Once again, a case named Brown has produced an arbitration ruling that is being greeted favorably by advocates for workers and consumers. See Brown v. Citicorp, No. 12-0062 (D. Idaho Feb. 21, 2013) (order denying motion to compel arbitration and to dismiss).
In Brown v. Citicorp, a federal district court has followed the National Labor Relations Board’s (NLRB) holding in In re D.R. Horton, Inc. that an employee’s lawsuit seeking a collective action under the federal Fair Labor Standards Act (FLSA) is “concerted action” protected by Section 7 of the National Labor Relations Act (NLRA). As such, enforcement of an arbitration clause relating to such a lawsuit would be precluded. See order at 5. Because enforcing the at-issue arbitration clause would materially impede the plaintiff’s ability to redress employee rights under the FLSA, the Brown v. Citicorp court held the clause unenforceable, stating, “[a] contract that violates public policy must not be enforced.” Order at 6-7.
Like many defendants in non-NLRB proceedings, Citicorp argued that D.R. Horton is inapplicable, contending that it “is not a valid decision because only two Board members joined in the decision.” Order at 5, n.2. However, the Brown v. Citicorp court rejected this argument, reasoning that “[t]he [NLRB’s] interpretation in Horton of Section 7 of the NLRA is rational and consistent with the Act: A collective action seeking recovery of wages for off-the-clock work falls easily within the language of Section 7 protecting ‘concerted action’ brought for the ‘mutual aid and protection’ of the employees.” On that basis, the court concluded that Citicorp’s proffered arbitration agreement “waives [the plaintiff’s] Section 7 rights to bring an FLSA collective action.” Order at 6.
Mirroring the NLRB in D.R. Horton, the court explained that “Citicorp’s arbitration agreement does more than merely waive Brown’s right to a procedural remedy; it bars her from asserting a substantive right that is critical to national labor policy.” Order at 6.