24 Hour Fitness USA, Inc.

National Labor Relations Board - Administrative Judge Opinions

Nov 6, 2012

20-CA-035419 (N.L.R.B. Nov. 6, 2012)

JD(SF)–51–12
San Ramon, California
UNITED STATES OF AMERICA
BEFORE THE NATIONAL LABOR RELATIONS BOARD
DIVISION OF JUDGES, SAN FRANCISCO BRANCH OFFICE
24 HOUR FITNESS USA, INC.
and Case 20-CA-035419
ALTON J. SANDERS, an Individual
Carmen Leon and Richard J. McPalmer, Attys.,
for the Acting General Counsel.
Marshall Babson, Atty., (Seyfarth Shaw LLP), of
New York, New York; Garry G. Mathiason, Atty.,
(Littler Mendelson, P.C.) of San Francisco, California;
and Daniel L. Nash, Atty., (Akin Gump Strauss Hauer
& Feld), of Washington, DC, for the Respondent.
Cliff Palefsky, Atty., (McGuinn, Hillsman, & Palefsky),
of San Francisco, California, for the Charging Party with
Michael Rubin and Caroline P. Cincotta, Attys., (Altshuler
Berzon LLP), San Francisco, California, and Judith A. Scott, Atty.,
Service Employees International Union, Washington, DC
on the post-hearing brief.
Willis J. Goldsmith and Kristina A. Yost, Attys., (Jones Day), of
New York, New York, and Robin S. Conrad and
Shane B. Kawka, Attys., National Chamber Litigation
Center, Washington, DC, submitted a brief amicus curiae
on behalf of the Chamber of Commerce of the United States
of America in support of 24 Hour Fitness USA, Inc.
DECISION
STATEMENT OF THE CASE
WILLIAM L. SCHMIDT, Administrative Law Judge. I heard this case at San Francisco,
California, on June 28, 2012. The unfair labor practice charge, filed by Alton J. Sanders
(Sanders), an individual, on February 15, 2011, alleges that 24 Hour Fitness USA, Inc.
(Company or Respondent) violated Section 8(a)(1) of the National Labor Relations Act (the Act
or NLRA). On April 30, 2012, the Regional Director for Region 20 of the National Labor
Relations Board (Board or NLRB) issued a formal complaint alleging that Respondent violated
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Section 8(a)(1) by maintaining and enforcing a provision in the arbitration policy, contained in
its employee handbook, that requires employees to forego any rights they have to the resolution
of employment-related disputes by collective or class action (the class action ban). The
complaint also alleges that Respondent violated Section 8(a)(1) by asserting the class action ban
in the 10(b) period in eight specific cases brought against it by employees. The Respondent filed
a timely answer denying that it engaged in the unfair labor practices alleged and interposing a
variety of affirmative defenses, including a claim the Board lacked a quorum when it decided a
case critical to the outcome here due to the expiration of the term of one of the Board Members.
Having now carefully considered the entire record, including the demeanor of the
witnesses and the reliability of their testimony, together with the arguments set forth in the
extensive briefs filed on behalf of the Acting General Counsel (AGC), the Respondent, and the
Charging Party as well as the briefs amicus curiae filed by the Service Employees International
Union (SEIU) and the Chamber of Commerce of the United States of America (Chamber), I find
that Respondent violated the Act as alleged based on the following1
FINDINGS OF FACT
I. JURISDICTION
Respondent, a California corporation, operates fitness centers in seventeen different
states, including a facility in San Ramon, California. During the calendar year ending December
31, 2011, Respondent, in conducting its business operations, derived gross revenues in excess of
$500,000. During the same period, Respondent purchased and received, at its San Ramon
facility, products, goods, and services valued in excess of $5,000 directly from points outside of
the State of California. Respondent admits, and I find, that it is an employer engaged in
commerce within the meaning of Section 2(2), (6), and (7) of the Act. I further find that it would
effectuate the purposes of the Act for the Board to exercise its statutory jurisdiction to resolve
this labor dispute.
II. ALLEGED UNFAIR LABOR PRACTICES
A. The Pleadings and the Basic Arguments about the Merits
The complaint alleges that in the 6-month period preceding the filing of the charge
Respondent enforced the provisions in its employee handbook that requires employees to “forego
any rights they have to the resolution of employment-related disputes by collective or class
action.” In that same period, the complaint alleges that Respondent initiated legal actions in
eight separate cases pending in both State and Federal courts seeking to enforce the unlawful
terms of its arbitration policy.

1 On May 18, 2012, Associate Chief Judge Cracraft granted the Service Employees
International Union (SEIU) motion to intervene but limited the degree of the SEIU’s
participation to that of “an amicus curiae in briefing to the administrative law judge and to the
Board.” In an order issued September 10, 2012, I likewise granted the request of the Chamber to
appear as amicus curiae to file a brief in support of Respondent’s position.
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Respondent’s answer admits that it “has maintained and enforced” employee handbook
policies, including its arbitration policy, but denies that its arbitration policy violates the Act.
Respondent also denies that it violated the Act by taking the certain legal actions to enforce the
class action ban contained in its arbitration policy in the eight specific cases cited in the
complaint, as well as three others identified in a hearing stipulation.
The AGC, the Charging Party, and the SEIU contend that D.R. Horton, 357 NLRB No.
184 (2012), controls the outcome here. (AGC Br., p. 1). They argue that employees have a right
under Section 7 to engage in collective or class activities when seeking to resolve disputes with
their employer about their wages, hours, and other terms and conditions of employment and,
hence, the ban on those particular activities contained in Respondent’s arbitration policy
unlawfully interferes with employee Section 7 rights within the meaning of Section 8(a)(1).2
Respondent disputes the controlling effect of Horton on the facts present here. Instead,
Respondent and the Chamber argue that the opt-out feature of its arbitration policy, described in
more detail below, establishes that the waiver of collective or class action is voluntary on the part
of the employee, thereby making this case fundamentally distinguishable from Horton. They
argue that Horton applies only to arbitration agreements containing a class action ban that are a
mandatory condition of employment. Because the employees here have the opportunity to opt-
out of Respondent’s arbitration policy completely, the policy cannot be fairly characterized as
mandatory. Hence, as Respondent’s policy is not mandatory, they argue, Horton does not apply.
B. Relevant Facts
The Company, which commenced operations in the early 1980s, currently operates more
than four-hundred membership fitness clubs scattered across 17 states. Charging Party Sanders
submitted an application for work at the Company on August 25, 2008, and commenced working
on October 6. He remained employed at the Company for approximately 2 years as a group
exercise instructor providing instruction primarily in yoga and spinning. During his tenure, he
worked at Company facilities in Larkspur, Santa Rosa, Petaluma, and Fairfield, California.
The three-page employment application that Sanders submitted in August 2008 contained
an “Applicant’s Certification” that included the following:
I understand that as an expeditious and economical way to settle employment disputes
without need to go through courts, 24 Hour Fitness agrees to submit such disputes to final
and binding arbitration. I understand that I may opt out of the arbitration procedure,
within a specified period of time, as the procedure provides. 24 Hour Fitness and I also
understand that if I am offered employment and I do not opt out, we both will submit

2 In pertinent part, Sec. 7 of the Act protects the right of employees “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.” (Emphasis added.) Sec. 8(a)(1) provides that it
is an unfair labor practice for an employer to “interfere with, restrain, or coerce” employees in
the exercise of their Sec. 7 rights.
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exclusively to final and binding arbitration all disputes arising out of or relating to my
employment. This means a neutral arbitrator, rather than a court or jury, will decide the
dispute. (R. Exh. 1, p. 3).
No evidence establishes that Sanders sought or was provided with any information at that time
concerning the opt-out procedures.
Later in October 2008, when he commenced working for the Company, Sanders went
through the typical “on-boarding” process required of all employees. At that time, he received a
copy of the 2007 Team Member Handbook (employee handbook) and a copy of the “New Team
Member Handbook Receipt Acknowledgement (handbook receipt form). He was requested to
sign and return the handbook receipt form to the Company, which he did. The handbook receipt
form included the following statement:
I have received the 2007 Handbook and I understand that in consideration for my
employment it is my responsibility to read and comply with the policies contained in
this Handbook and any revisions made to it. In particular, I agree that if there is a
dispute arising out of or related to my employment as described in the ‘Arbitration
of Disputes’ policy, I will submit it exclusively to binding and final arbitration
according to its terms, unless I elect to opt out of the ‘Arbitration of Disputes’policy
as set forth below.
I understand that I may opt out of the ‘Arbitration of Disputes’ policy by signing
the Arbitration of Disputes Opt-Out Form (‘Opt-Out Form’) and returning it
through interoffice mail to the CAC/HR File Room no later than 30 calendar days
after the date I received this Handbook, as determined by the Company’s record. I
understand that I can obtain the Opt-Out Form by calling the Employee Hotline at
1.866.288.3263. I understand that if I do not opt out, disputes arising out of or
related to my employment will be resolved under the ‘Arbitration of Disputes’
policy. I understand that my decision to opt out or not opt out will not be used as a
basis for the Company taking any retaliatory action against me. (G.C. Exh. 2)
(Emphasis in original.)
Concededly, Sanders did not opt-out of the Respondent’s arbitration policy. When he later
learned of a race and sex discrimination case another employee brought against the Company
and sought to join in the case, he was informed that he would have to proceed individually.
As noted, the process that Sanders encountered when he began employment with the
Respondent is typical. All new employees receive a copy (or access to a copy) of the
Respondent’s sixty-plus page handbook usually on their first day of work. The handbook
contains a description of various work policies. For example, the initial section headed “our
employment relationship” in the 2010 edition of the handbook contains provisions related to the
Respondent’s open door policy, the at-will nature of the employment relationship, its policies
concerning equal employment opportunity and accommodations for disabilities, its policy
against harassment, discrimination and retaliation, its policy regarding the arbitration of disputes
(the provision at issue here), policies regarding conflicts of interest and non-fraternization, and
its policies regarding confidentiality, proprietary information, trademarks, and copyrights. Other
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sections of the handbook contain detailed provisions about workplace conduct, health, security
and safety, employee development, compensation and benefits to name only a few. Each new
employee is also given a copy of the handbook receipt form designed to acknowledge receipt of
the handbook and is requested to sign it. Employees who decline to sign the receipt form are
told that the policies described in the handbook will, nonetheless, apply to them. Both the
handbook and the handbook receipt form have gone through several revisions in the last decade.
The Respondent first instituted its unilaterally devised arbitration policy for resolving
employment-related disputes that it imposed as a condition of employment more than a decade
ago. Since that time Respondent has fervently promoted its arbitration policy in documents
distributed to employees. The heart of Respondent’s arbitration policy has always provided that
“any employment-related dispute between a Team Member and 24 Hour Fitness” must be
submitted to final and binding arbitration. All versions of the Company’s arbitration policy since
2005 have provided explicitly that nothing in the policy “shall be deemed to preclude a Team
Member from filing or maintaining a charge with the Equal Employment Opportunity
Commission or the National Labor Relations Board.”
Additionally, the Respondent made another significant modification to its arbitration
policy in 2005 by adding language that banned class and other forms of concerted actions. This
revised language set forth in the handbook sought to effectively preclude employees from
combining their identical or closely related employment disputes against Respondent. The
policy adopted in 2005 and retained in various editions of the handbook thereafter provided:
In arbitration, the parties will have the right to conduct civil discovery and bring motions
as provided by the Federal Rules of Civil Procedure. However, there will be no right or
authority for any dispute to be brought, heard or arbitrated as a class action (including
without limitation opt out class actions or opt in collective class actions), or in a
representative or private attorney general capacity on behalf of a class of persons of the
general public.
In addition, Respondent’s revised arbitration policy further limited employee collaboration by
including nondisclosure language stating that “[e]xcept as may be required by law, neither a
party nor an arbitrator may disclose the existence, content, or results of any arbitration hereunder
without the prior written consent of both parties.” All subsequent editions of the handbook after
2005 retained these restrictions barring concerted employee activity in pursuit of employment-
related disputes.
The accompanying handbook receipt containing limited information about the arbitration
policy made no reference to these new limitations on concerted activities. Respondent’s practice
of applying all of its handbook policies to employees whether or not they signed the handbook
receipt effectively made the handbook policies a condition of employment applicable to all
current employees immediately and to future employees on their first day of work.
The next revision to Respondent’s arbitration policy occurred in or about January 2007.
Although the language of its arbitration policy as set forth in its 2005 handbook remained the
same, the Respondent gave each newly-hired employee an opportunity to opt out of the
arbitration policy provided the employee did so within the 30-day period following their receipt
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of the handbook. Except for its employees working in the State of Texas, none of the employees
hired before 2007 were provided with an opportunity to opt out of the arbitration policy.3 As a
consequence, those employees remained bound by the arbitration policy in effect when they were
originally hired.
The opt-out revision resulted in changes to two employment forms, the application for
employment and the handbook receipt. The last paragraph of the employment application form
was revised to include a general reference to the new opt-out procedure. It stated only that an
employee could “opt out of the arbitration procedure within a specified period of time, as the
procedure provides.” It then went on to state that if the applicant chose not to opt-out of the yet
undisclosed arbitration policy, it would be binding on both parties.
The new handbook receipt form contained the following language describing the opt-out
procedure in detail:
I have received the January 2005 handbook and I understand that in consideration for my
employment it is my responsibility to read and comply with the policies contained in this
handbook and any revisions made to it. In particular, I agree that if there is a dispute
arising out of or related to my employment as described in the “Arbitration of Disputes”
policy, I will submit it exclusively to binding and final arbitration according to its terms,
unless I elect to opt out of the “Arbitration of Disputes” policy as set forth below. I
understand that I may opt out of the “Arbitration of Disputes” policy by signing the
Arbitration of Disputes Opt-Out Form (“Opt-Out Form”) and returning it through
interoffice mail to the CAC/HR File Room no later than 30 calendar days after the date I
received this handbook, as determined by the Company’s records. I understand that I can
obtain the Opt-Out Form by calling the Employee Hotline at 1.866.288.3283. I
understand that if I do not opt out, disputes arising out of or related to my employment
will be resolved under the “Arbitration of Disputes” policy. I understand that my
decision to opt out or not opt out will not be used as a basis for the Company taking any
retaliatory action against me. (Jt. Exh. 5).
In September 2007, Respondent issued a new employee handbook and a new handbook
receipt form. The new handbook contained no changes in Respondent’s arbitration policy. The
handbook receipt form was revised to reflect that the employee had received the new 2007
handbook rather than the 2005 handbook. The 2010 edition of Respondent’s handbook retained
the same arbitration policy language as set forth in the 2007 handbook.
In or about February 2009, Respondent converted its new employee on-boarding process
to an electronic system. This new digital system required the new employee to review the new

3 This anomaly as to the Texas employees resulted from a court-mandated agreement in
Carey v. 24 Hour Fitness USA Inc., No. 10-03009 (S.D. Tex.). Although the full details are not
known, it appears that all of the Respondent’s Texas employees were provided a full written
explanation of the arbitration policy and another opportunity to opt out if they so chose.
Consequently, Texas employees of the Respondent hired before January 1, 2007, received an
opportunity to opt-out by virtue of this special, court-approved procedure.
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employee materials, including the 60+ page handbook, at a computer terminal and provide a
digital signature where required. All of the materials included a print option that the employee
could use to obtain a copy for her or his personal records. A separate series of screens dealt with
the terms of the arbitration policy and the opt-out process. After completing the electronic on-
boarding process, employees always had access to an electronic version of the handbook at any
location though their electronic employee account.
The 2009 digital version of the employee handbook receipt retained the same notice
providing that employees who declined to sign would nonetheless be bound by all policies set
forth in the handbook. This digital version of the arbitration policy in the employee handbook
contained three added paragraphs that had not previously appeared in the hardcopy versions of
the handbook. Those added paragraphs stated:
I agree that if there is a dispute arising out of or related to my employment as
described in the Arbitration of Disputes Policy, I will submit it exclusively to binding and
final arbitration according to its terms, unless I elect to opt out of the Arbitration of
Disputes Policy as set forth below.
I understand that I may opt out of the Arbitration of Disputes Policy by signing
the Arbitration of Disputes Opt-Out Form (“Opt-Out Form”) and returning it through
interoffice mail to the CAC/HR File Room no later than 30 calendar days after the date I
click on the button below. I understand that I can obtain the Opt-Out Form by calling the
Employee Hotline at 1.866.288.3283. I understand that if I do not opt out, disputes
arising out of or related to my employment will be resolved under the Arbitration of
Disputes Policy. I understand that my decision to opt out or not opt out will not be used
as a basis for 24 Hour Fitness taking any retaliatory action against me.
I UNDERSTAND THAT BY ENTERING MY INITIALS AND CLICKING
THE “CLICK TO ACCEPT” BUTTON, I AM AGREEING TO THE ARBITRATION
OF DISPUTES POLICY (WHICH INCLUDES MY ABILITY TO OPT-OUT OF THE
POLICY WITHIN THE PERIOD OF TIME NOTED ABOVE). I ALSO AGREE THAT
THIS ELECTRONIC COMMUNICATION SATISFIES ANY LEGAL
REQUIREMENT THAT SUCH COMMUNICATION BE IN WRITING.
Employees who successfully pursued the opt-out alternative received a simple form to
sign, date and return. The current form, sans the signature and other identity lines, reads as
follows:4

4 The Respondent modified the opt-out notices and its internal procedures for handling opt-
out requests in 2010 when it shifted responsibility for handling and dealing with opt-out inquiries
from its human resources to its legal department. The new opt-out information sheet instructed
employees interested in the process to contact a paralegal with that responsibility rather than the
employee hotline connected with its human resources department.
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DISPUTE RESOLUTION AGREEMENT
OPT-OUT FORM
By signing and dating below, I am choosing to opt-out of the 24 Hour Fitness' Dispute
Resolution Agreement (“Agreement”). I understand that by opting out, I will not
participate in or be bound by the alternative dispute resolution procedures described in
the Agreement.
* * *
IN ORDER TO OPT-OUT OF THE DISPUTE RESOLUTION AGREEMENT, YOU
MUST SIGN AND RETURN THIS FORM TO THE LEGAL DEPARTMENT
THROUGH INTEROFFICE MAIL OR BY FAX TO 925-543-3358, NO LATER THAN
30 CALENDAR DAYS AFTER DATE OF HIRE.
The Respondent’s brief argues that the next to last sentence of the above quoted
paragraph establishes that the arbitration policy is inoperative until the 30-day opt out period
expires. (R. Br., p. 9) Deborah Lauber, Respondent’s vice president and corporate counsel,
explained that this bifurcated opt-out procedure was adopted to minimize the potential for
retaliation or adverse inferences that might result if local managers knew of an employee’s opt-
out decision. In addition, she said, the procedure provided the employee with the opportunity to
reflect on that “important decision.”
In the week before the hearing, the Respondent employed 20,563 “Team Members” to
serve the more than three million members of its clubs. It admits that 19,614 are employees
within the meaning of Section 2(3). Of that number, 3,605 were hired prior to January 1, 2007,
when the opt-out aspect of its arbitration policy became effective. Based on Respondent’s
review of approximately 20,000 personnel files “out of a universe of approximately 70,000
files,” the parties stipulated that “no fewer and no more than 70 Section 2(3) employees”
successfully opted out of the Respondent’s arbitration policy. The number of pre-2007 Texas
employees who opted out under the special agreement in the Carey case is unknown.
Since August 15, 2010 (the last day of the 10(b) period), Respondent has sought in
several court cases to enforce the class action ban aspect of its arbitration policy, including the
Carey case previously mentioned. Respondent acknowledges that it took action to enforce the
class action ban in the following cases alleged in complaint paragraph 5:
(1) Fulcher v. 24 Hour Fitness USA, Inc., No. RG 10524911 (Alameda County
Superior Court, Cal.), a class action case initiated by former employee Raoul Fulcher and
other named plaintiffs containing causes of action brought individually and on behalf of
others similarly situated for (1) Race, Color, National Origin Discrimination (California
Fair Employment and Housing Act, Government Code Section 12940, et seq., ''FEHA''),
(2) Gender Discrimination (FEHA), and (3) Violations of the California Unfair
Competition Law, Business & Professions Code Sections 1700, et seq., ("UCL"). On
October 22, 2010, Respondent filed a motion to compel individual arbitration under the
terms of the Arbitration Policy. On March 29, 2011, the court granted the motion, in part
ordering the plaintiffs to submit their individual claims for monetary relief to binding
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arbitration pursuant to the terms of the Arbitration Policy. However, the court retained
jurisdiction over the plaintiffs' claims for declaratory and injunctive relief. On January
17, 2012, the court denied Respondent's motion to compel arbitration of plaintiffs' claims
for declaratory and injunctive relief. On January 27, 2012, Respondent appealed the
court's January 17 ruling.
(2) Beauperthuy v. 24 Hour Fitness USA, Inc., No. 06-715 SC (N.D. Cal.), a class action
brought by former employee Gabe Beauperthuy and other named plaintiffs (current and
former employees of Respondent) who had worked (or were working) in 11 states in
various capacities as managers, sales counselors, and trainers as well as others similarly
situated alleging violations of the Fair Labor Standards Act (FSLA), 29 U.S.C. § 201 et
seq. On February 21, 2006, Respondent filed a motion to dismiss the complaint based on
the failure to state a claim upon which relief can be granted (FRCP 12(b)(6)) or, in the
alternative, for a more definite statement (FRCP 12(e)), because the plaintiffs had agreed
to the Arbitration Policy. On February 21,2006, Respondent filed a Motion to Dismiss.
On April 11, 2006, the court denied Respondent's motion to dismiss, but granted the
motion for a more definite statement. On November 28, 2006, the Court issued an order
that Respondent had waived its right to compel arbitration. On February 24, 2011, the
court granted Respondent's motion to decertify the class. The court has retained
jurisdiction over the plaintiffs' claims.5
(3) Lee v. 24 Hour Fitness USA, Inc., No. 11-22700 (S.D. Fla.), a class action brought by
a former employee Jeanlin Lee and other named plaintiffs on behalf of themselves and
others similarly situated alleging FSLA violations. On September 6, 2011, Respondent
filed a motion to compel individual arbitration and to stay proceedings pending
arbitration based in part on the Arbitration Policy. On October 18, 2011, the court
granted Respondent's motion to compel arbitration pursuant to the terms of the
Arbitration Policy and granted Respondent's motion to stay proceedings pending
arbitration. The court has retained jurisdiction over this case.
(4) Constanza v. 24 Hour Fitness USA, Inc., No. 11-22694 (S.D. Fla.), a class action
brought by a former employee Elio Constanza on behalf of himself and others similarly
situated alleging violations of the FLSA. On September 6, 2011, Respondent filed a
motion to compel individual arbitration and to stay proceedings pending arbitration based
on the Arbitration Policy. On November I, 2011, the court granted Respondent's motion.
The court has retained jurisdiction over this case.
(5) Carey v. 24 Hour Fitness USA, Inc., No. 10-03009 (S.D. Tex.), a class action brought
by a former employee John Carey on behalf of himself and others similarly situated

5 When the court denied Respondent’s 2006 motion to dismiss, it held that Respondent’s
conduct amounted to a waiver of its right to compel plaintiffs to arbitrate their claims and barred
it from any future effort to do so. But when the court granted the Respondent’s motion in
February 2011 to decertify the various classes previously recognized, it provided the named
plaintiffs with the option of arbitrating their individual claims or proceeding before the court.
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alleging violations of the FLSA. On October 27, 2010, Respondent filed a motion to stay
and to compel individual arbitration based on the Arbitration Policy. On December 1,
2010, the court denied Respondent's motion. On December 13, 2010, Respondent filed
an appeal. On January 25, 2012, the United States Court of Appeals for the Fifth Circuit
affirmed the court's decision. The District Court has retained jurisdiction allowing
plaintiffs to pursue a collective action in court.
(6) Lewis v. 24 Hour Fitness USA, Inc., (Cal.App. 2 Dist. 2011), a class action brought by
former employee Kevin Lewis and other named plaintiffs on behalf of themselves and
others similarly situated alleging violations of the California Labor Code, Lab. Code §§
510, 1194(a), 203, 226 (a) , 226(e), 2698(a), 2698(f), and UCL. On July 29, 2010,
Respondent filed a motion to compel individual arbitration and stay all civil court
proceedings based on the Arbitration Policy. On September 20, 2010, the court denied the
motion to compel arbitration. The court has retained jurisdiction over this case. On
November 3, 2011, Respondent successfully appealed the denial of its motion. In March
2012, the trial court ruled that the plaintiffs' claim for relief under California's Private
Attorney General Act is not subject to arbitration and ordered that claim to proceed while
staying the arbitration on the other claims. Respondent has appealed the court's ruling on
that matter.
(7) Dominguez v. 24 Hour Fitness USA, Inc., No. BC439206 (Los Angeles County
Superior Ct.), a class action brought by former employee Iva Dominguez on behalf of
herself and others similarly situated alleging violations of the California Labor Code. On
September 16, 2010, Respondent filed a motion to compel individual arbitration and stay
all civil court proceedings based on the Arbitration Policy. On December 7, 2010, the
court granted Respondent's motion. The court has retained jurisdiction over this case.
(8) Martinez v. 24 Hour Fitness USA, Inc., No. 20-201l-00484316-CU-CE-CXC
(Orange County Superior Court), originally brought as a class action by a former
employee Max Martinez on behalf of himself and others similarly situated alleging
violations of the California Labor Code, Lab. Code §§ 510, 1198, 226.7, 512, 201, et
seq., and the UCL. On December 9, 2011, Respondent filed a motion to compel
individual arbitration and stay judicial proceedings based on the Arbitration Policy. On
January 31, 2012, the court granted Respondent's motion. The court has retained
jurisdiction over this case.
In addition to the foregoing proceedings, the parties stipulated that the Respondent sought
to enforce the class action ban in other legal proceedings pending as of August 15, 2010,
including, but not limited to, the following cases in the California courts:
1) Rosenloev, et al. v. 24 Hour Fitness USA, Inc., Orange County Superior Court Case
No. 30-2009-00180140, and Suppa v. 24 Hour Fitness, USA, Inc., Los Angeles
County Superior Court Case No. BC4221O: The Suppa case was transferred and
coordinated as a single action with the Rosenloev case. Respondent sought to compel
individual arbitration. The trial court denied Respondent's motion. Respondent appealed
the decision, and the Court of Appeal affirmed the trial court;
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2) Burton v. 24 Hour Fitness USA, Inc., Orange County Superior Court, Case No. 30-
2007-00031558: Respondent sought to compel individual arbitration. The trial court
denied Respondent's motion. Respondent appealed the decision. The Court of Appeal
affirmed the trial court; and
3) Lawler v. 24 Hour Fitness, Inc., San Bernardino County Superior Court, Case No.
CNDS 1001737: Respondent sought to compel individual arbitration. The trial court
granted Respondent's motion.
C. Further Findings and Conclusions
An employer violates Section 8(a)(1) by maintaining work rules that tend to chill
employee Section 7 activities. Lafayette Park Hotel, 326 NLRB 824, 825 (1998). Rules
explicitly restricting Section 7 activities violate Section 8(a)(1). Lutheran Heritage Village –
Livonia, 343 NLRB 646 (2004). But where a workplace rule does not explicitly restrict Section
7 activity, the General Counsel must establish by a preponderance of the evidence that: (1)
employees would reasonably construe the rule to prohibit Section 7 activity; (2) the employer
adopted the rule in response to union activity; or (3) the employer applied a rule to restrict
employee Section 7 activity. Id. at 647. If a rule explicitly infringes on the Section 7 rights of
employees, the mere maintenance of the rule violates the Act without regard for whether the
employer ever applied the rule for that purpose. Guardsmark v. NLRB, 475 F.3d 369, 375–376
(DC Cir. 2007).
Relying on these fundamental principles, the Board found the mandatory arbitration
agreement in Horton violated Section 8(a)(1) because it expressly restricted protected activity by
requiring employees to “refrain from bringing collective or class claims in any forum.”6 357
NLRB No. 184, slip op. at 5. (Emphasis added). This conclusion is predicated on the conclusion
that “employees who join together to bring employment-related claims on a classwide or
collective basis in court or before an arbitrator are exercising rights protected by Section 7 of
the NLRA.”7 Id. at 3. (Emphasis added.) In finding the violation, the Board stated:

6 The Board separately found the Horton arbitration agreement violated Sec. 8(a)(1) because
employees would reasonably interpret it as barring or restricting their right to file charges with
the Board. No such claim is made here presumably because Respondent’s arbitration policy
specifically provides that it does not preclude the filing charges with the NLRB or the EEOC.
7 Horton cites three prior Board cases (two of which were enforced in court) and two added
court cases decided between 1980 and 2011, for the proposition that the filing of a civil action by
employees relating to their wages, hours, and other terms and conditions of employment is
activity protected by Section 7. 357 NLRB No. 184, slip op. 2, fn 4. The Supreme Court has
reached a similar conclusion. In Eastex, Inc. v NLRB, 437 U.S. 556, 565–566 (1978), Justice
Powell, writing for the majority, noted “it has been held that the ‘mutual protection’ clause
protects employees from retaliation by their employers when they seek to improve working
conditions through resort to administrative and judicial forums.” It cited numerous prior Board
and lower court decisions with approval. Id at fn. 15. Yet, Respondent explicitly rejects the
notion that “the right to engage in class or collective action is a protected, concerted activity
under Section 7 of the Act” but provides no convincing rationale. See Resp. Br., p. 30.
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We need not and do not mandate class arbitration in order to protect employees’ rights
under the NLRA. Rather, we hold only that employers may not compel employees to
waive their NLRA right to collectively pursue litigation of employment claims in all
forums, arbitral and judicial. So long as the employer leaves open a judicial forum for
class and collective claims, employees’ NLRA rights are preserved without requiring the
availability of classwide arbitration. Employers remain free to insist that arbitral
proceedings be conducted on an individual basis.
The Acting General Counsel argues that all renditions of Respondent’s arbitration policy
have been incompatible with the first prong of the Lutheran Heritage Village-Livonia test since
the class action ban in 2007 prohibited employees from pursuing employment-related claims
collectively in any forum. But assuming that this arbitration policy does not expressly restrict
Section 7 activity, the Acting General Counsel contends that the Respondent has repeatedly
applied the class action ban in pending cases in order to restrict collective activity contrary to the
second prong of the Lutheran Heritage Village-Livonia test. The Acting General Counsel further
contends, in effect, that the opt-out provision fixes the removal of Section 7 protections as the
default position and puts employees in the position of following a convoluted process to regain
their statutory rights. This requirement that employees act affirmatively to secure rights the law
already provides, the Acting General Counsel argues, has long been found to be unlawful. In
support, the Acting General Counsel cites this rationale in Horton:
That this restriction on the exercise of Section 7 rights is imposed in the form of
an agreement between the employee and the employer makes no difference. From its
earliest days, the Board, again with uniform judicial approval, has found unlawful
employer-imposed, individual agreements that purport to restrict Section 7 rights –
including, notably, agreements that employees will pursue claims against their employer
only individually.
In National Licorice Co. v. NLRB, 309 U.S. 350 (1940), the Supreme Court
upheld the Board’s holding that individual employment contracts that included a clause
discouraging, if not forbidding, a discharged employee from presenting his grievance to
the employer “through a labor organization or his chosen representatives, or in any way
except personally” was unlawful and unenforceable. Id. at 360. The Court agreed that
the contracts “were a continuing means of thwarting the policy of the Act. Id. at 361.
“Obviously,” the Court concluded, “employers cannot set at naught the National
Labor Relations Act by inducing their workmen to agree not to demand performance of
the duties which it imposes.” Id. at 364.
Four years later, the Court reaffirmed the principle that employers cannot enter
into individual agreements with employees in which the employees cede their statutory
rights to act collectively. In J. I. Case Co. v. NLRB, 321 U.S. 332 (1944), the Court held
that individual employment contracts predating the certification of a union as the
employees’ representative cannot limit the scope of the employer’s duty to bargain with
the union. The Supreme Court observed that:
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Individual contracts no matter what the circumstances that justify their execution
or what their terms, may not be availed of to defeat or delay the procedures
prescribed by the National Labor Relations Act. . . .
. . . .
Wherever private contracts conflict with [the Board’s] functions [of
preventing unfair labor practices], they obviously must yield or the Act would be
reduced to a futility.
Id. at 337.
During this same period of time, the Board held unlawful a clause in individual
employment contracts that required employees to attempt to resolve employment
disputes individually with the employer and then provided for arbitration. J. H. Stone &
Sons, 33 NLRB 1014 (1941), enfd. in relevant part, 125 F.2d 752 (7th Cir. 1942). “The
effect of this restriction,” the Board explained, “is that, at the earliest and most crucial
stages of adjustment of any dispute, the employee is denied the right to act through a
representative and is compelled to pit his individual bargaining strength against the
superior bargaining power of the employer.” Id. at 1023 (footnote omitted). The Seventh
Circuit affirmed the Board’s holding, describing the contract clause as a per se violation
of the Act, even if “entered into without coercion,” because it “obligated [the employee]
to bargain individually” and was a “restraint upon collective action.” NLRB v. Stone, 125
F.2d 752, 756 (7th Cir. 1942).
357 NLRB No. 187, at 4-5.
Respondent seeks to distinguish its arbitration policy from the arbitration agreement in
the Horton case by claiming that its opt-out opportunity makes the agreement voluntary. It
asserts that no violation occurs when employees voluntarily refrain from exercising Section 7
rights. By providing employees with an opt-out opportunity, Respondent argues that it has
properly balanced its arbitration policy with the policies contained in the NLRA, the Federal
Arbitration Act (FAA), and the Rules Enabling Act. Respondent also argues that by
incorporating the Federal Rules of Civil Procedure in its arbitration policy, it has provided an
avenue for employees to pursue class action through a permissive joinder of claims under FRCP
Rule 20. Even though Respondent explicitly rejects any notion that the right to engage in class
or collective action is a protected concerted activity under Section 7, it argues that the Acting
General Counsel failed to prove the essential elements of his case for other reasons. On this
latter score, Respondent correctly argues that there is no evidence of interference, restraint, or
coercion that brought about the Charging Party’s or any other employee’s voluntary decision at
the beginning of their employment to forego participation in class or collective actions.
Respondent advances a variety of other claims. First, Respondent asserts that Horton
“was wrongly decided” because “even an arbitration policy with a class action waiver that is a
mandatory condition of employment must be enforced” under the FAA and Supreme Court
precedent. Second, Respondent argues that the charge is untimely with respect to employees
hired before January 2007 who have not been provided with an opt-out opportunity but, in the
event a violation is found as to them, the appropriate remedy would be merely to require that
they be provided with the opportunity to opt out of the arbitration policy. Third, Respondent
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asserts that its motion to dismiss complaint paragraph 5 should be granted because the NLRB
does not have authority to require courts to undo determinations that they have already made and
because a retroactive remedy in the case is not appropriate. And fourth, Respondent claims that
the NLRB did not have a proper quorum when Horton was decided because the term of Board
Member Becker (one of the panel participants) had expired when the case was decided.
As counsel for Respondent and the amicus know full well, I lack authority to adjudicate
any claims that Horton was wrongly decided, or was decided after Member Becker’s term
expired. Even so, Horton compiles statutory declarations and case precedent that date back
seven decades that are binding on me. So regardless of the outcome of that case, the precedent it
details is clearly binding until overruled.
The most important beginning point in the analysis of the issues presented here is to
recognize that this case does not place in question an employer’s right to require employees to
arbitrate employment-related disputes. For purposes of this decision, I have presumed that
employers may do exactly that and, if they do so, they would be entitled to enforce that
requirement. But the tedious arguments advanced by Respondent and its amicus ally fail to
convince me that the FAA provides employers with a license to unilaterally craft an arbitration
requirement in their terms and conditions of employment that serve to sweep away the well
recognized statutory rights of employees to act concertedly by bringing legal actions against their
employer. Quite plainly, this case presents the altogether different question as to whether an
employer may design and enforce an arbitration policy that prevents its workers from acting in
concert for their mutual aid and benefit by initiating and prosecuting a good-faith legal action
against their employer.
If one accepts Respondent’s arguments, the Supreme Court’s recent decisions involving
the FAA have radically empowered employers to limit employees Section 7 activity. Relatively
speaking, AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740 (2011) and CompuCredit, v.
Greenwood, 132 S. Ct. 665 (2012), which Respondent cites in support, have little, if anything, to
do with arbitration in the context of the employer-employer relationship. In Concepcion, the
U.S. Supreme Court held FAA’s requirement that the courts enforce private arbitration
agreements preempted the California Supreme Court’s holding in Discover Bank v. Superior
Court, 30 Cal. Rptr. 3d 76 (2005), a case where the state court held that arbitration agreements
containing class-action waivers in certain consumer contracts of adhesion unenforceable because
they operated effectively as exculpatory contract clauses that are contrary to that state’s public
policy.
Further, CompuCredit is essentially a statutory construction case. It arose after lower
courts decided to deny the defendant’s motion to compel arbitration per a private agreement
based on their conclusion that certain statutory language evidenced a congressional intent that
claims arising under the Credit Repair Organizations Act (CROA) would not be arbitrable. In its
decision, the Supreme Court concluded that the lower courts had misconstrued specific statutory
language in CROA that required a consumer rights notice to include the right to “sue” as
precluding litigation in an arbitral forum. It concluded that the remedial language elsewhere in
CROA did not foreclose the parties from adopting “a reasonable forum-selection clause” that
included arbitration and, if they did so, the courts were obliged to enforce parties’ agreement
under the FAA. 132 S.Ct. at 671-672.
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In my judgment, these cases do not address the fundamental question of whether, and to
what degree, the FAA may be used as a tool to alter, by way of private “agreements” that are in
large measure imposed unilaterally by employers, the fundamental substantive rights of workers
established by decades old congressional legislation. There should be no mistake about it that
such a conclusion would be a radical departure from the manner in which the NLRA has been
applied in the past. Here, the core issue is whether or not the Respondent may restrict the rights
of employees to engage in concerted activity long recognized and protected by Section 7.
Though instructive with respect the FAA’s standing in the world of general consumer litigation,
the arguments Respondent and its amicus ally have fashioned from Concepcion and
CompuCredit would require that the decades old statutory rights of employees be thrown
overboard in order to reach the conclusions they advocate.
Employer devised agreements that seek to restrict employees from acting in concert with
each other are the raison d'être for both the Norris-LaGuardia Act and Section 7 of the NLRA.
The congressional findings giving rise to NLRA and Norris-LaGuardia plainly state that these
statutes were intended to correct the massive imbalance in bargaining power between the
individual worker and his employer. To correct this imbalance, Congress empowered workers to
act concertedly for their mutual aid and benefit in the workplace. Thus, the public policy
declaration in Section 2 of the Norris-LaGuardia Act passed in 1932 states:
Whereas under prevailing economic conditions, developed with the aid of governmental
authority for owners of property to organize in the corporate and other forms of
ownership association, the individual unorganized worker is commonly helpless to
exercise actual liberty of contract and to protect his freedom of labor, and thereby to
obtain acceptable terms and conditions of employment, wherefore, though he should be
free to decline to associate with his fellows, it is necessary that he have full freedom of
association, self-organization, and designation of representatives of his own choosing, to
negotiate the terms and conditions of his employment, and that he shall be free from the
interference, restraint, or coercion of employers of labor, or their agents, in the
designation of such representatives or in self-organization or in other concerted activities
for the purpose of collective bargaining or other mutual aid or protection . . . 29 USC §
102. (Emphasis added)
Similarly, Section 1 of the NLRA states in part:
The inequality of bargaining power between employees who do not possess full freedom
of association or actual liberty of contract and employers who are organized in the
corporate or other forms of ownership association substantially burdens and affects the
flow of commerce, and tends to aggravate recurrent business depressions, by depressing
wage rates and the purchasing power of wage earners in industry and by preventing the
stabilization of competitive wage rates and working conditions within and between
industries. 29 USC § 151.
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Respondent’s arbitration policy serves to restore the imbalance between the individual worker
and the corporate employer by prohibiting employees from pursuing the resolution of work place
disputes with concerted legal actions and by imposing broad nondisclosure requirements.8
Essentially, the Respondent and its amicus ally lobby for this administrative tribunal to establish
an employer’s right to restrict employees, in order to hold a job, from exercising their statutory
right to use the full-range of legal remedies generally available to all citizens.
Lafayette Park, supra, requires a determination as to whether Respondent’s arbitration
policy contains terms that would tend to chill its employees Section 7 activities. On this
fundamental question, I find that both the class action ban and the nondisclosure restriction
contained in Respondent’s arbitration policy unlawfully limit Respondent’s employees from
exercising their Section 7 right to commence and prosecute employment-related legal actions in
concert with other employees,
Respondent’s arbitration policy unlawfully requires its employees to surrender core
Section 7 rights by imposing significant restraints on concerted action regardless of whether the
employee opts to be covered by it or not. For the purposes of worker rights protected by Section
7, the opt-out process designed by the Respondent is an illusion. The requirement that
employees must affirmatively act to preserve rights already protected by Section 7 rights through
the opt-out process is, as the Acting General Counsel argues, an unlawful burden on the right of
employees to engage in collective litigation that may arise in the future. Board precedent
establishes that employees may not be required to prospectively trade away their statutory rights.
Ishikawa Gasket American, Inc., 337 NLRB 175-176 (2001).
Even if a worker consciously chooses to opt-out and completes the separate process
necessary to do so in a timely manner, the Respondent can still effectively prevent concerted
employee activity between those who opt out and the vast majority of other employees who (1)
consciously chose not to opt-out; (2) unconsciously failed to opt-out in a timely fashion; and (3)
were hired before 2007 and thereby not given an opportunity to opt out.9 Respondent’s
arbitration policy limits the assistance the opted-out employee may obtain from fellow workers
even in pursuit of their own individual claims. But aside from that, any notion that an opt-out
employee can identify others who have opted-out in order to secure their fullest cooperation in a

8 I found the claims made in the briefs filed by Respondent and the amicus that Horton seeks
to alter all manner of rules governing the prosecution of complaints in federal and state courts
unconvincing. All Horton, and this decision for that matter, seek to protect is the right of
employees to invoke the ordinary rules that apply to all. Nothing would alter how the courts of
any jurisdiction deal with complaints brought before them by Respondent’s employees.
9 Charging Party and its amicus ally suggested that I essentially conclude the Respondent
deliberately designed its initial employment documents in order to, among other things, dupe
new employees into being bound by its arbitration policy. Although I am not willing to reach
that conclusion based on the limited evidence in this case, I would be startled to learn that the
number of employees who made a conscious, fully-informed decision to be bound by
Respondent’s highly self-serving arbitration policy even came close to the infinitesimal number
of employees who actually opted out.
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collective action is simply belied by Respondent’s own inability to readily identify other opted
out individuals in responding to the Acting General Counsel’s hearing subpoena.
Respondent also argues that its arbitration policy only requires employees to bring their
employment-related disputes individually and does nothing to prevent ordinary concerted
activities among employees. That assertion is simply far from the case. The nondisclosure
requirement in Respondent’s arbitration policy imposes extreme limitations on activities
protected by Section 7. The following portion of the Board’s decision in Kinder-Care Learning
Centers, 299 NLRB 1171 (1990), illustrates the long history of precedent finding that limitations
on employee communications about their wages, hours and working conditions such as those
imposed by this nondisclosure policy to be unlawful:
Under Section 7 of the Act, employees have the right to engage in activities for their
‘‘mutual aid or protection,’’ including communicating regarding their terms and
conditions of employment.3 It is well established that employees do not lose the
protection of the Act if their communications are related to an ongoing labor dispute and
are not so disloyal, reckless, or maliciously untrue 4 as to constitute, for example, ‘‘a
disparagement or vilification of the employer’s product or reputation.’’5 For example,
the Board has found employees’ communications about their working conditions to be
protected when directed to other employees,6 an employer’s customers,7 its advertisers,8
its parent company, 9 a news reporter,10 and the public in general.11
--------------------
3 See Eastex, Inc. v. NLRB, 437 U.S. 556 (1978).
4 Cf. NLRB v. Electrical Workers IBEW Local 1229 (Jefferson Standard), 346 U.S. 464 (1953).
5 See Sahara Datsun, 278 NLRB 1044, 1046 (1986), enfd. 811 F.2d 1317 (9th Cir. 1987), quoting
Allied Aviation Service Co. of New Jersey, 248 NLRB 229, 230 (1980), enfd. 636 F.2d 1210 (3d
Cir. 1980).
6 In addition to Waco, Inc., 273 NLRB 746 (1984), cited by the judge, see also Heck’s, Inc., 293
NLRB No. 132, slip op. at 23 (May 18, 1989), and Scientific-Atlanta, Inc., 278 NLRB 622, 625
(1986).
7 Greenwood Trucking, Inc., 283 NLRB 789 (1987).
8 Sacramento Union, 291 NLRB No. 83 (Oct. 31, 1988), enfd. 899 F.2d 210 (9th Cir. 1989).
9 Oakes Machine Corp., 288 NLRB 456 (1988), enfd. 897 F.2d 84 (2d Cir. 1990); Mitchell
Manuals, Inc., 280 NLRB 230, 232 fn. 7 (1986).
10 Auto Workers Local 980, 280 NLRB l378 (1986), enfd. 819 F.2d 1134 (3d Cir. 1987); Roure
Bertrand Dupont, Inc., 271 NLRB 443 (1984).
11 Cincinnati Suburban Press, 289 NLRB No. 127 (July 20, 1988).
More to the point here, the Board found in Double Eagle Hotel & Casino, 341 NLRB 112
(2004), that a communication rule providing for the discipline of any employee who disclosed
“disciplinary information, grievance/complaint information, performance evaluations, salary
information, salary grade, types of pay increases and termination data for employees who have
left the company” to be unlawful on its face. (Emphasis added)
Although the nondisclosure requirement here does not specify the type of the remedial
action available where an employee fails to heed its limitations, this lack of specificity permits
the inference that Respondent could either resort to disciplinary action or institute a separate
legal action for breach of the arbitration policy’s terms. The chilling effect of either option
should be obvious. Absent the unlikely consent of Respondent, this non-disclosure provision
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could be read by a reasonable employee as requiring the retention of a lawyer just to learn,
among other things, whether it would be permissible to openly solicit one’s fellow workers: (1)
for evidence or service as a witness; (2) for monetary contributions to help pay for the very
expensive costs of arbitration; or (3) for the presence of fellow employees at an arbitration
proceeding merely for moral support. It also means, of course, that the employee who has gone
through the arbitration process under Respondent’s policy would be prohibited, again absent
Respondent’s very unlikely consent, from advising other employees who have like or similar
employment disputes whether or not these other employees have opted out of the arbitration
policy. Even though Respondent’s management would have full access to the detail of prior
arbitration decisions, the nondisclosure provision muzzles the employee who did not opt out and
who invoked the arbitration process from providing a useful critique of the process, the outcome,
or any other worthwhile advice to any fellow worker with a similar dispute whether that
employee had opted out or not. This nondisclosure provision vividly illustrates that Respondent,
by way of the restrictions in its arbitration policy, seeks to restore the power imbalance between
workers and their employers that existed prior to congressional passage of Norris-LaGuardia and
the NLRA.10
For the foregoing reasons, I find Respondent’s arbitration policy with its class action ban
and its nondisclosure provision amounts to the type of private employment agreement that is
unlawful and unenforceable under the NLRA because it severely restricts protected concerted
employee activity. By maintaining it as well as enforcing it as to the pending cases described
above against individuals who are employees within the meaning of Section 2(3), Respondent
has violated, and is continuing to violate, Section 8(a)(1).
CONCLUSIONS OF LAW

10 Any claims that the nondisclosure provision in Respondent’s arbitration policy was not
properly plead nor fully litigated lack merit. In defending the class action ban in its arbitration
policy, Respondent’s arguments encompassed the entirety of its arbitration policy. Apart from
Respondent’s argument that its arbitration policy lawfully restricts class actions and does not
otherwise restrict concerted employee activity, Respondent’s defense relies on a variety of other
provisions in its arbitration policy. The most striking illustration is found in its unmeritorious
claim that FRCP Rule 20, incorporated in its policy by general reference to the FRCP, preserves
an avenue for employees to join in a concerted judicial action, thereby satisfying the Horton
requirement that there be an arbitral or judicial avenue open for collective litigation of
employment claims. In as much as Respondent has chosen to cherry-pick provisions throughout
its arbitration policy, whether explicitly stated or not, in support its defense, it cannot properly be
heard to complain about the scrutiny of its entire policy on the ground that it has not been fully
litigated.
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1. Respondent is an employer engaged in commerce or an industry affecting commerce
within the meaning of Section 2(2), (6), and (7) of the Act.
2. By maintaining and enforcing the arbitration policy contained in its “Team Member
Handbook,” Respondent has engaged in unfair labor practices within the meaning of Section
8(a)(1) of the Act.
3. Respondent’s conduct found above affects commerce within the meaning of Section
2(6) and (7) of the Act.
REMEDY
Having 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.
In accord with the request of the Acting General Counsel, my recommended order will
also require Respondent to notify “all judicial and arbitral forums wherein the (arbitration policy)
has been enforced that it no longer opposes the seeking of collective or class action type relief.”
This will include a requirement that Respondent: (1) withdraw any pending motion for individual
arbitration, and (2) request any appropriate court to vacate its order for individual arbitration
granted at Respondent’s request if a motion to vacate can still be timely filed.
Respondent opposes this added relief. It argues that the Board has no authority to direct a
federal or state court, or an arbitration tribunal to modify its own prior orders or awards. In
addition, Respondent argues that such retroactive relief is inappropriate.
I find the remedial action sought by the Acting General Counsel is appropriate here.
Respondent’s contention concerning the Board’s lack of authority misapprehends the nature of
this relief sought and granted. The Acting General Counsel seeks no order or directive that
would require any federal or state court, or arbitral tribunal to do anything. Instead the relief
sought, and which I grant, merely requires Respondent to take action consistent with this
decision by notifying any court or arbitral tribunal that have compelled the individual arbitration
of claims at the request of Respondent that it is withdrawing such a motion or request and no
longer objects to class or collective employment-related claims brought by those of its workers
who qualify as employees within the meaning of Section 2(3) of the Act. If the court or tribunal
chooses not to honor Respondent’s good-faith request for whatever reason, then so be it. And
the same is true with respect to an order requiring Respondent to withdraw any pending motion
seeking to prevent Section 2(3) employees from acting collectively.
Respondent’s further assertion that such relief is inappropriate as retroactive in nature
also misapprehends the nature of the relief. Any remedial order under Section 10(c) necessarily
applies to the past conduct of the employer or labor organization against whom it is issued. An
order that applies to a respondent’s own past conduct found unlawful following a hearing
conducted in accord with the principles of due process is not the type of order that would be
subject to, or require justification under, the principles of retroactive application. My
recommended order applies to no other pending case, no other employer, and to no other conduct
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than alleged unlawful in this complaint. For these reasons, Respondent’s assertions about
retroactive application lack merit.
On these findings of fact and conclusions of law and on the entire record, I issue the
following recommended11
ORDER
The Respondent, 24 Hour Fitness USA, Inc., San Ramon, California, its officers, agents,
successors, and assigns, shall
1. Cease and desist from
a. Maintaining any provision in the arbitration of disputes section of its Team Member
Handbook that prohibits its employees from bringing or participating in class or collective
actions brought in any arbitral or judicial forum that relates to their wages, hours, or other terms
and conditions of employment.
b. Enforcing, or seeking to enforce, any provision in the arbitration of disputes section of
its Team Member Handbook that prohibits employees from bringing or participating in class or
collective actions brought in any arbitral or judicial forum that relates to their wages, hours, or
other terms and conditions of employment.
c. 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 Act.
a. Remove from the arbitration of disputes section of future editions of its Team Member
Handbook any prohibition against employees from bringing or participating in class or collective
actions brought in any arbitral or judicial forum that relates to their wages, hours, or other terms
and conditions of employment.
b. Notify present and future employees individually that the existing prohibition against
bringing or participating in class or collective actions in any arbitral or judicial forum that relates
to their wages, hours, or other terms and conditions of employment currently contained it the
arbitration of disputes section of its Team Member Handbook will be given no effect and that the
provision will be removed from subsequent editions of the Team Member Handbook.

11 If no exceptions are filed as provided by Sec. 102.46 of the Board’s Rules and Regulations,
the findings, conclusions, and recommended Order shall, as provided in Sec. 102.48 of the Rules,
be adopted by the Board and all objections to them shall be deemed waived for all purposes.
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c. Notify any arbitral or judicial tribunal where it has pursued the enforcement of the
prohibition against bringing or participating in class or collective actions relating to the wages,
hours, or other terms and conditions of employment of its employees since August 15, 2010, that
it desires to withdrawal any such motion or request, and that it no longer objects to it employees
bringing or participating in such class or collective actions.
d. Within 14 days after service by the Region, post at all of its facilities located in the
United States and its territories copies of the attached notice marked “Appendix.”12 Copies of
the notice, on forms provided by the Regional Director for Region 20 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 posted. In addition to physical posting of paper notices, the notices shall be
distributed electronically, such as by email, posting on an intranet or an internet site, and/or other
electronic means, inasmuch as Respondent customarily communicates with its employees by
such means. Reasonable steps shall be taken by the Respondent to ensure that the posted hard
copy notices are not altered, defaced, or covered by any other material. In the event that, during
the pendency of these 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 February 15, 2011.
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 Respondent has taken to comply.
Dated, Washington, D.C. November 6, 2012
_____________________________
William L. Schmidt
Administrative Law Judge

12 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.”
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 by maintaining
and enforcing certain provisions of our Arbitration of Disputes policy contained in our Team
Member Handbook 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 any provision in the Arbitration of Disputes section of our Team
Member Handbook that prohibits you from bringing or participating in class or collective actions
relating to your wages, hours, or other terms and conditions of employment brought in any
arbitral or judicial forum.
WE WILL NOT enforce, or seek to enforce, any provision in the Arbitration of Disputes section
of our Team Member Handbook that prohibits you from bringing or participating in class or
collective actions relating to your wages, hours, or other terms and conditions of your
employment in any arbitral or judicial forum.
WE WILL NOT prohibit you from disclosing the existence, content, or results of any arbitration
conducted under our Arbitration of Disputes policy.
WE WILL NOT in any like or related manner interfere with, restrain, or coerce you in the
exercise of the rights guaranteed to you by Federal labor law.
WE WILL remove from the Arbitration of Disputes section of future editions of our Team
Member Handbook any prohibition against you from bringing or participating in class or
collective actions relates to your wages, hours, or other terms and conditions of employment
brought in any arbitral or judicial forum.
WE WILL remove from the Arbitration of Disputes section of future editions of our Team
Member Handbook any prohibition against you from disclosing the existence, content, or results
of any arbitration conducted under that policy
WE WILL notify present and future employees individually that our existing prohibition against
bringing or participating in class or collective actions in any arbitral or judicial forum that relate
to their wages, hours, or other terms and conditions of employment currently contained in the
Arbitration of Disputes section of our Team Member Handbook will be given no effect and that
the provision will be removed from subsequent editions of the Team Member Handbook.
WE WILL notify present and future employees individually that our existing prohibition against
disclosing the existence, content, or results of any arbitration conducted under our Arbitration of
Disputes policy will be given no effect and that the provision will be removed from subsequent
editions of our Team Member Handbook.
WE WILL notify any arbitral or judicial tribunal where we have pursued the enforcement of our
prohibition against bringing or participating in class or collective actions that relate to the wages,
hours, or other terms and conditions of employment of our employees since August 15, 2010,
that we desire to withdrawal any such motion or request, and that WE WILL no longer object to
our employees bringing or participating in such class or collective actions.
24 HOUR FITNESS USA, 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.
901 Market Street, Suite 400
San Francisco, California 94103-1735
Hours: 8:30 a.m. to 5 p.m.
415-356-5130.
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, 415-356-5139.