Kenai Drilling Limited

National Labor Relations Board - Administrative Judge Opinions

Apr 13, 2015

31-CA-128266 (N.L.R.B. Apr. 13, 2015)

JD(SF)–13–15
Bakersfield, California
UNITED STATES OF MERICA
BEFORE THE NATIONAL LABOR RELATIONS BOARD DIVISION OF JUDGES
SAN FRANCISCO BRANCH OFFICE
KENAI DRILLING LIMITED
and Case 31-CA-128266
EDDIE STEWART III, an Individual
Nicole Pereira, Esq. , for the General Counsel.
Robert M. Stone, Esq. and Charles N. Hargraves, Esq.
(Muisick, Peeler & Garrett, LLP), of Costa Mesa, California,
for the Respondent.
DECISION
STATEMENT OF THE CASE
Dickie Montemayor, Administrative Law Judge. This case was tried in Los Angeles,
California,on January 12, 2015. The charge in this matter was filed by Eddie Stewart, III, an
individual (the Charging Party) on May 7, 2014, against Kenai Drilling Limited (the
Respondent). A complaint issued on September 25, 2014. The sole issue is whether
Respondent’s maintenance and enforcement of an arbitration agreement and/or rule requiring
employees to arbitrate their work-related complaints in an individual capacity, unless they opt-
out within 30 days of receiving an employer provided opt-out notice, is unlawful under Section
8(a)(1) of the Act. This case therefore raises issues related to the Board’s decisions in D.R.
Horton, Inc., 357 NLRB No. 184 (2012), enf. granted in part and denied in part 737 F.3d 433
(5th Cir. 2013), and Murphy Oil, 361 NLRB No. 72 (2014).
Respondent filed an answer denying the material allegations of the complaint and raised
certain affirmative defenses, as discussed below. A hearing in this matter was held before me
and the parties filed posthearing briefs. After considering the record and the briefs filed by the
parties, I make the following
FINDINGS OF FACT
I. JURISDICTION
At all material times, Respondent has been a corporation with an office and place of
business in Bakersfield, California. Respondent has been engaged as a drilling contractor for the
oil, gas, and geothermal industries. During the 12 month period ending June 2, 2014, Respondent
in conducting its operations purchased and received at its Bakersfield, California facility, goods
and services valued in excess of $50,000 directly from points outside State of California. I find
JD(SF)–13–15
2
that at all material times, Respondent has been an employer engaged in commerce within the
meaning of Section 2(2), (6), and (7) of the Act.
II. ALLEGED UNFAIR LABOR PRACTICES
5
A. Stipulated Background Facts
At the hearing, the parties entered into a stipulation of facts which they identified as Joint
Exhibit 1. Paragraphs 1 and 2, of the stipulation included the joint request that General Counsel
Exhibits 1(a) through 1(p) and Joint Exhibits 2 though 5 be admitted into evidence without 10
objection. Joint Exhibit 1 page 26 beginning at paragraph 3 provides as follows:
3. (a) The charge in this proceeding was filed by the Charging Party on May 7, 2014,
and a copy was served on Respondent by U.S mail on May 9, 2014.
15
(b) The first amended charge in this proceeding was filed by the Charging Party on
July 21, 2014, and a copy was served on Respondent by U.S. mail on July 22, 2014.
(c) The second amended charge in this proceeding was filed by the Charging Party on
August 28, 2014, and a copy was-served on Respondent by U.S. mail on September 20
2, 2014.
4. (a) At all material times, Respondent has been a corporation with an office and place
of business in Bakersfield, California, and has been engaged as a drilling contractor in
the oil, gas, and geothermal industries.25
(b) During the 12-month period ending June 2, 2014, Respondent in conducting its
operations described above in paragraph 4(a), purchased and received at its
Bakersfield, California facility, goods and services valued in excess of $50,000
directly from points outside the State of California.30
5. At all material times, Respondent has been an employer engaged in commerce within
the meaning of Section 2(2), (6), and (7) of the Act.
6. On September 25, 2014, the Acting Regional Director of Region 31 issued a 35
complaint and notice of hearing complaint) (GC Exh. 10)). On October 8, 2014,
Respondent filed its answer to the complaint and affirmative defenses (answer) (GC
Exh. 1(1)). On December 17, 2014, the Regional Director of Region 31 issued an
amendment to complaint amending paragraph 4(b) of the complaint (GC Exh. 1(m)).
On December 24, 2014, Respondent filed its answer to amended complaint and 40
affirmative defenses. (GC Exh. l(o)). The complaint and amendment to complaint
allege that Respondent engaged in acts and conduct that constitute unfair labor
practices affecting commerce within the meaning of Section 2(6) and (7) of the
National Labor Relations Act. 29 U.SC. § 151 et seq. (the Act). Specifically, the
complaint and amendment to complaint allege that Respondent interfered with, 45
JD(SF)–13–15
3
restrained, and coerced employees in the exercise of their Section 7 activities as set
forth below:
(a) Since at least January 2007 and at all material times, Respondent has maintained
an arbitration policy comprised of the binding arbitration agreement (agreement) (GC 5
Exh. 1(j), Appendix A); the notice of binding arbitration agreement (notice) (GC
Exh. IG, Appendix B); the written acknowledgement of training
(acknowledgement) (GC Exh. 10, Appendix C) and the binding arbitration
program Opt-Out Notice (Opt-Out Notice) (GC Exh l(j), Appendix D)
(collectively the “arbitration Policy"). The Parties agree to the authenticity and10
relevancy of these documents, and their admission into evidence, without
objection.
(b) At all material times, Respondent has required employees to sign a Written
Acknowledgement of Training, which provides that employees would be bound 15
to the Arbitration Policy described in the documents set forth above in
paragraph 6(a), unless they opt out within 30 days of receiving the Opt-Out
Notice.
7. At no time did Charging Party sign or return the opt-out notice attached to the 20
complaint (GC Exh. 10 as Appendix D), or the opt out notice provided to him during
orientation.
8. On February 19, 2014, Respondent asserted its arbitration policy described above in
paragraph 6(a), in litigation brought against Respondent by Charging Party in Eddie 25
Stewart III, individually, and on behalf of other members of the general public similarly
situated, Plaintiff vs. Kenai Drilling Limited, a Delaware corporation, and DOES 1
through 10, inclusive, Defendant, Case No. BC 523209 (class action complaint) filed in
Superior Court of California, County of Los Angeles (Superior Court). A copy of the
class action complaint is attached as Joint Exhibit 2. Specifically:30
(a) About February 19, 2014, Respondent filed a petition to compel binding arbitration,
dismiss class claims, and stay action (motion to compel) and related documents including the
following: Memorandum of points and authorities in support of petition to compel binding
arbitration;declaration of Jennifer Phoutrides in support [of] Kenai Drilling Limited's35
petition for an order compelling arbitration and staying proceedings; declaration of Charles
N.Hargraves in support of petition to compel binding arbitration, dismiss class claims and
stay action;declaration of Kathy Sbimizu in support of petition to compel binding arbitration;
declaration of David A.Uhler in support of Kenai Drilling Limited’s petition for an order
compelling arbitration and motion to stay proceedings pending arbitration (declaration). A40
copy of the petition to compel and related documents are attached as Joint Exhibit 3.
(b) About March 12, 2014, Charging Party filed Plaintiff’s opposition to Defendant's
petition to compel arbitration, dismiss class claims, and stay action ("Opposition'') and
declaration of Eddie Stewart III in support of plaintiff’s opposition to Defendant’s petition45
JD(SF)–13–15
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to compel arbitration, dismiss class claims, and stay action. A copy of Charging Party's
opposition and declaration is attached as Joint Exhibit 4.
(c) About March 21, 2014, Respondent filed a reply brief in support of the petition to
compel binding arbitration. Dismiss class claims and stay action (reply brief) and related5
documents including the following: Declaration of Jennifer Phoutrides in Support of
Kenai Drilling Limited's reply brief in support of petition for an order compelling
arbitration and staying proceedings;Kenai Drilling Limited'sobjections to declaration of
Eddie Stewart submitted in support of plaintiff's opposition to Kenai Drilling Limited’s
petition to compel binding arbitration.dismiss class claims, and stay action;10
Declaration of Christine Tadd in support of Kenai Drilling Limited's reply brief in
support of petition of an order compelling arbitration and staying proceedings; a copy of
Respondent's reply brief and related documents is attached as Joint Exhibit 5.
(d) About May 2, 2014, the Honorable Jane Johnson, Judge of the Los Angeles 15
County Superior Court, held a hearing and granted Respondent's petition to compel
binding arbitration dismiss class claims, and stay action seeking to enforce the
arbitration agreement.1
The arbitration agreement in its entirety provided as follows: 20
BINDING ARBITRATION AGREEMENT
A. The following agreement sets forth the binding arbitration agreement
between ________ (“Employee”) and Kenai Drilling Ltd. ("Kenai") 25
(collectively referred to as "the Parties").
B. Employee understands this binding arbitration program is OPTIONAL.
However if Employee chooses not to participate in the binding arbitration
program, Employee must send the Opt-Out Notice to Kenai by _____. 30
Opt-Out Notice must be sent to David Uhler, Kenai Drilling Ltd., P.0.
Box 2248, Orcutt, CA 93457 and must be received by Kenai by
_____________. Employee's failure to send in the Opt-Out Notice as set
forth in this paragraph will be deemed acceptance of this Binding
Arbitration Agreement.35
TERMS OF THE BINDING ARBITRATION AGREEMENT
C. By participating in the Binding Arbitration Program, Employee and
Kenai agree that any controversy, dispute or claim arising out of or 40
relating to Employee's employment with Kenai Drilling Ltd. ("Kenai"),
including the termination of employment all be settled through binding
arbitration to be administered by the American Arbitration
Association("AAA”).

1 At the risk of some redundancy the entire stipulation is set forth above for the sake of
completeness.
JD(SF)–13–15
5
D. The Parties understand that if the Employee does not opt-out as set
forth above in Section B, Employee and Kenai are both giving up all rights
to a trial by jury or judge relating to any dispute or controversy arising of
Employee's employment with Kenai.5
E. Unless otherwise specified in this Agreement, the arbitration
proceedings shall be governed by AAA’s Employment Arbitration
Rules (“Rules”).
10
F. Notwithstanding any provision or term set forth in the Rules, the
following rules shall apply to all arbitrations conducted under this
Agreement:
(1) The arbitrator shall not and does not have the authority to consolidate the15
claims of different Employees, entertain class actions or representative
actions of any kind, or permit joinder.
(2) Summary disposition motions must be entertained by the arbitrator
even through the Rules may give discretion to the Arbitrator to hear 20
such motions if any party to this agreement seeks to bring such motion
in good faith.
(3) The California Evidence Code shall apply in the arbitration
proceedings and any resulting award notwithstanding any provision 25
in the Rules. In issuing the arbitration award or in making a decision
relevant to any issue in the arbitration, the arbitrator shall not rely on
any evidence that is inadmissible pursuant to the California Evidence
Code.
30
(4) Notwithstanding any provision set forth in the Rules, Employee
shall be responsible for all fees and costs that he would normally be
responsible for had the action been filed in state court including, but
not limited to, filing fees and costs for court reporting services, etc.
Each party will be responsible for his or her own attorney fees and 35
costs, unless otherwise ordered by the arbitrator in compliance with
statutory law.
(5) The arbitration hearing shall be conducted in Bakersfield, California.
40
(6) The Arbitrator shall not entertainany statutory claim unless the employee
has satisfied any duties to exhaust administrative remedies as required by
that statute examples including right to sue letters from the Department of
Fair Employment and Housing and the Equal Employment Opportunity
Commission. (Jt. Exh. 1). 45
The “Agreement” does not provide for any exceptions for types of claims filed. More
specifically, there are no express exceptions for claims filed with the NLRB and/or brought under
JD(SF)–13–15
6
the specific statutory framework of the NLRA. Nor is there any mention in the agreement
regarding how an employee goes about actually initiating an action covered by the arbitration
agreement.
Jenifer Phoutrides, Respondent’s human resources/training coordinator, described the on-5
boarding process as it relates to new employees and the arbitration agreement as follows:
Q Okay. When do you do the training for the new hires?
A During their new hire enrollment training day; their very first day with Kenai.
Q Okay. And can you explain to us how you go about giving this training to get 10
employees?
A I give them the packet, the acknowledgment packet, regarding arbitration along with
many other new hire papers. I tell them to read the packet thoroughly and put it to the
side because we'll talk about it later. And then I'll go back and then I'll ask everybody if
they read the packet. If I have people that say no, I make sure they read it. And then we 15
go forth and answer questions and talk about the policies.
Q Okay. What documents are included in the packet?
A It is the acknowledgment training for arbitration and the opt-out form. That's behind
it. Acknowledgment form. Yeah.
Q Is there also some --20
A That's --
Q -- type of a notice?
A A notice to employees, yes.
Q Okay. So --
A The first page is the acknowledgment, then it's the notice and then it's the opt-out 25
form.
Q And also -- is there also a copy of the agreement there as well?
A Yes.
Q Okay. So it's four documents?
A Yes. Sorry. 30
Q Okay. That's all right. So you'll ask them to read the four documents?
A Correct.
Q And once you see that they have read the documents, do you ask them any questions
about them?
A Yeah. I generally start -- I ask them so what do they think arbitration is. People will 35
give me their views your what they think. And then I'll start out with, you know,
basically explaining what arbitration is and how to go about it or how to proceed with our
procedures -- or policy.
With arbitration I tell them that they have 30 days to decide if they want to opt out or not.
It's purely voluntary. We talk about arbitration. Let's see, I try to break it to them in a 40
not simple form, but I tell them that, "Arbitration's another way of settling disputes that
they may have with their employment with Kenai. It's purely optional. You have 30
days to decide and you're going to have many remainders in the mail about it with your
paycheck stubs up until your opt-out date."
I make them fill their name out on the very first page of the acknowledgment and their 45
new hire date and their opt-out date. They physically fill those dates in themselves. And
then throughout the packet, it asks for them to fill in other -- or there's other areas on the
JD(SF)–13–15
7
form where they fill in the opt-out dates, and I make them fill it out as well with their
own writing.
Q Do you discuss the pros and cons of arbitration with them?
A I do. And I also suggest for them to look it up outside of work if it -- on their own if
they don't understand it completely. Pros and cons would be -- you know, pros would be, 5
you know -- well, pros and cons would be -- I guess class action suits are not part of it.
So if you choose to be part of the arbitration program, you don't do class actions. And
then it's another just way of settling disputes, like -- I don't know how to you want me to
explain it or how I tell them. I don't --
Q As best you --10
A Okay. I'm getting nervous. Sorry. So I'll start from the beginning. Okay, "So what
is arbitration? Arbitration is another way of settling disputes with your employment" --
"about your employment with Kenai. If you go through arbitration, you don't go through
normal court settings; you go in front of an arbitrator. The arbitrator's not affiliated with
Kenai. It's chosen by a third-party company, AAA, Arbitrators of America and 15
Association (sic)," I believe. "You would plead your side, Kenai pleads its side and the
arbitrator makes a decision. The decision's final. You cannot appeal the verdict in
arbitration like you can in normal court. So there's plenty of pros and cons that" -- "if it's
important to you as a personal level, then you need to make a decision on if you want to
opt out or not." 20
Q You mentioned class actions. Do you tell the employees about any other rights
they're giving up if they don't opt out of the arbitration agreement?
A I touch on the class action suits, I touch on the verdict. You know, you can't appeal it
like you can -- and that's -- that's about it.
Q Do you tell them whether they have a right to go to a jury trial? 25
A As part of arbitration? No. They -- they waive that.
Q Okay. And do you tell them whether they would have a right to a judge -- a trial
before a judge?
A Correct. If they choose not to opt out. If they choose -- yeah, if they choose to opt
out. Sorry. 30
Q Then they would. So if they agree -- if they don't opt out and they agree to the
arbitration agreement --
A Uh-huh.
Q -- what are they giving up? What do you tell them they're giving up?
A Oh. Their rights to a judge and jury through -- they would have to use arbitration if 35
they choose to use the program.2 (Tr. 14-18).
After the training was completed, employees were required to sign a written
acknowledgement of training, which advised that employees would be bound by the Arbitration
Policy unless they chose to opt out within 30 days of receiving the Opt-Out Notice. (Jt. Exh. 1). 40
Charging Party signed the acknowledgment of receipt form but did not sign and return the opt-
out form within 30 days. (Jt. Exh. 1). Thereafter, as noted above, Charging Party filed a class

2It is clear from the testimony of Ms. Phoutrides that she is not a legal expert in the arbitration
process, has only a very rudimentary understanding of arbitration in general, and would be
unable to advise employees regarding the full panoply of state and federal rights and remedies a
person might give up by failing to opt out of the arbitration process.
JD(SF)–13–15
8
action complaint and Respondent’s efforts to enforce the arbitration were granted via a motion to
compel Charging Party to individual arbitration. (Jt. Exh. 1).
III. Analysis and Conclusions
5
The General Counsel and the Charging Party argue that this matter is controlled by the
Board’s holding in D.R. Horton, 357 NLRB No. 184 (2012), denied enforcement in relevant part
737 F.3d 344 (5th Cir. 2013). See also Murphy Oil, 361 NLRB No. 72 (2014). In those cases,
the Board recognized that, “collective efforts to redress workplace wrongs or improve workplace
conditions are at the core of what Congress intended to protect by adopting the broad language of 10
Section 7 [of the National Labor Relations Act].” D.R. Horton, supra, slip op. at 3. The Board
found collective redress in legal or administrative settings are “not peripheral but central to the
Act’s purposes.” Id. The Board further found that an employer violates the Act by maintaining a
prohibition on the maintenance of class or collective actions. The General Counsel asserts that,
“Respondent requires employees to sign the Acknowledgement as a condition of employment. 15
By signing the Acknowledgement, employees become bound to Respondent’s Arbitration Policy
unless they take affirmative action to opt-out in the manner and time-frame dictated by
Respondent. It is undisputed that Respondent’s arbitration policy prohibits collective or class
claims in both judicial and arbitral forums.” (GC Br. at p.6). The General Counsel therefore
reasons that Respondent’s policy is “unlawful on its face” and violates Section 8(a)(1) of the Act.20
Respondent asserts that the charge in the matter was untimely filed and therefore
Charging Party is barred from pursuing the claim. Respondent also asserts that the Board’s
decision in D.R. Horton was wrongly decided, that the Board lacks authority to interpret the
Federal Arbitration Act, and nevertheless the rationale of D.R. Horton should not apply to the 25
facts presented because it contends that its arbitration agreement is “voluntary.” Respondent
further asserts that the remedies sought by the General counsel are improper. (R. Br. At 10).
A. D.R. Horton and Murphy Oil Are Controlling
30
Respondent, relying in part on the Supreme Court’s decision in AT&T Mobility LLC v.
Concepcion, 131, S.Ct. 1740, 1746 (2011), and CompuCredit v. Greenwood, 132 S.Ct. 665, 669
(2012), argues that D.R. Horton and Murphy Oil were both wrongly decided and should not be
controlling in this matter. Respondent further argues that because the Fifth Circuit and other
Circuit court’s have disagreed with the Board, the reasoning set forth in those cases should 35
control. It must be noted that I am bound by D.R. Horton and Murphy Oil until either the Board
or the Supreme Court overturns them.3 Waco Inc., 273 LRB 746, 749 fn. 14 (1984) (it is the
judge’s duty to apply established Board precedent which the Supreme Court has not reversed.”
and “for the Board, not the judge, to determine whether precedent should be varied.”) (citation
omitted); Los Angeles New Hospital, 244 NLRB 960, 962 fn. 4 (1979), enfd. 640 F.2d 1017 (9th 40
Cir. 1981); Pathmark Stores, 342 NLRB 378 fn. 1 (2004). In view of this obligation,
Respondent’s disagreement with the legitimacy of the Board’s holding in D.R. Horton and
Murphy Oil, and its assertions that the Board’s actions were misguided, do not fit within the FAA
savings clause, that there is no “Contrary Congressional Command” and/or that the Board
exceeded its authority are more appropriately addressed to the Board itself. 45

3 It is important to note that D.R. Horton was not affected by the Supreme Court’s decision in
Noel Canning v. NLRB, 134 S.Ct. 2550 (June 26, 2014), because D.R. Horton was not issued by
the same Board members whose appointments were held to be invalid.
JD(SF)–13–15
9
Nevertheless, Respondent asserts that even if D. R. Horton were properly decided it still
would not compel a finding that its arbitration agreement interfered with Charging Party’s
Section 7 rights. I disagree.
B. The Charge Is Not Barred by the Statute of Limitations in Section 10 (b).5
As will be discussed in more detail below, many of the issues raised herein by
Respondent are the same or similar to those raised and addressed by administrative law judges in
numerous other cases. This is a road that has been well traveled. Respondent’s timeliness
argument is a familiar example. Respondent asserts that, “the conduct at issue occurred long ago 10
and is clearly time barred.” (R. Br. at 19). Respondent’s theory is that since the arbitration
agreement itself dates back to 2011 and the charge was not filed until May 6, 2014, it is well
beyond the 6 months period contemplated by Section 10(b).4 This argument ignores well
established Board precedent.
15
The complaint alleged that Respondent maintained and enforced its arbitration agreement.
(GC Ex. 1 (j), complaint paragraphs 4(a) and 6). Respondent in its answer openly admits to both
the maintenance and enforcement of the agreement within 6 months of the filing of the charge.
(GC Ex. 1(o), R. answer paras. 2 and 5). The Board has long held that Section 10(b) does not bar
an allegation of unlawful conduct that began more than 6 months before a charge was filed but 20
has continued within the 6-month period since, “[t]he maintenance during the 10(b) period of a
rule that transgresses employee rights is itself a violation of Sec. 8(a)(1).” Register-Guard, 351
NLRB 1110, 1110 fn. 2 (2007), enfd. in part 571 F.3d 53 (D.C. Cir. 2009), citing Eagle-Picher
Industries, Inc., 331 NLRB 169, 174 fn. 7 (2000). See also Lafayette Park Hotel, 326 NLRB 824,
825 (1998).” See also, Control Services, Inc., 305 NLRB 435 fn. 2 (1991) (holding that Section 25
10(b) does not bar finding of violation of continually maintained rules), see also Cellular Sales of
Missouri, LLC 362 NLRB. No. 27 (2015). In view of the above longstanding applicable Board
precedent and Respondent’s admissions that it both maintained and enforced the arbitration
agreement, I find that the allegations are not time barred.
30
C. Respondent’s Violated Section 8(a)(1) by Maintaining and Enforcing its Arbitration Policy
The Board has long held that concerted legal action addressing wages, hours, and
working conditions, whether, in a civil suit, before an administrative agency, or through
arbitration, all constitute concerted protected activities under Section 7 of the Act. D.R. Horton, 35
supra slip op. at 2–3. In Eastex Inc. v. NLRB, 437 U.S. 556, 565–566 (1978), the Supreme Court
held that the ‘mutual protection’ clause protects employees from retaliation by their employers
when they seek to improve working conditions through resort to administrative and judicial
forums.” In Le Madri Restaurant, 331 NLRB 269, 275(2000), the Board held that the filing of
civil suit by employees is protected activity. 40

4 Respondent relies on Ledbetter v. Goodyear Tire & Rubber Co., 550 U.S. 618 (2007), which
arose in the context of Title VII. Respondent’s reliance on Ledbetter is misplaced as the Court’s
analysis was openly rejected and superceeded by passage of the Lilly Ledbetter Fair Pay Act of
2009 Pub. L. No. 1112, 123 Stat.5, which amended Title VII to define an unlawful employment
practice to occur when an individual is affected by the application of a discriminatory practice.
Simply put, Ledbetter is no longer good law and hasn’t been since at least January 29, 2009.
JD(SF)–13–15
10
There can be no dispute that the Act unambiguously gives employees the right to engage
in protected concerted activities without interference from the employer. Respondent’s policy on
its face prohibits collective or class claims not only in judicial but also in arbitral forms and
specifically and unambiguously precludes consolidation of claims, representative actions of any
kind, and specifically precludes joinder.5 In a nutshell, the arbitration policy by its own terms 5
seeks to deprive employees of the very right to engage in collective activity that Section 7 seeks
to protect. The Board has found that if a rule explicitly restricts activities protected by Section 7
of the Act, the rule is unlawful and violates Section 8(a)(1). See U-Haul of California, 347
NLRB 375, 377 (2006), enfd. 255 Fed. Appx. 527 (D.C. Cir 2007). I therefore find the policy
unlawfully restricts and interferes with the employees Section 7 rights to engage in concerted 10
action for mutual aid or protection and on its face violates Section 8(a)(1).
Similarly, I find that since the agreement in question provides that “any, controversy,
dispute or claim arising out of or relating to Employee’s employment . . . shall be settled through
binding arbitration,” given the all inclusive nature of the language and without any clear 15
exception for filing a charge with the Board, employees would reasonably conclude that they
were precluded from filing an unfair labor practice with the Board.6 (GC1(j) Appendix A).
Accordingly, a separate finding of a violation of Section 8(a)(1) predicated on the test and
rationale set forth in Lutheran Heritage Village-Livonia, 343 NLRB 646 (2004), is also
warranted. See also, Bill's Electric, Inc., 350 NLRB 292, 296 (2007); Dish Network Corp., 358 20
NLRB No. 29, slip op. at 7–8 (2012); University Medical Center, 335 NLRB 1318, 1320–1322
(2001), enf. denied in pertinent part, 335 F.3d 1079 (D.C. Cir. 2003).
I also find, as did the Board in Murphy Oil, that Respondent’s efforts to enforce the
arbitration agreement constituted a separate violation of 8(a)(1). In Murphy Oil the Board held 25
that, “it is well settled that an employer violates Section 8(a)(1) by enforcing a rule that
unlawfully restricts Section 7 rights.” See, e.g., NLRB v. Washington Aluminum Co., 370 U.S. 9,
16–17 (1962); Republic Aviation Corp., 324 U.S. 793 (1945). That is precisely what the
Respondent did through its motion to dismiss.” The identical reasoning is applicable to
Respondent’s motion to dismiss in this case. 30
Respondent attempts to distinguish D.R. Horton from the instant matter arguing because
its opt-out provision renders the agreement “voluntary” it does not violate the standards set forth
by the Board in D.R. Horton. At the outset, I disagree with Respondent’s characterization of the
agreement as “voluntary” or “optional.” Voluntary is defined in the Webster’s Third New 35
International Dictionary (1986) 2564, as “proceeding from the will or from one’s own free
choice or consent; unconstrained by interference . . . without legal obligation.” The agreement
doesn’t meet even the most basic and understood definition of the term “voluntary.” If the
agreement was truly “voluntary,” the employees would be afforded the opportunity (upon giving
the employer reasonable notice), to change their minds (after they had a full and fair opportunity 40

5 Member Johnson in his dissent in Murphy Oil noted that a policy that didn’t permit joinder
in and of itself would constitute a violation of the Act. He specifically stated while refering to
joinder that, “a prohibition on joint litigation imposed as a condition of employment prevents the
exercise of this Section 7 right and does not serve any of the legitimate employer interests.” I am
in agreement that the prohibition of the joinder of claims in and of itself rises to the level of a
separate violation of 8(a)(1).
6 It is important to note that even when the employees are on-boarded no attempt is made by
Ms. Phoutrides to specifically advise them regarding whether or not their rights to proceed to the
NLRB are affected by the arbitration agreement. (Tr. 14–18).
JD(SF)–13–15
11
to develop some real knowledge of the working conditions), and notify the employer of their
intention to no longer be covered by the agreement if they so desired. The employer’s efforts to
enforce the agreement make clear that this is simply not the case. If the employees do not
affirmatively opt-out they are forever locked into the arbitration agreement regardless of any
change in their choice or consent. 5
Moreover, as noted above, other Administrative Law Judges have addressed the identical
issues raised in this case in so far as they relate to the question of whether the maintenance of an
arbitration policy with an opt-out provision insulates Respondent from liability. In 24 Hour
Fitness USA, Inc. (Case 20–CA–035419, Nov. 6, 2012), Securitas Security Services USA, Inc., 10
2013 WL 5984335 (NLRB Div. of Judges Nov. 8, 2013), Dominos Pizza, LLC, 2014 WL
1267122(NLRB Div. of Judges, March 27, 2014), and RPM Pizza, 2014 WL 3401751(NLRB
Division of Judges, July 11, 2014), each found that an opt-out provision similar to that presented
in this case violated Section 8(a)(1), and constituted an unlawful restriction of core rights granted
to employees under Section 7. While these decisions are not binding precedent, I find the 15
reasoning and rationale presented within each to be in line with the Board’s rationale set forth in
Murphy Oil and persuasive. In particular, I agree with my colleagues who have previously held
that arbitration policies similar to that in this case were unlawful because the opt-out provision
gives employees only a short time (30 days) to irrevocably consider (often times without
representation) complex legal rights and consequences, many of which cannot be foreseen by a 20
new employee, and it places upon employees the unreasonable burden of affirmatively making a
decision to waive future rights protected under the Act. See Ishikawa Gasket America, Inc., 337
NLRB 175–176 (2001); Mandel Security Bureau, Inc., 202 NLRB 117 (1973).7
General Counsel supplements this list with its own assertions that:25
1) The arbitration policy unreasonably imposes upon employees a waiver at a time when
employees are unlikely to have notice of employment issues and/or where employees
have no notice of their Section 7 right to engage in class or collective activity or that a
prohibition on such activity violates Section 8(a)(1) of the Act;30
2) Even if employees do opt out they are precluded from acting in concert with those who
do; 8

7 I am mindful that other Administrative Law Judges have reached contrary results. See for
example, Bloomingdale’s Inc., WL 3225945 (June 25, 2013), see also Valley Health System
LLC, 28–CA–123611, 28–CA–127147 (March 18, 2015). The decisions appear to be contrary to
the clear authority set forth by the Board in Murphy Oil. In particular, they run afoul of Murphy
Oil’s holding that an arbitration agreement that prevents employees from exercising Section 7
rights, “amounts to a prospective waiver of a right guaranteed by the NLRA.”
So too, I disagree with the notion in Valley Health System LLC that endorses a requirement
that new employees shoulder the burden of paying for and seeking out counsel to preserve the
very rights that are guaranteed under federal law. It is this very burden that interferes with the
exercise of Section 7 rights.
8 One example of such interference comes when concerted activity takes the form of disparate
impact cases. In Griggs v. Duke Power, 401 U.S. 24 (1971), the Supreme Court held that
employment practices that are neutral on their face but have a discriminatory impact can violate
Title VII. A plaintiff in such cases need not prove discriminatory intent but rather can establish
JD(SF)–13–15
12
3) Requiring employees to preserve their Section 7 rights in an unlawful burdening of
their Section 7 rights; and
4) The opt out procedure by its nature requires new employees to self identify at a time 5
when they are particularly vulnerable as new employees and thus the agreement
significantly burdens the right to engage in collective action.
I concur with General Counsel that all of the above considered individually and together
offer valid and compelling rationale from which to conclude that the arbitration agreement 10
unlawfully restricts core rights. General Counsel asserts and I agree that requiring employees to
“self identify” burdens employee’s rights. This is especially true when as in this case the person
notified of the decision is a high ranking company official. See Special Touch Home Care
Services, 357 NLRB No. 2 (2011), holding that permitting an employer to compel employees to

through the use of statistics the discriminatory impact of the practice or policy. If a policy is
neutral on its face and can only be discovered through the use of statistical analysis which
requires some extensive investigation and/or discovery of the practices in question, it is highly
unlikely that any new employee would meet the 30-day deadline to make an informed decision
regarding whether to opt-out or not. Secondly, assuming the individual who discovered a neutral
but discriminatory practice had opted-out, he/she may still be precluded from engaging in
collective action and obtaining class wide relief to remedy class wide wrongs. In this
hypothetical, although class wide discrimination might be present, other affected potential class
members are presumably precluded from participating in the class thus defeating numerosity.
This would clearly conflict with Section 7’s and Title VII’s purposes. The Supreme Court has
held that, “race discrimination cases are by their very nature class suits involving class wide
wrongs.” East Texas Motor Freight Systems, Inc. v. Rodriguez, 431 U.S. 395, 405 (1977). It has
even been noted that 23(b)(2) was specifically drafted to facilitate the vindication of civil rights
through the class action device. See 5 Moore’s Federal Practice Section 23.43[1][b], at 23–
192(3rd Ed. 2005), see also, Barefield v. Chevron, 1899 WL 188433 (N.D. CA 1988). As the
Supreme Court implicitly recognized in Rodriguez individual relief in many cases is simply
inadequate to remedy class wrongs.
It should also be noted that the arbitration agreement, if enforced, would serve to dismantle
the private attorney general scheme envisioned by Congress to encourage the effective public
enforcement of statues designed to remedy class wide or systemic wrongs in the employment
setting. The fee shifting provisions of these statutes were specifically meant to bridge the gap
between the desire of an individual who has been deprived a federal right to see that right
vindicated and the financial ability to do so. As noted by Justice Brennan in Newman v. Piggie
Park Enterprises Inc., 390 U.S. 400, 401 (1968), by utilizing the private attorney general
framework, “Congress sought to capitalize on the happy coincidence that encouraging private
actions would, in the long run provide effective public enforcement.” As the Court also noted in
Amchem Products Inc. v. Windsor, 521 U.S. 591, 617 (1997), “the policy at the very core of the
class action mechanism is to overcome the problem that small recoveries do not provide the
incentive for any individual to bring a solo action prosecuting his or her rights. A class action
solves this problem by aggregating the relatively paltry recoveries into something worth
someone’s (usually an attorney’s) labor” (citations omitted).
JD(SF)–13–15
13
provide individual notice of participation in collective action would impose a significant burden
on the right.
In my view, the issue runs deeper than simply “self identification.” One of the two pillars
of concerted activity is the recognition that there is strength in numbers and with this strength 5
comes the balancing of power between employers and employees. Judge Dawson in RPM Pizza,
2014 WL 3401751(NLRB Division of Judges, July 11, 2014), eloquently touched upon this
when she noted that a similar opt-out provision, “creates a smokescreen and serves to restore the
inequity” the Act intended to address. The second pillar of concerted activity revolves around the
notion that that along with strength in numbers there is the perception of safety in numbers. 10
Indeed, the Act specifically references the right to engage in concerted activities for “protection.”
It is no doubt much easier for an employer to take an adverse action against a single “self
identified” employee who complains about terms and conditions of employment or opposes an
unlawful employment practice than it is to terminate a whole class of employees. Member
Miscimara in HTH, Pacific Beach Corp., 361 NLRB No. 65, 69 (2014), observed that, “the 15
NLRA is unique among federal employment statutes. The core focus of the NLRA relates
almost exclusively to the manner in which employees interact collectively and in support of one
another.” He further observed that, “all of these protections have meaning only if employees
have support from other employees….” Id.
20
The arbitration agreement by its very nature compels employees to act alone and strips
them of the very support and “protection” that the Act intends to provide. It essentially deprives
them of the core right to act in concert with others for “protection.” The chilling effect on the
exercise of an employee’s rights by requiring that the employee act alone and without the
“protection” of banding together with his or her fellow employees is unquantifiable and 25
immeasurable but very real. See Lafayette Park Hotel, 326 NLRB 824, 825 (1998) (wherein the
Board held that the mere maintenance of work rule by employer will violate Act where the rule
is likely to have a chilling effect), enfd. 203 F.3d 52 (D.C. Cir. 1999). A perfect example arises
repeatedly in cases of sexual harassment wherein a victim endures harassment because of fear.9
Oftentimes, these victims can find the courage to complain about the harassment only when 30
others who have also been victimized are willing to stand with them to face the harasser. This is
the very kind of support intended by the Act when it guaranteed employees the right to engage in
concerted activities for “mutual aid or protection” and the very kind of support the arbitration
agreement removes.
35
For the foregoing reasons, I find that Respondent’s maintenance of and requirement that
employees enter into its arbitration agreement, as set forth above, as a condition of employment,
unlawfully restricts core rights granted to employees under Section 7 of the Act and violates of
Section 8(a)(1) as alleged in the complaint.
40

9 See for example, Fresh & Easy Neighborhood Market Inc., 361 NLRB No. 12 (2014), which
held that that an employee seeking the assistance or support of his or her coworkers in raising a
sexual harassment allegation is acting for the purpose of mutual aid or protection.
JD(SF)–13–15
14
CONCLUSIONS OF LAW
(1) The Respondent, Kenai Drilling Limited, is an employer within the meaning of
Section 2(2), (6), and (7) of the Act.
5
(2) At all material times, the Respondent has violated Section 8(a)(1) of the Act by
maintaining and enforcing an arbitration policy that waives the rights of its employees to file and
maintain class and collective actions in all forums, arbitral and judicial, and is applicable to all
employees who fail to opt out of coverage under the arbitration policy during a one-time initial
opt out period permitted to each employee.10
(3) The above violations are unfair labor practices within the meaning of the Act.
(4) The unfair labor practices committed by Respondent affect commerce within the
meaning of Section 2(6) and (7) of the Act.15
REMEDY
Having found that the Respondent has engaged in certain unfair labor practices, I find that it
must be ordered to cease and desist and to take certain affirmative action designed to effectuate 20
the policies of the Act. Having found that the Respondent’s arbitration policy is unlawful, the
Respondent shall be ordered to rescind or revise it to make clear to employees (in all of its
facilities in which the arbitration policy has been implemented) that the policy does not
constitute or require a waiver in all forums of their right to maintain or participate in collective
and/or class actions, and shall notify employees of the rescinded or revised policy by providing 25
them a copy of the revised policy or specific notification that the policy has been rescinded.
Respondent is also ordered to distribute appropriate remedial notices to its employees
electronically, such as by email, posting on an intranet or internet site, and/or other appropriate
electronic means, if it customarily communicates with its employees by such means. J. Picini
Flooring, 356 NLRB No. 9 (2010).30
Respondent shall also notify any tribunal, arbitral or judicial where it has pursued the
enforcement of the arbitration agreement that the underlying basis of its objection to the pursuit
of any class or collective action was found to be violative of Section 8(a)(1) of the NLRA, and as
such, the request to enforce or compel arbitration was void ab initio. It shall also notify the 35
tribunal that in order to comply with federal law, Respondent desires to withdraw and/or vacate
any such motion or request to compel arbitration and that Respondent no longer objects to the
participation of its employees in such class or collective actions.
The General Counsel asks that Charging Party be reimbursed for any litigation expenses 40
directly related to opposing Respondent’s action to enforce its arbitration agreement.
Respondent argues that the award of litigation expenses is improper. The Board in Murphy Oil
directly considered the issue and stating, “consistent with the Board's usual practice in cases
involving unlawful litigation, we shall order the Respondent to reimburse the plaintiffs for all
reasonable expenses and legal fees, with interest, incurred in opposing the Respondent's unlawful 45
motion to dismiss their collective FLSA action and compel individual arbitration. See Bill
Johnson's, 461 U.S. at 747 (“If a violation is found, the Board may order the employer to
JD(SF)–13–15
15
reimburse the employees whom he had wrongfully sued for their attorneys' fees and other
expenses” and “any other proper relief that would effectuate the policies of the Act.”).” In view
of the Board having directly addressed the issue, and in reliance upon the Board’s decision, I find
that the award of litigation expenses with interest is appropriate. The applicable rate of interest
on the reimbursement shall be determined as outlined in New Horizons, 283 NLRB 1173 (1987) 5
(adopting the Internal Revenue Service rate for underpayment of Federal taxes). Interest on all
amounts due shall be computed on a daily bases as prescribed in Kentucky River Medical Center,
356 NLRB 8 (2010).
On these findings of fact and conclusions of law and on the entire record, I issue the 10
following recommended10
ORDER
The Respondent, Kenai Drilling Limited, City, State, its officers, agents and 15
representatives shall
1. Cease and desist from
(a) Maintaining, enforcing, seeking to enforce any arbitration agreement (the 20
agreement) or policy that waives the right of employees to file and maintain class or collective
actions in all forums, arbitral and judicial, and which applies irrevocably to those employees who
fail to opt out.
(b) Requiring employees to sign binding arbitration agreements that prohibit 25
collective and class litigation in all arbitral or judicial forums.
(c) In any like or related manner interfering with, restraining, or coercing employees
in the exercise of their rights under the Act.
30
2. Take the following affirmative action necessary to effectuate the policies of the Act.
(a) Rescind or revise the agreement, in all forms and places, to make clear to
employees that the agreement does not constitute or require a waiver in all arbitral or judicial
forums of their right to maintain employment-related class or collective actions.35
(b) Reimburse Charging Party, Eddie Stewart, III for all reasonable expenses and
legal fees, with interest incurred in opposing Respondent’s unlawful motion to dismiss and
compel arbitration.
40
(c) Notify employees of the rescinded or revised policy by providing them a copy of
the new revised policy and/or specific written notification that the policy has been rescinded.

10 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(SF)–13–15
16
(d) Notify any tribunal, arbitral or judicial where it has pursued the enforcement of
the arbitration agreement that the underlying basis of its objection to the pursuit of any class or
collective action was found to be violative of federal law, and as such, the request to enforce or
compel arbitration was void ab initio. Notify the tribunal that in order to comply with federal
law, Respondent desires to withdraw and/or vacate any such motion or request to compel 5
arbitration and that Respondent no longer objects to the participation of its employees in such
class or collective actions.
(e) Within 14 days after service by the Region, post at its facilities where the
Agreement has been or is in effect, copies of the attached notice marked Appendix. Copies of 10
this notice, on forms provided by the Region Director for Region 31, 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 physical posting of paper notices, notices shall be distributed
electronically, such as by email, posting or intranet or an internet site, and/or other electronic 15
means. Reasonable steps shall be taken by the Respondent to ensure that the notices are not
altered, defaced, or covered by any other material. If 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 July 1, 2011.1120
(f) Within 21 days after service by the Region, file with the Regional Director for
Region31 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.
25
Dated, Washington, D.C. April 13, 2015
30
_____________________
Dickie Montemayor
Administrative Law Judge35

11 If this Order is enforced by a judgment of a United States court of appeals, the words in the
notice reading “Posted by Order of the National Labor Relations Board shall read “posted
Pursuant to a Judgment of the United States Court of Appeals Enforcing an Order of the National
Labor Relations Board.”
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 Federal labor law and has
ordered us to post and obey this Notice.
FEDERAL LAW GIVES YOU THE RIGHT TO
Form, join, or assist a Union
Choose representatives to bargain with us on your behalf
Act together with other employees for your benefit and protection
Choose not to engage in any of these protected activities
WE WILL NOT maintain or enforce a binding arbitration agreement (the agreement) that
waives the right of employees to maintain or engage in class or collective actions in all
forums arbitral or judicial.
WE WILL NOT require employees to sign binding arbitration agreements that waive the right
to maintain or engage in class or collective actions in all arbitral or judicial forums.
WE WILL NOT in any manner enforce and/or seek to enforce any arbitration
agreement found to be in violation of the National Labor Relations Act by filing
motions to dismiss and/or motions seeking to compel individual arbitrations.
WE WILL NOT in any like or related manner interfere with, restrain, or coerce employees
in their rights guaranteed them by Section 7 of the Act.
WE WILL rescind or revise the agreement at all facilities where it has been implemented and
is currently in effect and make it clear to employees that the agreement does not constitute a
waiver of their right to maintain or engage in employment-related class or collective actions.
WE WILL notify our employees of the rescinded or revised agreement by providing to them a
copy of the revised agreement or specific notification that it has been rescinded.
WE WILL reimburse Charging Party, Eddie Stewart, III for all reasonable
expenses and legal fees, with interest incurred in opposing Respondent’s unlawful
motion to dismiss and compel arbitration.
WE WILL notify any tribunal where we have pursued the enforcement of our arbitration
agreement that the underlying basis of our objection to the pursuit of any class or collective
action was found to be violative of federal law, and as such, our request to enforce or compel
arbitration was void ab initio. Further, we will advise the tribunal that in order to comply with
federal law, we desire to withdraw and/or vacate any such motion or request to compel
arbitration and that we no longer object to the participation of our employees in such class or
collective actions.
KENAI DRILLING LIMITED
(Employer)
Dated By
(Representative) (Title)
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. You may also obtain information from the Board’s website: www.nlrb.gov.
11150 West Olympic Boulevard, Suite 700, Los Angeles, CA 90064-1824
(310) 235-7351, Hours: 8:30 a.m. to 5 p.m.
The Administrative Law Judge’s decision can be found at http://www.nlrb.gov/case/31-CA-128266 or by using the QR
code below. Alternatively, you can obtain a copy of the decision from the Executive Secretary, National Labor
Relations Board, 1099 14th Street, N.W., 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,
(310) 235-7424.