COASTAL MARINE SERVICES, INC.

National Labor Relations Board - Administrative Judge Opinions

Mar 1, 2016

21-CA-139031 (N.L.R.B. Mar. 1, 2016)

JD–16–16
San Diego, CA
UNITED STATES OF AMERICA
BEFORE THE NATIONAL LABOR RELATIONS BOARD
DIVISION OF JUDGES
COASTAL MARINE SERVICES, INC.
and Case 21–CA–139031
INTERNATIONAL ASSOCIATION OF
HEAT & FROST INSULATORS AND
ALLIED WORKERS, LOCAL 5
Ami Silverman, Esq.,
for the General Counsel.
L. Brent Garrett, Esq. (Fisher &
(Phillips, LLP)
for the Respondent.
David A. Rosenfeld, Esq.
(Weinberg Roger & Rosenfeld)
for the Charging Party.
DECISION
STATEMENT OF THE CASE
ROBERT A. GIANNASI, Administrative Law Judge. This case was submitted to the
Judges Division on a stipulated record and assigned to me by Order dated February 10, 2016.1
Paragraph 4 of the complaint alleges that, since at least April 25, 2014, Respondent has
maintained as a condition of employment for all its employees at its San Diego facility an
“Employee Acknowledgement and Agreement” that contains provisions requiring employees to
resolve employment-related disputes exclusively through individual arbitration proceedings and
to relinquish any rights they have to resolve disputes through collective or class action, in
violation of Section 8(a)(1) of the Act. Respondent filed an answer denying the alleged
violation. The General Counsel, the Respondent and Charging Party Union (hereafter the
Union) all filed briefs in support of their positions, which I have read and considered.

1 A portion of the case was resolved by a settlement agreement between the parties. The remaining
portion was submitted on partial stipulation of facts and exhibits. On December 14, 2015, Judge Jeffrey
Wedekind issued an order approving the partial stipulation, rejecting the Charging Party Union’s three
objections to the partial stipulation.
JD–16–16
2
Based on the entire record in this case, including the stipulation, the agreed upon exhibits,
and the briefs of the parties, I make the following:
Findings of Fact
The stipulation of the parties sets forth the following:
* * * *
4. (a) At all material times, Respondent, a California corporation, with
a warehouse facility located in San Diego, California, has been engaged in the
nonretail business of performing insulation work on ships.
(b) During the 12-month period ending November 5, 2014, a
representative period, Respondent, in conducting its business operations
described above in paragraph 4(a), performed services valued in excess of
$50,000 in States other than the State of California.
(c) During the 12-month period ending November 5, 2014, Respondent
in conducting its operations described above in paragraph 4(a), purchased
and received at its San Diego, California facility goods valued in excess
of $50,000 directly from points outside the State of California.
(d) At all material times, Respondent has been an employer engaged
in commerce within the meaning of Section 2(2)(6)(7) of the Act.
5. At all material times, the Union is a labor organization within the meaning of
Section 2(5) of the Act.
6. At all material times, and since at least on or about April 25, 2014, Respondent
has maintained as a condition of employment for all of its employees at the
San Diego facility an agreement titled “Employee Acknowledgement and
Agreement,” a copy of which is attached to the Complaint as Appendix A,
and which is also attached as Exhibit 7.
In pertinent part, the agreement set forth in Exhibit 7 requires the employee to agree to
“utilize binding arbitration as the sole and exclusive means to resolve all disputes that may arise
of or be related in any way to my employment . . . .” It also provides that, by signing the
agreement, the employee agrees to “waive any substantive or procedural rights that I may have to
bring an action on a class, collective, private attorney general, representative or other similar
basis.” It further provides that the employee may check a box at the end of paragraph 3 of the
agreement to retain those rights, which are otherwise waived.
The stipulation continues as follows:
7. (a) General Counsel takes the position that at all material times
since at least on or about April 25, 2014, employees would reasonably
conclude that the provisions of the “Employee Acknowledgement and
JD–16–16
3
Agreement” attached as Exhibit 7 and described above in paragraph 6,
preclude employees from engaging in conduct protected by Section 7 of
the Act.
(b) Respondent takes the position that at all times since at least on or
about April 25, 2014, employees would not reasonably conclude that the provisions
of the “Employee Acknowledgment and Agreement” attached as Exhibit 72
and described above at paragraph 6, preclude employees from engaging in
conduct protected by Section 7 of the Act.
The Issue Presented
Whether Respondent’s Employee Acknowledgment and Agreement violates Section
8(a)(1) of the Act.
Discussion and Analysis
The Board has held that maintaining mandatory agreements requiring employees to
pursue individual rather than collective arbitration and court actions with respect to employment
disputes interferes with substantive rights guaranteed by Section 7 of the Act and therefore
violates Section 8(a)(1) of the Act. See Flyte Tyme Worldwide, 363 NLRB No. 107 (2016),
citing and relying upon D.R. Horton, Inc., 357 NLRB No. 184 (2012), enf. denied in relevant
part, 737 F.3d 344 (5th Cir. 2013) and Murphy Oil USA, Inc., 361 NLRB No. 72 (2014), enf.
denied in relevant part, __F.3d __, 2015 WL 6457613 (5th Cir. Oct. 26, 2015). Accord: Bristol
Farms, 363 NLRB No. 45 (2015); Solar City Corp., 363 NLRB No. 83 (2015); Century Fast
Foods, Inc., 363 NLRB No. 97 (2016); Fuji Food Products, Inc., 363 NLRB No. 118 (2016);
Multiband EC, Inc., 363 NLRB No. 100 (2016); and Network Capital Funding Corp., 363 NLRB
No. 106 (2016). As an administrative law judge, I am bound to follow Board decisions unless
they are reversed by the Board itself or the Supreme Court. See Pathmark Stores, 342 NLRB
378 fn. 1 (2004).
The Employee Acknowledgement and Agreement in this case falls squarely within those
agreements found unlawful by the Board in the above cases. In D.R. Horton, the Board applied
the test in Lutheran Heritage Village-Livonia, 343 NLRB 646 (2004) and found that an
agreement requiring employees to waive their right to collectively pursue employment-related
claims violated the Act because “it expressly restricts Section 7 activity, or, alternatively,
because employees would reasonably read it as restricting such activity.” 357 NLRB No. 184,
slip op. at 7. Thus, the Board concludes that such agreements themselves, by their language and
their mandatory application, reasonably interfere with Section 7 rights. I therefore find the
agreement herein similarly violative of Section 8(a)(1) of the Act.3

2 This paragraph of the stipulation submitted to me and as set forth in the complaint erroneously
describes the agreement as Exhibit 8.
3 The Union’s brief advances many arguments in support of the view that the Federal Arbitration Act
(the FAA) does not apply in this case. I do not address those arguments here because the Board has
essentially treated the issue in D.R. Horton and Murphy Oil.
JD–16–16
4
In its brief (Br. 3-9), Respondent cites numerous court decisions that are contrary to the
Board’s rationale set forth in its D.R. Horton and Murphy Oil decisions and asks me to reject
those Board decisions because they are no longer “good law.” I am not, however, authorized to
do so, as indicated above. Moreover, the Board has repeatedly reaffirmed the rationale of its
seminal decisions on the issue, as I have also indicated above. Those decisions have already
rejected the kinds of arguments implicitly made in Respondent’s brief by its string cites to court
cases disagreeing with the Board’s views. I need not treat those implicit arguments further here.
Respondent does explicitly make two arguments in this respect—that no employees engaged in
concerted activities in this case; and that the agreement here was saved from illegality because of
its opt-out provision permitting employees to check a box if they wanted to preserve collective
rights (Br. 9-11). But the Board has rejected both of these arguments as well. As to the opt-out
feature, see AT&T Mobility Services, LLC, 363 NLRB No. 99 (2016), citing cases (such opt out
clauses are unlawful because they require employees “to prospectively waive their Section 7
right to engage in concerted activity.”); and, as to the concerted activity argument, see AT&T,
above, 363 NLRB No. 99, at fn. 3.4
Conclusions of Law
1. By maintaining its Acknowledgement and Agreement as a condition of employment,
Respondent has violated Section 8(a)(1) of the Act.
2. The above violation is an unfair labor practice within the meaning 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 from its unlawful conduct and to take certain
affirmative action designed to effectuate the policies of the Act. Having found that the
Respondent’s Employee Acknowledgement and Agreement is unlawful, Respondent shall be
ordered to rescind or revise it to make clear to employees that the agreement does not constitute
or require a waiver in all forums of their right to maintain or participate in collective and/or class
actions, and shall notify employees of the rescinded or revised agreement by providing them a
copy of the revised policy or specific notification that the agreement has been rescinded.
Respondent is also ordered to distribute appropriate remedial notices to its employees

4 Respondent also asserts (Br. 11-12) that a legal memorandum issued by the Office of General
Counsel’s Division of Operations Management discussing the effects of the Board’s D.R. Horton decision
revoked an earlier pre-D.R. Horton guideline memorandum of the General Counsel. According to
Respondent, that second memorandum was issued in violation of the Administrative Procedure Act
because it was not preceded by notice and comment required of agency rulemaking. It is not clear
whether Respondent’s effort means to fault the Board or the General Counsel. But insofar as it seeks to
invalidate the Board’s rationale in D.R. Horton, Respondent’s contention is without merit. The second
memorandum was simply a recognition of clear Board law as a result of the D.R. Horton decision, just as
the first one was an opinion based on the ambiguity of Board law before D.R. Horton. Moreover, it is the
Board’s decisions that are pertinent here, not the General Counsel’s views of those decisions. The
General Counsel’s office is the prosecuting arm of the Agency. The Board is the judicial arm of the
Agency. And, in D.R. Horton, the Board appropriately decided the issue by adjudication, not by
rulemaking. See NLRB v. Bell Aerospace Co., 416 U.S. 267, 290-295 (1974).
JD–16–16
5
electronically, such as by email, posting on an internet or intranet site, and/or other appropriate
electronic means, if it customarily communicates with its employees by such means. J.C. Picini
Flooring, 356 NLRB No. 9 (2010).
On these findings of fact and conclusions of law and on the entire record, I issue the
following recommended5
ORDER
Respondent, Coastal Marine Services Inc., its officers, agents, successors, and assigns,
shall
1. Cease and desist from
(a) Maintaining a mandatory and binding arbitration agreement that requires employees,
as a condition of employment, to waive the right to maintain class or collective actions in all
forums, whether arbitral or judicial.
(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
(a) Rescind its Employee Acknowledgement and Agreement in all of its forms, or revise
it in all of its forms to make clear to employees that the agreement does not constitute a waiver
of their right to maintain employment-related joint, class, or collective actions in all forums.
(b) Notify all current and former employees who were required to sign or otherwise
became bound to the Employee Acknowledgement and Agreement in any form that it has been
rescinded or revised and, if revised, provide them a copy of the revised agreement.
(c) Within 14 days after service by the Region, post at its facilities where the Employee
Acknowledgement and Agreement is or has been in effect copies of the attached notice marked
“Appendix.”6 Copies of the notice, on forms provided by the Regional Director for Region 21,
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, notices shall be distributed electronically, such as by email, posting on an intranet or an
internet site, 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

5 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.
6 If this Order is enforced by a judgment of a United States court of appeals, the words in the notice
reading “Posted by Order of the National Labor Relations Board” shall read “Posted Pursuant to a
Judgment of the United States Court of Appeals Enforcing an Order of the National Labor Relations
Board.”
JD–16–16
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notices are not altered, defaced, or covered by any other material. If 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 October 17, 2014.
(d) Within 21 days after service by the Region, file with the Regional Director for Region
21 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., March 1, 2016.
Robert A. Giannasi
Administrative Law Judge
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
WE WILL NOT maintain a mandatory and binding arbitration agreement that requires
employees, as a condition of 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 our Employee Acknowledgement and Agreement in all of its forms, or revise
it in all of its forms to make clear to employees that the agreement does not constitute a waiver
of their right to maintain employment-related joint, class, or collective actions in all forums.
WE WILL notify all current and former employees who were required to sign or otherwise
became bound to the Employee Acknowledgement and Agreement in any form that it has been
rescinded or revised and, if revised, provide them a copy of the revised agreement.
COASTAL MARINE SERVICES, 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.
888 South Figueroa Street, 9th Floor, Los Angeles, CA 90017-5449
(213) 894-5200, Hours: 8:30 a.m. to 5:00 p.m.
The Administrative Law Judge’s decision can be found at www.nlrb.gov/case/21-CA-139031
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, (213) 894-5184.