Kmart Corporation, a Subsidiary of Sears Holdings Corporation

578 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 363 NLRB No. 66 Kmart Corporation, a subsidiary of Sears Holdings Corporation and Ronald Daniels and Sears Holding Corporation and Ronald Daniels. Cases 06–CA–091823 and 06–CA–100022 December 16, 2015 DECISION AND ORDER BY CHAIRMAN PEARCE AND MEMBERS MISCIMARRA AND HIROZAWA On November 19, 2013, Administrative Law Judge David I. Goldman issued the attached decision. The Re- spondent filed exceptions and a supporting brief. The General Counsel filed limited cross-exceptions and a supporting brief, to which the Respondent filed an an- swering brief. The National Labor Relations Board has delegated its authority in this proceeding to a three-member panel. The judge found, applying the Board’s decision in D. R. Horton, 357 NLRB 2277 (2012), enf. denied in rele- vant part 737 F.3d 344 (5th Cir. 2013), that the Respond- ent violated Section 8(a)(1) of the Act by maintaining an arbitration policy that requires employees to waive their rights to pursue class or collective actions involving em- ployment-related claims in all forums, whether arbitral or judicial. In Murphy Oil USA, Inc., 361 NLRB 774 (2014), enf. denied in part __ F.d __ (5th Cir. 2015), the Board reaffirmed the relevant holdings of D. R. Horton, supra. The Board has considered the decision and the record in light of the exceptions and briefs and, based on the judge’s application of D. R. Horton and on our subse- quent decision in Murphy Oil, we affirm the judge’s rul- ings, findings,1 and conclusions,2 and adopt the recom- mended Order as modified and set forth in full below.3 1 There are no exceptions to the judge’s dismissal of the complaint allegations against Respondent Sears Holding Corporation in Case 06– CA–100022. The Respondent makes three procedural arguments related to the Board’s authority. Like the judge, we reject each argument. First, the Respondent argues that the Board had only two valid members at the time D. R. Horton issued because, in the Respondent’s view, the recess appointment of then-Member Becker was constitutionally invalid under NLRB v. Noel Canning, 134 S.Ct. 2550 (2014), and that the Board therefore lacked the required quorum to operate. New Process Steel, L.P. v. NLRB, 560 U.S. 674 (2010). We reject this argument for the reasons set forth in Murphy Oil, supra, slip op. at 2 fn. 16. Accord: Mathew Enterprise v. NLRB, 771 F.3d 812, 813 (D.C. Cir. 2014) (“[T]he President's recess appointment of Member Becker . . . was constitutionally valid.”); Gestamp South Carolina, LLC v. NLRB, 769 F.3d 254, 257–258 (4th Cir. 2014) (same). Second, the Respondent argues that the Regional Director for Region 6 acted without authority in this case because he had been invalidly appointed in 2009 by a two- member Board that lacked a quorum. New Process Steel, supra. We reject this argument on the ground that, on July 6, 2010, a duly consti- tuted Board, consisting of five members, ratified en masse the appoint- ments made by the two-member Board, “including but not limited to appointments of Regional Directors, Administrative Law Judges, and Senior Executives.” See Orchard Manor Rehabilitation & Nursing Center, Case 03–RC–110739, 2014 WL 7149606 (Dec. 15, 2014). Third, the Respondent argues that, even assuming the validity of Mem- ber Becker’s appointment, the decision in D. R. Horton was invalid because it was decided without an express delegation to the three- member panel. We reject this argument for the reasons stated by the judge. 2 The Respondent contends that the complaint is time-barred by Sec. 10 (b) to the extent employees did not opt out of the arbitration policy, and thereby elected to be bound by it, more than 6 months before the filing of the initial charge in this case. We reject this argument, as did the judge, because the Respondent continued to maintain the unlawful arbitration policy during the 6-month period preceding the filing of the initial charge. The Board has long held under these circumstances that maintenance of an unlawful workplace rule, such as the Respondent’s arbitration policy, constitutes a continuing violation that is not time- barred by Sec. 10(b). See PJ Cheese, Inc., 362 NLRB 1452, 1452 at 1 (2015); Neiman Marcus Group, 362 NLRB 1286 fn. 6 (2015); Cellular Sales of Missouri, LLC, 362 NLRB 241, 242 fn. 7 (2015). The Respondent and our dissenting colleague contend that the opt- out provision of its arbitration policy places it outside the scope of the prohibition against mandatory individual arbitration agreements under Murphy Oil and D. R. Horton. The Board has rejected this argument, holding that an opt-out procedure still imposes an unlawful mandatory condition of employment that falls squarely within the rule set forth in D. R. Horton and affirmed in Murphy Oil. See On Assignment Staffing Services, 362 NLRB 1672, 1672, 1674–1675 (2015). The Board fur- ther held in On Assignment Staffing Services, supra at 1672, 1675– 1677, that even assuming that an opt-provision renders an arbitration policy not a condition of employment (or nonmandatory), an arbitration policy precluding collective action in all forums is unlawful even if entered into voluntarily because it requires employees to prospectively waive their Sec. 7 right to engage in concerted activity. Our dissenting colleague also observes that the Act “creates no sub- stantive right for employees to insist on class-type treatment of non- NLRA claims.” This is surely correct, as the Board has previously explained in Murphy Oil, supra and Bristol Farms, 363 NLRB 442, 443 fn. 2 (2015.). But what our colleague ignores is that the Act does “cre- ate[] a right to pursue joint, class, or collective claims if and as availa- ble without the interference of an employer-imposed restraint.” Mur- phy Oil, supra at 789–790. The Respondent’s arbitration policy 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 arbitra- tion policy unlawful runs afoul of employees’ Sec. 7 right to “refrain from” engaging in protected activity. See Murphy Oil, supra at 791; Bristol Farms, supra. Nor is he correct in insisting that Sec. 9(a) of the Act requires the Board to permit individual employees to prospectively waive their Sec. 7 right to engage in concerted legal activity. Murphy Oil, supra at 790–791; Bristol Farms, at 443. 3 We shall modify the judge’s recommended Order to conform to our findings and to the Board’s standard remedial language, and we shall substitute a new notice to conform to the Order as modified. The General Counsel cross-excepts to the judge’s remedy on the ground that it fails to order the Respondent to notify arbitral or judicial panels, if any, where the Respondent has attempted to enjoin or other- wise prohibit employees from bringing or participating in class or col- lective actions, that it is withdrawing those objections, and that it no longer objects to such employee actions. We deny the General Coun- sel’s cross-exception, as there is no allegation in this case that the Re- spondent ever enforced the arbitration policy in any arbitral or judicial proceeding. KMART CORP. 579 ORDER The National Labor Relations Board orders that the Respondent, Kmart Corporation, a subsidiary of Sears Holding Corporation, Hoffman Estates, Illinois, its offic- ers, agents, successors, and assigns, shall 1. Cease and desist from (a) Maintaining an arbitration policy that requires em- ployees, as a condition of employment, to waive the right to maintain class or collective actions 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 arbitration policy in all of its forms, or revise it in all of its forms to make clear to employees that the arbitration policy does not constitute a waiver of their right to maintain employment-related joint, class, or collective actions in all forums. (b) Notify all applicants and current and former em- ployees who were required to sign or otherwise become bound to the arbitration policy in any form that it has been rescinded or revised and, if revised, provide them a copy of the revised policy. (c) Within 14 days after service by the Region, post at its facility in Erie, Pennsylvania, and all other facilities where the arbitration policy has been in effect, copies of the attached notice marked “Appendix.”4 Copies of the notice, on forms provided by the Regional Director for Region 6, after being signed by the Respondent’s author- ized representative, shall be posted by the Respondent and maintained for 60 consecutive days in conspicuous places, including all places where notices to employees are customarily posted. In addition to physical posting of paper notices, notices shall be distributed electronically, such as by email, posting on an intranet or an 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 Respond- ent to ensure that the notices are not altered, defaced, or covered by any other material. If the Respondent has gone out of business or closed a facility involved in these proceedings, the Respondent shall duplicate and mail, at its own expense, a copy of the notice marked “Appen- dix” to all current employees and former employees em- 4 If this Order is enforced by a judgment of a United States court of appeals, the words in the notices 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.” ployed by the Respondent at any time since April 1, 2012. (f) Within 21 days after service by the Region, file with the Regional Director for Region 6 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. The complaint in Case 06–CA–100022 is dismissed. MEMBER MISCIMARRA, dissenting. In this case, my colleagues find that the Respondent’s Arbitration Policy/Agreement violates Section 8(a)(1) of the National Labor Relations Act (the Act or NLRA) because the Policy waives the right to participate in class or collective actions regarding non-NLRA employment claims. I respectfully dissent from this finding 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 claim asserted under a statute other than NLRA.2 How- ever, I disagree with my colleagues’ finding that Section 8(a)(1) of the NLRA prohibits agreements that waive class and collective actions, and I especially disagree with the Board’s finding here, similar to the Board ma- jority’s finding in On Assignment Staffing Services,3 that class waiver agreements violate the NLRA even when they contain an opt-out provision. In my view, Sections 7 and 9(a) of the NLRA render untenable both of these propositions. As discussed in my partial dissenting opin- ion in Murphy Oil, NLRA Section 9(a) protects the right of every employee as an “individual” to “present” and “adjust” grievances “at any time.”4 This aspect of Sec- 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). 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 NLRA Sec. 7. See Murphy Oil, 361 NLRB 774, 796–798 (Member Miscimar- ra, 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 re- quirements 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). 3 362 NLRB 1672, 1672, 1675–1676 (2015). 4 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 representa- tives of all the employees in such unit for the purposes of collective 580 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD tion 9(a) is reinforced by Section 7 of the Act, which protects each employee’s right to “refrain from” exercis- ing the collective rights enumerated in Section 7. Thus, I believe it is clear that (i) the NLRA creates no substan- tive right for employees to insist on class-type treatment of non-NLRA claims;5 (ii) a class-waiver agreement per- taining to non-NLRA claims does not infringe on any NLRA rights or obligations, which has prompted the overwhelming majority of courts to reject the Board’s position regarding class-waiver agreements;6 (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);7 and (iv) for the reasons stated in my dissenting opinion in Pama Management, 363 NLRB 384 (2015), the legality of such a waiver is even more self-evident when the agreement contains an opt-out pro- 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). 5 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, 357 (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.”). 6 The Fifth Circuit has twice denied enforcement of Board orders in- validating a mandatory arbitration agreement that waived class-type treatment of non-NLRA claims. See Murphy Oil, Inc., USA 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., slip op. at 776 fn. 5 (Member Johnson, dissenting) (collect- ing cases); see also Patterson v. Raymours Furniture Co. , No. 14-CV- 5882 (VEC), 2015 WL 1433219 (S.D.N.Y. Mar. 27, 2015); Nanavati v. Adecco USA, Inc., No. 14-CV-04145-BLF, 2015 WL 1738152 (N.D. Cal. Apr. 13, 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 NLRA). 7 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 at 807 (Member Miscimarra, dissenting in part); id., 822–831 (Member Johnson, dis- senting). vision, based on every employee’s 9(a) right to present and adjust grievances on an “individual” basis and each employee’s Section 7 right to “refrain from” engaging in protected concerted activities. Although questions may arise regarding the enforceability of particular agree- ments that waive class or collective litigation of non- NLRA claims, I believe these questions are exclusively within the province of the court or other tribunal that, unlike the NLRB, has jurisdiction over such claims. 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 vio- lated 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. Choose not to engage in any of these protected activities. WE WILL NOT maintain an arbitration policy that re- quires employees, as a condition of employment, to waive the right to maintain class or collective actions in all forums, whether 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 arbitration policy in all of its forms, or revise it in all of its forms to make clear that the arbitration policy does not constitute a waiver of your right to maintain employment-related joint, class, or col- lective actions in all forums. WE WILL notify all applicants and current and former employees who were required to sign or otherwise be- come bound to the arbitration policy in any form that it has been rescinded or revised and, if revised, WE WILL provide them a copy of the revised policy. KMART CORPORATION, A SUBSIDIARY OF SEARS HOLDING CORPORATION The Board’s decision can be found at www.nlrb.gov/case/06–CA–091823 or by using the QR KMART CORP. 581 code below. Alternatively, you can obtain a copy of the decision from the Executive Secretary, National Labor Re- lations Board, 1015 Half Street, S.E., Washington, D.C. 20570, or by calling (202) 273-1940. Janice A. Sauchin, Esq., for the Acting General Counsel. Jonathan C. Fritts, Esq. (Morgan Lewis & Bockius), of Wash- ington, D.C., for the Respondents. Richard T. Ruth, Esq. (Attorney at Law), of Erie, Pennsylvania, for the Charging Party. DECISION DAVID I. GOLDMAN, ADMINISTRATIVE LAW JUDGE. These cases involve the application of the principles set forth by the National Labor Relations Board (Board) in D. R. Horton, Inc., 357 NLRB 2277 (2012), to a situation anticipated by but not reached in that decision. In D. R. Horton, the Board consid- ered, in relevant part, an employer’s implementation of a rule requiring employees to arbitrate employment disputes and which, as a feature of the rule, prohibited an employee from bringing or participating in any class or collective actions against the employer in any forum including before the arbitra- tor. The Board recognized that “these forms of collective ef- forts to redress workplace wrongs or improve workplace condi- tions are at the core of what Congress intended to protect by adopting the broad language of Section 7 [of the National La- bor Relations Act (Act)].” D. R. Horton, supra at slip op. 3. The Board opined that such collective redress of grievances in legal or administrative settings are “not peripheral but central to the Act’s purposes” (Id.), and concluded that an employer vio- lates the Act by maintaining a prohibition on the maintenance of class or collective actions in all forums. In this case, the question presented is whether an employer may implement an arbitration policy containing the very same type of ban on col- lective actions prohibited in D. R. Horton, where the policy provides each employee a one-time initial window of oppor- tunity to opt out of the arbitration policy, and therefore, out of the restriction on collective actions. After this initial opt-out opportunity, the window shuts and the policy and its ban on collective actions apply irrevocably to the employee. The is- sue, in other words, is whether the inclusion in this policy of a limited initial opportunity for the employee to avoid the rule prohibited in D. R. Horton removes the offense to the Act. I conclude that it does not and that the maintenance of such a rule, even with a meaningful but one time opt-out provision, is violative of the Act. As explained herein, I believe that this result follows directly, and indeed, quite obviously and ines- capably from the reasoning and principles set forth in D.R. Horton—principles and reasoning I believe are sound, but more pertinently, to which I am bound to adhere. Accordingly, as set forth herein, I find merit to the govern- ment’s allegation that the maintenance of the arbitration policy at issue violates Section 8(a)(1) of the Act. However, as dis- cussed herein, I also find that of the two respondents in this case—a parent holding company and one of its subsidiaries— the record fails to provide evidence that the parent respondent is an employer under the Act. No other theory of liability is asserted against the parent by the government. Accordingly, I am compelled to dismiss the complaint as to the parent re- spondent. STATEMENT OF THE CASE On October 22, 2012, Ronald Daniels filed an unfair labor practice charge alleging violations of the Act by Kmart, dock- eted by Region 6 of the Board as Case 06–CA–091823. Dan- iels amended the charge, naming the respondent as Kmart Cor- poration, a subsidiary of SHC Holdings Corp. (Kmart), on March 11, 2013. Based on an investigation into the charge, on March 15, 2013, the Acting General Counsel (General Coun- sel), by the Acting Regional Director for Region 6 of the Board, issued a complaint and notice of hearing alleging violations of Section 8(a)(1) of the Act by Kmart. Kmart filed an answer to the complaint denying all alleged violations of the Act. On March 11, 2013, Daniels filed an unfair labor practice charge against Sears Holding Corporation (SHC) alleging vio- lations of the Act, docketed by Region 6 of the Board as Case 06–CA–100022. Based on an investigation into the charge, on April 17, 2013, the General Counsel, by the Regional Director for Region 6 of the Board, issued a complaint and notice of hearing alleging violations of Section 8(a)(1) of the Act by SHC. SHC filed an answer to the complaint denying all alleged violations of the Act, and an amended answer in which it also denied all violations of the Act. On April 17, 2013, the Re- gional Director issued an order consolidating Cases 06–CA– 091823 and 06–CA–100022. A trial in these matters was conducted June 18, 2013, in Erie, Pennsylvania. Counsel for the General Counsel and for the Respondents filed posthearing briefs in support of their posi- tions by July 22, 2013. On the entire record, I make the follow- ing findings, conclusions of law, and recommendations. JURISDICTION Respondent Kmart is a Michigan corporation with of- fices and its headquarters in Hoffman Estates, Illinois, and places of business throughout the United States. It is engaged in the retail sale of clothing, household goods, and other consumer products. In conducting its opera- tions during a recent 12-month period Kmart derived gross revenues in excess of $500,000, and during this same 12-month period Kmart received and purchased at its Erie, Pennsylvania facility goods valued in excess of $50,000 directly from points outside the Commonwealth of Pennsylvania. Kmart is (and admits it is) an employer engaged in commerce within the meaning of Section 2(2), (6), and (7) of the Act. Based on the foregoing, I 582 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD find that this dispute affects commerce and that the Board has jurisdiction of Case 06–CA–091823 pursuant to Section 10(a) of the Act. Respondent SHC is a Delaware corporation and the parent company of Kmart, as well as of Sears Roebuck and Co. and numerous other subsidiaries, indirect subsidiaries, and affiliates located in and doing business across the United States and its territories. In conducting its operations during a recent 12- month period, SHC derived gross revenues in excess of $500,000, and during this time period through its subsidiaries and operations, purchased and received at its Kmart and/or Sears facilities located in the Commonwealth of Pennsylvania goods valued in excess of $50,000 directly from points outside the Commonwealth of Pennsylvania. In its amended answer SHC does not deny, and therefore admits (see, Board Rules & Regulations Section 102.20), that it is engaged in activity af- fecting commerce, within the meaning of Section 2(6) and (7) of the Act. However, while the complaint alleges that SHC is an em- ployer within the meaning of Section 2(2) of the Act, in its amended answer SHC denies it and “avers that,” as a holding company, it is not an employer under the Act because “it does not employ any employees within the meaning of Section 2(3) of the Act.”1 On brief SHC maintains that, the General Counsel having failed to show that SHC has statutory employees, SHC is not a statutory employer and the scope of this case must be limited to Kmart. Section 8(a)(1) of the Act—the section alleged to have been violated by SHC (and Kmart)—like all violations of Section 8(a) of the Act, requires a finding of “employer” status. In cases alleging violations of Section 8(a) the Board considers this finding of employer status to be jurisdictional. Operating Engineers Local 487 Health Fund, 308 NLRB 805, 808 (1992) (dismissing complaint for lack of jurisdiction because of the General Counsel’s failure to prove that respondent is a statutory employer). On brief, the General Counsel correctly anticipates that SHC will argue that it is not an employer, and the General Counsel states (GC Br. at 3 fn. 2) that at the hearing “no evidence was introduced to substantiate th[e] claim [of] Respondent SHC.” But of course, it is not SHC’s burden to disprove the allegation, but the General Counsel’s to prove it. Although the General Counsel anticipated SHC’s argument—SHC raised the issue in the amended answer to the complaint, at a prehearing confer- ence call, and in a March 18, 2013 position letter submitted to the Region—the General Counsel has failed to prove the allega- tion. The General Counsel demonstrated at the hearing that Rob- erta Kaselitz—an admitted supervisor under the Act—does not know if she works for SHC or Kmart or a subsidiary of one of them. She testified that “they’re are all the same,” and that Kmart and Sears are “one company.” But this does not go to the point. Whatever entity employs her, no one claims she is a statutory employee. And while the General Counsel correctly 1 Sec. 2(3) of the Act contains the statutory definition of “employ- ee.” argues that “there is no requirement set forth in Section 2(2) that an ‘employer’ must employ statutory employees,” the Board has called this definition “not very helpful in resolving the issue of whether an entity must employ statutory employees to be a statutory employer” and ruled that it must. Operating Engineers Local 487 Health Fund, supra at 805, 807–808 (be- cause benefit fund was not proven to have a single statutory employee it was not an employer under the Act). Kaselitz’ testimony is suggestive of a theory that SHC and Kmart are a single employer under the Act, but that cannot be proven based on one manager’s admission that the various enti- ties are “all the same.” Moreover, it is not alleged. Indeed, while there are various theories of derivate or agency liability available to the General Counsel (single employer, joint em- ployer, alter ego, direct participation theory), none is pled and none is argued. The bare evidence suggests that SHC along with its other related companies introduced the arbitration poli- cy at issue in this case together, but little or nothing else is re- vealed in the record that would shed light on the relationship between SHC and the various entities that comprise what the Respondents’ documents refer to as the “Sears Holdings Corpo- ration family.” At bottom, the General Counsel has failed to prove that SHC is an employer. There is no argument made or proof offered of an agency or derivative theory of liability against SHC. I admit that it feels like a technicality. I am not convinced that SHC has no employees. I am not convinced, indeed I suspect, that SHC could be held liable under a derivative theory.2 But the Respondent raised the issue and proof is lacking on this record. I will dismiss the case against SHC, Case 06–CA–100022. Unfair Labor Practices Kmart, and all of the “Sears Holding” companies, maintain an “arbitration policy/agreement” implemented in early April 2012 at stores nationwide for all of its employees (except those represented by a union). The full text of the policy is set out in an appendix to this de- cision. (Appendix 2.) Here, I summarize the key parts of the policy. 1. Coverage: Under the policy, all claims between an em- ployee and the employer (with a few specified exceptions) that are not resolved informally shall be resolved by binding arbitra- tion. The policy “provides that virtually any dispute related to [an employee’s] employment must be resolved only through binding arbitration.” Thus, “[t]his Agreement is intended to apply to and cover all such disputes that Associate has against Company that Associate could otherwise file in court and all such disputes Company has against Associate that Company could otherwise file in court.” The agreement states that “[a]rbitration replaces the right of both parties to go to court, including the right to have a jury decide the parties’ claims.” The Agreement states that it “will continue to apply after Asso- 2 Indeed, such matters can be explored in a compliance hearing in the case against Kmart. Southeastern Envelope Co., 246 NLRB 423, 423 (1979); Commissary of Great Race, 277 NLRB 1175, 1176 fn. 4 (1985). KMART CORP. 583 ciate is no longer employed by the Company.”3 2. Not Covered: By its terms, the policy does not apply to claims for workers compensation, state disability, and unem- ployment insurance benefits. The policy does not bar an em- ployee from filing a claim or charge with a federal, state, or local administrative agency including the National Labor Rela- tions Board. The policy does not apply to claims for employee benefits under a company-sponsored benefit plan covered by ERISA[4] or funded by insurance, although the policy does apply to other claims under ERISA, such as a claim for breach of fiduciary duty, or for penalties. Finally, the policy does not apply to any dispute within the jurisdiction of, or amenable to resolution under, any valid collective-bargaining agreement with the company. 3. No class, collective, or private attorney general actions: The agreement prohibits an employee from “filing, opting into, becoming a class member in, or recovering through a class action, collective action, representation action or similar pro- ceeding.” The agreement further provides that the employee and the company “agree to bring any dispute in arbitration on an individual basis only.” The agreement provides for a “class action waiver,” a “collective action waiver,” and a “private attorney general action waiver,” which the agreement defines as there being “no right or authority for any dispute to be brought, heard, or arbitrated as a class action” or as a “collective action,” or as a “private attorney general action.” 4. Opt-Out Provision: The agreement provides that an em- ployee who “does not wish to be bound by the Agreement . . . must opt out by following the steps outlined in this Agreement within 30 days of receipt of this Agreement. Failure to opt out within the 30-day period will demonstrate [the employee’s] intention to be bound by this Agreement and [the employee’s] agreement to arbitrate all disputes arising out of or related to [the employee’s] employment as set forth below.” Further into the agreement (numbered par. 11, on p. 6) the agreement sets forth the procedure for an employee to opt out and reiterates the requirement that the opt-out procedure be completed within 30 days of receipt of the agreement in order to be effective. Essen- tially, an opt-out form, to be obtained from a human resources representative or manager, must be filled out and returned to Sears Holding Legal Intake by mail or fax. The agreement provides that an employee “who timely opts out as provided in this paragraph will not be subject to any adverse employment action as a consequence of that decision and may pursue avail- able legal remedies without regard to this Agreement.” The final page of the agreement is the opt-out form, which is com- prised of two paragraphs stating that the employee elects to opt out of the arbitration policy, and states the 30-day time limita- tion to opt out and the need to fax or mail the signed form. In addition to a signature, the employee must provide an employee identification number. 3 I note that while the focus of the arbitration policy is on “employ- ment-related” related disputes, the scope of claims covered sweeps very widely to include trade secrets, unfair competition, and indeed, “all other state or federal statutory and common law claims. 4 The Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1000, et seq. Implementation and opt out The arbitration policy has been in effect unchanged since its introduction by Kmart and SHM to all of their stores in April 2012. When introduced, corporate officials directed stores to implement numerous procedures and practices to inform em- ployees about the program. While there was some dispute in the testimony at the hearing about whether all of these proce- dures were followed, at least in the Kmart store in Erie, Penn- sylvania, it is undisputed that a significant number of employ- ees, both nationally, and in the Erie store, took advantage of the opportunity to opt out of the policy. Interestingly, at the Erie store this included the store manager, the human resources manager, other management employees who testified, and even the district manager. Stipulations entered into by the parties provide some evi- dence of the extent of employees choosing to opt out of the policy. As of May 28, 2013, out of more than 84,500 Kmart employees nationwide approximately 8500, or just over 10 percent had affirmatively opted out. Approximately 54,000 (nearly 64 percent) had acknowledged the arbitration policy but not opted out (although some of these who are recent hires may have been within the 30 day opt out period). Approximately 21,000 (26 percent) others had yet to acknowledge the policy and were in various stages of being notified about the policy. If no answer is received, this would lead to them being considered bound by the policy. At the Erie, Pennsylvania store, at which the charging party in these cases was employed, the opt-out rates have been considerably higher than the national average. At the Erie store, 47 out of 76 employees, nearly 62 percent, opted out.5 Analysis In D. R. Horton, supra, the Board held that an employer vio- lates Section 8(a)(1) of the Act “by requiring employees to waive their right to collectively pursue employment-related claims in all forums, arbitral and judicial.”6 Here, Kmart’s 5 Notwithstanding the policy’s statement that employees had only 30 days to opt out, in practice, if an employee failed to acknowledge the policy within 30 days, headquarters would send a copy of the policy to the employee’s home and provide additional time for the employee to respond by mail or computer. Testimony suggested that if the em- ployee still did not take steps to acknowledge or opt out of the policy, he or she would then be considered not to have opted out and to be bound by the policy. I do not reach any conclusion about the General Counsel’s evidence—very much disputed by the Employer and its witnesses—questioning the thoroughness of the communication of the arbitration policy to employees. I do not find these disputes relevant to the outcome. Even assuming a thoroughly communicated policy, as discussed below, I do not believe the arbitration policy, even with an opt-out provision, is consonant with the Act. 6 The Board in D. R. Horton also found that the arbitration policy at issue in that case violated the Act by requiring employees to submit all employment-related disputes to arbitration. The Board found that this violated Sec. 8(a)(1) of the Act because it would lead employees to reasonably believe that they were prohibited from filing unfair labor practices with the Board. Here, the Respondent’s arbitration policy expressly excludes from its coverage the filing of charges with the Board and other agencies. Thus, that issue is not presented in this case. 584 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD arbitration policy requires a similar waiver.7 It is the one time opt-out opportunity, Kmart contends, that removes its policy from the ambit of D. R. Horton’s proscription. In other words, absent the opt-out provision, Kmart concedes, as it must, that its policy would violate the Act pursuant to D. R. Horton.8 Does the opportunity for employees to make an initial deci- sion to opt out of the policy render it lawful? In my view it does not, and the problem is more fundamental than whether the employees are fully apprised of their choice before making their decision, whether the decision to opt in or out may be considered “voluntary,” may be undertaken without fear of retaliation, or whether the burden posed by having to affirma- tively act to preserve rights under the Act is undue. The problem is not the feasibility of the opportunity to opt out. The issue is whether an employer and an individual em- ployee may enter into an agreement to waive irrevocably future rights protected by the Act. In this case, the right at issue is the substantive right to engage in collective redress of grievances, a right the Board has recognized as being “at the core of . . . Sec- tion 7” rights and “central to the Act’s purposes.” D. R. Hor- ton, supra. An employer can no more make such a binding agreement (or purport to make such a binding agreement) with an individ- ual employee than it can purport to obtain an employee’s agreement to waive irrevocably his or her future right to join a union, go on strike, or file charges with the Board. They are all illegitimate impingements and restrictions on section 7 activity. As the Board explained in D. R. Horton, That this restriction on the exercise of Section 7 rights is im- posed in the form of an agreement between the employee and the employer makes no difference. From its earliest days, the Board, again with uniform judicial approval, has found un- lawful employer-imposed, individual agreements that purport to restrict Section 7 rights –including, notably, agreements that employees will pursue claims against their employer only individually. 7 Kmart’s policy waives the employee’s right to be involved in a “class,” “collective,” “representation,” “private attorney general,” or “similar” actions. For simplicity, throughout this decision I will use the terms collective action or claim, or collective redress of grievances to refer generally to all of the types of claims that are prohibited by Kmart’s policy. 8 Kmart also contends that D. R. Horton should be overruled, how- ever, it represents current Board precedent that I must follow. Waco Inc., 273 NLRB 746, 749 fn. 14 (1984) (“We emphasize that it is a judge’s duty to apply established Board precedent which the Supreme Court has not reversed. It is for the Board, not the judge, to determine whether precedent should be varied”) (citation omitted). This is true even in the face of criticism of the rule of D. R. Horton by some federal courts. See Pathmark Stores, 342 NLRB 378 fn. 1 (2004). In addition to arguing that D. R. Horton should be overruled, the Respondent mounts numerous arguments identical to those rejected by the Board in D. R. Horton, without any effort to explain why the facts here warrant a different result. I have ignored such arguments, as they carry no force in light of my obligation to follow D. R. Horton. Throughout this deci- sion, I focus on the question of whether the policy at issue here—i.e., an arbitration policy containing an opt-out provision—warrants a dif- ferent result from the result in D .R. Horton. I conclude that it does not. 357 NLRB 2277, 2280 (footnotes with supporting citations omitted). The problem is in no way cured by the contention that the re- striction on Section 7 rights is voluntarily agreed to by the em- ployee. Again, the Board’s reasoning in D. R. Horton, supra, is instructive, and fully applicable to the situation at bar here: the Board [has] held unlawful a clause in individual employ- ment contracts that required employees to attempt to resolve employment disputes individually with the employer and then provided for arbitration. J. H. Stone & Sons, 33 NLRB 1014 (1941), enfd. in relevant part, 125 F.2d 752 (7th Cir. 1942). “The effect of this restriction,” the Board explained, “is that, at the earliest and most crucial stages of adjustment of any dispute, the employee is denied the right to act through a rep- resentative and is compelled to pit his individual bargaining strength against the superior bargaining power of the employ- er.” Id. at 1023 (footnote omitted). The Seventh Circuit af- firmed the Board’s holding, describing the contract clause as a per se violation of the Act, even if “entered into without coer- cion,” because it “obligated [the employee] to bargain indi- vidually” and was a “restraint upon collective action.” NLRB v. Stone, 125 F.2d 752, 756 (7th Cir. 1942). These precedents compel the conclusion that the [agreement] violates the NLRA. 357 NLRB 227, 2281. (footnotes omitted). In truth, the voluntariness of the Respondent’s policy is de- batable: an employee can be bound by the policy if he fails to respond to (or learn of) the arbitration policy and its opt-out provisions. However, assuming without deciding that the fail- ure of an employee to opt out constitutes a voluntary agreement to the policy, this does not save the policy under the Act. The inducement to individuals to irrevocably waive future Section 7 rights is not one the employer has the right to provide. It is not a choice employers may purport to enforce. It is not an agree- ment that an employee may irrevocably make with his employ- er. In D. R. Horton, the vice was the imposition of a rule bar- ring future collective actions. In this variant, the vice is the agreement between the individual employee and the employer to bar them. In this regard, the Respondent misses the issue at hand when it asserts (R. Br. at 23) that “[t]he Act does not prohibit em- ployees from voluntarily entering into individual agreements with the employer” and in support of this proposition cites and quotes J. I. Case Co. v. NLRB, 321 U.S. 332, 336–337 (1944): “Care has been taken in the opinions of the Court to reserve a field for the individual contract, even in industries covered by the National Labor Relations Act.” No one questions the general proposition that employees may enter into individual agreements with employers. But not at the expense of substantive rights under the Act. The point of J. I. Case, and the point of the instant indictment of the Re- spondent’s policy, is that while individual’s agreements with employers are not prohibited: individual contracts no matter what the circumstances that justify their execution or what the terms, may not be availed to defeat or delay procedures prescribed by the National La- bor Relations Act. . . . . Wherever private contracts conflict KMART CORP. 585 with [the Boards] functions, they must obviously yield or the Act would be reduced to a futility. J. I. Case, 321 U.S. at 337. The Respondent is free to reach all sorts of agreements with individual employees. However, the Respondent may not reach agreements with individuals that conflict with rights protected by the Act. None of this is based on new Board precedent. While the Board in D. R. Horton did not have to consider the issue of voluntary individual agreements, the Board has had occasion to consider such waivers and, consistent with the principles set forth in D. R. Horton, found that an individual’s broad waiver of “core” Section 7 rights “central” to the purposes of the Act is unlawful. Thus, in Ishikawa Gasket America, Inc., 337 NLRB 175 (2001), enfd. 354 F.3d 534 (6th Cir. 2004), the Board found unlawful a separation agreement between an employee Brown and the employer that restricted for a 1-year period the employee from attempting “to hire, influence, or otherwise direct any employee of the Company to leave employment of the Company or to engage in any dispute or work disruption with the Company, or to engage in any conduct which is con- trary to the Company’s interests in remaining union-free.” According to the Board: In our view, this separation agreement is overly broad in that it forces Brown to prospectively waive her lawful Section 7 rights. “[F]uture rights of employees as well as the rights of the public may not be traded away in this manner.” Mandel Security Bureau, Inc., 202 NLRB 117, 119 (1973) (release used by employer was overly broad and unlawfully prohibited filing of unfair labor practice charges concerning future inci- dents). See generally Metro Networks, Inc., 336 NLRB 63 (2001). 337 NLRB at 175–176; see also, Goya Foods, 358 NLRB 345, 345–346 (2012) (rejecting settlements that “purport to indefi- nitely prohibit [the employees] from engaging in any union activity relating to the Respondent or its employees. As in Ishikawa Gasket, we will not approve a settlement agreement that prospectively waives employees' Section 7 rights in such a manner. That reason alone suffices for us to find the settle- ments void and reject them in their entirety”) (footnotes omit- ted). In much the same way, those Kmart employees who failed to opt out of the arbitration policy have been deemed to have agreed to waive prospective Section 7 rights with regard to this employer, and in the case of the Kmart employees, the waiver is forever and not just for 1 year as was the case in Ishikawa Gasket. In Ishikawa Gasket the employee had to agree to waiver of these rights in exchange for compensation. In this case, Kmart employees had to agree to the waiver of their rights if they wanted to accept the benefits of the arbitration policy offered by the Respondent. This is not a waiver of rights that the Board can or should countenance under existing principles and poli- cies. The Respondent argues—in a contention that underlies its whole defense—that the waiver of the right to collective redress of workplace grievances “cannot be equated with the core rights protected by Section 7” and “has nothing to do with or- ganizing or bargaining collectively under the NLRA.” (R. Br. 26–28). However, in accordance with longstanding judicial precedent, the Board squarely holds otherwise. See D.R. Hor- ton, supra, slip op. at 2–4, citing cases. Indeed, in a very real sense, the Respondent’s contention misses the point of the Act. Illustrative of this, is the Respond- ent’s repeated citation to cases involving agreements negotiated between a union and an employer that waive Section 7 rights. These precedents do not advance the Respondent’s case. In fact, the distinction between union-employer negotiated waiv- ers of Section 7 rights and employee-employer attempts to do so goes to the heart of the Act’s schema. It has been long recognized that a union may waive a member’s statutori- ly protected rights, including his right to strike during the con- tract term, and his right to refuse to cross a lawful picket line. Such waivers are valid because they rest on the premise of fair representation and presuppose that the selection of the bar- gaining representative remains free. Metropolitan Edison Co. v. NLRB, 460 U.S. 693, 705 (1983) (internal quotations and citations omitted). These sanctioned waivers of section 7 rights are “freely and collectively bargained between a union and an employer”—and “the negotiations of such a waiver stems from an exercise of Section 7 rights: the collective bargaining process.” D. R. Hor- ton, supra, slip op. at 10) (Board’s emphasis). Collectively- bargained waivers in the form of collective-bargaining con- tracts are the very essence of the Act in action. On the other hand, employer imposed or procured individual employee waivers of Section 7 rights are a completely different matter and not permitted under a regime that exists to protect the right to engage in collective action. The difference between these two situations goes to the very heart of the Act, which has as its purpose the protection of collective bargaining as the means of negotiating terms and conditions of employment.9 Although the principles set forth in D. R. Horton (and Ishi- kawa Gasket) control the outcome of this case, the Board in D. R. Horton did not face and did not reach the question presented here. The Respondent sees great significance in the Board’s footnote in D. R. Horton calling “more difficult” the question of whether, if arbitration is a mutually beneficial means of dis- pute resolution, an employer can enter into an agreement that is not a condition of employment with an individual employee to resolve either a particular dispute or all potential employ- ment disputes through non-class arbitration rather than litiga- tion in court. 357 NLRB 2277, 2289 fn. 28. In my view, the Board’s comment constitutes an appropriate 9 See Sec. 1 of the Act (“It is declared to be the policy of the United States . . . [to] encourage[e] the practice and procedure of collective bargaining and by protecting the exercise by workers of full freedom of association, self-organization, and designation of representatives of their own choosing, for the purpose of negotiating the terms and condi- tions of their employment or other mutual aid or protection”). 586 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD recognition that there are a range of ways in which an individu- al employee might decide to forego collective action, and some pose “more difficult” questions than others. For instance it is one thing for an individual to choose not to engage in Section 7 activity, and, in that regard, to choose not to join or participate in a class action grievance or case as a means of resolving an employment dispute with his employer. That is a decision reserved for the employee, and it would be a difficult question if the Board were asked to find unlawful an individual’s one-time specific agreement with an employer not to join in a class action in exchange for an employer’s agree- ment to arbitrate a concrete pending employment dispute. In such a case, the waiver is narrow, discrete, and embodies a litigation choice made in light of known circumstances. It might well warrant a different outcome than that reached in D. R. Horton. At the other end of the spectrum, however, and not a difficult case, is the situation we encounter here: where an employer enters into an agreement with an employee—through employee inaction, no less—requiring the employee to waive prospective- ly and for all time the right to engage in an important form of Section 7 activity against the employer, in exchange for having access to an employer-offered arbitration program. The latter is what we have here and that is not an employee exercising the rights afforded under Section 7 to forego collective action but a permanent waiver of the right to engage in a “central” Section 7 right. Thus, if there are hard and easy cases—this one is easy: an irrevocable prospective lifetime waiver of certain Section 7 rights relating to all employment disputes that may arise in the future. It could be “worse” only if the employer’s policy pur- ported to waive an even greater array of Section 7 rights. The Act’s treatment of such a broad indefinite and irrevocable indi- vidual employee waivers is not in doubt. I would add that there is no conflict between the result here and the Federal Arbitration Act (FAA), and no undermining of the policy favoring arbitration agreements underlying the FAA. The Respondent advances numerous arguments on this score but this was also the “principal argument” of the employer and supporting amici in D. R. Horton and the Board extensively considered and rejected the proposition. Supra, slip op. at 8– 12. It is unnecessary to repeat the Board’s extended reasoning here. Suffice it to say that each point of the Board’s reasoning and conclusion on this score is fully and equally applicable to the restriction on the waivers at issue here. For the very same reasons set forth by the Board in D. R. Horton, there is no con- flict here with the FAA or the federal policy favoring arbitra- tion. In short, the FAA and its policy preference for arbitration do not privilege enforcement of such agreements when the terms contravene substantive protections under the Act. The Respondent cites two Supreme Court cases decided since D. R. Horton, but neither case changes anything nor in- forms the issue. In CompuCredit Corp. v. Greenwood, 132 S.Ct. 665 (2012), the Supreme Court upheld an arbitration agreement waiving the ability to sue in court for alleged viola- tions of the Credit Repair Organization Act (CROA), 15 U.S.C. § 1679 et seq., a Federal statute regulating the practices of cred- it repair organizations. The Court rejected the proposition that CROA contained a substantive right to sue—individually or as a class. 132 S.Ct. at 670. The Court reaffirmed its reasoning, found in Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991) and other cases, that an “utterly commonplace” provi- sion in a federal statute creating a private right of action does not prohibit an enforceable agreement to arbitrate such claims. 132 S.Ct. at 670. Similarly, in American Express Co. v. Italian Colors Restau- rant, 133 S.Ct. 2304 (2013), the Court, again reaffirming longstanding reasoning, this time articulated in Mitsubishi Mo- tors, Inc. v. Soler Chrysler-Plymouth, 473 U.S. 614 (1985), and held that Federal antitrust statutes do not evince an intent to preclude waiver of class action procedures, and found this so even if individual vindication of “low-value” antitrust cases would be impractical. Neither case affects the reasoning of the Board in D. R. Hor- ton, precisely because, among other reasons, the Board in D. R. Horton relied upon the Supreme Court’s recognition in Gilmer and Mitsubishi that the FAA does not require arbitration of statutory claims where it means that a party will “forgo the substantive rights afforded by the statute.” D. R. Horton, supra, slip op. at 9, quoting Gilmer, supra at 26, quoting Mitsubishi, supra at 628. This principle is unaffected by the Court’s deci- sion in CompuCredit and American Express, cases where the Court rejected the contention that there was a substantive right to collective action contained in the statutes at issue in those cases. However, the Act is different. In D. R. Horton the Board affirmed the settled principle that a “categorical prohibi- tion of joint, class, or collective federal state or employment law claims in any forum directly violates substantive rights vested in employees by Section 7 of the NLRA.” On this basis the Board invalidated the arbitration agreement at issue in D. R. Horton, and the reasoning is equally valid here and consistent with the Supreme Court’s decisions in American Express and CompuCredit. The key point is that the Board’s “issue” is with protecting the substantive right under the Act for employees to act collectively—at least in some forum—to vindicate their legal and contractual rights. In this regard, it cannot be stressed enough that the Board’s concern in this case, and in D. R. Horton, is not with the FAA or with arbitration. The Board’s rules neither evince nor are motivated by any hostility to arbitral resolution of disputes. An employer’s arbitration policy reached with individual employ- ees, even one that bars collective actions in arbitration, does not run afoul of D. R. Horton as long as the employee’s right to pursue collective actions in other forums is not infringed. The Board is not hostile to arbitration, but rather, unwilling to coun- tenance any unilateral employer policy, arbitral or otherwise, imposed upon or agreed to with individual employees, that purports to restrict employees’ substantive Section 7 rights, in this case the prohibition on all forms of collective actions in all forums.10 10 The Respondent also argues (R. Br. at 19–20) that a ruling pre- venting the individual waiver of Sec. 7 rights is bad policy as employ- ers will be unwilling to offer arbitration agreements, if they are “re- quired to permit employees to present class claims in arbitration.” This is wrong in two ways. First, neither D. R. Horton, nor the reasoning of KMART CORP. 587 Finally, the Respondent contends (R. Br. at 15) that the Act’s 6-month statute of limitations set forth in Section 10(b) of the Act precludes finding a violation “with respect to employees who acknowledge and entered into the Agreement more than six months prior to the filing of charges in this case.” This is completely wrong. Indeed, there is something ludicrous about the contention that employees waive the right to engage in Sec- tion 7 activity in perpetuity because they fail to complain to the Board within 6 months of the implementation of the unlawful rule. The violation here is the maintenance of an unlawful restriction on Section 7 activity that is an unfair labor practice each day that it is maintained. Whether viewed as an employer rule or as an agreement, the unlawful restriction on Section 7 activity may be prosecuted as long as the unlawful restriction is in effect. It is a classic continuing violation.11 The General Counsel alleges a violation only for a period of time within the statute of limitations period (i.e., since April 23, 2012). There is no 10(b) issue.12 For all of these reasons, I find that the Respondent’s mainte- nance of its arbitration policy which prohibits for all time the resort to class, collective, or representation actions in any forum by employees covered by it, unlawfully restricts “core” Section 7 rights “central” to the Act’s promise and is, therefore, viola- tive of Section 8(a)(1) of the Act.13 this decision requires employers to offer arbitration agreements that permit class claims in arbitration. They may offer arbitration agree- ments that preclude class claims in arbitration, as long as employees remain free to pursue rights they may otherwise have to pursue class claims through the judicial system. Second, this policy argument is better directed to Congress than to me or the Board. It is unlikely that the Board would eliminate substantive statutory protections of the Act it administers in order to incentivize employers to offer arbitration agreements. 11 An employer commits a continuing violation of the Act through- out the period that an unlawful rule is maintained. Lafayette Park Hotel, 326 NLRB 824, 825 (1998); Relco Locomotives, 359 NLRB 1145, 1160 (2013) (To the extent Respondent may claim this allegation is time barred, unlawful work rules which may be longstanding which are maintained within the statutory limitations period established in Sec. 10(b) of the Act constitute continuing violations of the “Act.”); Alamo Cement Co., 277 NLRB 1031, 1037 (1985) (maintenance of unlawful rules within 6 months of filing charges renders the action timely). Moreover, it is well-settled that an agreement entered into outside the 10(b) period may be found unlawful within the 10(b) period where its provisions are unlawful on their face. Teamsters Local 293 (R. L. Lipton Distributing), 311 NLRB 538, 539 (1993) (provision requiring extra payment of 45 cents per hour to shop stewards); Great Lakes Carbon Corp., 152 NLRB 988, 989–900 (1965) (provision providing for superseniority for strikers), review denied, 360 F.2d 19 (4th Cir. 1966); Whiting Milk Corp., 145 NLRB 1035, 1037–1038 (1964) (unlawful seniority provision in contract executed outside 10(b) period but enforced inside the 10(b) period), enforcement denied on other grounds, 342 F.2d 8 (1st Cir. 1965). 12 Machinists Local 1424 (Bryan Mfg. Co.) v. NLRB, 362 U.S. 411 (1960), is inapposite. In that case the Supreme Court treated with a contract lawful on its face and in its enforcement, but unlawful, essen- tially because of one party’s lack of capacity when entered into during a time-barred period. 13 The Respondent makes three procedural arguments relating to the Board’s authority, each of which I reject. First, relying on Noel Can- ning v. NLRB, 705 F.3d 490 (D.C. Cir. 2013), the Respondent argues CONCLUSIONS OF LAW 1. The Respondent Kmart Corporation, a subsidiary of Sears Holding Corporation, is an employer within the meaning of Section 2(2), (6), and (7) of the Act. 2. Since on or about April 1, 2012, the Respondent has vio- lated Section 8(a)(1) of the Act by maintaining an arbitration policy that waives the right to maintain collective actions in all forums, whether arbitral or judicial, and is applicable to all employees who fail to opt out of coverage under the arbitration policy during a one-time initial opt out period permitted each employee. 3. The unfair labor practices committed by Respondent affect commerce within the meaning of Section 2(6) and (7) of the Act. REMEDY Having found that the Respondent have engaged in certain unfair labor practices, I find that it must be ordered to cease and desist there from and to take certain affirmative action designed to effectuate the policies of the Act. Having found that the Respondent’s arbitration policy is un- lawful, the Respondent shall be ordered to rescind or revise it to make clear to employees in all of its facilities in which the arbi- tration policy has been implemented that the policy does not (R. Br. at 35–36) that Member Becker’s March 27, 2010 recess ap- pointment was invalid and therefore, the Board, which had only three members at the time D. R. Horton issued, had only two valid members and thus, lacked the required quorum to operate (in accordance with New Process Steel v. NLRB, 560 U.S. 674 (2010)). Second, in a related claim based on the same premise, the Respond- ent argues (R. Br. at 39–40) that the Regional Director of Region 6 did not have authority to issue the complaints in the instant cases because at the time of his appointment in March 2009, the Board had only two members and lacked the quorum necessary to make appointments. I reject both of these arguments for the reasons set forth in Blooming- dale’s Inc., 359 NLRB 1015 (2013). Third, the Respondent argues (R. Br. at 36–39) that, even assuming the validity of Member Becker’s appointment, the decision in D. R. Horton was invalid because it was decided without an express delega- tion to the three-member panel (Member Hayes was a member of the panel but recused himself). This is a meritless argument. As the Re- spondent notes (quoting Office of Legal Counsel Memorandum Opin- ion for the Solicitor National Labor Relations Board, 2003 WL 24166831 (Mar. 4, 2003)): “when the Board’s membership has fallen to three members, the Board has developed a practice of designating those members as a ‘group’ in cases where one member will be disqualified.” This practice, which was “left undisturbed” by the Supreme Court in New Process Steel (Correctional Medical Services, 356 NLRB 277, 277 fn. 1 (2010)), is precisely what the Board did in D. R. Horton, which is why D. R. Horton was issued “by” all three members, includ- ing Member Hayes, although he was recused and did not participate in deciding the merits of the case. Designate is not delegate and there is no requirement that a Board with only three members delegate its au- thority to the three before it is empowered to issue decisions. As the only members of the Board, the three had the right to “exercise all powers of the Board.” See Sec. 3(b) of the Act (“A vacancy in the Board shall not impair the right of the remaining members to exercise all of the powers of the Board”). This power includes “allow[ing] any panel to issue a decision by only two members if one member is dis- qualified.” New Process Steel, 130 S.Ct. at 2644. 588 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD require a waiver in all forums of their right to maintain collec- tive actions, and shall notify employees of the rescinded or revised policy including by providing them a copy of the re- vised policy or specific notification that the policy has been rescinded. The Respondent shall post an appropriate informational no- tice, as described in the attached appendix 1. This notice shall be posted in all Respondent’s facilities where the arbitration policy has been in effect, wherever the notices to employees are regularly posted for 60 days without anything covering it up or defacing its contents. In addition to physical posting of paper notices, notices shall be distributed electronically, such as by email, posting on an intranet or an internet site, and/or other electronic means, if the Respondent customarily communicates with its employees by such means. In the event that, during the pendency of these proceedings the Respondent has gone out of business or closed a facility at which the arbitration policy has been in effect, the Respondent 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 April 1, 2012. The Respondent shall also disseminate, on the first day of notice posting as required herein, a copy of this notice in electronic fashion on the same basis and to the same group or class of employees as the arbitration policy was made available through an electronic communications system includ- ing intranet and internet. When the notice is issued to the Re- spondent, it shall sign it or otherwise notify Region 6 of the Board what action it will take with respect to this decision. [Recommended Order omitted from publication.]