Employer Victory Is Bittersweet – NLRB Orders Payment Of Losing Side’s Fees

November 24, 2014

It may seem odd to think that the winning party in court could be ordered to pay the losing side’s attorney’s fees, but it happened recently in a dispute involving Murphy Oil USA, Inc. (“Murphy Oil”) and some of its employees. The result may seem even stranger in light of the fact the attorney’s fees were incurred by the employees in connection with their unsuccessful arguments against the company’s successful motion to dismiss.

The underlying litigation began in June 2010 when four of Murphy Oil’s employees filed a collective lawsuit against the company in the U.S. District Court for the Northern District of Alabama. (Hobson v. Murphy Oil USA, Inc., No. CV-10-HGD-1486-S.) In their complaint, the employees alleged that they (and other co-workers) had not been properly compensated for overtime and work done off the clock, which is a violation of the Fair Labor Standards Act (FLSA). Murphy Oil moved to dismiss the complaint on the grounds that the subject employees had all signed agreements requiring them to arbitrate their claims (as opposed to litigating their claims in court). The District Court agreed with the company and granted the motion. Accordingly, in September 2012, the employees were ordered to individually arbitrate their FLSA claims against the company.

Meanwhile, an unfair labor practice charge was filed with the National Labor Relations Board (NLRB). In the charge, it was alleged that the arbitration agreement Murphy Oil had required the employees to sign violated the National Labor Relations Act (NLRA) because it might prohibit employees from engaging in collaborative activities protected by the NLRA. In essence, the charge alleged that Murphy Oil’s use of the mandatory arbitration agreement would cause its employees to believe that they could not file charges with the NLRB (either individually or collectively). The NLRB agreed with that assertion and not only ordered Murphy Oil to stop using the mandatory arbitration agreement but to also “reimburse the plaintiffs for all reasonable expenses and legal fees, with interest, incurred in opposing the Respondent’s [Murphy Oil] unlawful motion to dismiss their collective FLSA action and compel individual arbitration.” (Murphy Oil USA, Inc. and Shelia M. Hobson, Case 10-CA-038804.) In other words, the NLRB ruled that because the binding arbitration agreement was unlawful, it was also unlawful for Murphy Oil to use it to seek and obtain dismissal of the employees’ FLSA claims in court.

We fully expect that the company will appeal the NLRB’s decision, but the case demonstrates how an employment complaint in one forum might lead to a claim under the National Labor Relations Act.

If you have any questions about how the information in this article may affect you or your business, please contact Peter Richter at prichter@stroudlaw.com or (608) 257‑2281 or your Stroud attorney. 

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