US Supreme Court Gives Rare Victory for Arbitration Opponents in a Narrow Case for Transportation Workers

By Sharon Gold

Over the past few decades, the US Supreme Court has become a very arbitration-friendly Court.  Indeed, in the last decade, the Court has upheld arbitration in numerous decisions.  This week, in a rare victory for arbitration opponents, the Supreme Court in New Prime Inc. v. Oliveira unanimously rejected arbitration for truck drivers who were classified as independent contractors under the narrow transportation exception.  At issue was an exception to the enforceability of arbitration clauses for “contracts of employment” of workers engaged as seamen, railroad workers or those engaged in foreign or interstate commerce under the Federal Arbitration Act.  Both parties in the case agreed that truck driver employees fell within the exception.  The questions at issue were: 1) Should the Court decide the initial issue of enforceability of arbitration or should an arbitrator; and 2) Whether the transportation exclusion applied to independent contractors rather than just employees.

The Court initially held that the decision of whether the exclusion applied was one for the Court to decide because it dealt with the statutory authority of the Court.  In another case decided by the Court this term, the Court held that the interpretation of an arbitration agreement, on the other hand, would be subject to review by an arbitrator who would then decide whether arbitration was proper.  Here, because the exclusion concerned the Court’s statutory authority to

Kentucky Supreme Court Limits Employers’ Ability to Enter Arbitration Agreements with Employees

By Marianna Michael

Within the first week of October, the Kentucky Supreme Court issued its opinion in Northern Kentucky Area Development District v. Snyder NO. 2015-CA-001167 (Ky. Aug. 27, 2018). The court faced the decision of whether the Federal Arbitration Act (“FAA”) preempted KRS 336.700. Ultimately, the court held that: (1) employers may not condition employment on entering into arbitration agreements and (2) the FAA does not preempt KRS 366.700(2).

In this case, Danielle Snyder brought suit against her former employer, the Northern Kentucky Area Development District (“NKADD”). NKADD is a public agency that provides social programs to eight Kentucky counties. It hired Snyder on the condition that she enter into an arbitration agreement. The agreement required Snyder to resolve all disputes with NKADD through arbitration and not through the courts. Snyder was given the option to reject the agreement within five days of accepting it, but the rejection would end her employment with the company. She accepted the condition and worked for NKADD until

NLRB’s Acting General Counsel Announces Revisions to Deferral Policy

By Edwin S. Hopson

On January 20, 2012, the NLRB’s Acting General Counsel, Lafe Solomon, in a press release announced a revision to the Board’s existing policy regarding deferral of unfair labor practice charges to arbitration under collective bargaining agreements.  Citing concerns about delays in processing grievances to arbitration, Solomon directed Regional Directors as follows:

 Section 8(a)(1) and (3) Cases

 –Conduct Charging Party investigation, make arguable-merit determination, and determine whether arbitration is likely to be completed in less than a year.

 –If arbitration is likely to be completed in less than a year:

           –Defer and conduct quarterly reviews.

           –At the fourth quarterly review (in new and currently pending cases in deferral status), send “show cause” letters to all parties seeking an explanation of why deferral should not be revoked.

           –If the Charging Party does not respond, contact the Charging Party and any individual discriminatees before dismissing for failure to prosecute.

          –If there is insufficient reason to continue deferral, conduct a full investigation; if the charge is meritorious, submit the case to Advice; if the charge is non-meritorious, dismiss absent withdrawal.

         –If there is good reason to continue deferral, contact Advice.

 –If arbitration is not likely to be completed in less than a year:

         –Determine, in consultation with all parties, including any individual discriminatees, whether deferral is inappropriate because the delay is likely to frustrate the Board’s remedial ability or unduly disadvantage the Charging Party.

        –If deferral is deemed inappropriate, conduct a full investigation and, if the charge is meritorious, submit the case to Advice.

       –If deferral is considered appropriate despite the delay, contact Advice.

Section 8(a)(5) Cases

–Make deferral decisions and conduct quarterly reviews, as under existing policy.

–If  arbitration is not likely to be or has not been completed within a year, and the case implicates individuals’ statutory rights or involves serious economic harm to the Charging Party, the Region may at its discretion conduct a full investigation and submit the case to Advice in the same manner as Section 8(a)(1) and (3) cases.

Any questions regarding implementation of this revised policy are to be directed to the Division of Advice in Washington, D.C.

NLRB Invalidates Mandatory Arbitration Provision Restricting Class Claims

In a decision issued January 3, 2012, a two Member NLRB, with Member Hayes recusing himself, ruled in D.R. Horton, Inc., 357 NLRB No. 184 (2012), that an employer may not require employees covered by the National Labor Relations Act to sign arbitration agreements which prevent them from pursuing class or collective action claims in court or arbitration.  Such agreements, according to Chairman Pearce and Member Becker, violate Section 7 of the Act.  In reaching this decision, the Board rejected a 2006 NLRB General Counsel internal opinion to the contrary. 

The agreement in question prohibited an arbitrator from consolidating claims, fashioning a class or collective action, or awarding relief to a group or class of employees.  Prior to its decision, the Board had sought amicus briefs on the issues raised by the case from interested parties and received more than a dozen.

The Board’s order requires D.R. Horton to rescind the agreement or revise it to make clear to employees that they are not waiving their right to pursue a class or collective action in all other possible forums including the courts and arbitration.

Supreme Court Confirms Company’s Right to Prohibit Class Action Claims Being Litigated Under an Arbitration Agreement

By Edwin S. Hopson

On April 27, 2011, in a 5 – 4 decision, authored by Justice Scalia and joined in by Chief Justice Roberts, and Justices Kennedy, Thomas and Alito, the U.S. Supreme Court in AT&T Mobility LLC v. Concepcion, 563 U.S. ____ (2011), held that the Federal Arbitration Act (“FAA”) preempted California law holding that an arbitration provision that disallowed class action proceedings was unconscionable and unenforceable.  Justices Breyer, Ginsburg, Sotomayor and Kagan dissented.  Although the underlying case was commercial in nature, this decision has significant ramifications in the employment law arena in light of the fact that many employers require employees to sign on to arbitration agreements or programs that limit the types of disputes that can be litigated in court or before administrative agencies.  Indeed, Justice Scalia relied in part on and cited Gilmer v. Interstate/Johnson Lane Corp., 500 U. S. 20, 33 (1991) which allowed age discrimination claims to be arbitrated.   Also, this case could have application to collective bargaining agreement arbitration provisions as well.

Supreme Court Expands Enforcement of Arbitration Clauses Calling for The Arbitrator To Decide Arbitrability Issues

By Edwin S. Hopson

The U.S. Supreme Court on June 21, 2010, in a 5 to 4 decision in Rent-A-Center, West, Inc. v. Antonio Jackson, 561 U.S. ____ (2010), expanded the reach of clauses in arbitration agreements that provide for the arbitrator to resolve questions of arbitrability when the challenge is to the enforceability of the entire agreement.