Covenant Care California, LLC; and Covenant Care La Jolla, LLC

700 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 363 NLRB No. 80 Covenant Care California, LLC and Covenant Care La Jolla, LLC and Lerma Vera. Case 21–CA– 090894 December 22, 2015 DECISION AND ORDER BY CHAIRMAN PEARCE AND MEMBERS HIROZAWA AND MCFERRAN On December 20, 2013, Administrative Law Judge Gerald A. Wacknov issued the attached decision. The Respondent filed exceptions and a supporting brief, and the General Counsel filed an answering brief and a cross- exception. The National Labor Relations Board has delegated its authority in this proceeding to a three-member panel.1 The judge found, applying the Board’s decision in D. R. Horton, Inc., 357 NLRB 2277 (2012), enf. denied in part 737 F.3d 344 (5th Cir. 2013), that the Respondent violated Section 8(a)(1) of the Act by maintaining and enforcing a Mutual Arbitration Agreement (Arbitration Agreement) that requires employees, as a condition of employment, to waive their rights to pursue class or col- lective actions involving employment-related claims in all forums, whether arbitral or judicial. In Murphy Oil USA, Inc., 361 NLRB 774 (2014), enf. denied in part No. 14-60800, 2015 WL 6457613 (5th Cir. October 26, 2015), the Board reaffirmed the relevant holdings of D. R. Horton, supra. The Board has considered the judge’s decision and the record in light of the exceptions, cross- exception, and briefs and has decided, based on the judge’s application of D. R. Horton and on our subse- quent decision in Murphy Oil, to affirm the judge’s rul- 1 Member Miscimarra is recused and took no part in the considera- tion of this case. ings, findings, and conclusions2 and to adopt the recom- mended Order as modified and set forth in full below.3 ORDER The National Labor Relations Board orders that the Respondents, Covenant Care California, LLC, Aliso Vie- jo, California, and Covenant Care La Jolla, LLC, La Jol- la, California, their officers, agents, successors, and as- signs, shall 1. Cease and desist from (a) Maintaining and/or enforcing a mandatory arbitra- tion agreement that requires employees, as a condition of employment, to waive the right to maintain class or col- lective actions in all forums, whether arbitral or judicial. 2 The Respondents argue that their arbitration agreement includes an exemption allowing employees to file charges with administrative agencies, including with the Board, and thus does not, as in D. R. Hor- ton, unlawfully prohibit them from collectively pursuing litigation of employment claims in all forums. See Owen v. Bristol Care, Inc., 702 F.3d 1050, 1053–1054 (8th Cir. 2013). We reject this argument for the reasons stated in SolarCity Corp., 363 NLRB 717 (2015). The Respondents also contend that Regional Director Olivia Garcia was without authority to issue the complaint in this case because the Board appointed her as Regional Director for Region 21 on January 6, 2012, when the Board lacked a quorum after the expiration of former Board Member Craig Becker’s term. This contention is without merit. Although Regional Director Garcia’s appointment was announced on January 6, 2012, the Board approved the appointment on December 22, 2011, at which time it had a valid quorum. See Mathew Enterprise, Inc. 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, L.L.C. v. NLRB, 769 F.3d 254, 256 (4th Cir. 2014) (same). 3 Consistent with our decision in Murphy Oil, supra at 21, we amend the judge’s remedy and shall order the Respondents to reimburse the Charging Party and any other plaintiffs for all reasonable expenses and legal fees, with interest, incurred in opposing the Respondents’ unlaw- ful motion in State court to compel arbitration of the class or collective claims. See Bill Johnson’s Restaurants, Inc. v. NLRB, 461 U. S. 731, 747 (1983) (“If a violation is found, the Board may order the employer to reimburse the employees whom he had wrongfully sued for their attorneys’ fees and other expenses” as well as “any other proper relief that would effectuate the policies of the Act.”). Interest shall be com- puted in the manner prescribed in New Horizons, 283 NLRB 1173 (1987), compounded daily as prescribed in Kentucky River Medical Center, 356 NLRB 6 (2010). See Teamsters Local 776 (Rite Aid), 305 NLRB 832, 835 fn. 10 (1991) (“[I]n make-whole orders for suits main- tained in violation of the Act, it is appropriate and necessary to award interest on litigation expenses.”), enfd. 973 F.2d 230 (3d Cir. 1992). We shall also amend the judge’s remedy to order the Respondents to notify the State court that they have rescinded or revised the Arbitration Agreement, to inform the court that they no longer oppose the Charging Party’s lawsuit on the basis of the Arbitration Agreement, and to post a notice at all of the facilities where the Arbitration Agreement has been or is in effect. Guardsmark, LLC, 344 NLRB 809, 812 (2005), enfd. in relevant part 475 F.3d 369 (D.C. Cir. 2007). Finally, we shall modify the judge’s recommended Order to conform to the amended remedy, to the judge’s unfair labor practice findings, and to the Board’s standard remedial language, and we shall substitute new notices to conform to the Order as modified. COVENANT CARE CALIFORNIA, LLC 701 (b) Maintaining a rule that prohibits the discussion of terms and conditions of employment by requiring em- ployees to keep information about arbitral proceedings confidential. (c) 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 Mutual Arbitration Agreement (Arbi- tration Agreement) in all of its forms, or revise it in all of its forms to make clear to employees that the Arbitration Agreement does not constitute a waiver of their right to maintain employment-related joint, class, or collective actions in all forums, and that it does not prohibit em- ployees’ discussion of terms and conditions of employ- ment by requiring them to keep information about arbi- tral proceedings confidential. (b) Notify all applicants and current and former em- ployees who were required to sign or otherwise become bound to the Arbitration Agreement in any form that it has been rescinded or revised, and, if revised, provide them a copy of the revised agreement. (c) Notify the Superior Court of California, County of San Diego, in the case of Lerma Vera v. Covenant Care California, LLC; Covenant Care La Jolla, LLC, Case No. 37-2012-00100591-CU-WT-CTL, that it has re- scinded or revised the mandatory arbitration agreement upon which it based its motion to dismiss or stay Lerma Vera’s class-action lawsuit and to compel arbitration, and inform the court that it no longer opposes the lawsuit on the basis of the Arbitration Agreement. (d) In the manner set forth in this decision, reimburse Lerma Vera and any other plaintiffs for any reasonable attorneys’ fees and litigation expenses that they may have incurred in opposing the Respondents’ motion to dismiss or stay the class lawsuit and compel arbitration. (e) Within 14 days after service by the Region, post at their La Jolla, California facility copies of the attached notice marked “Appendix A,” and at all other facilities where the unlawful Arbitration Agreement is or has been in effect, copies of the attached notice marked “Appendix B.”4 Copies of the notices, on forms provided by the Regional Director for Region 21, after being signed by the Respondents’ authorized representative, shall be posted by the Respondents and maintained for 60 con- secutive days in conspicuous places, including all places 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.” where notices to employees are customarily posted. In addition to physical posting of paper notices, notices shall be distributed electronically, such as by email, post- ing on an intranet or an internet site, and/or other elec- tronic means, if the Respondents customarily communi- cate with their employees by such means. Reasonable steps shall be taken by the Respondents to ensure that the notices are not altered, defaced, or covered by any other material. If the Respondents have gone out of business or closed the facility involved in these proceedings, the Respondents shall duplicate and mail, at their own ex- pense, a copy of the notice marked “Appendix A” to all current employees and former employees employed by the Respondents at their La Jolla, California facility at any time since April 10, 2012. If the Respondents have gone out of business or closed any facilities other than the one involved in these proceedings, the Respondents shall duplicate and mail, at their own expense, a copy of the notice marked “Appendix B” to all current employees and former employees employed by the Respondents at those facilities at any time since April 10, 2012. (f) Within 21 days after service by the Region, file with the Regional Director for Region 21 a sworn certifi- cation of a responsible official on a form provided by the Region attesting to the steps that the Respondents have taken to comply. APPENDIX A 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 Choose not to engage in any of these protected activities. WE WILL NOT maintain and/or enforce a mandatory arbitra- tion agreement that requires our 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 maintain a rule that prohibits the discus- sion of terms and conditions of employment by requiring our employees to keep information about arbitral pro- ceedings confidential. DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 702 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 Mutual Arbitration Agreement (Arbitration Agreement) in all of its forms, or revise it in all of its forms to make clear that the Arbitration Agree- ment does not constitute a waiver of your right to main- tain employment-related joint, class, or collective actions in all forums, and that it does not prohibit your discus- sion of terms and conditions of employment by requiring you to keep information about arbitral proceedings con- fidential. WE WILL notify all applicants and current and former employees who were required to sign or otherwise be- come bound to the Arbitration Agreement in any form that the Arbitration Agreement has been rescinded or revised and, if revised, WE WILL provide them a copy of the revised agreement. WE WILL notify the court in which Lerma Vera filed her class-action lawsuit that we have rescinded or revised the Arbitration Agreement upon which we based our motion to dismiss or stay her lawsuit and compel arbitra- tion, and WE WILL inform the court that we no longer oppose Lerma Vera’s class-action lawsuit on the basis of that agreement. WE WILL reimburse Lerma Vera and any other plain- tiffs for any reasonable attorneys’ fees and litigation ex- penses that they may have incurred in opposing our mo- tion to dismiss the class-action lawsuit and compel arbi- tration. COVENANT CARE CALIFORNIA, LLC AND COVENANT CARE LA JOLLA, LLC The Board’s decision can be found at www.nlrb.gov/case/21-CA-090894 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. APPENDIX B 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 Choose not to engage in any of these protected activities. WE WILL NOT maintain and/or enforce a mandatory ar- bitration agreement that requires our 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 maintain a rule that prohibits the discus- sion of terms and conditions of employment by requiring our employees to keep information about arbitral pro- ceedings confidential. 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 Mutual Arbitration Agreement (Arbitration Agreement) in all of its forms, or revise it in all of its forms to make clear that the Arbitration Agree- ment does not constitute a waiver of your right to main- tain employment-related joint, class, or collective actions in all forums, and that it does not prohibit your discus- sion of terms and conditions of employment by requiring you to keep information about arbitral proceedings con- fidential. WE WILL notify all applicants and current and former employees who were required to sign or otherwise be- come bound to the Arbitration Agreement in any form that the Arbitration Agreement has been rescinded or revised and, if revised, WE WILL provide them a copy of the revised agreement. COVENANT CARE CALIFORNIA, LLC AND COVENANT CARE LA JOLLA, LLC ‘ The Board’s decision can be found at www.nlrb.gov/case/21-CA-090894 or by using the QR code below. Alternatively, you can obtain a copy of the decision from the Executive Secretary, National Labor Relations COVENANT CARE CALIFORNIA, LLC 703 Board, 1015 Half Street, S.E., Washington, D.C. 20570, or by calling (202) 273–1940. Robert MacKay, Esq., for the General Counsel. Ross H. Friedman, Esq. (Morgan, Lewis & Brocius, LLP), of Chicago, Illinois, for the Respondents. Lee R. Feldman, Esq. (The Feldman Law Firm), of Los Ange- les, 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 October 9, 2012. Since the submission of this matter to me on July 15, 2013, briefs have been received on about August 21, 2013, from counsel for the General Counsel (the General Counsel), and counsel for the Respondents. Upon the stipulated record, and in consideration of the briefs submit- ted, I make the following FINDINGS OF FACT At all material times, Respondent Covenant Care California, LLC and Respondent Covenant Care La Jolla, LLC have been California corporations, with places of business located in Aliso Viejo, California, and La Jolla, California, respectively, and are engaged in operating skilled-nursing and rehabilitation centers. In the conduct of their business operations, each Respondent annually derives gross revenues in excess of $250,000 and purchases and receives goods valued in excess of $5000 direct- ly from points outside California. It is admitted and I find that each Respondent is an employer engaged in commerce within the meaning of Section 2(2), (6), and (7) of the National Labor Relations Act (the Act), and a health care institution within the meaning of Section 2(14) of the Act. II. ALLEGED UNFAIR LABOR PRACTICES A. Issues The principal issues in this proceeding are whether the Re- spondent has violated and is violating Section 8(a)(1) of the Act by maintaining a dispute resolution agreement, entitled Mutual Arbitration Agreement (the Agreement), requiring individual mandatory arbitration and precluding employees from engaging in concerted activity by filing collective class actions; by at- tempting to enforce the Agreement in State court litigation; and by including language in the Agreement that restricts employ- ees from disclosing the matters concerning arbitration proceed- ings with other individuals. 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: Lerma Vera, the Charging Party, a former employee of the Respondents, worked for the Respondents until August 1, 2011, and was required to sign the Agreement as a condition of employment with the Respondents at the La Jolla, California facility on or about September 11, 2008. The Agreement by its terms requires employees to resolve all current and future em- ployment-related disputes exclusively through individual arbi- tration proceedings, and to keep confidential the existence, content, and outcome of all 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. At all material times, and since at least April 10, 2012, signing the Agreement has been a required condition of employment for the Respondents’ employees. Since at least September 7, 2012, the Respondents have en- forced provisions of the Agreement by moving to compel arbi- tration and to dismiss or stay State court proceedings in a class- action wage-and-hour complaint filed by Vera. The Respond- ents’ foregoing motion was litigated in the Superior Court of California, County of San Diego, and was granted by the court on February 5, 2013. The court’s determination is currently upon appeal. Analysis and Conclusions D. R. Horton, Inc., 357 NLRB 2277 (2012), is the control- ling Board decision in this matter. It is currently pending re- view before the Fifth Circuit Court of Appeals, having been argued on February 5, 2013. While the Respondent maintains that D. R Horton was wrongly decided, I am required to follow it unless reversed by the Supreme Court. Waco, Inc., 273 NLRB 746, 749 fn. 14 (1984); Los Angeles New Hospital, 244 NLRB 960, 962 fn. 4 (1979), enfd. 640 F.2d 1017 (9th Cir. 1981); Pathmark 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 Respondent has stipulated herein, the Agreement does precisely that.2 Accordingly, the Agreement is facially unlawful. The complaint also alleges that the Agreement interferes with employees Section 7 right to share and discuss wages, hour, and other terms and conditions of employment with each 2 The Agreement expressly provides: “In exchange and considera- tion of your continuing employment, you and Covenant agree to re- solve any and all claims arising out of or relating to your employment application or candidacy for employment, or if hired, any claim related to your employment or employment termination, to final and binding arbitration before a neutral arbitrator.” ij DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 704 other.3 The Respondent argues that the language only applies to the actual proceedings before the arbitrator, and does not restrict employees from discussing issues underlying the arbi- tration, such as wage and hour matters. However, the actual proceedings before the arbitrator and the result of the arbitra- tion, I find, are relevant matters which employees are entitled to collectively discuss and evaluate before bringing individual arbitration claims on their own behalf. Accord-ingly, I find this restriction is unlawful as alleged. Double Eagle Hotel & Casi- no, 341 NLRB 112, 114–115 (2004), enfd. 414 F.3d 1249 (10th Cir. 2005), cert denied 546 U.S. 1170 (2006); Phoenix Transit System, 337 NLRB 510 (2002), enfd. per curiam 63 Fed.Appx. 524 (D.C. Cir. 2003). The Respondent maintains the charge is time barred by Sec- tion 10(b) of the Act, having been filed more than 6 months after September 11, 2008, the date Vera was required to sign the Agreement. Because, the Agreement is facially invalid, currently remains in effect, and, in addition, the Respondents are currently attempting to enforce it against Vera before the San Diego County Superior Court, it is clear that the charge is not time-barred. Control Services, 305 NLRB 435, 435 fn. 2 442 (1991), enfd. mem. 961 F.2d 1568 (3d Cir. 1992); Register- Guard, 351 NLRB 1110, 1110 fn. 2 (2007). Cf. Local Lodge 1424 v. NLRB, 362 U.S. 411 (1960). The Respondent maintains that the complaint is barred by the First Amendment to the extent it seeks to prevent the Respond- ents from petitioning a State court to dismiss Vera’s class- action wage-and-hour suit. The Board has determined that the Agreement is facially invalid and unlawful. Accordingly, a Board order requiring the Respondents to withdraw its opposi- tion to Vera’s claim in State court is compatible with estab- lished precedent. Bill Johnson’s Restaurants, 461 U.S. 731, 737 fn. 5 (1983); Loehmann’s Plaza, 305 NLRB 663, 671 (1991); Federal Security, Inc., 336 NLRB 703 (2001), remanded on other grounds 202 WL31234984 (D.C. Cir. 2002). The Respondent maintains the Agreement is not unlawful because it specifically permits employees to file charges or 3 The Agreement provides as follows: “The proceedings before the arbitrator and any award or remedy shall be of a private nature and kept confidential.” complaints with other administrative agencies. The gravamen of the violation herein is the restriction of employee’s rights to engage in concerted activity by, as a condition of employment, collectively pursuing litigation of employment claims in all forums arbitral and judicial. Here, the Respondent is attempting to limit those rights by permitting only charges or complaints before administrative agencies. I find the Respondent’s argu- ment 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, 2013 WL 276024 (D.C. Cir. 2013). This matter is currently being litigated in other forums. The Board has noted that that until the matter is ultimately de- cided it shall continue to fulfill its responsibilities under the Act. Belgrove Post Acute Care Center, 359 NLRB 633, 633 fn. 1(2013). CONCLUSIONS OF LAW AND RECOMMENDATIONS The Respondents are employers engaged in commerce with- in the meaning of Section 2(2), (6), and (7) of the Act, and health care institutions within the meaning of Section 2(14) of the Act. The Respondents have violated Section 8(a)(1) of the Act as alleged. THE REMEDY Having found that the Respondents have engaged in certain unfair labor practices, I recommend that they be required to cease and desist therefrom and from in any other like or related manner interfering with, restraining, or coercing employees in the exercise of their rights under Section 7 of the Act. It is also recommended that the Respondents reimburse Vera for attorney fees and litigation expenses directly related to opposing the Respondents’ unlawful petition to compel individual arbitra- tion. See Bill Johnson’s Restaurants, supra at 747. I shall also recommend the posting of an appropriate notice, attached here- to as an “Appendix,” at the locations where the Agreement has been in effect. [Recommended Order omitted from publication.]