5th Circuit Overturns NLRB Yet Again in Class Arbitration Waiver Case

The nation’s Fifth Circuit Court of Appeals has overturned a National Labor Relations Board (“NLRB) decision directing banking giant Citigroup to remove the class arbitration waiver included in the company’s employment contracts.  In Citigroup Technology, Inc., et al. v. NLRB, No. 15-60856 (5th Cir., December 8, 2016), a three-member panel of the appellate court ruled the NLRB committed error when it found that Citigroup’s employment arbitration policy (“EAP”)  violated the National Labor Relations Act.  Additional background related to the Board’s order is available in a prior Disputing blog post.

In its brief opinion, the Fifth Circuit panel held:

Contrary to the Board’s erroneous Decision and Order in the instant case, the EAP does not violate the Act. Through this Petition for Review, Citigroup is not asking this Court to address a typical unfair labor practice case that can be decided in a vacuum of Board precedent. Rather, Citigroup asks that this Court continue to apply its own precedent, which is binding on the Board here, on issues which Congress has chosen to regulate through another statute, namely, the FAA. Four recent decisions of the United States Supreme Court have established the broad preemptive sweep of the FAA. These decisions by the High Court mandate that arbitration agreements be enforced according to their terms, and they reject the application of other state and federal statutes to arbitration agreements in the absence of an express “congressional command” to override the FAA. Additionally, contrary to the Board’s erroneous conclusions, the contractual defenses enumerated in the FAA’s saving clause are inapplicable to the instant matter and cannot be used to validate the Board’s erroneous position in Citigroup.

In addition, the Board erred in failing to find this matter to be untimely, as it was clearly filed outside the six-month statute of limitations established by Section 10(b) of the Act. Additionally, the Board erred in concluding Smith was engaged in protected concerted activity when she joined the demand for arbitration in the instant case.

The appellate court added:

The Board also acknowledges that [the D.R. Horton and Murphy Oil] cases are dispositive of the issue on review and currently preclude enforcement of the Board’s Order. Nevertheless, the Board seeks to preserve the issue in the event of possible en banc or Supreme Court review.

The Fifth Circuit Court of Appeals then reversed the NLRB’s decision in the case and denied the Board’s Cross-Application for Enforcement.

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