Categories: NLRB Developments

Last week we reported that the NLRB continues its assault on arbitration agreements in spite of judicial rejection of its holdings.  Days after our post, another federal judge disregarded the NLRB’s holdings and actually dismissed employees’ wage and hour claims because the employees failed to follow the court’s order compelling the employees to arbitration.

Specifically, on July 8, 2015, a federal judge dismissed (PDF) the original wage and hour collective action that ultimately led to the NLRB’s decision in Murphy Oil where it held that arbitration agreements containing joint, class and collective action waivers in all forums, judicial and arbitral, are unlawful under the National Labor Relations Act.

The four Murphy Oil USA Inc. employees who had originally filed the collective action alleging overtime violations were ordered to arbitration by U.S. District Judge C. Lynwood Smith Jr. of the Northern District of Alabama in 2012.  However, rather than proceed to arbitration as the Court ordered, the plaintiffs waited while one of the four pursued the action before the NLRB.  The plaintiffs undoubtedly were hoping that they would be able to avoid arbitration and proceed with their overtime claim in federal court based on the NLRB’s holding in Murphy Oil.

In February 2015, the plaintiffs filed a motion requesting Judge Smith to reconsider his decision compelling arbitration in light of the NLRB’s October 2014 ruling in Murphy Oil.  Judge Smith not only denied the plaintiffs’ motion for reconsideration, but he also dismissed the action altogether, leaving the plaintiffs without even the option to arbitrate their claims.

Judge Smith found the plaintiffs had willfully ignored and delayed in following the court’s order and that they had done so "for the purpose of gaining a strategic advantage” in the NLRB action.  The Judge found the plaintiffs’ argument that they would have been unable to pursue their case before the NLRB if they had proceeded to arbitration as ordered to be disingenuous.  Judge Smith noted that instead of appealing his order or requesting a stay of arbitration, the plaintiffs engaged "simply disregarded this court’s order because it required them to do something they did not want to do."

Judge Smith stated that the plaintiffs had:

not cited any authority to support their outlandish suggestion that a federal court order is without effect if there is a related proceeding pending before the NLRB.

While not likely to dislodge the NLRB from its position and apparent collision with the Supreme Court, it is interesting that the NLRB’s position is seemingly now also putting employees, as well as employers, in situation where they face untenuous choices.   Employees now may be faced with the choice of resolving claims through their signed arbitration agreements that they have agreed to with their employers or pursuing the NLRB’s anti-arbitration position at the risk of a court throwing out their claims and losing any chance for relief on their claims.

As discussed in our previous post, the NLRB’s divergent position has already forced employers to carefully navigate between maintaining and enforcing their otherwise valid arbitration agreements and the NLRB’s aggressive condemnation of those agreements.  This District Court’s decision clearly gives employers even more to think about in deciding how to proceed given the conflicting guidance of the Courts and the NLRB.

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