Citi Trends, Inc.

National Labor Relations Board - Administrative Judge Opinions

Mar 9, 2015

10-CA-133697 (N.L.R.B. Mar. 9, 2015)

JD(ATL)–03–15
Darlington, SC
UNITED STATES OF AMERICA
BEFORE THE NATIONAL LABOR RELATIONS BOARD
DIVISION OF JUDGES
ATLANTA BRANCH OFFICE
CITI TRENDS, INC.
and Case 10–CA–133697
DEDRICK PETERKIN, an Individual
Michael W. Jeannette, Esq.,
for the General Counsel.
Edward M. Cherof, Esq.
(Jackson Lewis P.C.),
for the Respondent.
DECISION
STATEMENT OF THE CASE
IRA SANDRON, Administrative Law Judge. This case is before me on the parties’ January
2, 2015 joint motion to waive a hearing and have a decision based on a stipulated record,1 and
Associate Chief Judge William N. Cates’ January 12, 2015 order accepting the motion, setting a
briefing schedule, and designating me as the judge to prepare the decision. On February 23,
2015, the General Counsel and the Respondent timely filed briefs, which I have duly considered.

Issues
As stipulated, the primary issue is whether the Board’s decisions in D. R. Horton2 and
Murphy Oil3 should be applied to find that Citi Trends, Inc. (the Respondent) violated Section
8(a)(1) of the National Labor Relations Act (the Act) by maintaining a mandatory arbitration
agreement (MAA) that provides for arbitration of employment disputes on an individual basis.

1
Jt. Exh. 1 (hereinafter the stipulation).
2
357 NLRB No. 184 (2012), enf. denied in relevant part 737 F.3d 344 (5th Cir. 2013), pet. for rehearing en
banc denied (5th Cir. No. 12-60031, April 16, 2014).
3
361 NLRB No. 72 (2014).
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2
The Respondent also contends that the complaint is barred by Section 10(b) of the Act
because the underlying charge was filed more than 6 months after the Charging Party signed the
MAA in question.
Stipulated Facts5
The Respondent, a Delaware corporation, operates retail clothing stores in 29 states, with
511 locations, and maintains distribution warehouses in South Carolina and Oklahoma. At all
material times, the Respondent has been an employer engaged in commerce within the meaning
of Section 2(2), (6), and (7) of the Act.10
At all material times through the present, Respondent has required employment
applicants and current employees at its retail sales and distribution warehouses to sign a
document titled “Arbitration Agreement” (mandatory arbitration agreement or MAA), which
requires employees to waive their right to pursue certain class and collective actions before an 15
arbitrator and mandates that certain employment-related disputes be arbitrated rather than
litigated in a court of law.4 Relevant portions of the MAA are as follows:
Class/Collective Action Waiver
20
This Agreement requires all claims to be pursued on an individual basis only.
You and the Company hereby waive all rights to (i) commence, or be a party to,
any class, representative or collective claims or (ii) jointly bring any claim against
each other with any other person or entity. You and the Company must pursue
any claim on an individual basis only, including claims alleging a pattern and25
practice of unlawful conduct. In addition, the inability to join others in a claim
for pattern and practice violations shall not by itself constitute a bar to the pursuit
of such a claim.
Lastly, nothing herein limits your right and the rights of others to collectively30
challenge the enforceability of this Agreement, including the class/collective
action waiver. Notwithstanding, the Company will assert that the parties have
agreed to pursue all claims individually in the arbitral forum and may ask a court
to compel arbitration of each individual’s claims. To the extent that the filing of
such an action is concerted activity protected under the National Labor Relations 35
Act, such filing will not result in threats, discipline or discharge.
* * *
Receipt and Acknowledgement40
By your signature below, you acknowledge receipt of this Arbitration Agreement.
You also acknowledge that this Agreement is a legal document which, among
other things, requires you to arbitrate, all claims you may have now or in the
future with the Company, which otherwise could have been brought in court.
45

4
Stipulation, Exh. 2.
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3
I knowingly and freely agree to this mutual agreement to arbitrate claims, which
otherwise could have been brought in court. I affirm that I have had sufficient
time to read and understand the terms of this agreement and that I have been
advised of my right to seek legal counsel regarding the meaning and effect of this
agreement prior to signing. By issuance of this agreement, the company agrees to 5
be bound to its terms without any requirement to sign this agreement. [Emphasis
on the form omitted]
G) Either party can reference or rely upon other sections of the Arbitration
Agreement in support of its position.10
Peterkin began employment at the Respondent’s Darlington, South Carolina distribution
warehouse on about November 24, 2008. On October 16, 2012, he signed the above MAA.5 His
discharge from employment on November 11, 2014 is not pertinent to this matter. He has never
filed or pursued a collective action against the Respondent. 15
Analysis and Conclusions
The Respondent’s 10(b) argument
20
Section 10(b) of the Act provides that “no complaint shall issue based upon on any unfair
labor practice occurring more than six months prior to the filing of the charge. . . .”
The Respondent contends that Section 10(b) bars the General Counsel from pursuing a
complaint inasmuch as the charge was filed on July 30, 2014, more than 6 months after Peterkin 25
signed the MAA, on September 16, 2012. However, the Board has long recognized that Section
10(b) does not bar an allegation of unlawful conduct that began more than 6 months before a
charge was filed but has continued within the 6-month period. More specifically, Section 10(b)
does not preclude a complaint allegation based on the maintenance of a facially invalid rule or
policy within the 10(b) period, even if the rule or policy was promulgated earlier and has not 30
been enforced, since “[t]he maintenance during the 10(b) period of a rule that transgresses
employee rights is itself a violation of Sec. 8(a)(1).” Register-Guard, 351 NLRB 1110, 1110 fn.
2 (2007), enfd. in part 571 F.3d 53 (D.C. Cir. 2009), citing Eagle-Picher Industries, Inc., 331
NLRB 169, 174 fn. 7 (2000). See also Lafayette Park Hotel, 326 NLRB 824, 825 (1998). The
Respondent has cited no contrary precedent.35
Therefore, I conclude that Section 10(b) does not bar the instant complaint.
The legality of the MAA
40
The parties agree that if the principles enunciated in Horton and Murphy Oil govern, the
MAA violates Section 8(a)(1) of the Act. Thus, the Respondent does not dispute that the MAA
is unlawful under Horton and Murphy Oil; rather, the thrust of the Respondent’s defense is that
those decisions are bad law.

5
Stipulation, Exh. 3.
JD(ATL)–03–15
4
In Horton, the Board analyzed an MAA in the context of how the Board decides whether
other unilaterally-implemented workplace rules violate Section 8(a)(1), under the test set forth in
Lutheran Heritage Village-Livonia, 343 NLRB 646 (2004). The Board found that the MAA
explicitly restricted the exercise of Section 7 rights and was therefore unlawful under the first
inquiry set out in Lutheran Heritage Village. The Board held that an employer violates Section 5
8(a)(1) of the Act by “requiring employees to waive their right to collectively pursue
employment-related claims in all forums, arbitral and judicial,” because “[t]he right to engage in
collective action—including collective legal action—is the core substantive right protected by
the NLRA and is the foundation on which the Act and Federal labor policy rest.” Horton, supra,
slip op. at 12 (emphasis in original).10
The Board further concluded that finding such MAA unlawful was “consistent with the
well-established interpretation of the NLRA and with core principles of Federal labor policy”
and did not “conflict with the letter or interfere with, the policies underlying the Federal
Arbitration Act (FAA) [9 U.S.C., § 1 et seq.]. . . .” Id., slip op. at 10. 15
The Respondent argues that the Fifth Circuit Court of Appeals and other Federal
appellate courts have rejected Horton to the extent that it found it to be afoul of the Act an MAA
prohibiting class action. Thus, the Fifth Circuit concluded that neither the Act’s statutory text
nor its legislative history contained a congressional command against application of the FAA and 20
that, in the absence of an inherent conflict between the FAA and the Act’s purpose, an MAA
should be enforced according to its terms. 737 F.3d at 361–363. Accordingly, the court denied
enforcement of the Board’s order invalidating the MAA.6
In Murphy Oil, the Board acknowledged the Fifth Circuit's rejection of the Board’s 25
Horton decision on appeal, by a divided panel, as well as decisions of the Second and Eighth
Circuits also indicating disagreement with Horton, but it cited the well-established rule that
“[t]he Board is not required to acquiesce in adverse decisions of the Federal courts in subsequent
proceedings not involving the same parties.” Murphy Oil, supra, slip op at 2 fn. 17, citing Enloe
Medical Center v. NLRB, 433 F.3d 834, 838 (D.C. Cir. 2005), and Nielsen Lithographing Co. v. 30
NLRB, 854 F.2d 1063, 1066–1067 (7th Cir. 1988). Thus, the Board has explained that it is not
required, on either legal or pragmatic grounds, to automatically follow an adverse court decision
but will instead respectfully regard such ruling solely as the law of that particular case. See
Manor West, Inc., 311 NLRB 655, 667 fn. 43 (1993), revd. 60 F.3d 1195 (6th Cir. 1995). See
also D.L. Baker, Inc., 351 NLRB 515, 529 at fn. 42 (2007); Arvin Industries, 285 NLRB 753, 35
757 (1987).
The Board in Murphy Oil expressly reaffirmed Horton, stating that “[t]he rationale of D.
R. Horton was straightforward, clearly articulated, and well supported at every step.” Murphy
Oil, supra, slip op. at 6, and that “[w]ith due respect to the courts that have rejected D. R. Horton, 40
and to our dissenting colleagues, we adhere to its essential rationale for protecting workers’ core
substantive rights under the National Labor Relations Act.” Id., slip op. at 7.

6 The court did enforce the Board’s order that Sec. 8(a)(1) had been violated because an employee would
reasonably interpret the MAA as prohibiting the filing of a claim with the Board.
JD(ATL)–03–15
5
Even assuming arguendo that I agree with the rationales of the circuit courts that have
rejected Horton, I am constrained to follow Board precedent that has not been reversed by the
Supreme Court or by the Board itself, rather than contrary courts of appeals precedent. See
Pathmark Stores, 342 NLRB 378, 378 fn. 1 (2004), citing Iowa Beef Packers, Inc., 144 NLRB
615 (1963), enfd. in part 331 F.2d 176 (8th Cir. 1964); Waco, Inc., 273 NLRB 746, 749 fn. 14 5
(1984).
The Supreme Court, in upholding the enforcement of individual MAAs in various
contexts, has enunciated the general principal that the FAA was designed to promote arbitration.
See, e.g., AT & T Mobility LLC v. Conception, 131 S.Ct. 1740, 1749 (2011). Moreover, the 10
Court in Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991), held that a MAA signed
by an employee waived his right to bring a Federal court action under the Age Discrimination in
Employment Act. However, as the Board noted in Horton, Gilmer dealt with an individual
claim, and the MAA contained no language specifically waiving class or collective claims; ergo,
the Court in Gilmer addressed neither Section 7 nor the validity of a class-action waiver. 15
Horton, supra, slip op. at 12. Inasmuch as the Supreme Court has not specifically addressed the
issue of mandatory arbitration provisions that cover class and/or collective actions vis-à-vis the
Act, it follows that the Court has not overruled the Board’s Horton decision, which I therefore
must apply to determine whether the Respondent’s MAA violated Section 8(a)(1) of the Act.
20
This MAA expressly requires “all claims to be pursued on an individual basis only” and
provides that employees “waive all rights to (i) commence, or be a party to, any class,
representative or collective claims or (ii) jointly bring any claim against each other with any
other person or entity,” including claims alleging a pattern and practice of unlawful conduct.
Clearly, the MAA runs afoul of Horton’s prohibition against requiring that “employees waive 25
their right to collectively pursue employment-related claims in all forums, arbitral and judicial.”
Horton, supra, slip op. at 12.
The MAA contains the caveat that:
30
[N]othing herein limits your right and the rights of others to collectively challenge
the enforceability of this Agreement, including the class/collective action waiver.
Notwithstanding, the Company will assert that the parties have agreed to pursue
all claims individually in the arbitral forum and may ask a court to compel
arbitration of each individual’s claims. To the extent that the filing of such an 35
action is concerted activity protected under the National Labor Relations Act,
such filing will not result in threats, discipline or discharge.
This provision fails to cure the defects in the MAA. In Horton, the Board analyzed the
mitigating effect of language in an MAA that employees have the right to file a class or 40
collective action, including Board charges, challenging the validity of the required waiver. It
found such language to lack substance because employees “still would reasonably believe that
they were barred from filing or joining class or collective action, as the arbitration agreement . . .
still expressly state[s] that they waive the right to do so.” Horton, supra, slip op. at 9 (fn.
omitted). The Board proceeded to explain how such a purported assurance is confusing to 45
employees since “employees [are] told they have the right to do the very thing they waive the
right to do. . . .” Ibid. See also Murphy Oil, supra, slip op at 26 (at best, the language creates an
JD(ATL)–03–15
6
ambiguity, which must be construed against the employer as the drafter), citing Lafayette Park
Hotel, 326 NLRB 824,828 (1998), enfd. 203 F.3d 52 (D.C. Cir. 1999).
Therefore, I conclude that the Respondent violated Section 8(a)(1) of the Act by
maintaining, as a condition of employment and continued employment, a mandatory arbitration 5
agreement (MAA) that requires employees to waive their right to pursue collective or class
lawsuits and arbitrations, and which employees reasonably would believe bars or restricts their
right to file charges with the National Labor Relations Board.
CONCLUSIONS OF LAW10
1. The Respondent is an employer engaged in commerce within the meaning of
Section 2(2), (6), and (7) of the Act.
2. By the following conduct, the Respondent has engaged in unfair labor practices 15
affecting commerce within the meaning of Section 2(6) and (7) of the Act and violated Section
8(a)((1) of the Act:
Maintained, as a condition of employment and continued employment, a mandatory
arbitration agreement (MAA) that requires employees to waive their right to pursue collective or 20
class lawsuits and arbitrations, and which employees reasonably would believe bars or restricts
their right to file charges with the National Labor Relations Board.
REMEDY
25
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.
On these findings of fact and conclusions of law and on the entire record, I issue the 30
following recommended7 order
The Respondent, Citi Trends, Inc. Darlington, SC, its officers, agents, successors, and
assigns, shall
35
1. Cease and desist from
(a) Maintaining, as a condition of employment and continued employment, a
mandatory arbitration agreement (MAA) that require employees to waive their right to pursue
collective or class lawsuits and arbitrations, and which employees reasonably would believe bars 40
or restricts their right to file charges with the National Labor Relations Board.

7 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.
JD(ATL)–03–15
7
(b) In any like or related manner interfering with, restraining, or coercing
employees in the exercise of the rights guaranteed them by Section 7 of the Act.
2. Take the following affirmative action necessary to effectuate the policies of the
Act.5
(a) Rescind the requirement that employees enter into or sign the MAA that is
currently in effect as a condition of employment or continued employment, and expunge all such
agreements and acknowledgements at any of the Respondent’s facilities where the Respondent
has required employees to sign such agreements.10
(b) Rescind or revise the MAA to make it clear that the agreement does not
constitute a waiver of the employees’ right to initiate or maintain employment-related collective
or class actions in arbitrations and in the courts, or to file unfair labor practice charges with the
National Labor Relations Board.15
(c) Notify all applicants and current and former employees that the MAA has
been rescinded or revised to comport with subparagraph (b), and, if revised, provide them with
any revised agreement.
20
(d) Within 14 days after service by the Region, post at its facilities in
Darlington, South Carolina, and any other facilities where MAAs have been maintained as a
condition of employment, copies of the attached notice marked “Appendix.”8 Copies of the
notice, on forms provided by the Regional Director for Region 10, after being signed by the
Respondent’s authorized representative, shall be posted by the Respondent and maintained for 60 25
consecutive days in conspicuous places including all places where notices to employees are
customarily 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 set, and/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, 30
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
January 30, 2014, 6 months before the underlying charge was filed.935
(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.
40

8 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.”
9
See Eagle-Picher Industries, Inc., supra, at 174, 174 fn. 7.
JD(ATL)–03–15
8
Dated, Washington, DC March 9, 2015
5
___________________________________
Ira Sandron
Administrative Law Judge
10
JD(ATL)–03–15
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 (MAA) that our employees
reasonably would believe bars or restricts their right to file charges with the National Labor
Relations Board.
WE WILL NOT maintain or enforce an MAA that requires our employees, as a condition of
employment and continued employment, to waive the right to maintain class or collective
actions in all forums, whether arbitral or judicial.
WE WILL NOT in any like or related manner interfere with, restrain, or coerce employees in
the exercise of the rights guaranteed them by Section 7 of the Act.
WE WILL rescind the requirement that employees enter into or sign the MAA that is
currently in effect, or sign acknowledgements relating to it, as a condition of employment, and
expunge all such agreements and acknowledgements at all of the Respondent’s facilities where
the Respondent has required employees to sign such agreements or acknowledgements.
WE WILL rescind or revise the MAA in all its forms to make it clear that the agreement does
not constitute a waiver of our employees’ right to initiate or maintain employment-related
collective or class actions in arbitrations and in the courts, and that it does not restrict our
employees’ right to file charges with the National Labor Relations Board.
WE WILL notify all applicants and current and former employees who were required to sign the
MAA that the MAA has been rescinded or revised and, if revised, provide them a copy of the
revised agreement.
JD(ATL)–03–15
CITI TRENDS, 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.
233 Peachtree Street N.E., Harris Tower, Suite 1000, Atlanta, GA 30303-1531
(404) 331-2896, Hours: 8 a.m. to 4:30 p.m.
The Administrative Law Judge’s decision can be found at www.nlrb.gov/case/10-CA-133697 or by using the QR code
below. Alternatively, you can obtain a copy of the decision from the Executive Secretary, National Labor Relations Board,
1099 14th Street, N.W., Washington, D.C. 20570, or by calling (202) 273-1940.
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, (404) 331-2870.