Cordua Restaurants, Inc. and Ramirez, 16-CA-160901

• Court: National Labor Relations Board
• Writing for the Court: John F. Ring, Chairman
• Parties: Cordúa Restaurants, Inc. v. Steven Ramirez and Rogelio Morales and Shearone Lewis.
• Docket Number: 16-CA-173451,16-CA-161380,16-CA-160901,16-CA-170940
• Decision Date: 14 August 2019

Cordúa Restaurants, Inc. and Steven Ramirez and Rogelio Morales and Shearone Lewis.

Nos. 16-CA-160901, 16-CA-161380, 16-CA-170940, 16-CA-173451

United States of America, National Labor Relations Board

August 14, 2019

Chairman Ring and Members McFerran, Kaplan, and Emanuel

SUPPLEMENTAL DECISION, ORDER, AND NOTICE TO SHOW CAUSE

John F. Ring, Chairman

In Epic Systems Corp. v. Lewis, 584 U.S.__, 138 S.Ct. 1612 (2018), the Supreme Court held that agreements containing class- and collective-action waivers and stipulating that employment disputes are to be resolved by individualized arbitration do not violate the National Labor Relations Act and must be enforced as written pursuant to the Federal Arbitration Act. This case presents two important issues of first impression regarding mandatory arbitration agreements following Epic Systems: (1) whether the Act prohibits employers from promulgating such agreements in response to employees opting in to a collective action; and (2) whether the Act prohibits employers from threatening to discharge an employee who refuses to sign a mandatory arbitration agreement. Consistent with Epic Systems, we find that the Act contains no such proscriptions. We reaffirm, however, longstanding precedent establishing that Section 8(a)(1) prohibits employers from disciplining or discharging employees for engaging in concerted legal activity, which includes filing a class or collective action with fellow employees over wages, hours, or other terms and conditions of employment.

On April 26, 2018, the Board issued a Decision and Order in this proceeding, which is reported at 366 NLRB No. 72.^[1] The Board found, among other things, that the Respondent violated Section 8(a)(1) by discharging employee Steven Ramirez because he filed a collective-action lawsuit against the Respondent alleging minimum wage and overtime violations under Federal and State law, and it severed and retained certain other unfair labor practice allegations for further consideration. Thereafter, the Respondent filed a petition for review in the United States Court of Appeals for the Fifth Circuit. On May 21, 2018, while the petition was pending, the United States Supreme Court issued its decision in Epic Systems Corp. v. Lewis, supra. Following the Supreme Court's decision, the Board vacated the prior Decision and Order in this case pursuant to Section 10(d) of the Act and reconsolidated the allegations resolved in the prior decision with the severed allegations for reconsideration in this proceeding.

The Board has considered the administrative law judge's decision and the record in light of the exceptions and briefs and has decided to affirm the judge's rulings, ^[2]findings, ^[3] and conclusions only to the extent consistent with this Decision and Order.^[4]

The judge found that the Respondent unlawfully maintained several employee handbook rules and unlawfully promulgated and maintained an arbitration agreement that required employees, as a condition of employment, to waive their right to pursue class or collective legal claims. In addition, the judge found that the Respondent unlawfully discharged two employees because they engaged in protected concerted activity and dismissed the allegation that the Respondent unlawfully discharged a third employee. As explained below, we reverse the judge's finding that the promulgation of a revised arbitration agreement was unlawful, and we also reverse the judge's finding that the Respondent unlawfully discharged employee Shearone Lewis. However, we adopt the judge's finding that the Respondent unlawfully discharged employee Steven Ramirez, and we also adopt the judge's dismissal of the allegation that the Respondent unlawfully discharged employee Rogelio Morales.^[5] We also adopt the judge's finding that one of the employee handbook rules was unlawful, and we shall issue a notice to show cause why the other handbook rule allegations should not be remanded to the judge for further consideration.

I. THE REVISED ARBITRATION AGREEMENT

Prior to the events at issue in this case, the Respondent maintained an arbitration agreement that required employees to waive their “right to file, participate or proceed in class or collective actions (including a Fair Labor Standards Act (‘FLSA') collective action) in any civil court or arbitration proceeding.” In January 2015, a group of seven employees (including Steven Ramirez) filed a collective action in the United States District Court for the Southern District of Texas alleging violations of the FLSA and the Texas Minimum Wage Act. On September 29, 2015, after a number of employees opted in to the collective action, the Respondent began distributing a revised arbitration agreement, under which employees would additionally agree not to opt in to collective actions.^[6] Applying Murphy Oil USA, Inc., 361 NLRB 774 (2014), the judge found that the Respondent violated Section 8(a)(1) by promulgating and maintaining the revised arbitration agreement because it required 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 light of that finding, the judge did not pass on the General Counsel's alternative argument that the revised arbitration agreement was also unlawful on the basis that the Respondent promulgated it in response to employees' protected activity of opting in to the ongoing FLSA collective action.

After the judge issued her decision, the Supreme Court granted certiorari in Murphy Oil USA. See NLRB v. Murphy Oil USA, Inc., 137 S.Ct. 809 (2017). In the now-vacated Decision and Order, the Board retained the complaint allegations pertaining to the revised arbitration agreement and a related statement made by one of the Respondent's managers, discussed below, “[p]ending the Supreme Court's decision in Murphy Oil.” 366 NLRB No. 72, slip op. at 1 fn. 2. In light of the Court's decision in Epic Systems and for the reasons set forth below, we now reverse the judge's finding that the Respondent violated Section 8(a)(1) by promulgating and maintaining the revised arbitration agreement.

In Epic Systems, the Court held that employer-employee agreements containing class- and collective-action waivers and providing that employment disputes are to be resolved through individualized arbitration do not violate the National Labor Relations Act and must be enforced as written pursuant to the Federal Arbitration Act (FAA). 138 S.Ct. at 1619, 1632. On this basis, the Board, post- Epic Systems, has routinely dismissed complaints alleging that employers unlawfully maintained and/or enforced arbitration agreements that require employees, as a condition of employment, to waive their right to pursue employment disputes through class or collective actions. See, e.g., KO Huts, Inc., 366 NLRB No. 150 (2018). On the same basis, we reverse the judge's finding that the Respondent unlawfully maintained the revised arbitration agreement.

We further hold that the promulgation of such an agreement, even in response to Section 7 activity, also does not violate the Act. We assume, without deciding, that an individual employee engages in protected concerted activity when he or she opts in to a collective action. Nevertheless, the promulgation of the revised agreement in response to that activity did not violate the Act. As the Supreme Court made clear in Epic Systems, an agreement requiring that employment-related claims be resolved though individual arbitration, rather than through class or collective litigation, does not restrict Section 7 rights in any way. Epic Systems Corp. v. Lewis, 138 S.Ct. at 1626 (“Section 7 does nothing to address the question of class and collective actions. . .”).^[7] Because opting in to a collective action is merely a procedural step required in order to participate as a plaintiff in a collective action, it follows that an satisfied its burden of proving that it would have discharged Lewis and Morales even in the absence of their protected activity. Specifically, the record evidence establishes that the Respondent reasonably believed that Lewis and Morales engaged in misconduct and that it relied on that belief in discharging them. arbitration agreement that prohibits employees from opting in to a collective action does not restrict the exercise of Section 7 rights and, accordingly, does not violate the Act.^[8]

The Board has held that, under some circumstances, an employer does violate the Act when it promulgates an otherwise lawful rule in response to protected activity. See Lutheran Heritage Village-Livonia, 343 NLRB 646, 647 (2004). But those cases involve the promulgation of rules that do restrict the exercise of Section 7 rights.^[9] For example, even though it is presumptively lawful, a rule that prohibits solicitation on nonworking time restricts Section 7 activity: a prohibition of all solicitation on nonworking time necessarily includes within its scope a prohibition of union solicitation.^[10] Moreover, such rules are enforced by the employer through the imposition of discipline and, when promulgated in response to union activity, chill employees from engaging in such activity. The promulgation of a no-solicitation rule, backed by the threat of discipline, only when employees begin engaging in union solicitation sends the message that all union activity is unwelcome and thus reasonably tends to discourage employees from engaging in any union activity going forward. Id.^[11]

The promulgation of the revised arbitration agreement had no such effect. To be sure, the revised agreement did require employees to agree not to opt in to a collective action. But the effect of that prohibition was simply to require employees to resolve their employment-related claims through individual arbitration rather than through collective actions. As we have explained, this...