D.R. Horton, Inc.

National Labor Relations Board - Administrative Judge Opinions

Jan 3, 2011

12-CA-025764 (N.L.R.B. Jan. 3, 2011)

JD(ATL)–32–10
Deerfield Beach, FL
UNITED STATES OF AMERICA
BEFORE THE NATIONAL LABOR RELATIONS BOARD
DIVISION OF JUDGES
ATLANTA BRANCH OFFICE
D. R. HORTON, INC.
and CASE 12–CA–25764
MICHAEL CUDA, an Individual
John F. King, Esq., for the General Counsel.
Mark Stubley, Esq. & Bernard P. Jeweler, Esq.,
(Ogletree Deakins), for the Respondent.
DECISION
Statement of the Case
William N. Cates, Administrative Law Judge. This matter arises out of a consolidated
complaint and notice of hearing issued on November 26, 2008, against D.R. Horton, Inc. (the
Respondent), stemming from unfair labor practice (ULP) charges filed by Michael Cuda, an
individual. The complaint, as amended, alleges that the Respondent violated Section 8(a)(1) and
(4) of the National Labor Relations Act (the Act) by maintaining and enforcing individual
arbitration agreements that employees have been required to execute as a condition of
employment. 1
Pursuant to notice, I conducted a trial in Miami, Florida, on November 8, 2010, at which
I afforded the parties full opportunity to be heard, to examine and cross-examine witnesses, and
to introduce evidence.

1 On April 20, 2009, the Regional Director issued an order severing cases, approving withdrawal of certain
allegations of complaint, and approving withdrawal of charge in Case 12–CA–25766. As a result, co-
respondent DHI Mortgage Co. LTD, a subsidiary of the Respondent, was removed from the complaint.
Accordingly, I will not address evidence that pertained to it as distinct from the Respondent per se.
JD(ATL)–32–10
2
Issues
1) Has the Respondent violated Section 8(a)(1) by maintaining and enforcing a
mandatory arbitration agreement with its employees that unlawfully prohibits them
from engaging in protected concerted activities, including joint arbitration claims or 5
class action lawsuits?
2) Do such agreements lead employees reasonably to believe that they are barred or
restricted from filing charges with the NLRB, thereby violating Section 8(a)(4) and
(1)?10
Facts
Based on the entire record, including testimony, documents, and stipulations, as well as
the thoughtful post trial briefs filed by the General Counsel and the Respondent, I find the 15
following.
The salient facts are undisputed. The Respondent, a Delaware corporation with an office
and place of business located in Deerfield Beach, Florida (the facility), is engaged in the business
of building and selling homes. The Respondent has admitted Board jurisdiction as alleged in the 20
complaint, and I so find.
In January 2006, Respondent, on a corporate-wide basis, implemented a policy of
requiring each current and new employee to sign a mutual arbitration agreement as a condition of
employment.2 The agreement provides, inter alia, that all employment disputes and claims shall 25
be determined exclusively by final and binding arbitration before a single, neutral arbitrator.
Specifically included are claims for discrimination or harassment; wages, benefits, or other
compensation; breach of contract; violations of public policy; personal injury; and tort claims.
In reference to employees’ statutory rights, the only express exclusions are employee claims for
workers’ compensation or unemployment benefits.30
Paragraph six of the agreement states:
[T]he arbitrator will not have the authority to consolidate the claims of other
employees into a proceeding originally filed by either the Company or the 35
Employee. The arbitrator may hear only Employee’s individual claims and does
not have the authority to fashion a proceeding as a class or collective action or to
award relief to a group or class of employees in one arbitration proceeding.
At around the time of the distribution of the arbitration agreement to employees, the 40
Respondent provided facility supervisors with a list of employees’ frequently asked questions

2 Jt. Exh. 2.
JD(ATL)–32–10
3
and the appropriate responses.3 One of the instructions was to tell employees who expressed
concern about the scope of the agreement that the agreement applied to relief sought through the
courts and that they would still be able to go to the EEOC or similar agency with a complaint.
However, the Respondent did not provide these questions and answers to employees at the time,
and there is no evidence it ever communicated to them the above clarification of the scope of the 5
agreement to its employees.
By letter dated February 13, 2008,4 Cuda’s attorney, Richard Celler, notified the
Respondent that his law firm had been retained to represent Cuda and a class of similarly situated
current and former “Superintendents” the Respondent employed on a national basis, to contest 10
the Respondent’s “misclassification” of them as exempt employees under the Fair Labor
Standards Act.5 The letter went on to state it constituted formal notice of a request to commence
the arbitration process under paragraph 3 of the arbitration agreement. By letter of the same
date, Celler advised Respondent his firm was also representing five other named employees.6
By letter of February 21, Celler notified Respondent he was similarly representing employee15
Mario Cabrera and a class of similarly situated current and former “Superintendents” Respondent
employed on a national basis.7
By letter of March 14, Michael Tricarloo, Respondent’s counsel, replied to Celler’s
February 13 letter concerning the five-named employees.8 Citing the language in paragraph 620
barring arbitration of collective claims, he denied the February 13 letter constituted effective
notice of intent to initiate arbitration. For the same reason, Ticarloo, by letter of March 20,
denied the validity of Cabrera’s notice of intent.9
Analysis and Conclusions25
Preliminarily, in reaching my conclusions about the legality of the provisions in question,
I do not rely on the Region’s initial determination or the contrary result of the General Counsel’s
Office of Appeals.10 Further, I will not consider as dispositive Memorandum GC-10-06, cited
in the Respondent’s brief (at 5). The Board has repeatedly held that policies set out in the 30
General Counsel’s Casehandling Manual are not binding on the Board (or the General Counsel,
for that matter). Hempstead Lincoln Mercury Motors Corp., 349 NLRB 552, 553 fn. 4 (2007);
see also Children’s National Medical Center, 322 NLRB 205, 205 fn. 1 (1996) . The same logic
applies to other internal pronouncements the General Counsel issues.

3 E. Exh. 1.
4 All dates hereinafter occurred in 2008 unless otherwise stated.
5 Jt. Exh. 4.
6 Jt. Exh. 5.
7 Jt. Exh. 6.
8 Jt. Exh. 8.
9 Jt. Exh. 10.
10 See E. Exhs. 3 & 2, respectively.
JD(ATL)–32–10
4
I. Does the mandatory arbitration agreement violate Section 8(a)(1) by unlawfully
prohibiting employees from engaging in protected concerted activities?
Section 7 of the Act, as amended, 29 U.S.C. § 157, provides in relevant part that 5
employees have the right to engage in concerted activities for their “mutual aid or protection.”
The Supreme Court has held that this “mutual aid or protection” clause encompasses employees
acting together to better their working conditions through resort to administrative and judicial
forums. Eastex, Inc. v. NLRB, 437 U.S. 556, 565–567 (1978). In Rockwell International Corp.
v. NLRB, 814 F.2d 1530, 1536 (11th Cir. 1987), the Circuit Court cited Eastex for the proposition 10
that Section 7 is liberally construed to protect a broad range of employees concerns. Filing a
class action lawsuit constitutes protected activity unless done with malice or in bad faith. Harco
Trucking, LLC, 344 NLRB 478 (2005); U Ocean Palace Pavilion, Inc., 345 NLRB 1162 (2005).
The crux of the matter here is the efficacy of a mandatory arbitration provision that 15
restricts employees’ from joining arbitration claims or collectively seeking recourse outside of
arbitration. The General Counsel does not contend arbitration agreements are per se unlawful
(GC br. at 12).
Indeed, decisions of the Supreme Court in recent years reflect a strong sentiment favoring 20
arbitration as a means of dispute resolution. A leading case in the employment area is Gilmer v.
Interstate/Johnson Lane Corp., 500 U.S. 20 (1991). Therein, the Court held an Age
Discrimination in Employment Act (ADEA) claim can be subject to compulsory arbitration. The
Court reviewed the Federal Arbitration Act (FAA), originally enacted in 1925, 43 Stat. 883, and
then reenacted and codified in 1947 as Title 9 of the United States Code, concluding its 25
provisions manifest a “‘liberal federal policy favoring arbitration agreements.’ Moses H. Cone
Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 24 (1983).” Id. at 25 (footnote
omitted).
The Court went on to state (Id. at 26) (citations omitted):30
Although all statutory claims may not be appropriate for arbitration, ‘[h]aving
made the bargain to arbitrate, the party should be held to it unless Congress itself
has evinced an intention to preclude a waiver of judicial remedies for the statutory
rights at issue.” . . . [T]he burden is on Gilmer to show that Congress intended to 35
preclude a waiver of a judicial forum for ADEA claims . . . . “[Q]uestions of
arbitrability must be addressed with a healthy regard for the federal policy
favoring arbitration.”
The Court noted an individual ADEA claimant subject to an arbitration agreement was 40
still free to file a charge with the Equal Employment Opportunity Commission, even though
barred from instituting private judicial action.
In 14 Penn Plaza LLC v. Pyett, 129 S. Ct. 1456, 1465 (2009), the Court held the Gilmer
Court’s interpretation of the ADEA fully applied in the collective-bargaining context so that a45
provision in a collective-bargaining agreement requiring union members to arbitrate ADEA
JD(ATL)–32–10
5
claims was enforceable as a matter of federal law.
The Eleventh Circuit Court of Appeals has also expressed judicial support for the use of
arbitration in the employment arena. See Caley v. Gulfstream Aerospace Corp., 428 F.3d 1359,
1367 (11th Cir. 2005) (“[C]ompulsory arbitration agreements are now common in the workplace, 5
and it is not an unlawful employment practice for an employer to require an employee to
arbitrate, rather than litigate, rights under various federal statues, including employment-
discrimination statutes”); Weeks v. Harden Mfg. Corp., 291 F.3d 1307, 1313 (11th Cir. 2002)
(“[A]rbitration agreements encompassing claims brought under federal employment
discrimination statutes have also received near universal approval”). 10
I am not aware of any Board decision holding that an arbitration clause cannot lawfully
prevent class action lawsuits or joinder of arbitration claims. On the other hand, in Stolt-Nielsen
S.A. v. Animal Feeds, 130 S. Ct. 1758, 1773–1775 (2010), the Supreme Court emphasized the
consensual nature of private dispute resolution and held “a party may not be compelled under the15
FAA to submit to class arbitration unless there is a contractual basis for concluding that the party
agreed to do so” (emphasis in original).
In light of the above pronouncements of the Supreme Court and the Eleventh Circuit
Court of Appeals, and the absence it appears of direct Board precedent, I decline to conclude that 20
the provision in question violates Section 8(a)(1) by unlawfully prohibiting employees from
engaging in protected concerted activities.
II. Does the mandatory arbitration agreement violate Section 8(a)(4) and (1)
by leading employees reasonably to believe they cannot file charges with25
the NLRB?
In at least two cases, the Board has dealt with the issue of mandatory arbitration policies
in unorganized workforces. In U-Haul Co. of California, 347 NLRB 375 (2006), enforcement
granted, 255 Fed.Appx. 527 (D.C. Cir. 2007), rehearing en banc denied (2008), the Board 30
addressed a mandatory arbitration policy that enumerated various types of disputes and claims
and included “any other legal or equitable claims and causes of action recognized by local, state
or federal law or regulations.” The Board held this language unlawful under Section 8(a)(4)
and (1) because employees reasonably could conclude they were precluded from filing NLRB
charges. Id. at 377–378. The Board specifically rejected the respondent’s argument the 35
arbitration policy was not unlawful because the memo announcing it included the statement the
“arbitration process is limited to disputes, claims or controversies that a court of law would be
authorized to entertain or would have jurisdiction over to grant relief.” As the Board explained
(ibid):
40
The reference to a “court of law” in this part of the memo does not by its terms
specifically exclude an action governed by an administrative proceeding such as one
conducted by the National Labor Relations Board. . . . Further, inasmuch as decisions of
the National Labor Relations Board can be appealed to a United States court of appeals,
the reference to a “court of law” does nothing to clarify that the arbitration policy does 45
not extend to the filing of unfair labor practice charges. While . . . it is the NLRB, and
JD(ATL)–32–10
6
not the individual, who presents the case to court, we believe that most nonlawyer
employees would not be familiar with such intricacies of Federal court jurisdiction, and
thus the language is insufficient to cure the defects in the policy.
Similarly, in Bills Electric, Inc., 350 NLRB 292, 296 (2007), the Board found unlawful a 5
mandatory arbitration provision providing that arbitration be “the exclusive method of resolution
of all disputes,” although it expressly stated that “this shall not be a waiver of any requirement
for the Employee to timely file any charge with the NLRB, EEOC, or any State Agency.” As the
Board stated, after analyzing all of the factors present, “At the very least, the mandatory
grievance and arbitration policy would reasonably be read by affected applicants and employees 10
as substantially restricting, if not totally prohibiting, their access to the Board’s processes.” Ibid.
The ultimate test it appears, then, is determining whether nonlawyer employees would
reasonably conclude they are barred or restricted from filing NLRB charges. Although the
Respondent’s instructions to its supervisors clarified the right of employees to access the Board’s 15
processes, such was never communicated to employees and therefore is of no operative effect. I
conclude the language of the mandatory arbitration agreement, on its face, would lead employees
reasonably to believe they could not file charges with the Board.
Even if I deemed the language to be ambiguous, it is well settled, as a general precept,20
ambiguous policies or rules that reasonably could be interpreted as violative of employee rights
will be construed against the maker of the policy or rule and, even if not followed, will be found
to violate the Act. St. Francis Hotel, 260 NLRB 1259, 1260 (1982); see also Norris/O’Bannon,
307 NLRB 1236, 1245 (1992).
25
Accordingly, I conclude Respondent’s maintenance of the mandatory arbitration
agreement violates Section 8(a)(4) and (1) of the Act.
Conclusion of Law
30
1. The Respondent is an employer engaged in commerce within the meaning of
Section 2(2), (6), and (7) of the Act.
2. By maintaining a mandatory arbitration provision that employees reasonably
could believe bars or restricts their right to file charges with the National Labor Relations Board, 35
the Respondent has engaged in unfair labor practices affecting commerce within the meaning of
Section 2(6) and (7) of the Act and violates Section 8(a)(4) and (1) of the Act.
Remedy
40
Because I have found that the Respondent has engaged in certain unfair labor practices, I
find that it must be ordered to cease and desist and to take certain affirmative action designed to
effectuate the policies of the Act.
JD(ATL)–32–10
7
ORDER
The Respondent, D.R. Horton, Inc., Deerfield Beach, Florida, its officers, agents,
successors, and assigns, shall
5
1. Cease and desist from
(a) Maintaining a mandatory arbitration agreement that employees reasonably
could believe bars or restricts their right to file charges with the National Labor Relations
Board.10
(b) In any like or related manner interfering with, restraining, or coercing
employees in the exercise of the rights guaranteed to them by Section 7 of the Act.
2. Take the following affirmative action necessary to effectuate the policies of the 15
Act.
(a) Rescind or revise the mutual arbitration agreement to make it clear to
employees the agreement does not in any way bar or restrict their right to file charges with the
National Labor Relations Board.20
(b) Notify the employees of the rescinded or revised agreement to include
providing them a copy of the revised agreement or specific notification that the agreement has
been rescinded.
25
(c) Within 14 days after service by the Region, post at its facility at Deerfield
Beach, Florida, copies of the attached notice marked “Appendix.”11 Copies of the notice, on
forms provided by the Regional Director for Region 12 after being signed by the Respondent’s
authorized representative, shall be posted by the Respondent and maintained for 60 consecutive
days in conspicuous places including all places where notices to employees are customarily 30
posted. In addition to physical posting of paper notices, notices shall be distributed
electronically, such as by email, posting on an intranet or an internet site, or other electronic
means, if the Respondent customarily communicates with its employees by such means.
Reasonable steps shall be taken by the Respondent to ensure that the notices are not altered,
defaced, or covered by any other material. In the event that, during the pendency of these 35
proceedings, the Respondent has gone out of business or closed the 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 3, 2010.
40
(d) Within 21 days after service by the Region, file with the Regional Director
for Region 12 a sworn certification of a responsible official on a form provided by the Region

11 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 National Labor Relations Board” shall read “Posted Pursuant to a Judgment of
the United States Court of Appeals Enforcing an Order of the National Labor Relations Board.”
JD(ATL)–32–10
8
attesting to the steps that the Respondent has taken to comply.
Dated Washington, D.C., January 3, 2011.
5
____________________________________
William N. Cates
Administrative Law Judge10
JD(ATL)–32–10
9
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 notice.
FEDERAL LAW GIVES YOU THE RIGHT TO
Form, join, or assist a union
Choose representatives to bargain with us on your behalf
Act together with other employees for your benefit and protection
Choose not to engage in any of these protected activities
WE WILL NOT maintain a mandatory arbitration agreement that you reasonably could believe
bars or restricts your right to file charges with the National Labor Relations Board.
WE WILL NOT in any like or related manner interfere with, restrain, or coerce you in the
exercise of the rights that Federal law guarantees you.
WE WILL rescind or revise the mutual arbitration agreement to make it clear the agreement does
not in any way bar or restrict your right to file charges with the National Labor Relations Board.
WE WILL provide to you copies of the revised agreement, or notify you in writing we have
rescinded the agreement.
D. R. HORTON, INC.
(Employer)
Dated: __________________ By: _____________________________________________
(Representative) (Title)
The National Labor Relations Board is an independent Federal agency created in 1935 to enforce the National Labor
Relations Act. It conducts secret-ballot elections to determine whether employees want union representation and it
investigates and remedies unfair labor practices by employers and unions. To find out more about your rights under the
Act and how to file a charge or election petition, you may speak confidentially to any agent with the Board’s Regional
Office set forth below. You may also obtain information from the Board’s website: www.nlrb.gov.
201 East Kennedy Boulevard, South Trust Plaza, Suite 530, Tampa, Florida 33602–5824
(813)228–2641, Hours: 8:00 a.m. to 4:30 p.m.
THIS IS AN OFFICIAL NOTICE AND MUST NOT BE DEFACED BY ANYONE THIS NOTICE MUST
REMAIN POSTED FOR 60 CONSECUTIVE DAYS FROM THE DATE OF POSTING AND MUST NOT BE
ALTERED, DEFACED, OR COVERED BY ANY OTHER MATERIAL. ANY QUESTIONS CONCERNING
THIS NOTICE OR COMPLIANCE WITH ITS PROVISIONS MAY BE DIRECTED TO THE ABOVE
REGIONAL OFFICE’S COMPLIANCE OFFICER, (813) 228–2455