Will Neiman Marcus mark down the NLRB’s latest anti-arbitration decision?

“2, 4, 6, 8, we don’t want to litigate.  1, 2, 3, 4, that’s what arbitration’s for!”

If you’ve been following the NLRB the last few years, you probably know that this agency does not like mandatory arbitration agreements containing class action waivers. Not at all.  According to the current labor board, such waivers interfere with (unionized and nonunionized) employees’ right to engage in protected concerted activity.  Class or collective actions are one such type of concerted activity. 

This week, the NLRB issued yet another decision refusing to enforce an arbitration agreement and class action waiver in Neiman Marcus Group Inc., 362 NLRB No. 157 (8/4/15).  In a nutshell, the employee there filed a wage & hour class action lawsuit against Neiman Marcus in (yeah, you guessed it) California.  Neiman raised an affirmative defense that the employee agreed to mandatory arbitration and further agreed to waive class action proceedings in any arbitration.  The trial court sided with Neiman and sent the parties packing to arbitration.

The employee then filed an unfair labor practice charge at the NLRB challenging the validity of the arbitration agreement.  True to form, the board held that the mandatory arbitration agreement and its class action waiver violated section 7 of the National Labor Relations Act, which creates the right to protected concerted activity. 

In doing so, however, the board again ignored the 5th Circuit’s D.R. Horton decision expressly rejecting the NLRB’s identical arguments for refusing to honor arbitration agreements with class action waivers.  More important, the board once again implicitly thumbed its nose at the Supreme Court, which for decades has made crystal clear that it strongly endorses, and enforces, arbitration agreements in virtually every context.  (If you’re interested in the Supreme Court’s view of arbitration, and specifically class action waivers, see its decision in Concepcion.)

Neiman should probably appeal the NLRB’s decision for two reasons.  First, it is highly likely that the 9th Circuit Court of Appeals, which could hear this appeal, would refuse to enforce the board’s decision.  Why?  A couple years ago the 9th Circuit in Richards v. Ernst & Young gave a favorable head nod to mandatory arbitration agreements, taking time to specifically call out the NLRB for refusing to enforce class action waivers in arbitration agreements. 

The second reason Neiman may appeal this latest anti-arbitration decision is the NLRB awarded attorneys’ fees and costs against Neiman and in favor of the employee.  The labor board rarely awards fees and costs.  Avoiding such awards in the future is something Neiman and other employers may certainly want to see the 9th Circuit address when and if it handles this appeal. 

And here’s the kicker.  The employee in this case asked to withdraw its charge against Neiman Marcus a couple months ago, and the NLRB refused to allow her to withdraw it!  For an agency that is supposed to act only in response to a filed charge or petition, and not unilaterally, do you think maybe the board has its own agenda to execute regardless what litigants might want to do?

The NLRB frequently speaks about anti-union animus when whacking employers who find themselves embroiled in an unfair labor practice dispute.  This week’s Neiman Marcus decision confirms that the board itself may suffer from anti-arbitration animus. Sooner or later, this issue will make it to the Supreme Court, where you can all but bet the NLRB will lose this one.  Until then, look for a slow, expensive, circuit-by-circuit battle where the outcome has all but been predetermined.

And just in case you missed the parenthetical in my opening paragraph, this NLRB decision applies to unionized and nonunionized employers alike, so don’t think you can ignore the NLRB because you don’t have a union to deal with.  Also, if you’re an employer and don’t have an arbitration program in place – with a class action waiver – you may want to think about doing so.

Good luck.


Chris Bourgeacq frequently practices before the NLRB and has handled several arbitrations in a variety of areas.  He also can help you design an arbitration program if you don’t have one.  A happy and pleasant fellow, you can reach him at or check out his website at

This Bud’s not for you. The NLRB chugs Anheuser-Busch.

Reconsidering its many pre-Noel Canning cases, the NLRB in Piedmont Gardens not surprisingly held again this week that employers cannot withhold witness statements from unions as a matter of general practice.  And with that decision so goes nearly 40 years of precedent, in place across both Democratic- and Republican-appointed boards. 

So what happened? 

First, a quick bit of history.  In 1978 the NLRB held in Anheuser-Busch, 237 NLRB 982 (1978), that employers had the general right to refuse to provide witness statements to unions.  The Board based this rule on the reasoning that “the premature release of witness statements risked employer and union intimidation of potential witnesses, as well as the possibility that witnesses might be reluctant to give statements at all absent assurances against prehearing disclosure.”  This bright-line rule made labor practice easy for everyone:  If the union demanded witness statements in a request for information, an employer could decline to produce them, and that was that.  The rule and its rationale made sense.

Overruling Anheuser-Busch, the Board majority in Piedmont Gardens concluded that disclosure or nondisclosure of witness statements now depends on a balancing of interests between the union’s right to information against “legitimate and substantial confidentiality interests established by the employer,” as explained in the Supreme Court’s 1979 Detroit Edison case.  This result of course requires more work by an employer and also exposes the employer to a potential unfair labor practice charge if its balancing of interests differs from the Board's view.

How does this balancing of interests work?  That’s the tricky part. 

Labor law presumes, or at least very strongly encourages, employers having to produce information sought by a union.  Therefore, an employer needs to dig hard and deep for those “confidentiality interests” the Board and Supreme Court hold are worthy of protecting.  

Some practice tips for employers considering whether to withhold witness statements:

1.     Depending on the nature of the investigation generating the witness statements, legal counsel for the employer should either interview the witnesses themselves and create the statement or direct nonlawyers, in writing, to conduct the investigation and create a work-product privilege shield.

2.     If there is a possibility of witness intimidation or retaliation, ask and document the witness’ concern about such conduct and document the witness’ request for protection against disclosure of the statement. Also document any examples of existing harassment or retaliation toward the witness.

3.     With investigations arising from discrimination charges or complaints – especially by a supervisor of a complaining party – rely on the EEOC’s Enforcement Guidance dealing with vicarious liability for supervisor’s conduct. Significantly, that guidance states:

“An employer should make clear to employees that it will protect the confidentiality of harassment allegations to the extent possible. An employer cannot guarantee complete confidentiality, since it cannot conduct an effective investigation without revealing certain information to the alleged harasser and potential witnesses. However, information about the allegation of harassment should be shared only with those who need to know about it. Records relating to harassment complaints should be kept confidential on the same basis.”        

Dissenting Member Johnson noted in Piedmont Gardens that the EEOC itself in separate guidance requires confidentiality of witnesses in its own internal investigations.  And in an interesting bit of questionable due process, the NLRB itself refuses to turn over its witness affidavits in a complaint hearing until right after the witness testifies.  Why?  Ostensibly, to protect witnesses.

4.     Immediately raise confidentiality concerns in your response to the union’s request for information; don’t assert your concern weeks or months later, as an afterthought, when responding to an unfair labor practice charge from the union.

5.   Consider negotiating a nondisclosure agreement (NDA) with the union to narrowly limit disclosure and use of the witness statement. The Board’s majority in Piedmont Gardens noted that an NDA could be a reasonable accommodation to the union requesting a witness statement.  Alternatively, offer to provide an accurate summary of the witness statement in lieu of the statement itself.

6.    Ultimately, you may want or need to produce a witness statement if you intend to use it later in an arbitration, administrative proceeding, or litigation. If you plan on using it later for substantive proof (as opposed to merely impeachment), cough it up now and move on.  You’ll avoid a donnybrook later when you introduce the statement into evidence.

A couple final comments.  If an employer knows or suspects the union has taken witness statements, demand them.  Unions have to respond to relevant requests for information from employers.  The duty to provide information under NLRB precedent is mutual and reciprocal.  Turnabout is fair play.

Also, the Board’s Piedmont Gardens decision arose in a unionized workplace, based on rationale and obligations that apply specifically to unions and employers in their bargaining relationship.  As we know, however, the Board has tremendously expanded the reach of the NLRA to nonunionized workplaces.  While Piedmont Gardens should not apply in a nonunionized context, don’t dismiss that possibility.  We’ve seen more than once this Board’s efforts to forcefully hammer a square peg into a round hole.  Forewarned, therefore, is forearmed.

Good luck.