Murphy Oil USA, Inc.: NLRB Holds On Class Action Arbitration Agreements

James Michalski is a Partner in our Los Angeles office.

NLRB Reaffirms Its 2012 D.R. Horton Ruling Despite Strong Dissent and Adverse Courts of Appeals Decisions

HIGHLIGHTS:

The National Labor Relations Board in Murphy Oil USA, Inc. and Sheila M. Hobson refused to back away from its controversial 2012 ruling in D.R. Horton, Inc. finding class action waivers unenforceable. A clear resolution of the issue of class action waiver enforceability under the National Labor Relations Act (NLRA) likely will not occur until the U.S. Supreme Court reviews the question. The National Labor Relations Board (Board) in Murphy Oil USA, Inc. and Sheila M. Hobson1 (Murphy Oil) refused to back away from its controversial 2012 ruling in D.R. Horton, Inc. and Michael Cuda2 (D.R. Horton) finding class action waivers unenforceable. The Board's opinion was filed on Oct. 28, 2014. Instead, a bare three-member majority reaffirmed D.R. Horton over a vigorous dissent and in defiance of adverse judicial decisions of the U.S. Courts of Appeals for the Second, Fifth and Eighth Circuits - all of which have rejected D.R. Horton. A clear resolution of the issue of class action waiver enforceability under the National Labor Relations Act (NLRA) likely will not occur until the U.S. Supreme Court reviews the question.

Factual Background About Murphy Oil Case

Murphy Oil USA, Inc. (Company) operates more than 1,000 retail fueling stations in 21 states. Prior to March 6, 2012, the Company required all job applicants and current employees, as a condition of employment, to sign a "Binding Arbitration Agreement and Waiver of Jury Trial" (Agreement) wherein they each agreed to arbitrate any employment claims individually with the Company. Importantly, and relevant to the decision, applicants and employees signing the Agreement thereby "waive" their right to commence, be a party to, or act as a class member in any class or collective action in any court action or arbitration.3

Nonetheless, four Company employees filed a federal collective action under the Fair Labor Standards Act (FLSA). The complaint alleged that the Company failed to pay overtime and pay for various required work-related activities performed off the clock, including driving to the fuel stations of competitors to monitor fuel prices and check the accuracy of their signage. In July 2010, the Company filed a motion to compel arbitration on an individual basis and to dismiss the FLSA collective action based on the...