The Pep Boys Manny Moe & Jack of California

PEP BOYS MANNY MOE & JACK OF CALIFORNIA 737 363 NLRB No. 65 The Pep Boys Manny Moe & Jack of California and Robert Nash. Case 31–CA–104178 December 23, 2015 DECISION AND ORDER BY CHAIRMAN PEARCE AND MEMBERS MISCIMARRA AND HIROZAWA On March 7, 2014, Administrative Law Judge Gerald A. Wacknov issued the attached decision. The Respond- ent filed exceptions and a supporting brief, and the Gen- eral Counsel filed an answering brief. The National Labor Relations Board has delegated its authority in this proceeding to a three-member panel. The Board has considered the decision and the stipu- lated record in light of the exceptions and briefs and has decided to affirm the judge’s rulings, findings,1 and con- clusions and to adopt the recommended Order as modi- fied and set forth in full below.2 1 1 In adopting the judge’s finding that the Respondent violated Sec. 8(a)(1) by maintaining the Agreement, we find no merit in the Re- spondent’s argument that the Board lacked authority to decide D. R. Horton, Inc., 357 NLRB 2277 (2012), enf. denied in relevant part 737 F.3d 344 (5th Cir. 2013), because the three-member panel included Member Becker, whose appointment was constitutionally invalid. For the reasons set forth in Murphy Oil USA, Inc., 361 NLRB 774, 775 fn. 16 (2014), decided subsequent to the judge’s decision, we reject this argument. For the reasons set forth in Pallet Cos., 361 NLRB 339, 339–340 (2014), we also reject the Respondent’s argument that the complaint was not validly issued because the Board lacked a quorum at the time it approved the appointment of Mori Rubin as Regional Direc- tor for Region 31. We reject the Respondent’s argument that the complaint is time barred under Sec. 10(b). Although the Charging Party signed the “Mu- tual Agreement to Arbitrate Claims” (the Agreement) more than 6 months before the initial unfair labor practice charge was filed, the Respondent stipulated and the judge found that the Respondent contin- ued to maintain the Agreement throughout the 10(b) period. The Board has repeatedly held that the maintenance of a facially unlawful rule is a continuing violation, regardless of when the rule was first promulgated. See PJ Cheese, Inc., 362 NLRB 1452, 1452 (2015); Neiman Marcus Group, 362 NLRB 1286, 1287 2 and fn. 6 (2015); and Cellular Sales of Missouri, LLC, 362 NLRB 241, 242 (2015). We also reject the Respondent’s contention that the Agreement is lawful because it does not prohibit employees from challenging the enforceability of the Agreement on a class or collective basis. As the Board has previously held, because employees would find provisions allowing such challenges to be “confusing or empty,” they do not cure otherwise unlawful agreements. See Murphy Oil, supra, slip op. at 19. Finally, the Respondent argues that the Agreement is lawful because it includes an exemption allowing employees to file charges with ad- ministrative agencies, including the Board, and thus does not, as in D. R. Horton, unlawfully prohibit them from collectively pursuing litiga- tion of employment claims in all forums. We reject the Respondent’s argument for the reasons set forth in SolarCity Corp., 363 NLRB 717 (2015). 2 We shall modify the judge’s recommended Order to conform to the Board’s standard remedial language, and we shall substitute a new notice to conform to the Order as modified and in accordance with Durham School Services, 360 NLRB 694 (2014). The judge found, applying the Board’s decision in D. R. Horton, Inc., 357 NLRB 2277 (2012), enf. denied in relevant part 737 F.3d 344 (5th Cir. 2013), that the Re- spondent violated Section 8(a)(1) of the Act by maintain- ing an arbitration agreement that requires employees, as a condition of employment, to waive their rights to pursue class or collective actions involving employment-related claims in all forums, whether arbitral or judicial. In Murphy Oil USA, Inc., 361 NLRB 774 (2014), enf. de- nied --- F.3d --- (5th Cir. 2015), the Board reaffirmed the relevant holdings of D. R. Horton, supra. Based on the judge’s application of D. R. Horton, and on our subse- quent decision in Murphy Oil, we agree with the judge that the agreement was unlawful.3 ORDER The National Labor Relations Board orders that the Respondent, The Pep Boys Manny Moe & Jack of Cali- fornia, Inglewood, California, its officers, agents, succes- sors, and assigns, shall 1. Cease and desist from (a) Maintaining a mandatory arbitration agreement that requires employees, as a condition of employment, to waive the right to maintain joint, class, or collective ac- tions in all forums, whether arbitral or judicial. (b) In any like or related manner interfering with, re- straining, or coercing employees in the exercise of the rights guaranteed to them by Section 7 of the Act. 2. Take the following affirmative action necessary to effectuate the policies of the Act. (a) Rescind the unlawful arbitration agreement in all of its forms, or revise it in all of its forms to make clear to employees that the agreement does not constitute a waiv- er of their right to maintain employment-related joint, class, or collection actions in all forums. 3 Our dissenting colleague observes that the Act does not “dictate” any particular procedures for the litigation of non-NLRA claims, and “creates no substantive right for employees to insist on class-type treatment” of such claims. This is all surely correct, as the Board has previously explained in Murphy Oil, supra, 361 NLRB 774, 775, and Bristol Farms, 363 NLRB 442, 443 fn. 2 (2015). But what our col- league ignores is that the Act does “create[] a right to pursue joint, class, or collective claims if and as available without the interference of an employer-imposed restraint.” Murphy Oil, supra, at 775. The Re- spondent’s Agreement is just such an unlawful restraint. Likewise, for the reasons explained in Murphy Oil and Bristol Farms, there is no merit to our colleague’s view that finding the Agreement unlawful runs afoul of employees’ Sec. 7 right to “refrain from” engaging in protected concerted activity. See Murphy Oil, 361 NLRB 774, 791; Bristol Farms, 363 NLRB 442, 443. Nor is he correct in insisting that Sec. 9(a) of the Act requires the Board to permit indi- vidual employees to prospectively waive their Sec. 7 right to engage in concerted legal activity. See Murphy Oil, supra, at 790–791; Bristol Farms, supra, at 443. 738 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD (b) Notify all current and former employees who were required to sign the unlawful arbitration agreement that it has been rescinded or revised and, if revised, provide them a copy of the revised agreement. (c) Within 14 days after service by the Region, post at its Inglewood, California facility, and at all other facili- ties where the unlawful arbitration agreement is or has been in effect, copies of the attached notice marked “Ap- pendix.”4 Copies of the notice, on forms provided by the Regional Director for Region 31, after being signed by the Respondent’s authorized representative, shall be posted by the Respondent and maintained for 60 consec- utive days in conspicuous places including all places where notices to employees are customarily posted. In addition to physical posting of paper notices, the notices shall be distributed electronically, such as by email, post- ing on an intranet or internet site, and/or other electronic means, if the Respondent customarily communicates with its employees by such means. Reasonable steps shall be taken by the Respondent to ensure that the notic- es are not altered, defaced, or covered by any other mate- rial. If the Respondent has gone out of business or closed the facility involved in these proceedings, the Re- spondent shall duplicate and mail, at its own expense, a copy of the notice to all current employees and former employees employed by the Respondent at any time since October 31, 2012. (d) Within 21 days after service by the Region, file with the Regional Director for Region 31 a sworn certifi- cation of a responsible official on a form provided by the Region attesting to the steps that the Respondent has taken to comply. MEMBER MISCIMARRA, dissenting. In this case, my colleagues find that the Respondent’s Mutual Agreement to Arbitrate Claims violates Section 8(a)(1) of the National Labor Relations Act (the Act or the NLRA) because the policy waives the right to partic- ipate in class or collective actions regarding non-NLRA employment claims. I respectfully dissent from this find- ing for the reasons explained in my partial dissenting opinion in Murphy Oil USA, Inc.1 I agree that an employee may engage in “concerted” activities for “mutual aid or protection” in relation to a 4 If this Order is enforced by a judgment of a United States court of appeals, the words in the notice reading “Posted by Order of the Na- tional Labor Relations Board” shall read “Posted Pursuant to a Judg- ment of the United States Court of Appeals Enforcing an Order of the National Labor Relations Board.” 1 361 NLRB 774, 795–808 (2014) (Member Miscimarra, dissenting in part). The Board majority’s holding in Murphy Oil invalidating class-action waiver agreements was recently denied enforcement by the Court of Appeals for the Fifth Circuit. Murphy Oil USA, Inc. v. NLRB, No. 14-60800, 2015 WL 6457613 (5th Cir. Oct. 26, 2015). claim asserted under a statute other than the NLRA.2 However, Section 8(a)(1) of the Act does not vest author- ity in the Board to dictate any particular procedures per- taining to the litigation of non-NLRA claims, nor does the Act render unlawful agreements in which employees waive class-type treatment of non-NLRA claims. To the contrary, as discussed in my partial dissenting opinion in Murphy Oil, Section 9(a) protects the right of every em- ployee as an “individual” to “present” and “adjust” grievances “at any time.”3 This aspect of Section 9(a) is reinforced by Section 7 of the Act, which protects each employee’s right to “refrain from” exercising the collec- tive rights enumerated in Section 7. Thus, I believe it is clear that (i) the NLRA creates no substantive right for employees to insist on class-type treatment of non- NLRA claims;4 (ii) a class-waiver agreement pertaining to non-NLRA claims does not infringe on any NLRA rights or obligations, which has prompted the over- whelming majority of courts to reject the Board’s posi- 2 I agree that non-NLRA claims can give rise to “concerted” activi- ties engaged in by two or more employees for the “purpose” of “mutual aid or protection,” which would come within the protection of the NLRA, Sec. 7. See Murphy Oil, 361 NLRB 774, 796–798 (Member Miscimarra, dissenting in part). However, the existence or absence of Sec. 7 protection does not depend on whether non-NLRA claims are pursued as a class or collective action, but on whether Sec. 7’s statutory requirements are met—an issue separate and distinct from whether an individual employee chooses to pursue a claim as a class or collective action. Id.; see also Beyoglu, 362 NLRB 1238, 1241–1242 (2015) (Member Miscimarra, dissenting). 3 Murphy Oil, above, at 803–807 (Member Miscimarra, dissenting in part). Sec. 9(a) states: “Representatives designated or selected for the purposes of collective bargaining by the majority of the employees in a unit appropriate for such purposes, shall be the exclusive represent- atives of all the employees in such unit for the purposes of collective bargaining in respect to rates of pay, wages, hours of employment, or other conditions of employment: Provided, That any individual em- ployee or a group of employees shall have the right at any time to pre- sent grievances to their employer and to have such grievances adjusted, without the intervention of the bargaining representative, as long as the adjustment is not inconsistent with the terms of a collective-bargaining contract or agreement then in effect: Provided further, That the bargain- ing representative has been given opportunity to be present at such adjustment” (emphasis added). The Act’s legislative history shows that Congress intended to preserve every individual employee’s right to “adjust” any employment-related dispute with his or her employer. See Murphy Oil, above, at 804–805 (Member Miscimarra, dissenting in part). 4 When courts have jurisdiction over non-NLRA claims that are po- tentially subject to class treatment, the availability of class-type proce- dures does not rise to the level of a substantive right. See D. R. Horton, Inc. v. NLRB, 737 F.3d 344, 362 (5th Cir. 2013) (“The use of class action procedures . . . is not a substantive right.”) (citations omitted), petition for rehearing en banc denied No. 12-60031 (5th Cir. 2014); Deposit Guaranty National Bank v. Roper, 445 U.S. 326, 332 (1980) (“[T]he right of a litigant to employ Rule 23 is a procedural right only, ancillary to the litigation of substantive claims.”). PEP BOYS MANNY MOE & JACK OF CALIFORNIA 739 tion regarding class waiver agreements;5 and (iii) en- forcement of a class-action waiver as part of an arbitra- tion agreement is also warranted by the Federal Arbitra- tion Act (FAA).6 Although questions may arise regard- ing the enforceability of particular agreements that waive class or collective litigation of non-NLRA claims, I be- lieve these questions are exclusively within the province of the court or other tribunal that, unlike the NLRB, has jurisdiction over such claims.7 Accordingly, I respectfully dissent. APPENDIX NOTICE TO EMPLOYEES POSTED BY ORDER OF THE NATIONAL LABOR RELATIONS BOARD An Agency of the United States Government The National Labor Relations Board has found that we violated Federal labor law and has ordered us to post and obey this notice. FEDERAL LAW GIVES YOU THE RIGHT TO Form, join, or assist a union Choose representatives to bargain with us on your behalf Act together with other employees for your bene- fit and protection 5 The Fifth Circuit has twice denied enforcement of Board orders invalidating a mandatory arbitration agreement that waived class-type treatment of non-NLRA claims. See Murphy Oil USA, Inc. v. NLRB, above; D. R. Horton, Inc. v. NLRB, above. The overwhelming majority of courts considering the Board’s position have likewise rejected it. See Murphy Oil, 361 NLRB 774, 807 (Member Miscimarra, dissenting in part); id., at 809 fn. 5 (Member Johnson, dissenting) (collecting cases); see also Patterson v. Raymours Furniture Co., 96 F. Supp. 3d 71 (S.D.N.Y. 2015); Nanavati v. Adecco USA, Inc., 99 F. Supp. 3d 1072 (N.D. Cal. 2015), motion to certify for interlocutory appeal denied 2015 WL 4035072 (N.D. Cal. June 30, 2015); Brown v. Citicorp Credit Services, No. 1:12-cv-00062-BLW, 2015 WL 1401604 (D. Idaho Mar. 25, 2015) (granting reconsideration of prior determination that class waiver in arbitration agreement violated the NLRA). 6 For the reasons expressed in my Murphy Oil partial dissent, and those thoroughly explained in former Member Johnson’s dissent in Murphy Oil, the FAA requires that the arbitration agreement be en- forced according to its terms. Murphy Oil, above, slip op. at 34 (Mem- ber Miscimarra, dissenting in part), id., at 822–831 (Member Johnson, dissenting). 7 Because I disagree with the Board’s decisions in Murphy Oil, above, and D. R. Horton, Inc., 357 NLRB 2277 (2012), enf. denied in pert. part 737 F.3d 344, 362 (5th Cir. 2013), and I believe the NLRA does not render unlawful arbitration agreements that provide for the waiver of class-type litigation of non-NLRA claims, I find it unneces- sary to reach whether such agreements should independently be deemed lawful to the extent they “leave[] open a judicial forum for class and collective claims,” D. R. Horton, 357 NLRB 2277, 2288, by permitting the filing of complaints with administrative agencies that, in turn, may file class or collective action lawsuits. See Owen v. Bristol Care, Inc., 702 F.3d 1050 (8th Cir. 2013). Choose not to engage in any of these protected activities. WE WILL NOT maintain a mandatory arbitration agree- ment that requires employees, as a condition of employ- ment, to waive the right to maintain joint, class, or col- lective actions in all forums, where arbitral or judicial. WE WILL NOT in any like or related manner, interfere with, restrain, or coerce you in the exercise of the rights listed above. WE WILL rescind the unlawful arbitration agreement in all of its forms, or revise it in all of its forms to make clear that the agreement does not constitute a waiver of your right to maintain employment-related joint, class, or collective actions in all forums. WE WILL notify all current and former employees who were required to sign the unlawful arbitration agreement that it has been rescinded or revised and, if revised, pro- vide them a copy of the revised agreement. THE PEP BOYS MANNY MOE & JACK OF CALIFORNIA The Board’s decision can be found at www.nlrb.gov/case/31-CA-104178 or by using the QR code below. Alternatively, you can obtain a copy of the decision from the Executive Secretary, National Labor Relations Board, 1015 Half Street, S.E., Washington, D.C. 20570, or by calling (202) 273-1940. Nikki Cheaney, Esq., for the General Counsel. Ross H. Friedman, Esq. (Morgan Lewis & Bockius, LLP), of Chicago, Illinois, for the Respondent. Matthew Righetti, Esq. (Righetti Glugoski, P.C.), of San Fran- cisco, California, for the Charging Party. DECISION STATEMENT OF THE CASE GERALD A. WACKNOV, Administrative Law Judge. This matter is based on a stipulated record. The initial charge in this matter was filed on April 30, 2013. Since the submission of this matter to me on December 11, 2013, briefs have been re- ceived on January 28, 2014, from counsel for the General Counsel (the General Counsel), and counsel for the Respond- ent. Upon the stipulated record, and consideration of the briefs submitted, I make the following 740 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD FINDINGS OF FACT I. JURISDICTION At all material times Respondent The Pep Boys Manny Moe & Jack of California has been a corporation with an office and place of business located in Inglewood, California, and has been engaged in operating retail auto parts stores. In the con- duct of its business operations the Respondent annually derives gross revenues in excess of $500,000 and purchases and re- ceives at its Inglewood, California facility products, goods, and materials valued in excess of $5000 directly from points outside the State of California. It is admitted and I find that the Re- spondent is an employer engaged in commerce within the meaning of Section 2(2), (6), and (7) of the National Labor Relations Act (the Act). II. ALLEGED UNFAIR LABOR PRACTICES A. Issues The principal issue in this proceeding is whether the Re- spondent has violated and is violating Section 8(a)(1) of the Act by maintaining a dispute resolution agreement, entitled “Mutual Agreement to Arbitrate Claims” (the Agreement), requiring individual mandatory arbitration and precluding employees, including a former employee, the charging party, Robert Nash, from engaging in concerted activity by filing and participating in collective class actions. B. Facts The facts are not in dispute. The stipulation of facts entered into by the parties to this proceeding, together with the Agree- ment and other accompanying exhibits, in pertinent part, are as follows: Robert Nash, the Charging Party, is a former employ- ee of the Respondent. Nash was required to sign the Agreement as a condition of employment with the Respondent. He did so on July 19, 2012. The Agreement by its terms requires em- ployees to resolve all current and future employment-related disputes exclusively through individual arbitration proceedings. The Agreement provides that it should not be interpreted to restrict the filing of charges or complaints with the National Labor Relations Board (the Board) or any other Federal, State, or local administrative agency. The Agreement provides that “This Agreement will survive the termination of Employee’s employment with the Company as well as the termination of or expiration of any benefit of such employment.” Analysis and Conclusions D. R. Horton, Inc., 357 NLRB 2277 (2012), is the control- ling Board decision in this matter. The Respondent maintains that D. R. Horton was wrongly decided, and in its comprehen- sive brief significantly relies upon the recent Fifth Circuit deci- sion which considers and discusses many of the arguments raised by the Respondent, which need not be reexamined here- in, and denies enforcement of D. R. Horton in material re- spects.1 However, I am required to follow D. R. Horton unless reversed by the Supreme Court. Waco, Inc., 273 NLRB 746, 749 fn. 14 (1984); Los Angeles New Hospital, 244 NLRB 960, 1 D. R. Horton, Inc. v. NLRB, 737 F.3d 344 (5th Cir. 2013). 962 fn. 4 (1979), enfd. 640 F.2d 1017 (9th Cir. 1981); Path- mark Stores, Inc., 342 NLRB 378 fn. 1 (2004). The Board determined in D. R. Horton that as a condition of employment “employers may not compel employees to waive their NLRA right to collectively pursue litigation of employ- ment claims in all forums arbitral and judicial.” 357 NLRB 2277, 2288. As the Agreement by its terms restricts employees, as a condition of their employment, from acting concertedly by pursuing arbitral and judicial litigation of employment claims, I find that it is facially unlawful. The Respondent maintains the charge is time barred by Sec- tion 10(b) of the Act, having been filed on April 30, 2013, more than 6 months after July 19, 2012, the date Nash signed the Agreement. Nash, as a former employee, nevertheless contin- ues to be an employee within the meaning of the Act. Little Rock Crate & Basket Co., 227 NLRB 1406 (1977); Waco, Inc., 273 NLRB 746, 747 fn. 8 (1984). Because the Agreement is facially invalid and, as noted, currently remains in effect and governs Nash’s collective rights under the Act, it is clear that the charge is not time barred. Control Services, Inc., 305 NLRB 435, 435 fn. 2, 442 (1991), enfd. mem. 961 F.2d 1568 (3d Cir. 1992); Guard Publishing Co., 351 NLRB 1110, 1110 fn. 2 (2007). Cf. Machinists Local Lodge 1424 v. NLRB, 362 U.S. 411 (1960). The Respondent maintains the Agreement is not unlawful because it specifically permits employees to file charges or complaints with other administrative agencies, specifically including the NLRB. The gravamen of the violation is the re- striction of employees’ rights, as a condition of employment, to engage in concerted activity by collectively pursuing litigation of employment claims in all forums arbitral and judicial. Here, the Respondent is attempting to circumscribe and limit those rights by permitting only individual arbitration of all claims and charges or complaints before administrative agencies. As the Board makes clear in D. R. Horton, the forums for collective action by employees may not be limited to the NLRB or other administrative agencies. I find the Respondent’s argument to be without merit. The Respondent maintains the Board did not have the au- thority to decide D. R. Horton due to the recess appointment issue regarding the composition of the Board. See Noel Can- ning v. NLRB, 705 F.3d 490 (D.C. Cir. 2013). Moreover, the Respondent contends that the complaint is invalid as a result of the interim appointment of the Regional Director who issued the instant complaint. These matters are currently being consid- ered in other forums. The Board has noted that until such mat- ters are ultimately decided it shall continue to fulfill its respon- sibilities under the Act. Belgrove Post Acute Care Center, 359 NLRB 633, 633 fn. 1 (2013); Universal Lubricants, LLC, 359 NLRB 1526, 1526 fn. 1 (2013). On the basis of the foregoing, I find the Respondent has vio- lated and is violating Section 8(a)(1) of the Act as alleged. CONCLUSIONS OF LAW AND RECOMMENDATIONS 1. The Respondent is an employer engaged in commerce within the meaning of Section 2(2), (6), and (7) of the Act. 2. The Respondent has violated Section 8(a)(1) of the Act as alleged. PEP BOYS MANNY MOE & JACK OF CALIFORNIA 741 THE REMEDY Having found that the Respondent has engaged in certain un- fair labor practices, I recommend that it be required to cease and desist therefrom and from in any other like or related man- ner interfering with, restraining, or coercing employees in the exercise of their rights under Section 7 of the Act. I shall also recommend the posting of an appropriate notice, attached here- to as “Appendix,” at the locations where the Agreement has been in effect. [Recommended Order omitted from publication.]