Logisticare Solutions, Inc. v. Nat'l Labor Relations Bd.

866 F.3d 715

LOGISTICARE SOLUTIONS, INCORPORATED, Petitioner Cross-Respondent,

v.NATIONAL LABOR RELATIONS BOARD, Respondent Cross-Petitioner.

No. 16-60029

United States Court of Appeals, Fifth Circuit.

FILED August 9, 2017

Buena Vista Lyons, Esq., Rachel Z. Ullrich, FordHarrison, L.L.P., Dallas, TX, Thomas J. Walsh, Jr., Esq., Senior Counsel, FordHarrison, L.L.P., Memphis, TN, for Petitioner Cross-Respondent.

Linda Dreeben, Esq., Deputy Associate General Counsel, Gregoire Sauter, Kira Dellinger Vol, National Labor Relations Board, Appellate & Supreme Court Litigation Branch, Washington, DC, Martha Elaine Kinard, Esq., Director, National Labor Relations Board, Fort Worth, TX, for Respondent Cross-Petitioner.

Before HIGGINBOTHAM, ELROD, and HIGGINSON, Circuit Judges.

JENNIFER WALKER ELROD, Circuit Judge:

LogistiCare Solutions, Incorporated, requires its employees and applicants for employment to sign a class or collective action waiver by which the employee or applicant waives any right to be a representative for, or member of, a class or collective action lawsuit against LogistiCare. An Administrative Law Judge and a three-member panel of the National Labor Relations Board concluded that the waiver violates Section 8(a)(1) of the National Labor Relations Act. Because we conclude, under our binding precedent, that the waiver does not violate Section 8(a)(1) explicitly, and because we conclude that the waiver cannot otherwise be reasonably understood to violate the Act, we GRANT LogistiCare's petition for review and DENY the Board's cross-petition for enforcement.

I.

LogistiCare requires its employees and applicants for employment to sign a "Class Action and Collective Action Waiver" in order to be eligible for employment. The waiver provides:

Class Action and Collective Action Waiver

Class and Collective action lawsuits have been abused recently by trial lawyers forcing American Companies to pay large settlements, not because the cases have merit or because the Company violated any laws, but because the suits are too expensive to litigate and the company is left with no reasonable alternative. Class and Collective action suits primarily benefit the trial lawyers and rarely accomplish any other objective. There are more effective ways to protect your individual employment related rights than through a Class or Collective action law suit. Your signature on this document indicates that you agree to waive any right you may have to be a member of a Class or Collective action lawsuit or a representative of a Class or Collective action lawsuit against the Company.

I hereby acknowledge and understand that as a condition of my employment: [1] I am waiving my right to have a trial by jury to resolve any lawsuit related to my application or employment with the Company; [2] I am waiving my right to participate as a member of a Class or Collective action lawsuit and/or serve as a class representative of similarly situated employees in any lawsuit against the company.¹

One applicant who signed the waiver brought an unfair-labor-practice charge with the National Labor Relations Board. The Board in turn brought a complaint alleging that LogistiCare violated Section 8(a)(1) of the National Labor Relations Act, 29 U.S.C. § 158(a)(1) (NLRA or Act), by requiring employees and applicants to sign the waiver. In particular, the Board alleged that: (1) the waiver's prohibition on engaging in class or collective litigation violates Section 8(a)(1) of the NLRA by infringing rights protected by Section 7 of the Act; and (2) the waiver independently violates Section 8(a)(1) because employees would reasonably interpret the waiver to restrict their right to file charges with the Board.

The dispute was first heard by an Administrative Law Judge, who accepted both of the Board's grounds for finding a Section 8(a)(1) violation. In a two-to-one decision, a three-member panel of the Board affirmed the ALJ's order. The Board first concluded that Section 7 of the Act guarantees employees the right to participate in class or collective actions. In so doing, it distinguished our decisions in D.R. Horton, Inc. v. NLRB , 737 F.3d 344 (5th Cir. 2013) and Murphy Oil USA, Inc. v. NLRB , 808 F.3d 1013 (5th Cir. 2015) because the waivers in those cases were contained within arbitration agreements, which are governed by the Federal Arbitration Act, 9 U.S.C. § 1, et seq . Rather than relying on these cases, the Board looked to its own decision in Convergys Corporation, et al. , 363 NLRB No. 51 (2015).² The Board next concluded that the waiver is "independently unlawful" because "employees would reasonably read the rule as restricting their right to file unfair labor practice charges with the Board." Member Miscimarra dissented on both issues.

Having found two Section 8(a)(1) violations, the Board ordered LogistiCare to cease and desist from the unlawful conduct and to take steps to notify all applicants and current employees that the waiver was no longer enforceable. LogistiCare petitioned for review of the Board's order and the Board cross-petitioned for enforcement.³

II.

We review the Board's factual findings under a substantial evidence standard. Flex Frac Logistics, L.L.C. v. NLRB , 746 F.3d 205, 207 (5th Cir. 2014) (quoting Sara Lee Bakery Grp., Inc. v. NLRB , 514 F.3d 422, 428 (5th Cir. 2008) ). Substantial evidence is such relevant evidence "sufficient for a reasonable mind to accept as adequate to support [the] conclusion"; it is "more than a mere scintilla and less than a preponderance." Id . (alteration omitted). While we review the Board's legal conclusions de novo , we will "enforce the Board's order if its construction of the statute is reasonably defensible." Murphy Oil , 808 F.3d at 1017 ; Pattern Makers' League of N. Am., AFL-CIO v. NLRB , 473 U.S. 95, 114, 105 S.Ct. 3064, 87 L.Ed.2d 68 (1985).

III.

Section 8(a)(1) of the NLRA provides that "[i]t shall be an unfair labor practice for an employer ... to interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in [Section 7]." 29 U.S.C. § 158(a)(1). Section 7 of the Act provides, in relevant part, that employees "shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection...." 29 U.S.C. § 157.

Determining whether an employer's action infringes a Section 7 right—and therefore violates Section 8(a)(1)—requires a two-step inquiry. First, we must determine "whether the [employer's conduct] explicitly restricts activities protected by Section 7." Flex Frac , 746 F.3d at 208–09 (emphasis omitted). Second, even if the employer's action does not "explicitly" infringe on a Section 7 right, it still violates Section 8(a)(1) if, as relevant here, "employees would reasonably construe the language to prohibit Section 7 activity[.]" Id . at 209 ; see also D.R. Horton , 737 F.3d at 363 ("[A] company nonetheless violates section 8(a)(1) if employees would reasonably construe the language to prohibit section 7 activity."); Murphy Oil , 808 F.3d at 1019 (same).

A.

The Board first determined that the waiver violates Section 8(a)(1) "explicitly." In particular, it concluded that an employee's right under Section 7 "to engage in other concerted activities" includes participation in class or collective action litigation, and so the waiver's prohibition of this activity "interfere[s]" with this right in violation of Section 8(a)(1). See 29 U.S.C. § 158(a)(1).

We addressed this precise issue in Convergys Corporation v. NLRB , No. 15-60860, 866 F.3d 635, 2017 WL 3381432 (5th Cir. Aug. 7, 2017). In that case, we held that our binding decision in D.R. Horton holds that Section 7 does not confer a substantive right to participate in class or collective action litigation and therefore forecloses the Board's argument. Convergys , No. 15-60860, 866 F.3d at 637–40. Because we are bound by our decision in D.R. Horton , we hold that the Board erred in concluding that the waiver violates Section 8(a)(1) explicitly.

B.

The Board also determined that the waiver independently violates Section 8(a)(1) because employees would reasonably interpret the waiver to restrict their right to file charges with the Board. We have held that language that does not violate Section 8(a)(1) explicitly might still do so if "employees would reasonably construe the language to prohibit Section 7 activity." Flex Frac , 746 F.3d at 209. In undertaking this inquiry, "we may not presume that a workplace rule impermissibly interferes with employees' right to exercise their Section 7 rights," id . ; nor is it "enough that [the language] merely could possibly be read that way." NLRB v. Arkema, Inc. , 710 F.3d 308, 318 (5th Cir. 2013). Rather, it must actually "be reasonable for employees to interpret the [language] to prohibit Section 7 activities." Id . And in making this determination, "we ‘must refrain from reading particular phrases in isolation.’ " Flex Frac , 746 F.3d at 209 (quoting Lutheran Heritage Village-Livonia , 343 NLRB 646, 646 (2004) ).

In this case, the Board determined that the waiver is "independently unlawful" because "employees would reasonably read the rule as restricting their right to file unfair labor charges with the Board." LogistiCare agrees that Section 7 confers a right to file charges with the Board, but it contends that the waiver cannot reasonably be understood to infringe this right.

In D.R. Horton and Murphy Oil , we considered whether certain class and collective action waivers would be reasonably understood to prohibit bringing charges to the Board. D.R. Horton involved an arbitration agreement by which the employees "waive[d] all rights to trial in court before a judge or jury on all claims between them" and agreed that "all disputes and claims" would "be determined exclusively by final and...