Quality Dining, Inc. and Grayling Corporation (collectively "Quality Dining")

National Labor Relations Board - Administrative Judge Opinions

Dec 15, 2016

04-CA-175450 (N.L.R.B. Dec. 15, 2016)

JD(NY)-49-16
Philadelphia, PA
UNITED STATES OF AMERICA
BEFORE THE NATIONAL LABOR RELATIONS BOARD
DIVISION OF JUDGES
NEW YORK BRANCH OFFICE
QUALITY DINING, INC.
And Case 04-CA-175450
RYAN RUTHERFORD, AN INDIVIDUAL
David G. Rodriguez, Esq., for
the General Counsel.
Matthew Hank, Esq., counsel for the
Respondent.
R. Andrew Santillo, Esq., counsel for
the Charging Party.
DECISION
STATEMENT OF THE CASE
RAYMOND P. GREEN, Administrative Law Judge. The charge and amended charges
were filed on May 3, June 9, and July 20 and 26, 2016. The initial complaint was issued on July
29, 2016, and an amended complaint was issued on October 17, 2016. In substance the
complaint alleged that (a) the Respondent has maintained an arbitration agreement and dispute
resolution program that requires employees to waive their right to seek collective legal action
regarding employment issues and claims and (b) has threatened to discharge employees who
did not sign the revised arbitration agreement.
On, October 20, the parties filed a joint motion to submit the case on a stipulation of
facts.
Upon consideration of the stipulated record and the briefs filed, I make the following
FINDINGS OF FACT
I. JURISDICTION
Based on the stipulated facts, the Respondent admitted 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
The Respondent is an Indiana corporation which, through wholly-owned subsidiaries, is
engaged in the operation of over 100 franchise restaurants in New Jersey, Indiana, Ohio,
Delaware, Michigan, and Pennsylvania.
Between November 4, 2015, and April 25, 2016, the Respondent required the
employees of the restaurants, including the Charging Party, to sign an arbitration agreement as
a condition of employment. The arbitration agreement reads in pertinent part:
JD(NY)-49-16
2
Employee and the Company mutually agree that any and all claims or
disputes described in paragraph 2 that Employee may have now or in the
future with or against the Company may be heard by a neutral mediator and
that if voluntary mediation is unsuccessful, or if the Employee or the Company 5
do not wish to use the voluntary mediation procedure, the claim or dispute
shall be submitted to arbitration.
The disputes and claims covered by this Agreement include all claims or
controversies, whether or not arising out of employment or termination of 10
employment and claims for violation of any federal, state, local, or other
governmental law, statute, regulation, or ordinance including without limitation
any law related to discrimination, terms and conditions of employment, or
termination of employment whether now existing or subsequently enacted.
15
Only one employee may be a party to any particular arbitration unless
otherwise agreed by the parties. Each arbitration is limited to the claims of
the Employee who is a party to that arbitration and shall not include claims
pertaining to any other Employee unless otherwise agreed by the parties.
20
Since on or before November 4, 2015, the Respondent has maintained and enforced as
a dispute resolution program. This program contains the following provisions:
I understand if I am employed by Quality Dining, I will be required to sign an
Arbitration Agreement which provides that I cannot file a lawsuit against the 25
Company for anything connected with my employment, and that any such
claims will be heard by an arbitrator and not by a judge in court.
Only one Employee may be a party to any particular arbitration unless
otherwise agreed by the parties. Each arbitration is limited to the claims of the 30
Employee who is a party to that arbitration and shall not include claims
pertaining to any other Employee unless otherwise agreed by the parties.
Since about April 25, 2016, the Respondent began requiring employees of the
restaurants as a condition of employment, to sign a revised arbitration agreement. This contains 35
the following provisions:
CLASS AND COLLECTIVE ACTION WAIVERS
a. EMPLOYER AND I WAIVE ANY RIGHT FOR ANY DISPUTE TO BE 40
BROUGHT, HEARD, DECIDED OR ARBITRATED AS A CLASS ACTION and
the Arbitrator will have no authority to hear or preside over any such claim
("Class Action Waiver"). Notwithstanding any other clause in this Agreement,
the Class Action Waiver is not severable from this Agreement in any instance
in which the dispute is brought as a class action.45
b. EMPLOYER AND I WAIVE ANY RIGHT FOR ANY DISPUTE TO BE
BROUGHT, HEARD, DECIDED OR ARBITRATED AS A COLLECTIVE
ACTION and the Arbitrator will have no authority to hear or preside over any
such claim ("Collective Action Waiver"). Notwithstanding any other clause in this 50
JD(NY)-49-16
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Agreement, the Collective Action Waiver is not severable from this Agreement
in any instance in which the dispute is brought as a collective action.
On April 28, 2016, the Respondent sent a memorandum to the employees of the
Restaurants. This memorandum contained the following statements: 5
Please take the time to read this Arbitration Agreement. Entering this version of
the Arbitration Agreement is a condition of employment. IT APPLIES TO YOU.
Going forward, the Arbitration Agreement will govern all covered legal disputes
between you and the Company. 10
Please sign and return the Arbitration Agreement to your Store manager by May
1, 2016. If you have any questions regarding the Arbitration Agreement, please
contact your Human Resources Manager, Trish Norvell at 574-243-6216.
15
On April 28, 2016, Grayling Corporation’s Whitehall, Pennsylvania restaurant sent a
broadcast text message to its employees. This message stated:
Corporate will not allow you to work past Thursday 5/5/16 if you do not hand in
your arbitration agreement. Please get the back to management ASAP. 20
I should note here that the arbitration agreements do contain a proviso that permits
employees to file charges with administrative agencies including the National Labor Relations
Board.
25
On March 22, 2016, the Charging Party and employee Stephanie Joseph filed a class-
action lawsuit on behalf of themselves and similarly situated employees in the Pennsylvania
Court of Common Pleas, alleging, inter alia, that the Respondent violated the Pennsylvania
Minimum Sage Act.
30
On April 22, 2016, the aforesaid lawsuit was removed to the United States District Court
for the Eastern District of Pennsylvania.
On April 26, 2016, the Plaintiffs amended the lawsuit to add an allegation that the
Respondent violated the Fair Labor Standards Act of 1938. 35
On May 4, 2016, the Respondent filed a motion to dismiss the aforesaid lawsuit and
requested the Court to enforce the Arbitration Agreement against the Plaintiffs.
ANALYSIS40
This is yet another case involving an employer’s implementation of a policy requiring
employees to enter into agreements that waive their right to utilize any legal process, other than
arbitration, to enforce their collective interests in relation to wages, hours, and terms and
conditions of employment.145

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
JD(NY)-49-16
4
Notwithstanding a variety of decisions by some circuit courts, until the Supreme Court
makes a definitive ruling on this issue, I am bound to follow the Board’s current precedent.
This case is controlled by the Board’s decision in Murphy Oil USA, Inc., 361 NLRB No. 5
72 (2014), enf. denied, 808 F.3d 1013 (5th Cir., Oct. 26, 2015). In Murphy Oil and subsequent
cases, the Board has consistently held that requiring employees to execute arbitration
agreements containing class action waivers is a violation of Section 8(a)(1) of the Act.
The Respondent’s dispute resolution policy has been maintained and enforced within the 10
6 month period prior to the filing of the charge in this case. By the same token, the Respondent
has required employees to execute the arbitration agreements during that same period of time.
Accordingly, despite the fact that the policy and the arbitration agreements were created outside
the statute of limitations period, this matter is not precluded by Section 10(b) of the Act. In this
respect, the Board has consistently held that an agreement entered into outside the 10(b) period 15
may be found to be unlawful if the provisions are unlawful and are being enforced within the
10(b) period. Control Services, 305 NLRB 435 fn. 2 (1991), enfd. 961 F.2d 1569 (3d Cir. 1992);
Teamsters Local 293 (R.L. Lipton Distributing), 311 NLRB 538, 539 (1993); and Whiting Milk
Corp., 145 NLRB 1035, 1037–1038 (1964).
20
The assertion by the Respondent that its policy and mandatory arbitration agreements
are not prohibited because of a savings clause is also without merit. In SolarCity Corp., 363
NLRB No. 83, slip op. at page 6 (2015), the Board stated:
It would be unclear to the reader (especially to a reader without specialized 25
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
file an unfair labor practice charge, particularly when the charge is filed with or 30
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
Finally, in its communication to employees dated April 28, 2016, the Respondent 35
essentially threatened to discharge any of its employees who refused to sign and hand in the
arbitration agreements. I therefore conclude that by doing so the Respondent threatened
employees with discharge in violation of Section 8(a)(1) of the Act
Remedy40
As I have concluded that the Respondent has unlawfully maintained a policy that
precludes class or collective actions by employees, I shall recommend that it be ordered to
rescind or revise that policy, to make it clear to employees that its policy and agreements made
pursuant to that policy do not constitute a waiver in all forums of their rights to maintain class or 45
collective actions relating to their wages, hours or other terms and conditions of employment. I

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)-49-16
5
shall also recommend that the Respondent be required to notify its employees of the rescinded
or revised policy.
Because the Respondent’s dispute resolution program and arbitration agreements have
been and continues to be maintained on a multistate basis, it is recommended that the 5
Respondent be ordered to post the attached Notice at all locations where the program has been
or is still in effect.
Although the United States District Court for the Eastern District of Pennsylvania had
not, at the time of this stipulation made a decision, it is recommended that the Respondent be 10
required to file a motion with the court requesting the withdrawal of its motion to dismiss the
Charging Party’s lawsuit and to enforce the arbitration agreements.
To the extent that the Charging Party has incurred litigation expenses relating to the
Respondent’s petition to compel arbitration in conformance with an arbitration agreement, it is 15
recommended that the Respondent reimburse Ryan Rutherford, Stephanie Joseph, and any
other employees who participated in the class action lawsuit, for such expenses with interest as
determined in Kentucky River Medical Center, 356 NLRB8 (2010), enf. denied on other
grounds, sub. nom. Jackson Hospital Corp. v. NLRB, 647 F.3d 1137 (DC Cir. 2011).
20
On these findings of fact and conclusions of law and on the entire record, I issue the
following recommended 3
ORDER
25
The Respondent, Quality Dining Inc., its officers, agents, and representatives, shall
1. Cease and desist from
(a) Maintaining and/or enforcing a policy that compels employees, as a condition of 30
employment, to waive the right to maintain class or collective actions in all forums, whether
arbitral or judicial
(b) Requiring employees to sign binding arbitration agreements that prohibit collective
and class litigation. 35
(c) Threatening employees with discharge unless they signed binding arbitration
agreements that prohibit collective and class actions.
(d) In any like or related manner, interfering with, restraining, or coercing employees in 40
the exercise of their rights under Section 7 of the Act.
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 45
employees that the policy does not constitute a waiver of their right to maintain employment-
related joint, class, or collective actions in all forums or that requires employees to waive their

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)-49-16
6
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
become bound by the mandatory arbitration policy in any form that it has been rescinded or 5
revised and, if revised, provide them with a copy of the revised policy
(c) Withdraw any pending motions in the United States District Court for the Eastern
District of Pennsylvania in which the Respondent seeks enforcement of the arbitration policy’s
unlawful restriction on class or collective claims; or if such motions have already been granted, 10
move the appropriate court to vacate any orders for individual arbitration and reimburse
employees for any litigation expenses including attorney’s fees, directly related to opposing
Respondent’s motions to compel individual arbitration.
(d) In the manner set forth in this decision, reimburse Ryan Rutherford and Stephanie 15
Joseph, and any other class participants, for any reasonable attorneys’ fees and litigation
expenses that he may have incurred in opposing the Respondent’s motion to compel individual
arbitration.
(e) Within 14 days after service by the Region, post at its locations nationwide where the 20
arbitration policy has been promulgated, maintained or enforced copies of the attached notice
marked “Appendix.” Copies of the notice, on forms provided by the Regional Director for
Region 4 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 the physical posting of 25
paper notices, the notices shall be distributed electronically, 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 30
basis and to the same group or class of employees as the arbitration policy was 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 December 3, 2015.35
(f) 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
Dated, Washington, D.C. December 15, 2016
________________________
Raymond P. Green45
Administrative Law Judge
JD(NY)-49-16
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 an arbitration 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 pursuant to the terms of such agreements seek to enforce them by filing
motions in court to dismiss collective action lawsuits and to compel individual arbitrations.
WE WILL NOT require employees to sign binding arbitration agreements that prohibit collective
and class litigation.
WE WILL NOT threaten employees with discharge if they refuse to sign binding arbitration
agreements.
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 withdraw any pending motions in which we have sought to enforce the arbitration
policy’s unlawful restriction on class or collective claims; or if such motions have already been
granted, move the appropriate court to vacate any orders for individual arbitration.
WE WILL reimburse Ryan Rutherford and Stephanie Joseph, and any other class action
participants, for any reasonable litigation expenses including attorney’s fees, directly related to
opposing our motion to dismiss a Fair Labor Standards Act lawsuit and to compel individual
arbitration.
QUALITY DINING, INC.
(Employer)
Dated By
(Representative) (Title)
JD(NY)-49-16
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.
615 Chestnut Street, 7th Floor
Philadelphia, PA 19106-4404
Phone: (215) 597-7601. Fax: (215) 597-7658
Hours 8:30am - 5:00pm. You may also obtain information from the Board’s website:
www.nlrb.gov.
The Administrative Law Judge’s decision can be found at www.nlrb.gov/case/04-CA-175450 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, (215) 597-7601.