MUY PIZZA SOUTHEAST, LLC

National Labor Relations Board - Administrative Judge Opinions

Dec 15, 2016

15-CA-174267 (N.L.R.B. Dec. 15, 2016)

JD(NY)-50-16
New Orleans, LA
UNITED STATES OF AMERICA
BEFORE THE NATIONAL LABOR RELATIONS BOARD
DIVISION OF JUDGES
NEW YORK BRANCH OFFICE
MUY PIZZA SOUTHEAST, LLC
and Case No. 15–CA–174267
STEVEN GREGORY COLVIN
Joseph A. Hoffmann, Jr. Esq.,
for the General Counsel.
William A. McNab Esq.,
for the Respondent.
Mark A. Potashnick Esq.,
for the Charging Party.
DECISION
STATEMENT OF THE CASE
RAYMOND P. GREEN, Administrative Law Judge. The charge was filed on April 18, 2016
and a Complaint was issued on July 28, 2016. In substance, the complaint alleges that the
Respondent has required as a condition of employment that employees agree to be bound by
an agreement requiring them to arbitrate employee disputes and to do so on an individual basis.
On October 14, 2016, the parties filed a joint motion to submit the case on a stipulation
of facts.
Upon consideration of the stipulated record and the parties’ briefs, I make the following
FINDINGS OF FACT
I. JURISDICTION
The 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.
II. ALLEGED UNFAIR LABOR PRACTICES
At all material times, Rebecca Anderson has held the position of Respondent’s store
manager and has been a supervisor within the meaning of Section 2(11) of the Act and an
agent of Respondent within the meaning of Section 2(13) of the Act.
During the fall of 2014, the Charging Party went to Respondent’s facility in Gulf Breeze,
Florida, to apply for a job. There were no openings at the time so the Charging Party left his
name and contact information.
JD(NY)-50-16
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Around early March of 2015, the Respondent’s store manager, Anderson, called the Charging
Party and invited him to apply for a job as a delivery driver. He was instructed to submit an
application online. On March 3, 2015, the Charging Party filled out an application at
https://my.peoplematter.at/panhandlepizza/hire.
5
As part of the application process, the Charging Party was required to sign an
“Agreement to Arbitrate”, which the Charging Party signed on March 3, 2015.
In pertinent part, the “Agreement to Arbitrate,” a copy of which is attached to the
stipulation, states as follows: 10
Because of the delay and expense of the court systems, MUY Pizza
Southeast on behalf of itself and its parents and affiliates, officers and
directors (collectively, “Pizza Hut”) and I agree to use confidential binding
arbitration, instead of going to court, for any claims, including any claims now 15
in existence or that may exist in the future (a) that I may have against Pizza
Hut and/or its current or former employees or (b) that Pizza Hut may have
against me. Without limitation, such claims include any concerning wages,
expense reimbursement, compensation, leave, employment (including, but not
limited to, any claims concerning harassment, discrimination, or retaliation), 20
conversion, breach of fiduciary duty, and/or termination of employment. This
Agreement to Arbitrate shall be governed by the Federal Arbitration Act, 9
U.S.C. Section 1 et seq. Nothing in this Agreement to Arbitrate shall prohibit
me from filing, participating in, or pursuing action with an administrative
agency in accordance with applicable law, including the filing of charges or 25
claims with the National Labor Relations Board or the Equal Employment
Opportunity Commission, or the filing of a workers' compensation claim or
unemployment claim with an applicable state agency. In any arbitration, the
then prevailing employment dispute resolution rules of the American
Arbitration Association will apply, except that (a) Pizza Hut will pay the 30
arbitrator's fees; (b) if I am the one filing the claim, Pizza Hut will pay that
portion of the arbitration filing fee in excess of the similar court filing fee had I
gone to court; and (c) as discussed below, the arbitration shall occur only as
an individual action and not as a class, collective, representative, or
consolidated action. 35
Pizza Hut and I agree that any and all claims subject to arbitration under this
Agreement to Arbitrate may be instituted and arbitrated only in an individual
capacity, and not on behalf of or as a part of any purported class, collective,
representative, or consolidated action (collectively referred to in this 40
Agreement to Arbitrate as a “Class Action”). Furthermore, Pizza Hut and I
agree that neither party can initiate a Class Action in court or in arbitration in
order to pursue any claims that are subject to arbitration under this
Agreement to Arbitrate. Moreover, neither party can join a Class Action or
participate as a member of a Class Action instituted by someone else in 45
court or in arbitration in order to pursue any claims that are subject to
arbitration under this Agreement to Arbitrate. It is the parties’ intent to the
fullest extent permitted by law to waive any and all rights to the application of
Class Action procedures or remedies with respect to all claims subject to this
“Agreement to Arbitrate.” It is expressly agreed between Pizza Hut and me 50
that any arbitrator adjudicating claims under this Agreement to Arbitrate shall
JD(NY)-50-16
3
have no power or authority to adjudicate Class Action claims and
proceedings or to rule on the validity and enforceability or the class action
waiver provided for herein. The waiver of Class Action claims and
proceedings is an essential and material term of this Agreement to Arbitrate,
and Pizza Hut and I agree that if it is determined that it is prohibited or invalid 5
under applicable law, then this entire Agreement to Arbitrate is
unenforceable.
I acknowledge and agree that this Agreement to Arbitrate is made in
exchange for my employment or continued employment, as well as the mutual 10
promises contained in this Agreement. This Agreement to Arbitrate is not and
shall not be construed to create any contract of employment, express or
implied. This Agreement to Arbitrate does not in any way alter the “at-will"
status of employment with Pizza Hut, meaning that either I or Pizza Hut may
terminate the employment relationship at any time, with or without advance 15
notice, and with or without cause. This Agreement to Arbitrate supersedes any
and all prior agreements to arbitrate entered into between me and Pizza Hut.
Since at least March 3, 2015, the Respondent has been requiring employees, as a term
and condition of employment, to sign the “Agreement to Arbitrate.”20
On March 9, 2015, the Charging Party began working for the Respondent as a
delivery driver.
On February 5, 2016, the Charging Party, on behalf of himself and other25
employees similarly situated, filed a complaint in the United States District Court for the
Northern District of Florida (Pensacola Division), asserting that Respondent has been failing to
pay employees the minimum wage required by the Fair Labor Standards Act (FLSA). The case
number of the FLSA claim was 3:16-CV-00046. On March 14, 2016, the Respondent filed its
answer denying it was violating the FLSA. 30
On April 11, 2016, the Respondent’s attorney in the FLSA claim sent an email
to the attorney for the Charging Party which contained, as an attachment, a copy of the
“Agreement to Arbitrate.” Respondent’s attorney indicated that it appeared that the “Agreement
to Arbitrate” was enforceable in the United States 11th Circuit Court of Appeals and that “it 35
changes things quite a bit.”
On April 15, 2016, based on the “Agreement to Arbitrate”, the Respondent and the
Charging Party filed a stipulation of dismissal without prejudice in the FLSA claim and on April
18, 2016, the FLSA claim was dismissed by the Court. 40
On April 21, 2016, the Charging Party filed a “Statement of Claim” with the
American Arbitration Association identical to the FLSA claim. On May 31, 2016, the
Respondent filed its answer in the arbitration proceeding and denied that it was violating the
FLSA. As of the date of this motion and stipulation, the AAA arbitration is currently pending. 45
ANALYSIS
This is another in a long line of cases involving an employer’s implementation of a policy
requiring employees to enter into agreements that waive their right to utilize any legal process 50
JD(NY)-50-16
4
other than arbitration, to enforce collective interests in relation to wages, hours, and terms and
conditions of employment.1
The Board’s position, despite reversals by several circuit courts, is that an employer will
violate Section 8(a)(1) of the Act if it requires its employees to execute agreements to utilize 5
arbitration to resolve employment disputes and that preclude employees from acting in concert
to bring class actions, whether in court or before an arbitrator.
In my capacity as an administrative law judge of the NLRB, I am bound to follow Board
precedent irrespective of contrary opinions by circuit courts, unless and until the Supreme Court 10
makes a definitive ruling on the subject matter in dispute.
In my opinion, this case is controlled by the Board’s decision in Murphy Oil USA, Inc.,
361 NLRB No. 72 (2014), enf. denied 808 F.3d 1013 (5th Cir. 2015). In that and subsequent
cases, the Board has held that requiring employees to sign class action waivers, with or without 15
an “opt out” clause, is a violation of Section 8(a)(1) of the Act.
It is true that the Respondent’s arbitration agreement excludes charges that might be
filed with various agencies including the National Labor Relations Board. But this provision
contains no explanation of the types of charges that might be subject to NLRA jurisdiction. As 20
such, it is my opinion that no reasonable employee could possibly understand what types of
employment charges would or could be excluded from the arbitration requirement and it
therefore cannot serve as a defense. See SolarCity Corp., 363 NLRB No. 83, slip op. at 6
(2015), where the Board stated:
25
It would be unclear to the reader (especially to a reader without specialized
legal knowledge) whether and to what extent the subsequent language creating
an exception for filing charges with Federal agencies modifies the previous
broad prohibition on pursuing any form of collective or representative activity…
This ambiguity would lead a reasonable employee to wonder whether he may 30
file an unfair labor practice charge, particularly when the charge is filed with or
on behalf of other employees, and thus serves as another reason to affirm the
judge’s finding that the Agreements unlawfully prohibit filing charges with the
Board. 2
35
CONCLUSIONS OF LAW
By maintaining a policy that requires employees (a) to waive the right to bring
class actions or to act concertedly in regard to their terms and conditions of employment
and (b) to waive the right to initiate lawsuits regarding their collective terms and 40
conditions of their employment, the Respondent has violated Section 8(a)(1) of the Act.

1 In view of the large number of NLRB cases that have dealt with this issue over the past few years, it
seems that these types of policies and agreements have become common, even ubiquitous among
companies of sufficient size to have a human resource manager or department. In this regard, I think that
it would fair to assume that the number of cases reaching the Board by way of unfair labor practice
charges represents only the tip of the iceberg. Accordingly, it may be increasingly difficult for a
prospective employee to turn down a job where this type of agreement is required as a condition of
employment inasmuch as the next employer to whom he or she applies will likely have the same
requirement.
2 See also Lincoln Eastern Management Corp., 364 NLRB No. 16, slip op. at 3 fn. 2 (2016).
JD(NY)-50-16
5
REMEDY
Having concluded that the Respondent has unlawfully maintained a policy that requires
its employees to arbitrate employment disputes and which precludes class or collective actions
by employees, I shall recommend that it be ordered to rescind or revise that policy to make it 5
clear to employees that the policy and any agreements to arbitrate made pursuant to the policy
do not constitute a waiver in all forums of their rights to maintain class or collective actions
relating to their wages, hours or other terms and conditions of employment. I shall also
recommend that the Respondent be required to notify its employees of the rescinded or revised
policy.10
In addition, I shall recommend that the Respondent upon request, agree to a voluntary
dismissal of the pending arbitration proceeding and agree to the reinstatement of the Complaint
that was filed in the United States District Court for the Northern District of Florida (Pensacola
Division), case number 3:16-CV-00046.15
On these findings of fact and conclusions of law and on the entire record, I issue the
following recommended 3
ORDER20
The Respondent, Muy Pizza Southeast, LLC, [city, state] its officers, agents, and
representatives, shall
1. Cease and desist from 25
(a) Maintaining and/or enforcing a policy that compels employees, as a condition of
employment, to waive the right to maintain class or collective actions in all forums, whether
arbitral or judicial.
30
(b) Requiring employees to sign binding arbitration agreements that prohibit collective
and class litigation.
(c) In any like or related manner interfering with, restraining, or coercing employees in
the exercise of their rights under Section 7 of the Act.35
2. Take the following affirmative action necessary to effectuate the policies of the Act.
(a) Rescind or revise the mandatory arbitration policy, or revise it to make clear to
employees that the arbitration policy does not constitute a waiver of their right to maintain 40
employment-related joint, class, or collective actions in all forums or that requires employees to
waive their right to maintain employment related class and collective claims in all forums,
whether arbitral or judicial.
(b) Notify all current and former employees who were required to sign or otherwise 45
become bound by the mandatory arbitration policy in any form that it has been rescinded or
revised and, if revised, provide them with a copy of the revised policy.

3 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(NY)-50-16
6
(c) Upon request, agree to a voluntary dismissal of the pending arbitration proceeding
and agree to the reinstatement of the complaint that was filed in the United States District Court
for the Northern District of Florida (Pensacola Division), case number 3:16-CV-00046.
(d) Within 14 days after service by the Region, post at its Gulf Breeze, Florida facility 5
copies of the attached notice marked “Appendix.” Copies of the notice, on forms provided by
the Regional Director for Region 15 after being signed by the Respondent’s authorized
representative, shall be posted by the Respondent and be maintained for 60 consecutive days
in conspicuous places including all places where notices to employees are customarily posted.
In addition to the physical posting of paper notices, the notices shall be distributed electronically, 10
such as by email, posting on an intranet or 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 notices are not altered, defaced, or covered
by any other material. In addition, a copy of this notice will be made available to employees on
the same basis and to the same group or class of employees as the Arbitration Policy was 15
made available to them. 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 March 3,
2015.20
(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.
25
Dated, Washington, D.C., December 15, 2016.
________________________
Raymond P. Green30
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 the National Labor Relations Act
and has ordered us to post and abide by this notice.
Section 7 of the Act gives employees these rights.
To organize
To form, join, or assist any union
To bargain collectively through representatives of their own choice
To act together for other mutual aid or protection
To choose not to engage in any of these protected concerted activities.
WE WILL NOT maintain or enforce a policy, or any agreements made with employees pursuant to
that policy, that waives the right of employees to maintain class or collective action in any forum.
WE WILL NOT require employees to sign binding arbitration agreements that prohibit collective
and class litigation.
WE WILL NOT in any like or related manner interfere with, restrain, or coerce employees in the
exercise of their rights under Section 7 of the Act.
WE WILL upon request, agree to a voluntary dismissal of the pending arbitration proceeding and
agree to the reinstatement of the complaint that was filed in the United States District Court for
the Northern District of Florida (Pensacola Division), case number 3:16-CV-00046.
Muy Pizza Southeast LLC
(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
600 South Maestri Place, 7th Floor,
New Orleans, LA 70130-3413
Phone: (504) 589-6362. Hours: 9 a.m. to 5:30 p.m.
The Administrative Law Judge’s decision can be found at www.nlrb.gov/case/15-CA-174267 or by using the QR code
below. Alternatively, you can obtain a copy of the decision from the Executive Secretary, National Labor Relations Board,
1015 Half Street, S.E., Washington, D.C. 20570, or by calling (202) 273-1940.
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, (504) 589-6362