PLF supports freedom of contract in brief to the Fifth Circuit

Sacramento, CA; June 5, 2012: Pacific Legal Foundation stresses the need for courts to safe­guard freely agreed-upon contracts, including provisions to promote alternatives to litigation, in an amicus brief that PLF filed today with the Fifth U.S. Circuit Court of Appeals.

PLF’s brief was submitted in D.R. Horton, Inc. v. National Labor Relations Board, a case challenging a company requirement that employees agree to resolve disputes with individual arbitration — and forego any right to a class action or class arbitration.

Donor-supported PLF is the leading legal watchdog that litigates, nationwide, for limited govern­ment, property rights, individual rights, and free enterprise. In the brief submitted today, PLF represents itself and the National Federation of Independent Business (NFIB).

A Florida-based homebuilder, D.R. Horton makes individual arbitration a condition of employ­ment. By accepting a job, an applicant consents not to go to court if conflicts arise with the company; instead, employees agree that disputes will be handled by individual arbitration, and arbitrators cannot consolidate claims by more than one employee as a “class action” proceeding.

D.R. Horton employee Michael Cuda filed a challenge with the NLRB, alleging that such individual arbitration agreements constitute an “unfair labor practice” in violation of the National Labor Relations Act (NLRA). PLF’s brief counters by citing the U.S. Supreme Court’s landmark 2011 ruling in AT&T Mobility, LLC v. Concepcion, which upheld a class-action waiver in a consumer contract and emphasized that arbitration agreements reflect the freedom of contract to which all Americans are entitled. This policy is reflected in the Federal Arbitration Act, which controls all individual employment contracts (as opposed to union-driven collective bargaining agreements).

“The Supreme Court has repeatedly said that arbitration is a legitimate, even desirable practice, and that people have the right to agree to it if they want,” said PLF Principal Attorney Deborah J. La Fetra, who authored PLF’s brief. “It is not an unfair labor practice for workers and employers to freely bargain over the terms of their contract — whether it be salary, vacation time, or how they will resolve any disagreements that might arise.”

Indeed, the administrative law judge who first heard Cuda’s challenge held that the class action waiver did not violate the NLRA. However, the judge’s holding on that point was overruled by the National Labor Relations Board, leading to D.R. Horton’s appeal to the Fifth Circuit.

About Pacific Legal Foundation
Donor-supported Pacific Legal Foundation (www.pacificlegal.org) is the leading legal watchdog that litigates for limited government, property rights, individual rights, and free enterprise, in courts nationwide. PLF has advocated in favor of the freedom of contract in all the U.S. Supreme Court’s recent arbitration cases.