCOTUS precedent in Concepcion and American Express Co. v. Italian Colors Restaurant as arising outside the employment realm, hence, not implicating NLRA-covered employees entitled to the substantive right to collective action. And the court expressed its “respectful disagreement” with the 5th Circuit’s decision in Horton II, that “the right to protected concerted litigating activity under Section 7 is not a substantive non-waivable right:” “In short, the Fifth Circuit fails to provide a convincing response to the Board’s explanation of why the right to engage in collective legal action is a core substantive right protected by Section 7.”
Citing clear SCOTUS precedent, albeit from the 1940s (J.I. Case Co. v. NLRB, 321 U.S. 332 (1944) and National Licorice Co. v. NLRB, 309 U.S. 350 (1940)), Gee’s decision emphasizes that “individual contracts that conflict with employees’ rights to engage in concerted activities for the purpose of mutual aid or protection under Section 7 are unlawful” and remarks that the 5th Circuit in Horton II “failed to cite, much less distinguish” J.I. Case or National Licorice. The court also rightly discounts other circuit court decisions on the issue for their failure to contain any substantive analysis.
So the days are numbered for SCOTUS to squarely address Horton I, with its attendant large sociopolitical implications.