COSTA MESA CARS, INC., D/B/A AUTONATION HONDA COSTA; MESA F/K/A POWER HONDA COSTA MESA AND AUTONATIO

National Labor Relations Board - Board Decisions

Aug 6, 2018

366 NLRB No. 154 (N.L.R.B. 2018)

366 NLRB No. 154
NOTICE: This opinion is subject to formal revision before publication in the
bound volumes of NLRB decisions. Readers are requested to notify the Ex-
ecutive Secretary, National Labor Relations Board, Washington, D.C.
20570, of any typographical or other formal errors so that corrections can
be included in the bound volumes.
Costa Mesa Cars, Inc. d/b/a Autonation Honda Costa
Mesa; f/k/a Power Honda Costa Mesa and Au-
tonation, Inc. and Michael Applebaum. Case
21–CA–123072
August 6, 2018
DECISION AND ORDER
BY MEMBERS PEARCE, MCFERRAN, AND KAPLAN
On March 14, 2016, Administrative Law Judge Elea-
nor Laws issued the attached decision. The Respondents
filed exceptions and a supporting brief, the General
Counsel filed an answering brief, and the Respondents
filed a reply brief. The General Counsel filed a cross-
exception and supporting brief, and the Respondents
filed an answering brief.
The National Labor Relations Board has delegated its
authority in this proceeding to a three-member panel.
The judge found, applying the Board’s decisions in D.
R. Horton, Inc., 357 NLRB 2277 (2012), enf. denied in
relevant part 737 F.3d 344 (5th Cir. 2013), and Murphy
Oil, 361 NLRB 774 (2014), enf. denied in relevant part,
808 F.3d 1013 (5th Cir. 2015), that Respondent AutoNa-
tion Honda Costa Mesa (Costa Mesa Honda) violated
Section 8(a)(1) of the National Labor Relations Act by
maintaining and enforcing an arbitration agreement that
seeks to have employees waive their rights to pursue
class or collective actions involving employment-related
claims in all forums, whether arbitral or judicial. The
judge also found that Respondent AutoNation violated
Section 8(a)(1) of the Act by maintaining the arbitration
agreement at its indirectly-owned dealerships, including
Costa Mesa Honda, and by enforcing the arbitration
agreement against Charging Party Michael Applebaum.
Recently, the Supreme Court issued a decision in Epic
Systems Corp. v. Lewis, 584 U.S. __, 138 S. Ct. 1612
(2018), a consolidated proceeding including review of
court decisions below in Lewis v. Epic Systems Corp.,
823 F.3d 1147 (7th Cir. 2016), Morris v. Ernst & Young,
LLP, 834 F.3d 975 (9th Cir. 2016), and Murphy Oil USA,
Inc. v. NLRB, 808 F.3d 1013 (5th Cir. 2015). Epic Sys-
tems concerned the issue, common to all three cases,
whether employer-employee agreements that contain
class- and collective-action waivers and stipulate that
employment disputes are to be resolved by individual-
ized arbitration violate the National Labor Relations Act.
Id. at __, 138 S. Ct. at 1619–1621, 1632. The Supreme
Court held that such employment agreements do not vio-
late this Act and that the agreements must be enforced as
written pursuant to the Federal Arbitration Act. Id. at __,
138 S. Ct. at 1619, 1632.
The Board has considered the decision and the record
in light of the exceptions and briefs. In light of the Su-
preme Court’s decision in Epic Systems, which overrules
the Board’s holding in Murphy Oil, we conclude that the
complaint must be dismissed.1
ORDER
The complaint is dismissed.
Dated, Washington, D.C. August 6, 2018
______________________________________
Mark Gaston Pearce, Member
______________________________________
Lauren McFerran, Member
______________________________________
Marvin E. Kaplan, Member
(SEAL) NATIONAL LABOR RELATIONS BOARD
Lindsay R. Parker, Esq., for the General Counsel.
Lonnie D. Giamela, Esq., for the Respondents.
DECISION
STATEMENT OF THE CASE
ELEANOR LAWS, Administrative Law Judge. This case was
tried in Los Angeles, California, on December 7, 2015. At that
time, I admitted into the record a joint stipulation of facts and
numerous joint exhibits. (Jt. Exhs. 1, 2.1)
The original charge in this proceeding was filed by Michael
Applebaum (the Charging Party or Applebaum) through his
attorney on February 21, 2014, and an amended charge was
filed on May 27, 2014.2 The General Counsel issued the origi-
nal complaint on September 21, 2015, and an amendment to the
complaint was admitted into the record at the hearing on De-
cember 7. (GC Exh. 2.) Costa Mesa Cars, Inc. and AutoNa-

1 We therefore find no need to address other issues presented in the
case or raised by the parties’ exceptions.
1 Abbreviations used in this decision are as follows: “Jt. Exh.” for
joint exhibit; “GC Exh.” for General Counsel’s exhibit; “GC Br.” for
the General Counsel’s brief; “R. Br.” for the Respondents’ brief. Alt-
hough I have included several citations to the record to highlight par-
ticular exhibits, I emphasize that my findings and conclusions are based
not solely on the evidence specifically cited, but rather are based my
review and consideration of the entire record.
2 Applebaum withdrew the charges but the General Counsel persist-
ed with the complaint.
2 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
tion, Inc. (the Respondents3) filed a timely answer denying all
material allegations and setting forth defenses.
This is another case applying the Board’s decisions in D. R.
Horton, Inc., 357 NLRB 2277 (2012), enf. granted in part and
denied in part, 737 F.3d 344 (5th Cir. 2013), and Murphy Oil
USA, Inc., 361 NLRB 774 (2014). Specifically, the complaint
alleges the Respondents violated the National Labor Relations
Act (the Act) by maintaining and enforcing agreements requir-
ing employees to resolve employment-related disputes through
individual binding arbitration (the “Agreements”).4
On the entire record, and after considering the briefs filed by
the General Counsel and the Respondents, I make the following
FINDINGS OF FACT
I. CORPORATE STRUCTURE
Respondent AutoNation is a holding company, and is the
parent company of Respondent CMC, among other dealerships.
AutoNation has a 100 percent ownership interest in Auto Hold-
ing LLC, a Delaware limited liability company. Auto Holding
LLC has a 100 percent ownership interest in AutoNation Enter-
prises Inc., a Florida Corporation. Auto Nation Enterprise, Inc.
wholly owns Costa Mesa Cars Holding, LLC, a Delaware lim-
ited liability company. Costal Mesa Cars Holding, LLC owns
Respondent CMC. Auto Nation Enterprises, Inc., also wholly
owns AutoNation Dealership Holding Corp., a Florida Corpora-
tion. AutoNation Dealership Holding Corp. wholly owns Au-
toNation Western Regional Management, LLC, a Delaware
limited liability company. (GC Exh. 7; Tr. 24–27.)
Respondent AutoNation has no employees for federal in-
come tax purposes. Respondent AutoNation does not comingle
funds or other assets with its indirectly owned dealerships;
rather the funds of separate corporate entities are segregated.
AutoNation treats the dealerships as independent corporations.
CMC is a distinct and separate corporate entity from AutoNa-
tion. CMC keeps its own books and records, has its own federal
tax identification number and maintains its own bank account.
The premises where CMC’s employees work is not owned or
leased by AutoNation. (Jt. Exh. 1 at Exh. 7.)
At all relevant times, Coleman G. Edmunds has been the
senior vice president, Deputy General Counsel, and assistant
secretary of Respondent AutoNation. He has been an officer of
AutoNation since 1998. (Jt. Exh. 1 at Exh. 7.) Aaron Duport
has been CMCs’ general manager during all relevant times, and
an agent of CMC.5 (Jt. Exh. 1 ¶ 6.)
II. JURISDICTION
At all material times, Respondent Costa Mesa Cars, Inc.
(CMC), a California corporation with a place of business in
Costa Mesa, California, has been engaged in the operation of an

3 Costa Mesa Cars and AutoNation are collectively referred to as the
Respondents in this decision when discussing matters relating to both
of them. Each entity is referred to by its name when needed in order to
discuss distinctions between them.
4 The plural term “Agreements” is used because the amended com-
plaint includes agreements similar to arbitration agreement distributed
at CMC. (GC Exh. 2.) With regard to enforcement, however, only
Applebaum’s agreement is at issue.
5 Duport is mistakenly identified as Dupree in the complaint.
automobile dealership and service shop. The parties admit, and
I find, that at all material times, Respondent Costa Mesa Cars
has been an employer engaged in commerce within the mean-
ing of Section 2(2), (6), and (7) of the Act.
At all material times Respondent AutoNation, Inc. (AutoNa-
tion) a Delaware corporation, with headquarter offices located
in Fort Lauderdale, Florida, has, through its indirect subsidiar-
ies including Respondent CMC, been engaged in the business
of owning automobile dealerships located throughout the Unit-
ed States. Respondent AutoNation admits that during a repre-
sentative period, in conducting its business operations, it de-
rived gross revenues in excess of $500,000 and purchased and
received at its headquarter offices in Fort Lauderdale, Florida
goods valued in excess of $50,000 directly from points outside
the State of Florida. In its answer, however, Respondent Au-
toNation denied it is an employer engaged in commerce.6 (GC
Exh. 1(k).) The parties later stipulated that AutoNation is an
employer engaged in commerce within the meaning of Section
2(2), (6), and (7) of the Act. (Jt. Exh. 1 ¶ 5(b).) At the hearing,
however, Respondent AutoNation contended it has no employ-
ees. More specifically, during opening statements, the Re-
spondent stated that AutoNation “does not employ a single
individual.” (Tr. 14.) The only witness called at the hearing,
Dan Best, the vice president of human resources for AutoNa-
tion Corporate Management, LLC, testified that AutoNation
has no employees. (Tr. 29–30.)
While factual stipulations are binding, stipulations regarding
questions of law are not. See Swift & Co. v. Hocking Valley Ry.
Co., 243 U.S. 281, 289 (1917). Because Respondent AutoNa-
tion denied it was an employer under the Act in its answer,
stated it had no employees in its opening statement, and pre-
sented witness testimony on the issue, I decline to bind Re-
spondent AutoNation to the stipulation as to the legal conclu-
sion that it is an employer under the Act.
The General Counsel argues that nothing in the Act’s defini-
tion of “employer” requires it to have employees. The Act, at
Section 2(2), defines “employer” as follows:
The term “employer” includes any person acting as an agent
of an employer, directly or indirectly, but shall not include the
United States or any wholly owned Government corporation,
or any Federal Reserve Bank, or any State or political subdi-
vision thereof, or any person subject to the Railway Labor Act
[45 U.S.C. § 151 et seq.], as amended from time to time, or
any labor organization (other than when acting as an employ-
er), or anyone acting in the capacity of officer or agent of such
labor organization.
The Board, in Operating Engineers Local 487 Health Fund,
308 NLRB 805, 807–808 (1992), ruled that an entity must not
only have employees, but must employ statutory employees to
be considered an employer under the Act. Section 2(3) of the
Act defines “employee” as follows:

6 The General Counsel asserts that the Respondents admitted Auto-
Nation is an employer in its answer. I note, however, that the Respond-
ents denied complaint allegation 4(b), which alleges that “[a]t all mate-
rial times, Respondent AutoNation has been an employer engaged in
commerce within the meaning of Section 2(2), (6), and (7) of the Act.”
(GC Exhs. 1(g) and (k).)
COSTA MESA CARS, INC. D/B/A AUTONATION HONDA COSTA MESA; INC. 3
F/K/A POWER HONDA COSTA MESA AND AUTONATION
The term “employee” shall include any employee, and shall
not be limited to the employees of a particular employer, un-
less this subchapter explicitly states otherwise, and shall in-
clude any individual whose work has ceased as a consequence
of, or in connection with, any current labor dispute or because
of any unfair labor practice, and who has not obtained any
other regular and substantially equivalent employment, but
shall not include any individual employed as an agricultural
laborer, or in the domestic service of any family or person at
his home, or any individual employed by his parent or spouse,
or any individual having the status of an independent contrac-
tor, or any individual employed as a supervisor, or any indi-
vidual employed by an employer subject to the Railway La-
bor Act [45 U.S.C. 151 et seq.], as amended from time to
time, or by any other person who is not an employer as herein
defined.
The Supreme Court, in NLRB v. Bell Aerospace Co. Division,
416 U.S. 267 (1974), held that managers are also excluded from
the definition of “employee” under the Act.
The General Counsel asserts that the signature of Coleman
Edmunds, who is an officer of AutoNation and its Deputy Gen-
eral Counsel, appears on the Agreements. While this is true, it
does not establish that Edmunds is a statutory employee of
AutoNation. Because the General Counsel did not prove Au-
toNation has any statutory employees, I find the burden to es-
tablish AutoNation is a statutory employer, standing alone, has
not been met.
The General Counsel contends that AutoNation was a direct
participant in the alleged distribution and maintenance of the
Agreements. Under the direct participation theory of liability,
“a parent corporation may be held liable for the wrongdoing of
a subsidiary where the parent directly participated in the subsid-
iary’s unlawful actions.” Esmark Inc. v. NLRB, 887 F.2d 739,
756 (7th Cir. 1989). A parent company may be derivatively
liable for a subsidiary’s actions when the parent or other affili-
ated corporation disregards the separateness of its subsidiary or
affiliated corporations and exercises direct control over specific
transactions. American Electric Power Co., 302 NLRB 1021,
1023 (1991), enf. mem. 976 F.2d 725 (4th Cir. 1992). In such
cases, the Board may “permissibly find that a parent corpora-
tion should not be permitted to act through its subsidiaries to
the detriment of the subsidiaries’ workforce and yet escape
liability for acts which it has mandated.” Esmark Inc., supra at
757; See also Smithfield Foods, 347 NLRB 1225 fn. 2 (2006);
See also American Electrical Power Co., 302 NLRB 1021,
1023 (1991).
Though it does not use any particular term of art, the com-
plaint clearly alleges that Respondent AutoNation directly
maintained the arbitration agreements, participated in the action
to remove the Charging Party’s lawsuit to federal court, and
participated in filing the motion to compel arbitration. “All that
is requisite in a valid complaint before the Board is that there
be a plain statement of the things claimed to constitute an unfair
labor practice that the respondent may be put upon his de-
fense.” American Newspaper Publishers Assn. v. NLRB, 193
F.2d 782, 800 (7th Cir. 1951), affd. 345 U.S. 100 (1953), quot-
ing from NLRB v. Piqua Munising Wood Products Co., 109
F.2d 552, 557 (6th Cir. 1940). Accordingly, I find that if the
General Counsel can establish AutoNation directly participated
in the conduct ascribed to it, jurisdiction may attach to it as a
direct participant with its subsidiary employers, including
CMC, in the alleged violations. This is discussed below.7
III. FACTUAL BACKGROUND
A. The Arbitration Agreements
On April 19, Peter Vano, AutoNation Western Region Man-
agement, LLC’s senior director for human resources, sent an
email to the general managers of dealerships in California. The
email stated:
The Company is rolling out an update to the California Arbi-
tration Agreement to all AutoNation Associates in California.
Please review the attachment which includes the updated
agreement, along with a memorandum which provides back-
ground information and roll-out instructions for all California
Associates.
Your help is needed to roll out this updated agreement to all
Associates in your store (excluding any Associates covered
by a collective bargaining agreement) through the email dis-
tribution process outlined below. We ask that you sign the
updated agreement as well.
Roll-Out To All CA Store Associates
Promptly email your store’s Department Heads using the
attached Department Head email template to:
o Notify them of this distribution process and request
that they sign the updated agreement
o Instruct them to promptly email their Department
Associates using the attached Associate email template
o Please be sure the AutoNation Arbitration Program
attachment is included.
• Ensure that management and/or Region HR follow up
in-person/one-on-one with Associates who have not re-
turned the agreement after one week— providing a courte-
sy copy of the Department Head’s email, the memorandum
and the agreement, since some Associates may not have relia-
ble or regular access to email.
• Direct any questions from Associates to Region HR (as not-
ed in the attached memorandum).
Secure all signed agreements returned to you. Please be sure
each agreement includes the Associate’s PRINTED name

7 The complaint also asserts that Duport is an agent of AutoNation.
I find that the General Counsel has established this allegation. As
discussed herein, the general managers, including Duport, carried out
instructions to disseminate and collect arbitration agreements from
employees bearing AutoNation’s officer’s signature. The other general
managers were not alleged as agents of AutoNation, however, so in the
event a reviewing authority finds AutoNation’s liability is limited to an
agency theory based on Duport’s actions, the remedy portion of this
complaint would only apply to Costa Mesa Cars and AutoNation.
4 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
and date of signing as well.
• Deliver all signed agreements to Region HR.
Target Due Date:
• Monday, April 29, 2013 to obtain signed agreements.
• Monday, May 6, 2013, to deliver all signed agreements to
Region HR.
(GC Exh. 6, emphasis in original.) Vano instructed the general
managers to contact him or their regional human resources
representatives with any questions. He included a template for
the general managers to pass on to department heads, stating:
Department Heads:
The Company is rolling out an update to the California Arbi-
tration Agreement to all AutoNation Associates in California.
Review the attachment which includes the updated agree-
ment, along with a memorandum which provides background
information and roll-out instructions for all California Associ-
ates.
Roll-Out to All Department Associates
Promptly email (preferably via group email) your Department
Associates regarding this roll-out using the attached email
template. Be sure the AutoNation Arbitration Program at-
tachment is included.
Follow up in-person/one-on-one with Associates who have
not returned the agreement after one week. Provide a courtesy
copy of your email, the memorandum and agreement (two
versions), since some Associates may not have reliable or
regular access to email. Other store management and/or Re-
gion HR may assist with this follow-up as appropriate.
Direct any questions from Associates to Region HR (as noted
in the attached memorandum). Secure all signed agreements
provided to you. Please be sure each agreement includes the
Associates PRINTED name and date of signing as well.
Deliver all signed agreements to my attention.
Due Date: Monday April 29, 2013, to complete the roll-out
and deliver signed agreements.
(Tr. 24; GC Exh. 6.)
The arbitration agreement (Agreement) attached to Vano’s
email provides:
ARBITRATION AGREEMENT
PLEASE TAKE TIME TO READ AND CONSIDER THIS
AGREEMENT
Arbitration of Disputes. Both employee signing below (the
‘‘Employee”) and the Company (as defined below) agree that
any claim, dispute, and/or controversy between them which
would otherwise require or allow resort to any court or other
governmental dispute resolution forum arising from, or relat-
ed to, or having any relationship or connection whatsoever
with Employee’s seeking employment with, employment by,
termination of employment from, or other association with
the Company, shall be resolved through mandatory, neutral
binding arbitration on an individual basis only. For purposes
of this agreement, the “Company’’ is defined as the entity
Employee is employed by, together with its parents, subsidiar-
ies, affiliates, predecessors, successors and assigns, and each
of their respective owners, directors, officers, managers, em-
ployees, vendors, and agents. This Agreement covers all theo-
ries and disputes, whether styled as an individual claim, class
action claim, private attorney general claim or otherwise, and
includes, but is not limited to, any claims of discrimination,
harassment, breach of contract, tort, or alleged violations of
statute, regulation or ordinance, or any claims in equity. Any
arbitration hereunder shall be governed by the Federal Arbitra-
tion Act (9 U.S.C.§1 et seq., hereinafter the “FAA”) and not by
any state law concerning arbitration, and, except as modified by
this Agreement, In conformity with the Federal Rules of Evi-
dence, the Federal Rules of Civil Procedure, and the substantive
law governing the claims pled. This Agreement shall not be
construed to allow or permit the consolidation or joinder of
other claims or controversies involving any other employees,
and no matter whatsoever will proceed as a class action, col-
lective action, private attorney general action or any similar
representative action. No arbitrator shall have the authority
under this agreement to order any such class, representative
or similar action without the express written consent and
agreement of both employee and the Company. The class ac-
tion waiver referenced in this paragraph does not waive Em-
ployee’s rights under Section 7 of the National Labor Relations
Act. Employee will not be retaliated against for concertedly
challenging the validity of the class action waiver through class
or collective actions seeking to enforce Employee’s employ-
ment rights.
Claims Excluded from Binding Arbitration, The sole excep-
tions to the mandatory arbitration provision are claims arising
under the National Labor Relations Act which are brought be-
fore the National Labor Relations Board, claims for medical
and disability benefits under Workers’ Compensation, claims
filed with the state for Unemployment Compensation, and any
claims. or disputes arising out of any other written contracts
between Employee and the Company where the Contract spe-
cifically· provides for resolution through the courts. Nothing
herein shall prevent Employee from filing and pursuing admin-
istrative proceedings only before the U.S. Equal Employment
Opportunity Commission or an equivalent state agency (alt-
hough If Employee chooses to pursue a claim following the
exhaustion of such administrative remedies, that claim would
be subject to arbitration).
Waiver of Right to Participate in Class Actions. Employee
understands and acknowledges that the terms of this· Agree-
ment include a waiver of any substantive or procedural rights
that Employee may have to bring or participate in an action
COSTA MESA CARS, INC. D/B/A AUTONATION HONDA COSTA MESA; INC. 5
F/K/A POWER HONDA COSTA MESA AND AUTONATION
on a class, collective, private attorney general, representative
or other similar basis. This class action waiver does not take
away or restrict the right of Employee to pursue Employee’s
own claims, but only requires that any such claims be pur-
sued in Employee’s own individual capacity, rather than on a
class, collective, private attorney general, representative or
similar basis.
Severability. If any portion of this Agreement is deemed in-
valid or unenforceable, It shall not invalidate the other provi-
sions of this Agreement; provided however, that if the provi-
sion prohibiting class wide arbitration is deemed invalid or
unenforceable, then this entire Arbitration Agreement shall be
null and void.
Exclusive Agreement. Any agreement contrary to or modify-
ing, the foregoing arbitration provisions must be· entered into,
in writing, by the President of the company oral representations
made before or after Employee is hired do not alter this Agree-
ment.
Entire Agreement. This Agreement supersedes any and all
prior agreements regarding arbitration, including, but not lim-
ited to, any arbitration provisions in employment applications.
MY SIGNATURE ATTESTS TO THE FACT THAT I
HAVE READ, UNDERSTAND, AND AGREE TO BE
LEGALLY BOUND BY ALL OF THE ABOVE TERMS. I
FURTHER UNDERSTAND THAT THIS AGREEMENT
REQUIRES ME TO ARBITRATE ANY AND ALL
DISPUTES THAT ARISE OUT OF MY EMPLOYMENT;
EXCEPT AS EXPRESSLY PROVIDED OTHERWISE
HEREIN.
(Jt. Exh. 1 at Exh. 6, emphasis in original.) CMC has main-
tained the Agreement since August 2013. (Jt. Exh. 1 ¶ 7.)
The employees at AutoNation’s California subsidiaries re-
ceived the following memorandum with the Agreement:
For over a decade, AutoNation has maintained a successful
Employee Arbitration Program at all AutoNation dealerships
and other entities. The Company developed this program to
promote a simpler, friendlier, less-costly system of alternative
dispute resolution to resolve disputes between the Company
and our Associates that may arise out of the employment rela-
tionship. As part of this program, revisions are made to our
arbitration agreements from time to time.
Enclosed is the most recent update to the California Arbitra-
tion Agreement (in both English and Spanish versions) which
is being distributed to all AutoNation Associates in California.
• Please review the Agreement and direct any ques-
tions to your Region Human Resources Representative
for your location. Your General Manager or Depart-
ment Head can provide contact information if needed.
It is your decision whether to sign the Agreement.
• Signed Arbitration Agreements (English or Spanish
version) should be returned to your dealership’s De-
partment Head (or Stand-Alone Collision Manager as
applicable). Please be sure to also print your name and
date the Agreement as indicated.
Signed Arbitration Agreements should be returned by no later
than April 29, 2013. Your dealership will follow up directly in
approximately one week to ensure that you received this
communication.
(GC Exh. 6.)
Since August 25, 2013, certain indirectly-owned dealerships
of Respondent AutoNation have utilized identical versions of
the Agreement. Edmunds’ signature, on behalf of the “Compa-
ny”, appears on those Agreements as well. (Jt. Exh. 1 at Exh.
7.) At least one current employee from each indirectly owned
subsidiary dealership of Respondent AutoNation has signed the
Agreement or a similar Agreement that contains provisions
requiring employees to resolve certain employment-related
disputes exclusively through individual arbitration proceedings
and to relinquish any right they have to resolve disputes
through collective or class action.8 (Jt. Exh. 1 ¶ 9.)
B. Charging Party’s Actions and Litigation
Applebaum received the Agreement at work in May 2013.
He did not understand it, so he did not immediately sign it.
According to Applebaum, the same afternoon he received the
Agreement, Duport called him, asked why he had not signed
the Agreement, and told him he needed to sign it to keep his
job. Applebaum said he wanted to have his family attorney
review it. He took the Agreement home and transmitted it for
review by his attorney. Before his attorney could review the
Agreement, Duport told Applebaum that he was getting pres-
sure from “corporate” to sign the Agreement and he needed to
sign it immediately if he wanted to remain gainfully employed.
(Jt. Exh. 1 at Exhs. 6, 7.) Duport denies making the statements
Applebaum attributes to him. (Jt. Exh. 2 ¶ 7.)
Applebaum signed the Agreement on May 6, 2013. An im-
age of Edmunds’ signature is also on the Agreement for the
“Company.” (Jt. Exh. 1 at Exh. 9.)
CMC terminated Applebaum’s employment in June 2013.9
On October 31, 2013, Applebaum filed a class action complaint
in the Orange County Superior Court of the State of California
against AutoNation and CMC, alleging wage-and-hour and
other violations on the part of CMC and AutoNation under state
law. (Jt. Exh. 1 at Exh. 10.) On December 11, attorneys for
AutoNation and CMC removed Applebaum’s complaint to the
U.S. District Court for the Central District of California, Case
8: 13-cv-0 1927-JVS-RNB. (Jt. Exh. 1 at Exh. 11.) On January
29, 2014, AutoNation and CMC jointly filed a motion to com-
pel arbitration of Applebaum’s claims. (Jt. Exh. 1 at Exh. 12.)
The parties filed various ensuing motions culminating in an

8 Signed agreements were retained at the National Payroll Center, a
third-party vendor service. The physical location for storing the
agreements is not material.
9 AutoNation had no involvement with Applebaum’s termination.
6 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
April 8, 2014, order from Judge James V. Selna granting the
Respondents’ motion to compel. (Jt. Exh. 1 at Exhs. 13–17.)
On January 28, 2015, Applebaum voluntarily dismissed his
lawsuit following settlement of his claims against the Respond-
ents. (Jt. Exh. 1 at Exh. 18.)
IV. DECISION AND ANALYSIS
A. The Agreements’ Prohibition on Class and Collective
Legal Claims
Complaint paragraphs 7 and 8 allege that the Respondents
have violated the Act by maintaining the Agreements, which
require employees to waive their right to resolution of employ-
ment-related disputes by collective or class action, in violation
of Section 8(a)(1) of the Act.
Under Section 8(a)(1), it is an unfair labor practice for an
employer to interfere with, restrain, or coerce employees in the
exercise of the rights guaranteed by Section 7 of the Act. The
rights Section 7 guarantee include the right “to form, join or
assist labor organizations, to bargain collectively through repre-
sentatives of their own choosing, and to engage in other con-
certed activities for the purpose of collective bargaining or
other mutual aid or protection . . .”
As a threshold issue, I must determine whether AutoNation
directly participated in maintaining the Agreements. I find that
Edmunds’ signature on the Agreements on the Respondents’
behalf demonstrates that AutoNation directly participated in
effectuating and maintaining the Agreements. No other man-
ager or supervisor for any of the subsidiaries is signatory to the
Agreements.10 In addition, subsidiary entities wholly owned by
AutoNation rolled out the Agreements, oversaw their imple-
mentation, and maintained them as work rules.11 Accordingly,
I find AutoNation may be held liable if the Agreements violate
the Act. Esmark Inc., supra; Smithfield Foods, supra.
When evaluating whether a rule, including an arbitration
agreement, violates Section 8(a)(1), the Board applies the test
set forth in Lutheran Heritage Village-Livonia, 343 NLRB 646
(2004). See U-Haul Co. of California, 347 NLRB 375, 377
(2006), enfd. 255 Fed.Appx. 527 (D.C. Cir. 2007); D. R. Hor-
ton, supra. Under Lutheran Heritage, the first inquiry is
whether the rule explicitly restricts activities protected by Sec-
tion 7. If it does, the rule is unlawful. If it does not, “the viola-
tion is dependent upon a showing of one of the following: (1)
employees would reasonably construe the language to prohibit
Section 7 activity; (2) the rule was promulgated in response to
union activity; or (3) the rule has been applied to restrict the
exercise of Section 7 rights.” Lutheran Heritage at 647.
Because the Agreements explicitly prohibit employees from
pursuing employment-related claims on a class or collective
basis, I find they violate Section 8(a)(1). The right to pursue

10 It would follow that if Edmunds’ signature does bind employees
of the subsidiaries to the agreement, and AutoNation must have partici-
pated in maintaining and enforcing the Agreements; otherwise nobody
signed the Agreements on behalf of Costa Mesa Cars or the other sub-
sidiaries.
11 The Respondents assert that there was not centralized control over
labor relations, interrelation of operations, or common management,
ownership, or financial control. These factors, however, go toward
single employer status, which is not alleged in the complaint.
concerted legal action, including class complaints, addressing
wages, hours, and working conditions falls within Section 7’s
protections. See, e.g., Murphy Oil USA, Inc., supra; D. R. Hor-
ton, supra;12 see also Eastex, Inc. v. NLRB, 437 U.S. 556, 566
(1978)(Section 7 protects employee efforts seeking “to improve
working conditions through resort to administrative and judicial
forums”); Spandsco Oil & Royalty Co., 42 NLRB 942, 948–
949 (1942); Salt River Valley Water Users Assn., 99 NLRB
849, 853–854 (1952), enfd. 206 F.2d 325 (9th Cir. 1953);
Brady v. National Football League, 644 F.3d 661, 673 (8th Cir.
2011) (“lawsuit filed in good faith by a group of employees to
achieve more favorable terms or conditions of employment is
‘concerted activity’ under §7 of the National Labor Relations
Act.”); Trinity Trucking & Materials Corp. v. NLRB, 567 F.2d
391 (7th Cir. 1977) (mem. disp.), cert. denied, 438 U.S. 914
(1978). Accordingly, an employer rule or policy that interferes
with such actions violates Section 8(a)(1). D. R. Horton, supra.;
Murphy Oil, supra; See also, e.g., Chesapeake Energy Corp.,
362 NLRB No. 80 (2015); Cellular Sales of Missouri, 362
NLRB No. 27 (2015); The Neiman Marcus Group, Inc., 362
NLRB No. 157 (2015); Countrywide Financial Corp., 362
NLRB No. 165 (2015); Leslie’s Pool Mart, Inc., 362 NLRB
No. 184 (2015).
The Respondents assert that as the lone named putative class
member, Applebaum, was not engaged in concerted activity.
Established caselaw instructs otherwise. Whether or not there
were named plaintiffs other than Applebaum is immaterial
since the Act “protects employees who engage in individual
action . . . with the objective of initiating or inducing group
action.” Mushroom Transportation Co. v. NLRB, 330 F.2d.
683, 685 (3d Cir. 1964). Applebaum’s class action lawsuit
sought to “enlist the support of fellow employees in mutual aid
and protection” and intended to “initiat[e] or induc[e] group
action” regarding alleged wage-and-hour violations against the
Respondents. Whitaker Corp., 289 NLRB 933 (1988). “Clear-
ly, an individual who files a class or collective action regarding
wages, hours or working conditions, whether in court or before
an arbitrator, seeks to initiate or induce group action and is
engaged in conduct protected by Section 7.” D. R. Horton,
supra, slip op. at 313; see also The Neiman Marcus Group, Inc.,
362 NLRB No. 157 (2015). I therefore find Applebaum was
engaged in protected concerted activity when he filed and pur-
sued his class action suit.
The Respondents further assert that the Agreements are vol-
untary. Even assuming Duport did not tell Applebaum he
would be terminated if he did not sign the Agreement, I still
find the Agreements were coercive. The instructions to Auto-
Nation’s general managers and department heads plainly re-
quire management or regional human resources to follow up
individually and in-person with employees who do not return a

12 The Board in Murphy Oil reexamined D. R. Horton, and deter-
mined that its reasoning and results were correct.
13 At footnote 5 in D. R. Horton, the Board, citing to court deci-
sions, notes, “Employees surely understand what several Federal courts
have recognized: that named plaintiffs run a greater risk of suffering
unlawful retaliation than unnamed class members.” As such, the Board
observed that “in a quite literal sense, named-employee-plaintiffs pro-
tect the unnamed class members.”
COSTA MESA CARS, INC. D/B/A AUTONATION HONDA COSTA MESA; INC. 7
F/K/A POWER HONDA COSTA MESA AND AUTONATION
signed Agreement within a week’s time. This requires man-
agement to track who returns the Agreements. It further sub-
jects employees who choose to protect their Section 7 right to
engage in class or collective litigation by not signing the
Agreement to a one-on-one, in-person follow-up discussion
with management. Finally, even if the Agreements are volun-
tary, they constitute an impermissible prospective waiver of
Section 7 rights. On Assignment Staffing Services, 362 NLRB
No. 189, slip op. at 1, 4–5 (2015).
Consistent with the Board’s precedent, I find the General
Counsel has met his burden to prove the Respondents violated
the Act as alleged in complaint paragraphs 7 and 8.
B. Enforcement of the Agreement
Complaint paragraph 9 alleges that the Respondents violated
Section 8(a)(1) of the Act by enforcing Applebaum’s Agree-
ment as detailed above.
As a threshold issue, I find that AutoNation directly partici-
pated in enforcing the Agreement. The record, detailed above,
is clear that attorneys for AutoNation and CMC jointly sought
removal of Applebaum’s lawsuit to federal court, jointly filed
the motion to compel arbitration, and participated in the ensu-
ing litigation resulting in that motion’s success.
It is well settled that an employer violates Section 8(a)(1) by
enforcing a rule that unlawfully restricts Section 7 rights. See,
e.g., NLRB v. Washington Aluminum Co., 370 U.S. 9, 16–17
(1962); Republic Aviation Corp. v. NLRB, 324 U.S. 793 (1945).
Here, it is undisputed that the Respondents enforced the
Agreement by filing a motion to compel individual arbitration
and related documents in Applebaum’s wage-and-hour lawsuit.
(Jt. Exh. 1 ¶ 14, 16, 18.)
C. Affirmative Defenses
The Respondents contend that Applebaum’s complaint is
time-barred because “Plaintiff failed to file his complaint with-
in six months of filing his charge with the Board.” (R Br. p.
20.) This misconstrues Section 10(b) of the Act, which pro-
vides that “no complaint shall issue based upon any unfair labor
practice occurring more than six months prior to the filing of
the charge with the Board.” Clearly, the Agreement was main-
tained and enforced within 6 months of the charge and the
amended charge. See PJ Cheese, Inc., 362 NLRB No. 177, slip
op. at 1 (2015). Accordingly, any statute of limitations argu-
ment fails.
The Respondents further asserts that the Board acted im-
properly by failing to give notice prior to revoking Memoran-
dum GC10-06 and by adopting a new rule without soliciting
public comments.14 This affirmative defense was not asserted
in the answer, and appears for the first time in the Respondents’
posthearing brief. Even considering it on its merits, however,
the Respondents’ contention fails. General Counsel Memoran-
da are not considered binding authority, and they do not consti-
tute Board procedure. My decision is based on Board and Su-

14 The Respondents assert other affirmative defenses in the answer
to the complaint, but did not argue any of them at the hearing or in
closing briefs.
preme Court caselaw, which of course is not governed by the
General Counsel’s position in any manner.
V. CONCLUSIONS OF LAW
(1) Respondent Costa Mesa Cars, Inc., is an employer with-
in the meaning of Section 2(6) and (7) of the Act and Respond-
ent AutoNation, Inc., is a holding company and CMC’s parent
company.
(2) The Respondents violated Section 8(a)(1) of the Act by
maintaining and enforcing arbitration agreements requiring all
employment-related disputes to be submitted to individual
binding arbitration.
(3) The Respondents violated Section 8(a)(1) of the Act by
asserting the arbitration agreement in litigation the Charging
Party brought against the Respondent in order to prevail on a
motion to compel arbitration.
(4) Respondent AutoNation is liable for violating Section
8(a)(1) of the Act because it was a direct participant with its
subsidiary CMC and other subsidiary dealerships in maintain-
ing and enforcing the arbitration agreements.
REMEDY
Having found that the Respondents have engaged in certain
unfair labor practices, I shall order them to cease and desist
therefrom and to take certain affirmative action designed to
effectuate the policies of the Act.
As I have concluded that the arbitration agreements are un-
lawful, the recommended order requires that the Respondents
revise or rescind them in all of forms to make clear to employ-
ees that the arbitration agreements do not constitute a waiver of
their right to maintain employment-related joint, class, or col-
lective actions in all forums. The Respondents shall notify all
current and former employees who were required to sign the
arbitration agreements in any form that they have been rescind-
ed or revised and, if revised, provide them a copy of the revised
agreement. Because the Respondents utilized the arbitration
agreements on a corporate-wide basis, the Respondents shall
post a notice at all locations where the arbitration agreements,
or any portion of them requiring all employment-related dis-
putes to be submitted to individual binding arbitration, was in
effect. See, e.g., U-Haul Co. of California, supra, fn. 2 (2006);
D. R. Horton, supra, slip op. at 17; Murphy Oil, supra.
I recommend the Respondents be required to reimburse Ap-
plebaum for any litigation and related expenses, with interest,
to date and in the future, directly related to the Company’s
filing its motion to compel arbitration in Applebaum v. AutoNa-
tion, Inc. and Costa Mesa Cars, Inc., Case 8: 13-cv-0 1927-
JVS-RNB. 15 Determining the applicable rate of interest on the
reimbursement will be as outlined in New Horizons, 283 NLRB
1173 (1987), (adopting the Internal Revenue Service rate for
underpayment of Federal taxes). Interest on all amounts shall
be computed on a daily basis as prescribed in Kentucky River
Medical Center, 356 NLRB 6 (2010).

15 Any extent to which litigation expenses were resolved by the set-
tlement agreement between the parties shall be determined in the com-
pliance stage.
8 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
On these findings of fact and conclusions of law and on the
entire record, I issue the following recommended16
ORDER
The Respondents, Costa Mesa Cars, Inc., Costa Mesa, Cali-
fornia, and AutoNation, Inc. (AutoNation) a Delaware corpora-
tion with headquarter offices located in Fort Lauderdale, Flori-
da, their officers, agents, successors, and assigns, shall
1. Cease and desist from
(a) Maintaining and/or enforcing arbitration agreements that
seek to have employees waive the right to maintain class or
collective actions regarding employment-related disputes in all
forums, whether arbitral or judicial.
(b) In any like or related manner interfering with, restrain-
ing, or coercing employees in the exercise of the rights guaran-
teed to them by Section 7 of the Act.
2. Take the following affirmative action necessary to effec-
tuate the policies of the Act.
(a) Rescind the arbitration agreements in all forms, or revise
them in all forms to make clear to employees that the arbitra-
tion agreements do not constitute a waiver of their right to
maintain employment-related joint, class, or collective actions
in all forums.
(b) Notify all current and former employees who signed the
arbitration agreements in any form that they have been rescind-
ed or revised and, if revised, provide them a copy of the revised
agreement(s).
(c) In the manner set forth in this decision, reimburse the
Charging Party for any reasonable attorneys’ fees and litigation
expenses that he may have incurred in opposing the Respond-
ents’ motion to dismiss his claims and compel individual arbi-
tration in Applebaum v. AutoNation, Inc. and Costa Mesa Cars,
Inc., Case 8: 13-cv-0 1927-JVS-RNB.
(d) Within 14 days after service by the Region, post at all
facilities where it has maintained the arbitration agreements the
attached notice marked “Appendix. “17 Copies of the notice, 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 where
notices to employees are customarily posted. In addition to
physical posting of paper notices, the notices shall be distribut-
ed electronically, such as by email, posting on an intranet or an
internet site, and/or other electronic means, if the Respondents
customarily communicates with its 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. In the event that, during the pendency of these pro-

16 If no exceptions are filed as provided by Sec. 102.46 of the
Board’s Rules and Regulations, the findings, conclusions, and recom-
mended Order shall, as provided in Sec. 102.48 of the Rules, be adopt-
ed by the Board and all objections to them shall be deemed waived for
all purposes.
17 If this Order is enforced by a judgment of a United States court of
appeals, the words in the notice 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.”
ceedings, a Respondent has gone out of business or closed any
facility involved in these proceedings, the Respondent shall
duplicate and mail, at its own expense, a copy of the notice to
all current employees and former employees employed by the
Respondent at any time since August 25, 2013.
(e) Within 21 days after service by the Region, file with the
Regional Director a sworn certification of a responsible official
on a form provided by the Region attesting to the steps that the
Respondents have taken to comply.
Dated, Washington, D.C. March 14, 2016
APPENDIX
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 no-
tice.
FEDERAL LAW GIVES YOU THE RIGHT TO
Form, join, or assist a union
Choose representatives to bargain with us on your be-
half
Act together with other employees for your benefit and
protection
Choose not to engage in any of these protected activi-
ties.
WE WILL NOT maintain and/or enforce arbitration agreements
that seek to have employees waive the right to maintain class or
collective actions regarding employment-related disputes in all
forums, whether arbitral or judicial.
WE WILL NOT in any like or related manner interfere with, re-
strain, or coerce our employees in the exercise of the rights
listed above.
WE WILL NOT rescind the arbitration agreements in all forms,
or revise them in all forms, to make clear that the arbitration
agreements do not constitute a waiver of your right to maintain
employment-related joint, class, or collective actions in all
forums.
WE WILL NOT notify all current and former employees who
signed an arbitration agreement in any of its forms that the
arbitration agreement has been rescinded or revised and, if
revised, we will provide them a copy of the revised agree-
ment(s).
COSTA MESA CARS, INC.; D/B/A AUTONATION HONDA
COSTA MESA; F/K/A POWER HONDA COSTA MESA AND
AUTONATION, INC.
COSTA MESA CARS, INC. D/B/A AUTONATION HONDA COSTA MESA; INC. 9
F/K/A POWER HONDA COSTA MESA AND AUTONATION
The Administrative Law Judge’s decision can be found at
www.nlrb.gov/case/21-CA-123072 or by using the QR code be-
low. 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.