Denying an employer’s motion to compel individual arbitration of a wage and hour class action, a California federal court ruled that the employer’s dispute resolution program violated its employees’ right to engage in concerted action under the National Labor Relations Act (“NLRA”). Totten v. Kellogg Brown & Root, LLC. Notably, this ruling departs from the established trend of federal courts declining to follow the precedent set in In re D.R. Horton, Inc. (“Horton I”) and has significant implications for employers contemplating whether to remove a class action involving the enforcement of arbitration agreements to federal court.

Kellogg Brown & Root LLC’s (“KBR”) hired David Totten (“Totten”) in 2012. During his new hire orientation, Totten signed an agreement to participate in KBR’s Dispute Resolution Program (“DRP”) as a condition of his employment. The DRP required employees to arbitrate any claims against KBR that related to, or arose out of, their employment. The DRP also prohibited “KBR, employees and applicants from pursuing claims on a class, collective, or representative basis…” KBR terminated Totten’s employment in June 2014. Approximately one month later, Totten filed a class action against KBR for alleged wage and hour violations and unfair business practices.
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