NETWORK CAPITAL FUNDING CORPORATION

National Labor Relations Board - Board Decisions

Feb 18, 2016

363 NLRB No. 106 (N.L.R.B. 2016)

363 NLRB No. 106
NOTICE: This opinion is subject to formal revision before publication in the
bound volumes of NLRB decisions. Readers are requested to notify the Ex-
ecutive Secretary, National Labor Relations Board, Washington, D.C.
20570, of any typographical or other formal errors so that corrections can
be included in the bound volumes.
Network Capital Funding Corporation and Erik
Papke. Case 21–CA–107219
February 18, 2016
DECISION AND ORDER
BY CHAIRMAN PEARCE AND MEMBERS MISCIMARRA
AND MCFERRAN
On March 5, 2014, Administrative Law Judge William
Nelson Cates issued the attached decision. The Re-
spondent filed exceptions and a supporting brief, and the
General Counsel filed an answering brief.
The National Labor Relations Board has delegated its
authority in this proceeding to a three-member panel.
The judge found, applying the Board’s decision in D.
R. Horton, 357 NLRB 2277 (2012), enf. denied in rele-
vant part 737 F.3d 344 (5th Cir. 2013), that the Respond-
ent violated Section 8(a)(1) of the Act by maintaining
and enforcing an Employee Acknowledgment and
Agreement (the Agreement) that requires employees, as a
condition of employment, to waive their rights to pursue
class or collective actions involving employment-related
claims in all forums, whether arbitral or judicial. In
Murphy Oil USA, Inc., 361 NLRB No. 72 (2014), the
Board reaffirmed the relevant holdings of D. R. Horton,
supra. Based on the judge’s application of D. R. Horton,
and on our subsequent decisions in Murphy Oil and
Countrywide Financial Corp., 362 NLRB No. 165
(2015), we affirm the judge’s rulings, findings,1 and con-
clusions,2 and adopt the recommended Order as modified

1 Our dissenting colleague observes that the Act does not “dictate”
any particular procedures for the litigation of non-NLRA claims, and
“creates no substantive right for employees to insist on class-type
treatment” of such claims. This is all surely correct, as the Board has
previously explained in Murphy Oil, supra, slip op. at 2 and Bristol
Farms, 363 NLRB No. 45, slip op. at 2 fn. 2. But what our colleague
ignores is that the Act does “create[] a right to pursue joint, class, or
collective claims if and as available without the interference of an em-
ployer-imposed restraint.” Murphy Oil, supra, slip op. at 2. The Re-
spondent's Agreement is just such an unlawful restraint.
2 We agree with the judge that, although the Agreement is silent on
whether employees can arbitrate claims on a class or collective basis,
the Respondent interpreted and applied the Agreement to restrict all
employment disputes to individual arbitration, in violation of Sec.
8(a)(1). See Countrywide, 362 NLRB No. 165, slip op. at 3–4. More-
over, the Respondent did not except to the judge’s finding that the
Agreement effectively barred class or collective employee actions in
any forum and that employees would reasonably read it to that effect.
The Respondent argues that the complaint is time barred by Sec.
10(b) because the initial unfair labor practice charge was filed and
served more than 6 months after the Charging Party, Erik Papke, signed
and became subject to the Agreement. We reject this argument, as did
the judge, because the Respondent continued to maintain the unlawful
and set forth in full below.3
In affirming the judge’s unfair labor practice findings,
we observe that the judge correctly found that signing the
Respondent’s Agreement was a mandatory condition of
employment. At an orientation session for newly hired
employees, the Respondent’s representative distributed
copies of the Agreement, along with other forms, for

Agreement during the 6-month period preceding the filing of the initial
charge. The Board has long held under these circumstances that
maintenance of an unlawful workplace rule, such as the Respondent’s
Agreement, constitutes a continuing violation that is not time-barred by
Sec. 10(b). See PJ Cheese, Inc., 362 NLRB No. 177, slip op. at 1
(2015); Neiman Marcus Group, 362 NLRB No. 157, slip op. at 2 fn. 6
(2015); and Cellular Sales of Missouri, LLC, 362 NLRB No. 27, slip
op. at 2 fn. 7 (2015). It is equally well established that an employer’s
enforcement of an unlawful rule, like the Agreement here, independent-
ly violates Sec. 8(a)(1). See Murphy Oil, supra, at 19–21. The Re-
spondent enforced its Agreement on June 11, 2013, within the relevant
6-month period before the charge was filed and served.
The Respondent also argues that its Agreement includes an exemp-
tion allowing employees to file charges with administrative agencies,
including with the Board, and thus does not, as in D. R. Horton, unlaw-
fully prohibit them from collectively pursuing litigation of employment
claims in all forums. We reject this argument for the reasons given in
SolarCity Corp., 363 NLRB No. 83 (2015).
3 Because the lawsuit has been dismissed, we find it unnecessary to
order the Respondent, as in Murphy Oil (slip op. at 21–22), to remedy
the 8(a)(1) enforcement violation by notifying the court that it no long-
er opposes Papke’s lawsuit. However, consistent with our decision in
Murphy Oil, supra at 21, we clarify the judge’s remedy by ordering the
Respondent to reimburse Papke and all other plaintiffs, if any, for all
reasonable expenses and legal fees, with interest, incurred in respond-
ing to the Respondent’s unlawful motion in State court to compel indi-
vidual arbitration and dismiss the class action lawsuit. See Bill John-
son’s Restaurants v. NLRB, 461 U. S. 731, 747 (1983) (“If a violation is
found, the Board may order the employer to reimburse the employees
whom he had wrongfully sued for their attorneys’ fees and other ex-
penses” as well as “any other proper relief that would effectuate the
policies of the Act.”). Interest shall be computed in the manner pre-
scribed in New Horizons, 283 NLRB 1173 (1987), compounded daily
as prescribed in Kentucky River Medical Center, 356 NLRB 6 (2010).
See Teamsters Local 776 (Rite Aid), 305 NLRB 832, 835 fn. 10 (1991)
(“[I]n make-whole orders for suits maintained in violation of the Act, it
is appropriate and necessary to award interest on litigation expenses”),
enfd. 973 F.2d 230 (3d Cir. 1992).
We reject our dissenting colleague's view that the Respondent's mo-
tion to compel arbitration was protected by the First Amendment's
Petition Clause. In Bill Johnson’s Restaurants v. NLRB, supra, the
Court identified two situations in which a lawsuit enjoys no such pro-
tection: where the action is beyond a State court’s jurisdiction because
of Federal preemption, and where “a suit . . . has an objective that is
illegal under federal law.” 461 U.S. at 737 fn. 5. Thus, the Board may
properly restrain litigation efforts such as the Respondent's motion to
compel arbitration that have the illegal objective of limiting employees'
Sec. 7 rights and enforcing an unlawful contractual provision, even if
the litigation was otherwise meritorious or reasonable. See Murphy
Oil, supra, slip op. at 20–21; Convergys Corp., 363 NLRB No. 51, slip
op. at 2 fn. 5 (2015).
Finally, we modify the judge’s recommended Order to conform to
the Amended Remedy, to the judge’s unfair labor practice findings, and
to the Board’s standard remedial language, and we shall substitute a
new notice to conform to the Order as modified.
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD2
Papke and eight other newly hired loan officers “to sign”
and submit to the presenter. As found by the judge, the
presenter did not indicate in any way that the employees
could remain employed without signing the Agreement.
Further, we find it significant that the purpose of the ori-
entation session was to instruct new hires on the Re-
spondent’s required operating procedures. In this con-
text, Papke and the other employees present would rea-
sonably have believed that signing the Agreement was a
condition of their employment.4
ORDER
The National Labor Relations Board orders that the
Respondent, Network Capital Funding Corporation, Ir-
vine, California, its officers, agents, successors, and as-
signs, shall
1. Cease and desist from
(a) Maintaining or enforcing an Employee Acknowl-
edgment and Agreement (the Agreement that requires
employees, as a condition of employment, to waive the
right to maintain joint, class, or collective actions in all
forums, whether arbitral or judicial.
(b) In any like or related manner interfering with, re-
straining, or coercing employees in the exercise of their
rights under the Act.
2. Take the following affirmative action designed to
effectuate the policies of the Act.
(a) Rescind the Agreement in all of its forms, or revise
it in all of its forms to make clear to employees that the
Agreement does not constitute a waiver of their right to
maintain employment-related joint, class, or collective
actions in all forums.
(b) Notify all current and former employees who were
required to sign the Agreement in any form that the
agreement has been rescinded or revised and, if revised,
provide them a copy of the revised agreement, and fur-
ther notify them that the Agreement will not be enforced
in a manner that compels them to waive their right to
maintain employment-related joint, class or collective
actions in all forums.
(c) In the manner set forth in the remedy section of this
decision, reimburse Erik Papke and any other plaintiffs
for any reasonable attorneys’ fees and litigation expenses

4 In any event, we would find that the Respondent’s maintenance
and enforcement of the Agreement unlawful even if executing the
Agreement was not a mandatory condition of employment. See On
Assignment Staffing Services, Inc., 362 NLRB No. 189 (2015).
We also agree with the judge that neither Papke’s voluntary motion
to dismiss his state lawsuit nor his subsequent demand for class arbitra-
tion constituted a waiver of any of his rights under the Act. See
Bethenergy Mines, 308 NLRB 1242, 1245–1246 (1992) (an employee’s
waiver of a Sec. 7 right must be clear and unmistakable, citing Metro-
politan Edison v. NLRB, 460 U.S. 693 (1983)); Electrical Workers
IBEW Local 2008, 302 NLRB 322, 331 (1991) (same).
they may have incurred in responding to the Respond-
ent’s motion to compel individual arbitration and strike
class allegations in Erik Papke v. Network Capital Fund-
ing Corp.
(d) Within 14 days after service by the Region, post at
its Irvine, California facility, copies of the notice marked
“Appendix.”5 Copies of the notice, on forms provided by
the Regional Director for Region 21, after being signed
by the Respondent’s authorized representative, shall be
posted by the Respondent and maintained for 60 consec-
utive days in conspicuous places including all places
where notices to employees are customarily posted.
Reasonable steps shall be taken by the Respondent to
ensure that the notices are not altered, defaced, or cov-
ered by any other material. In addition to the physical
posting of paper notices, notices shall be distributed elec-
tronically, such as by email, posting on an intranet or an
internet site, or other electronic means, if the Respondent
customarily communicates with its employees by such
means. In the event that, during the pendency of these
proceedings, the Respondent has gone out of business or
closed the facility involved in these proceedings, the Re-
spondent 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 June 11, 2013, and any employees and former em-
ployees against whom the Respondent has enforced the
Agreement since December 13, 2012.
(e) Within 21 days after service by the Region, file
with the Regional Director for Region 21 a sworn certifi-
cation of a responsible official on a form provided by the
Region attesting to the steps that the Respondent has
taken to comply.
Dated, Washington, D.C. February 18, 2016
______________________________________
Mark Gaston Pearce, Chairman
______________________________________
Lauren McFerran, Member
(SEAL) NATIONAL LABOR RELATIONS BOARD
MEMBER MISCIMARRA, dissenting.

5 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 Na-
tional Labor Relations Board” shall read “Posted Pursuant to a Judg-
ment the United States Court of Appeals Enforcing an Order of the
National Labor Relations Board.”
NETWORK CAPITAL FUNDING CORP. 3
In this case, my colleagues find that the Respondent’s
Employee Acknowledgement and Agreement (the
Agreement) violates Section 8(a)(1) of the National La-
bor Relations Act (the Act or NLRA) because the
Agreement waives the right to participate in class or col-
lective actions regarding non-NLRA employment claims.
Charging Party Erik Papke signed the Agreement, and
later he filed a class action lawsuit against the Respond-
ent in State court alleging violations of the California
Labor Code. In reliance on the Agreement, the Re-
spondent filed a motion to compel arbitration on an indi-
vidual basis.1 My colleagues find that the Respondent
thereby unlawfully enforced its Agreement. I respectful-
ly dissent from these findings for the reasons explained
in my partial dissenting opinion in Murphy Oil USA,
Inc.2
I agree that an employee may engage in “concerted”
activities for “mutual aid or protection” in relation to a
claim asserted under a statute other than NLRA.3 How-
ever, Section 8(a)(1) of the Act does not vest authority in
the Board to dictate any particular procedures pertaining
to the litigation of non-NLRA claims, nor does the Act
render unlawful agreements in which employees waive
class-type treatment of non-NLRA claims. To the con-
trary, as discussed in my partial dissenting opinion in
Murphy Oil, NLRA Section 9(a) protects the right of
every employee as an “individual” to “present” and “ad-
just” grievances “at any time.”4 This aspect of Section

1 Following the Respondent’s motion to compel arbitration, Papke
filed a request to dismiss his lawsuit, which the court granted. Papke
then filed a demand for class arbitration of the same claims previously
asserted in his lawsuit. The Respondent filed a complaint for declarato-
ry and injunctive relief in State court and moved for a preliminary
injunction against Papke’s class arbitration demand. The court granted
the Respondent’s motion, finding that Papke’s claims must proceed on
an individual basis. Papke appealed the court’s order, and his appeal
remains pending in the California courts. See Network Capital Fund-
ing Corp. v. Papke, 230 Cal.App. 4th 503 (Cal. Ct. App. 4th Dist. 2014)
(denying appeal), review granted 340 P.3d 1043 (Cal. 2015).
2 361 NLRB No. 72, slip op. at 22–35 (2014) (Member Miscimarra,
dissenting in part). The Board majority’s holding in Murphy Oil inval-
idating class-action waiver agreements was recently denied enforce-
ment by the Court of Appeals for the Fifth Circuit. Murphy Oil USA,
Inc. v. NLRB, No. 14–60800, 2015 WL 6457613 (5th Cir. 2015).
3 I agree that non-NLRA claims can give rise to “concerted” activi-
ties engaged in by two or more employees for the “purpose” of “mutual
aid or protection,” which would come within the protection of NLRA
Sec. 7. See Murphy Oil, 361 NLRB No. 72, slip op. at 23–25 (Member
Miscimarra, dissenting in part). However, the existence or absence of
Sec. 7 protection does not depend on whether non-NLRA claims are
pursued as a class or collective action, but on whether Sec. 7’s statutory
requirements are met—an issue separate and distinct from whether an
individual employee chooses to pursue a claim as a class or collective
action. Id.; see also Beyoglu, 362 NLRB No. 152, slip op. at 4–5
(2015) (Member Miscimarra, dissenting).
4 Murphy Oil, above, slip op. at 30–34 (Member Miscimarra, dis-
senting in part). Sec. 9(a) states: “Representatives designated or select-
9(a) is reinforced by Section 7 of the Act, which protects
each employee’s right to “refrain from” exercising the
collective rights enumerated in Section 7. Thus, I be-
lieve it is clear that (i) the NLRA creates no substantive
right for employees to insist on class-type treatment of
non-NLRA claims;5 (ii) a class-waiver agreement per-
taining to non-NLRA claims does not infringe on any
NLRA rights or obligations, which has prompted the
overwhelming majority of courts to reject the Board’s
position regarding class-waiver agreements;6 and (iii)
enforcement of a class-action waiver as part of an arbitra-
tion agreement is also warranted by the Federal Arbitra-
tion Act (FAA).7 Although questions may arise regard-
ing the enforceability of particular agreements that waive

ed for the purposes of collective bargaining by the majority of the em-
ployees in a unit appropriate for such purposes, shall be the exclusive
representatives of all the employees in such unit for the purposes of
collective bargaining in respect to rates of pay, wages, hours of em-
ployment, or other conditions of employment: Provided, That any indi-
vidual employee or a group of employees shall have the right at any
time to present grievances to their employer and to have such griev-
ances adjusted, without the intervention of the bargaining representa-
tive, as long as the adjustment is not inconsistent with the terms of a
collective-bargaining contract or agreement then in effect: Provided
further, That the bargaining representative has been given opportunity
to be present at such adjustment” (emphasis added). The Act’s legisla-
tive history shows that Congress intended to preserve every individual
employee’s right to “adjust” any employment-related dispute with his
or her employer. See Murphy Oil, above, slip op. at 31–32 (Member
Miscimarra, dissenting in part).
5 When courts have jurisdiction over non-NLRA claims that are po-
tentially subject to class treatment, the availability of class-type proce-
dures does not rise to the level of a substantive right. See D. R. Horton,
Inc. v. NLRB, 737 F.3d 344, 362 (5th Cir. 2013) (“The use of class
action procedures . . . is not a substantive right.”) (citations omitted),
petition for rehearing en banc denied No. 12–60031 (5th Cir. 2014);
Deposit Guaranty National Bank v. Roper, 445 U.S. 326, 332 (1980)
(“[T]he right of a litigant to employ Rule 23 is a procedural right only,
ancillary to the litigation of substantive claims.”).
6 The Fifth Circuit has twice denied enforcement of Board orders
invalidating a mandatory arbitration agreement that waived class-type
treatment of non-NLRA claims. See Murphy Oil, Inc., USA v. NLRB,
above; D. R. Horton, Inc. v. NLRB, above. The overwhelming majority
of courts considering the Board’s position have likewise rejected it.
See Murphy Oil, 361 NLRB No. 72, slip op. at 34 (Member
Miscimarra, dissenting in part); id., slip op. at 36 fn. 5 (Member John-
son, dissenting) (collecting cases); see also Patterson v. Raymours
Furniture Co., 96 F. Supp. 3d 71 (S.D.N.Y. 2015); Nanavati v. Adecco
USA, Inc., 99 F. Supp. 3d 1072 (N.D. Cal. 2015), motion to certify for
interlocutory appeal denied 2015 WL 4035072 (N.D. Cal. June 30,
2015); Brown v. Citicorp Credit Services, No. 1:12-CV-00062-BLW,
2015 WL 1401604 (D. Idaho Mar. 25, 2015) (granting reconsideration
of prior determination that class waiver in arbitration agreement violat-
ed NLRA).
7 For the reasons expressed in my Murphy Oil partial dissent and
those thoroughly explained in former Member Johnson’s dissent in
Murphy Oil, the FAA requires that the arbitration agreement be en-
forced according to its terms. Murphy Oil, above, slip op. at 34 (Mem-
ber Miscimarra, dissenting in part); id., slip op. at 49–58 (Member
Johnson, dissenting).
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD4
class or collective litigation of non-NLRA claims, I be-
lieve these questions are exclusively within the province
of the court or other tribunal that, unlike the NLRB, has
jurisdiction over such claims.8
Because I believe the Respondent’s Agreement was
lawful under the NLRA, I would find it was similarly
lawful for the Respondent to file a motion in State court
seeking to enforce the Agreement.9 That the Respond-
ent’s motion was reasonably based is supported by court
decisions that have enforced similar agreements.10 As
the Fifth Circuit recently observed after rejecting (for the
second time) the Board’s position regarding the legality
of class waiver agreements: “[I]t is a bit bold for [the
Board] to hold that an employer who followed the rea-
soning of our D. R. Horton decision had no basis in fact
or law or an ‘illegal objective’ in doing so. The Board
might want to strike a more respectful balance between

8 For the reasons expressed in my dissenting opinion in Bristol
Farms, 363 NLRB No. 45, slip op. at 2–4 (2015), I believe that an
agreement to arbitrate disputes is lawful regardless of whether it is a
condition of employment or continued employment. Accordingly, I do
not reach the issue of whether the Agreement at issue here was a condi-
tion of employment.
Because I disagree with the Board’s decisions in Murphy Oil, above,
and D. R. Horton, Inc., 357 NLRB 2277 (2012), enf. denied in pertinent
part 737 F.3d 344 (5th Cir. 2013), and I believe the NLRA does not
render unlawful arbitration agreements that provide for the waiver of
class-type litigation of non-NLRA claims, I find it unnecessary to reach
whether such agreements should independently be deemed lawful to the
extent they “leave[] open a judicial forum for class and collective
claims,” D. R. Horton, 357 NLRB 2277, 2288, by permitting the filing
of complaints with administrative agencies that, in turn, may file class
or collective action lawsuits. See Owen v. Bristol Care, Inc., 702 F.3d
1050 (8th Cir. 2013).
9 As noted, the Charging Party did not oppose the motion to compel
arbitration but instead voluntarily dismissed his lawsuit and filed a
demand for class arbitration. I do not understand the majority to find
that the Respondent violated the Act by filing a complaint for declara-
tory and injunctive relief in state court and moving for a preliminary
injunction against the Charging Party’s class arbitration demand, or to
award attorneys’ fees to the Charging Party or any other party for op-
posing that motion. Any such finding would be unwarranted in any
event. The Agreement furnishes no basis for a conclusion that the
Respondent agreed to arbitrate employment-related disputes on a class
basis, and the Supreme Court has held that a “party may not be com-
pelled under the FAA to submit to class arbitration unless there is a
contractual basis for concluding that the party agreed to do so.” Stolt-
Nielsen S.A. v. Animal Feeds International Corp., 559 U.S. 662, 684–
685 (2010) (emphasis in original). Thus, the Respondent’s motion to
compel individual arbitration was “well-founded in the FAA as authori-
tatively interpreted by the Supreme Court.” Philmar Care, LLC, 363
NLRB No. 57, slip op. at 4 fn. 11 (2015) (Member Miscimarra, dissent-
ing); see also Countrywide Financial Corp., 362 NLRB No. 165, slip
op. at 9 (2015) (Member Johnson, dissenting).
10 See, e.g., Murphy Oil, Inc., USA v. NLRB, above;
Johnmohammadi v. Bloomingdale’s, 755 F.3d 1072 (9th Cir. 2014); D.
R. Horton, Inc. v. NLRB, above; Owen v. Bristol Care, Inc., 702 F.3d
1050 (8th Cir. 2013); Sutherland v. Ernst & Young LLP, 726 F.3d 290
(2d Cir. 2013).
its views and those of circuit courts reviewing its or-
ders.”11 I also believe that any Board finding of a viola-
tion based on the Respondent’s meritorious state court
motion to compel arbitration would improperly risk in-
fringing on the Respondent’s rights under the First
Amendment’s Petition Clause. See Bill Johnson’s Res-
taurants v. NLRB, 461 U.S. 731 (1983); BE & K Con-
struction Co. v. NLRB, 536 U.S. 516 (2002); see also my
partial dissent in Murphy Oil, above, 361 NLRB No. 72,
slip op. at 33–35. Finally, for similar reasons, I believe
the Board cannot properly require the Respondent to re-
imburse the Charging Party or any other plaintiffs for
their attorneys’ fees in the circumstances presented here.
Murphy Oil, above, 361 NLRB No. 72, slip op. at 35.
Accordingly, I respectfully dissent.
Dated, Washington, D.C. February 18, 2015
______________________________________
Philip A. Miscimarra Member
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 vio-
lated 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 bene-
fit and protection
Choose not to engage in any of these protected
activities.
WE WILL NOT maintain or enforce an Employee Ac-
knowledgment and Agreement (the Agreement) that re-
quires our employees, as a condition of employment, to
waive the right to maintain employment-related joint,
class or collective actions in all forums, whether arbitral
or judicial.
WE WILL NOT in any like or related manner interfere
with, restrain, or coerce employees in the exercise of the
rights listed above.

11 Murphy Oil, Inc., USA v. NLRB, above at fn. 6.
NETWORK CAPITAL FUNDING CORP. 5
WE WILL rescind the Agreement or revise it in all of its
forms to make clear that it does not restrict your right to
maintain employment-related joint, class, or collective
actions in all forums.
WE WILL notify all current and former employees who
were required to sign or otherwise become bound to the
Agreement in all of its forms that it has been rescinded or
revised and, if revised, WE WILL provide them a copy of
the revised Agreement.
WE WILL reimburse Papke and any other plaintiffs for
reasonable attorneys’ fees and litigation expenses in-
curred, with interest, in responding to our motion to
compel individual arbitration and dismiss class action
allegations.
NETWORK CAPITAL FUNDING CORPORATION
The Board’s decision can be found at
www.nlrb.gov/case/21–CA–107219 or by using the QR
code below. Alternatively, you can obtain a copy of the
decision from the Executive Secretary, National Labor Re-
lations Board, 1015 Half Street, S.E., Washington, D.C.
20570, or by calling (202) 273-1940.
Jean C. Libby, Esq., for the Government.1
Lonnie D. Giamela, Esq., for the Company.2
John Glugoski, Esq., for the Charging Party.3
DECISION
STATEMENT OF THE CASE
WILLIAM NELSON CATES, Administrative Law Judge. This
case was tried before me on December 16, 2013, in Los Ange-
les, California. Charging Party Papke filed the charge initiating
this matter on June 13, 2013, and the General Counsel issued a
complaint and notice of hearing (complaint) on August 30,
2013. The Government alleges the Company, since on or about
December 14, 2012, has maintained an Employee Acknowl-
edgement and Agreement (Agreement) which contains provi-

1 I shall refer to counsel for the General Counsel as counsel for the
Government and the General Counsel as the Government.
2 I shall refer to counsel for the Respondent as counsel for the Com-
pany and shall refer to the Respondent as the Company. It is noted that
in the parties partial stipulation of facts, set forth elsewhere here, the
Company is referred to as the Respondent.
3 I shall refer to the Charging Party as Charging Party Papke or
Papke and counsel for the Charging Party as counsel for Papke or coun-
sel for Charging Party Papke.
sions that require employees to utilize binding arbitration to
resolve all disputes that may arise out of or be related to their
employment. It is also alleged the Company, on or about Octo-
ber 25, 2011, required Charging Party Papke to sign the
Agreement as a condition of his employment. It is further al-
leged that on or about June 11, 2013, the Company has sought
to enforce the Agreement by filing a Motion to Compel Arbi-
tration on an Individual Basis in a class action complaint filed
against the Company by Charging Party Papke in Erik Papke v.
Network Capital Funding Corp., Case No. 30–2013–0063857–
CU–OE–CXC in Superior Court of California, County of Or-
ange. The Government alleges, that by the conduct just de-
scribed, the Company has been interfering with, restraining,
and coercing employees in the exercise of their rights guaran-
teed in Section 7 of the National Labor Relations Act (the Act)
and is in violation of Section (8)(a)(1) of the Act.
In essence this is another case raising issues concerning arbi-
tration policies that effect collective bargaining and representa-
tional rights related to D. R. Horton, Inc., 357 NLRB 2277
(2012), enf. denied in pertinent part 737 F.3d 344 (2013).
The Company, in its answer to the complaint, and at trial,
denies having violated the Act in any manner alleged in the
complaint.
The parties were given full opportunity to participate, to in-
troduce relevant evidence, to examine and cross-examine wit-
nesses, and to file briefs. I carefully observed the demeanor of
the two witnesses as they testified and I rely on those observa-
tions here. I have studied the whole record including the par-
ties partial stipulated facts, and based on the detailed findings
and analysis below, I conclude and find the Company violated
the Act essentially as alleged in the complaint.
FINDINGS OF FACT
The parties, on December 16, 2013, executed a partial stipu-
lation of facts which contained a joint petition, to the court that
in order to effectuate the purposes of the Act and avoid unnec-
essary costs and delay, and pursuant to Section 102.35(a)(9) of
the Board’s Rules and Regulations, that I decide this case par-
tially on the stipulation. I accepted the partial stipulation of
facts as a record exhibit and rely on the facts set forth there.
The stipulated facts are:
1. All parties agree that the charge, the Complaint, the
Amended Complaint and Notice of Hearing, the Answer to
the Complaint, the Answer to the Amended Complaint and
this Partial Stipulation of Facts, along with attached exhib-
its described herein, constitute most of the record in this
case and that the balance of the record will be created at
the hearing currently scheduled for December 16, 2013.
2. Upon a charge filed by Papke on June 13, 2013, and
served on Respondent by regular mail on June 14, 2013, a
copy of which is attached as Exhibit 1(a), and receipt of
which is hereby acknowledged by Respondent, and upon
an amended charge filed by Papke on August 14, 2013,
and served on Respondent by regular mail on August 16,
2013, a copy of which is attached as Exhibit 1(b), and re-
ceipt of which is hereby acknowledged by Respondent, the
Acting General Counsel of the Board, by the Regional Di-
rector for Region 21, acting pursuant to the authority
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD6
granted in Section 10(b) of the act, as amended, 29 U.S.C.
Section 151, et seq., and Section 102.15 of the Board’s
Rules and Regulations, issued a Complaint and Notice of
Hearing against Respondent on August 30, 2013, and the
General Counsel of the Board, by the Region Director for
Region 21, pursuant to the same authority issued an
Amended Complaint and Notice of Hearing against Re-
spondent on December 9, 2013, copies of which are at-
tached as Exhibits 2(a) and 2(b). True copies of the Com-
plaint and Notice of Hearing were duly served by certified
mail upon Respondent and Papke on August 30, 2013.
True copies of the Amended Complaint and Notice of
Hearing were duly served by certified mail upon Respond-
ent and Papke on December 9, 2013. An Answer to the
Complaint, which was filed on September 13, 2013 was
duly served on the Regional Director for Region 21 and
Papke September 13, 2013. An Answer to the Complaint
shall be filed and served prior to the December 16, 2013,
hearing in this matter. Copies of the Answers are attached
as Exhibits 3(a) and 3(b).
3. At all material times, Respondent has been a Cali-
fornia corporation with an office and place of business in
Irvine, California, where it has been engaged in the busi-
ness of home loans.
4. Annually Respondent, in conducting its operations
described above in paragraph 3, derives gross revenues in
excess of $500,000, and performs services valued in ex-
cess of $50,000 in states other than the State of California.
5. At all material times, Respondent has been an em-
ployer engaged in commerce within the meaning of Sec-
tion 2(2), (6), and (7) of the Act.
6. About October 25, 2011, Papke signed an Employ-
ee Acknowledgement and Agreement (Agreement), a true
copy of which is attached hereto as Exhibit 4.
7. About March 18, 2013, Papke filed a class-action
complaint in the Orange County Superior Court in the case
Erik Papke v. Network Capital Funding Corp., Civil Case
No. 30-2013–00638–457–CU–OE–CXC-alleging, inter
alia, various violations of the California Labor Code. A
true copy of this complaint is attached hereto as Exhibit 5.
8. About June 11, 2013, Respondent filed a Motion to
Compel Arbitration on an Individual Basis, Strike the
Class Allegations and Stay the Proceedings Pending Arbi-
tration of Papke’s suit described above at paragraph 7. A
true copy of this motion, and the supporting Memorandum
of Points and Authorities and declarations are attached
hereto as Exhibit 6.
9. About June 19, 2013, Papke voluntarily filed a re-
quest for dismissal of the complaint described above in
paragraph 7. That same day the complaint was dismissed.
A copy of the request for dismissal and the order dismiss-
ing the complaint are attached as Exhibit 7.
10. About June 20, 2013, Papke filed a Demand for
Arbitration Before JAMS of a class-action arbitration for
various violations of the California Labor Code. Attached
to the Demand was a class-action complaint nearly identi-
cal to the complaint filed in Orange County Superior Court
that is described above in paragraph 7. A true copy of this
arbitration demand and complaint are attached hereto as
Exhibit 8.
11. About June 28, 2013, Respondent filed a Com-
plaint for Declaratory and Injunctive Relief in the Orange
County Superior Court, Case No. 30–2013–00659735 re-
questing that the Court decide that Papke’s claims should
proceed to arbitration on an individual basis, and not as a
class action. A true copy of this complaint is attached
hereto as Exhibit 9.
12. On October 10, 2013, the court granted Respond-
ent’s Motion for a Preliminary Injunction finding that Re-
spondent cannot be forced to arbitrate the class action and
that Papke’s claims must proceed on an individual basis.
A true copy of the court’s order is attached as Exhibit 10.
13. On October 17, 2013, Papke appealed the court’s
October 10, 2013, order. The Notice of Appeal is attached
as Exhibit 11.
14. General Counsel and Papke take the position that
Respondent required Papke to sign the Agreement de-
scribed above in paragraph 6 as a condition of his em-
ployment and that Respondent’s enforcement of the
Agreement requiring employees to arbitrate on an individ-
ual basis alleged violations of the California Labor Code
precludes employees from engaging in conduct protected
by Section 7 of the Act. Respondent takes the position
that Papke was not required to sign the Agreement as a
condition of his employment and that enforcement of the
Agreement is not unlawful.
15. This Partial stipulation of Facts is made without
prejudice to any objection that any party may have as to
the materiality or relevance of any facts stated herein.
The Agreement Charging Party Papke executed on October
25, 2011, and which is referenced in and attached to the parties
Partial Stipulation of Facts follows:
EMPLOYEE ACKNOWLEDGEMENT
AND AGREEMENT
This will acknowledge that I have received my copy of
the Network Capital Funding Corporation Employee
Handbook and that I will familiarize myself with its con-
tents.
I understand that this handbook represents the current
policies, regulations, and benefits of the Company. How-
ever, the Company retains the right to prospectively add,
change, delete or modify policies, benefits, wages, and all
other working conditions at any time (except as expressly
set forth in the Employee Handbook and except for the
policy of “at-will-employment” and the Arbitration
Agreement below, which may not be changed, altered, re-
vised or modified without a written agreement signed by
both myself and the C.E.O. of the Company).
I further understand that nothing in the Employee
Handbook creates or is intended to create a promise or
representation of continued employment and that my em-
ployment, position, and compensation at the Company are
at-will, and may be changed or terminated at the will of
the Company. I understand that I have the right to termi-
NETWORK CAPITAL FUNDING CORP. 7
nate my employment at any time, with or without cause or
notice, and that the Company has a similar right. My sig-
nature below certifies that I understand the foregoing
agreement that at-will status is the sole and entire agree-
ment between the Company and myself concerning the du-
ration of my employment and the circumstances under
which my employment may be terminated. It supersedes
all prior agreements, understandings, and representations
(whether written or oral) concerning my employment with
the Company.
I further agree and acknowledge that the Company and
I will utilize binding arbitration to resolve all disputes that
may arise out of or be related to my employment in any
way. Both the Company and I agree that any claim, dis-
pute, and/or controversy that either I may have against the
Company (or its owners, directors, officers, managers,
employees, agents), or the Company may have against me,
shall be submitted to and determined exclusively by bind-
ing arbitration under the Federal Arbitration Act, incon-
formity with the procedures of the California Arbitration
Act (Cal. Code Civ. Proc. sec 1280 et seq., including sec-
tion 1283.05 and all of the Act’s other mandatory and
permissive rights to discovery). Included within the scope
of this Agreement are all disputes, whether based on tort,
contract, statute (including, but not limited to, any claims
of discrimination and harassment, whether they be based
on the California Fair Employment and Housing Act, Title
VII of the Civil Rights Act of 1964, as amended, or any
other state or federal law or regulation), equitable law, or
otherwise. The only exception to the requirement of bind-
ing arbitration shall be for claims arising under the Na-
tional Labor Relations Act which are brought before the
National Labor Relations Board, claims for medical and
disability benefits under the California Workers; Compen-
sation Act, Employment Development Department claims,
or as may otherwise be required by state or federal law.
However, nothing herein shall prevent me from filing and
pursing proceedings before the California Department of
Fair Employment and Housing, or the United States Equal
Employment Opportunity Commission (although if I
choose to pursue a claim following the exhaustion of such
administrative remedies, that claim would be subject to the
provisions of this Agreement). Further, this Agreement
shall not prevent either me or the Company from obtaining
provisional remedies to the extent permitted by Code of
Civil Procedure Section 1281.8 either before the com-
mencement of or during the arbitration process. In addi-
tion to any other requirements imposed by law, the arbitra-
tor selected shall be a retired California Superior Court
Judge, or otherwise qualified individual to whom the par-
ties mutually agree, and shall be subject to disqualification
on the same grounds as would apply to a judge of such
court. All rules of pleading (including the right of demur-
rer), all rules of evidence, all rights to resolution of the
dispute by means of motions for summary judgment,
judgment on the pleadings, and judgment under Code of
Civil Procedure Section 631.8 shall apply and be ob-
served. Resolution of the dispute shall be based solely up-
on the law governing the claims and defenses pleaded, and
the arbitrator may not invoke any basis (including but not
limited to, motions of “just cause”) other than such con-
trolling law. The arbitrator shall have the immunity of a
judicial officer from civil liability when acting in the ca-
pacity of an arbitrator, which immunity supplements any
other existing immunity. Likewise, all communications
during or in connection with the arbitration proceedings
are privileged in accordance with Cal. Civil Code Section
47(b). As reasonably required to allow full use and benefit
of this agreement’s modifications to the Act’s procedures,
the arbitrator shall extend the times set by the Act for the
giving of notices and setting of hearings. Awards shall in-
clude the arbitrator’s written reasoned opinion. I under-
stand and agree to this binding arbitration provision, and
both I and the Company give up our right to trial by jury
of any claim I or the Company may have against each oth-
er.
This is the entire agreement between the Company and
me regarding dispute resolution, the length of my em-
ployment, and the reasons for termination of employment,
and this agreement supersedes any and all prior agree-
ments regarding these issues. It is further agreed and un-
derstood that any agreement contrary to the foregoing
must be entered into, in writing, by myself and the C.E.O.
of the Company. No supervisor or representative of the
Company, other than its C.E.O., has any authority to enter
into any agreement for employment for any specified peri-
od of time or make any agreement contrary to the forego-
ing. Oral representations made before or after you are
hired do not alter this Agreement.
If any term or provision, or portion of this Agreement
is declared void or unenforceable it shall be severed and
the remainder of this Agreement shall be enforceable.
MY SIGNATURE BELOW ATTESTS TO THE
FACT THAT I HAVE READ, UNDERSTAND, AND
AGREE TO BE LEGALLY BOUND TO ALL OF THE
ABOVE TERMS.
DO NOT SIGN UNTIL YOU HAVE READ THE
ABOVE ACKNOWLEDGEMENT AND AGREEMENT.
/S/ Erik Papke
Print Full Name
/S/ Erik Papke
Signature
10/25/11
Date
[RETAIN IN EMPLOYEE PERSONNEL FILE]
The Government and Company each called a witness to ex-
pand upon the stipulated facts.
The Government called Charging Party Papke who testified
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD8
he attended an orientation meeting at the Company on October
25, 2011, along with eight or so others seeking employment as
loan officers. The meeting was conducted by Company Trainer
Steve Azizi (Azizi). Papke described the orientation; “There
was a general overview and presentation of the underwriting
system and just various—couple different systems the Compa-
ny used for managing the loans and leads, and then at the con-
clusion we were given [by Azizi] paperwork to sign.” Included
in the paperwork were W–4, I–9 forms as well as a receipt for
the Employee Handbook. According to Papke, Azizi told them
they were “to complete the paper work and turn it back in,” but
said nothing else. Papke, and the others, completed the paper-
work, turned it in, but, were not provided copies of what they
had just signed. Papke stated Azizi made no mention of em-
ployees having a choice on whether to sign the forms; or, that
the Company was ready and willing to negotiate the content
and terms of any forms just signed; nor, was anything said
about a willingness to add or subtract any part of the forms.
Papke did not ask to negotiate about, add or delete, anything
from or to the forms. Papke said Azizi did not ask if he had
any questions about the forms nor did he or the others ask any
questions.
Papke acknowledged signing the Agreement on October 25,
2011, and beginning work at the Company on January 3, 2012,
as a loan officer/mortgage loan originator. Papke explained he,
and the other 404 or so loan officers, accepted residential loan
applications, qualified potential borrowers and presented bor-
rowers with loan options and interest rates for their considera-
tions.
Loan officers are paid on commission. Papke said he was in
the top 10 percent fairly consistently. Papke resigned his em-
ployment on March 11, 2013, because the “work environment
was not enjoyable, and the compensation had dropped consid-
erably.” Papke explained, “when my commission was reduced
greatly . . . I pursued other opportunities.”
On March 18, 2013, Papke filed his class action lawsuit in
the Orange County Superior Court, Erik Papke v. Network Cap-
ital Funding Corp., alleging various violations of the California
Labor Code. Papke acknowledged that after the Company, on
June 13, 2013, filed a response to his lawsuit, in which the
Company sought to compel Papke and others to arbitrate their
claims on an individual basis, Papke voluntarily moved to dis-
miss his March 18, 2013 lawsuit. However, on June 20, 2013,
Papke filed a demand for arbitration before JAMS as a class
action arbitration regarding various alleged violations of the
California Labor Code.
Further related actions of the parties are fully set forth else-
where here in the parties partial stipulation of facts and will not
be repeated here.
Charging Party Papke, acknowledged on cross-examination,
he never objected to signing the Agreement and first read the
Agreement when it came to his attention, after he left his em-
ployment, that there was an agreement to arbitrate. Papke testi-
fied he did not know or realize that anything on the Agreement
was optional and did not seek to negotiate any terms of the
Agreement. Papke testified, on cross-examination, he never

4 The number of loan officers eventually grew to approximately 100.
complained to the Company he believed his rights under the
Board, or protected concerted activity, were being denied by
the Company.
Human Resources Manager Christopher Bales (Manager
Bales or Bales), who assumed his duties with the Company
mid-October 2012, testified he is involved in the recruitment
process including day-to-day duties such as hiring, reviewing
employees’ performance, and, when necessary terminations.
Bales is involved with new hire orientations. All employees are
provided a copy of the employee handbook orientation which
handbook according to Bales, was redone in June 2013. The
new handbook, with the revised Employment Acknowledge-
ment and Agreement, utilized since June 2013, states in perti-
nent part as follows:
I and the Company agree to utilize binding arbitration as the
sole and exclusive means to resolve all disputes that may arise
out of or be related in any way to my employment, including
but not limited to the termination of my employment and my
compensation. I and the Company each specifically waive
and relinquish our respective rights to bring a claim against
the other in a court of law, and this waiver shall be equally
binding on any person who represents or seeks to represent
me or the Company in a lawsuit against the other in a court of
law. Both I and the Company agree that any claim, dispute,
and/or controversy that I may have against the Company (or
its owners, directors, officers, managers, employees, or
agents), or the Company may have against me, shall be sub-
mitted to and determined exclusively by binding arbitration
under the Federal Arbitration Act…. The only exception to
the requirement of binding arbitration shall be for claims aris-
ing under the National Labor Relations Board, claims for
medical and disability benefits under the California Workers’
Compensation Act, Employment Development Department
claims, or as may otherwise be required by state or federal
law. . . .
Bales testified no employee ever refused to sign the Agree-
ment. Bales testified Charging Party Papke never complained
to him (Bales) at any time after he (Bales) became employed at
the Company about the Agreement. Bales testified that while
Papke was employed, the Company had no written or unwritten
policy indicating that signing the Agreement was a condition of
employment or that anyone refusing to sign the Agreement
would suffer any adverse employment action. Bales acknowl-
edged no employees were told they did not have to sign the
Agreement; nor, were they told there would be no adverse con-
sequences if they refused to sign the Agreement. Bales testi-
fied that at orientation employees were not told they had to sign
the documents. Papke was never asked to sign the 2013 revised
Agreement.
I turn to the issue of whether signing the Agreement was a
mandatory condition of employment. Counsel for the Govern-
ment stated during her opening at trial and asserts in her
posttrial brief that the Company required Papke, on October 25,
2011, to execute, and accept, the Agreement as a condition of
his employment.
The Company, contended at trial, and in its posttrial brief,
NETWORK CAPITAL FUNDING CORP. 9
there is nothing in the Company’s hiring process that required
Papke or any employee to sign the Agreement at any time, nor,
is an employee prohibited from negotiating new or different
terms of the Agreement.
Counsel for the Company notes a complete absence of evi-
dence Papke ever complained about or objected to the Agree-
ment and no showing he sought to negotiate new or different
terms for the Agreement or to not sign the Agreement at all.
I find signing the Agreement was a condition of employment
for Charging Party Papke and other employees. The facts es-
tablish Papke and others were presented a number of forms at
the orientation held on October 25, 2011. Papke credibly testi-
fied Company Trainer Azizi, after giving the employees an
overview of upcoming work, gave them W–4 and I–9 forms, as
well as the employee handbook, which contained the two-page
single spaced Agreement “to sign” and turn in to him. Papke
credibly testified Azizi did not tell he or the others they had a
choice to sign, or not sign, the forms, including the Agreement,
nor, did Azizi say anything about a willingness on the part of
the Company to negotiate individually with the employees the
terms or language of the Agreement. Papke did not realize any
portion of the Agreement was optional or negotiable.
The Company placed Trainer Azizi, at orientation, in a posi-
tion from which employees could reasonably assume he spoke
for the Company. Azizi gave the forms, including the Agree-
ment, to the employees to complete, sign, and turn in to him
(Azizi) and that is exactly what Papke and the others did.
Papke, and the others, were never informed that any of the doc-
uments, specifically the Agreement, were voluntary, optional or
that employees could, on an individual basis, negotiate different
Agreement terms or simply decline to sign the forms at all.
It is unreasonable to conclude from the facts here, and I do
not, that if any employee did not wish to sign the Agreement,
he or she, could simply ask for the human resources director, or
other representatives from that department, to negotiate new or
different terms for the Agreement acceptable to each employee.
Having individual employees negotiate terms and language of
the Agreement could have resulted in possibly eight separate
individual agreements between the Company and employees
simply from those attending the October 25, 2011 orientation
meeting. As loan officer numbers grew to approximately 100
there could then have been 100 separately negotiated Agree-
ments. I find the Company cannot successfully contend signing
the orientation forms were voluntary or negotiable based on the
fact no employee sought, on an individual basis or otherwise, to
negotiate different terms for the Agreement. Likewise, the
Company cannot persuasively contend the orientation forms
were voluntary, specifically the Agreement, based on the fact
no employee complained about or sought to negotiate new or
different terms with the human resources department during
orientation. The fact Papke never read the Agreement before
he signed it does not require a finding the Agreement was vol-
untary. Additionally, the fact Papke did not read the Agree-
ment until after he had resigned his employment with the Com-
pany does not somehow cause his signing the Agreement to be
voluntary. The Company never advised Papke, or the others,
verbally or in writing, they did not have to sign the Agreement
nor were the employees told there would be no adverse conse-
quences if they refused to sign the orientation forms, specifical-
ly the Agreement. The fact Papke never complained about
having to sign the Agreement, perhaps, only reflects he accept-
ed the reality that if he wished to work for the Company he
needed to sign the Agreement and other forms. The fact no
employee has ever refused to sign the Agreement is strong
evidence the employees have concluded it was, in fact, neces-
sary for them to do so. The Company failed to demonstrate or
establish signing the forms, including the Agreement, was vol-
untary on the part of the employees.
In summary on this issue, I am fully persuaded signing the
Agreement was a term and condition of employment Papke,
and the others, needed to accomplish in order to be employed at
the Company.
I next turn to the issue of whether the allegations of the com-
plaint are time barred. The Company contends the entire com-
plaint should be dismissed because it is time barred by Section
10(b) of the Act in that the complaint is based on events that
occurred outside the applicable limitations period. Section
10(b) of the Act in part provides “. . . no complaint shall issue
based upon any unfair labor practice occurring more than six
months prior to the filing of the charges with the Board . . . “ It
is undisputed Charging Party Papke signed the Agreement, at
issue here, on October 25, 2011, well outside the 10(b) period.
As noted elsewhere here the original charge was filed on June
13, 2013. It is alleged the Company, since about December 14,
2012, has maintained the Agreement, as a condition of em-
ployment, requiring its employees to utilize binding arbitration
to resolve all disputes that may arise out of or be related to their
employment. This allegation is within the 10(b) limitations
period but, is it inescapably grounded in pre-10(b) events? It is
not. The Company’s June 11, 2013 filing of its Motion to
Compel Arbitration on an Individual Basis, strike the class
allegations, and, stay the proceeding pending arbitration of
Papke’s suit, Erik Papke v. Network Capital Funding, is clearly
with the 10(b) limitation period. This enforcement action by
the Company, based on Papke’s signed Agreement, took place
only 2 days before the charge here was filed. This action, by
the Company, demonstrates it was enforcing the Agreement
within the applicable time period.
On June 19, 2013, Papke voluntarily filed a request for dis-
missal of his March 18, 2013 class action lawsuit and the next
day, June 20, 2013, filed a demand for arbitration before JAMS
as a class action arbitration which was nearly identical to his
court filed class action. The Company on June 28, 2013, sought
to enforce Papke’s October 25, 2011 signed Agreement, when
it filed its complaint for declaratory and injunctive relief with
the Orange County Superior Court requesting the Court decide
that Papke’s claims should proceed to arbitration only on an
individual basis, and not as a class action. On October 10,
2013, the Court granted the Company’s motion for a prelimi-
nary injunction finding the Company could not be forced to
arbitrate on a class action basis but that Papke’s claims must
proceed on an individual basis.
I find the Company’s 10(b) defense without merit. While it
is clear Papke signed the Agreement on October 25, 2011, well
outside the 10(b) period, the Company continued to maintain
and enforce the Agreement well into the 10(b) period. The
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD10
Government’s allegation the Company has, since December 14,
2012, a time within the 10(b) period, continued to maintain the
Agreement is established. The Company’s motion filing on
June 11, 2013, a time clearly within the 10(b) period, was
grounded on Papke’s signed Agreement in which he agreed to
arbitration on an individual basis. After Papke, on June 20,
2013, filed his demand for arbitration before JAMS, the Com-
pany, made responsive filings on June 28, 2013, seeking in-
junctive relief contending, in part, Papke’s signed Agreement
committed him to proceed on an individual basis and not as a
class action arbitration. Again the Company continued to
maintained and enforced the Agreement Papke signed on Octo-
ber 25, 2011, as a defense in his suit for class arbitration. In
these circumstances, the date Papke signed the Agreement is
not controlling or relevant. What is controlling and relevant is
the Company continued to maintain and enforce Papke’s
Agreement within the 10(b) period. By continuing to maintain
and enforce the Agreement within the 10(b) period establishes
the conduct and action by the Company is not inescapably
grounded in pre-10(b) events. The Board, in Lafayette Park
Hotel, 326 NLRB 824 (1998), held an employer commits a
continuing violation of Section 8(a)(1) of the Act throughout
the period an unlawful rule, is maintained. Furthermore, the
Board has held that where an employer, as here, enforces an
unlawful rule during the 10(b) period it violates Section 8(a) (1)
of the Act. Such is a continuing violation, see: Teamsters Local
293 (R. L. Lipton Distributing), 311 NLRB 538, 539 (1993).
The continuing violation I find here precludes the Company
from a valid 10(b) type defense.
Neither Papke’s voluntarily filing his June 19, 2013 request
to dismiss his class action lawsuit, or the fact he appealed the
Superior Court’s granting the Company a preliminary injunc-
tion forcing arbitration on an individual basis, does not require
a different result than I reach here. The fact Papke obtained
dismissal of his class action lawsuit and filed a class action
arbitration does not somehow serve as a wavier of any rights
afforded to him. In summary, the Company’s 10(b) defense is
without merit.
The Company, in its posttrial brief contends D. R. Horton,
supra, is invalid because it was not decided by a quorum of at
least three Board Members pursuant to 29 U.S.C. Section
153(b) and thus unconstitutional; citing Noel Canning v. NLRB
705 F.3d 490 (D.C. Cir. 2013), cert. granted 133 S.Ct. 2861
(2013) and NLRB v. New Vista Nursing & Rehabilitation, 719
F.3d 203, 218–221 (3d Cir. 2013). The Company notes Mem-
ber Craig Becker was found to have been unlawfully appointed
to the Board. The Company thus contends neither the Board as
a whole, nor the delegated group that considered the D. R. Hor-
ton matter, satisfied the quorum requirements at the time the
Board issued its decision. The Company notes that whenever
the Board acts without a quorum or jurisdiction, its actions are
invalid and unenforceable and the D. R. Horton decision is no
longer controlling precedent. The Board has rejected similar
contentions in numerous cases, see, e.g., Bloomingdale’s Inc.,
359 NLRB No. 113 (2013).
Furthermore, I note the Board now has a full complement of
five members nominated by the President and confirmed by the
Senate and could, if they deemed appropriate, reaffirm the ear-
lier Board’s actions. Consistent with Board precedent, I reject
the Company’s Noel Canning, supra, and New Vista Nursing,
supra, defense.
The controlling issue here is whether the Company’s
Agreement (original and revised) contains restrictive provisions
that violate Section 8(a)(1) of the Act.
The complaint alleges that since about December 14, 2012,
the Company has maintained an Agreement for its employees
which contains provisions that require employees to utilize
binding arbitration to resolve all disputes that may arise out of
or be related to their employment. Additionally, it is alleged
that since June 11, 2013, the Company has sought to enforce
the Agreement by filing a Motion to Compel Arbitration on an
Individual Basis in a class action complaint filed against the
Company by Charging Party Papke on March 18, 2013, in the
case of Erik Papke v. Network Capital Funding Corp., Case
No. 30–2013–0063857–CV–OE–CXC in Superior Court of
California, County of Orange.
In evaluating whether a rule applied to all employees, as a
condition of continued employment, including the mandatory
Agreement (original and revised) at issue here, violates Section
8(a)(1) of the Act, the Board, as noted in D. R. Horton Inc., at
2280–2282, applies its test set forth in Lutheran Heritage Vil-
lage-Livonia, 343 NLRB 646 (2004), citing U–Haul Co. of
California, 347 NLRB 375, 377 (2006), enfd. 255 Fed. Appx.
527 (D.C. Cir. 2007). Pursuant to Lutheran Heritage the in-
quiry, or test to be applied, is whether the rule explicitly re-
stricts activities protected by Section 7 of the Act. If so, the
rule is unlawful. If it does not explicitly restrict protected ac-
tivity, the finding of a violation is dependent upon a showing of
one of the following: (1) employees would reasonably construe
the rule to prohibit Section 7 activity; (2) the rule was promul-
gated in response to union activity; or, (3) the rule has been
applied to restrict the exercise of Section 7 rights.
While the Agreement here may not explicitly restrict pro-
tected activity, I am, however, fully persuaded, as explained
below, a reasonable employee would, after the Company’s
responses to collective class, legal, or arbitration type actions,
conclude the Agreement restricts employees ability to resolve,
in concert, employment disputes protected by Section 7 of the
Act.
Following the guidance set forth above, I now address
whether the Agreement (original and revised), interferes with
and restricts employees’ from engaging in protected concerted
conduct. Before doing so, however, I note two important find-
ings by the Board in D. R. Horton, Inc. supra, namely, at slip
op. 13 that an employer violates Section 8(a)(1) of the Act “by
requiring employees to waive their right to collectively pursue
employment-related claims in all forms, arbitral and judicial,”
and at slip op. 10, “The right to engage in collective action-
including legal action-is the core substantive right protected by
the NLRA and is the foundation on which the Act and Federal
Labor policy rest.”
Looking now at certain provisions of the Agreement it states
in part; “I further agree and acknowledge that the Company and
I will utilize binding arbitration to resolve all disputes that may
arise out of or be related to my employment in any way. Both
the Company and I agree that any claim dispute, and/or contro-
NETWORK CAPITAL FUNDING CORP. 11
versy that either I may have against the Company . . . or the
Company may have against me, shall be submitted to and de-
termined exclusively by binding arbitration. . . .” Portions of
the Agreement also continue; “I understand and agree to this
binding arbitration provision, and both I and the Company give
up our right to trial by jury of any claim I or the Company may
have against each other.” The Company by its actions clearly
sought to have all employment related disputes raised by Papke
resolved on an individual basis rather than as a collective ac-
tion. In that regard the evidence establishes the Company
sought to end Papke’s March 18, 2013 collective court action
when on June 11, 2013, it asked the court to end the class ac-
tion and only allow the matter to advance on an individual basis
in arbitration. After Papke obtained a dismissal of his lawsuit,
and filed a demand for class arbitration, the Company filed a
complaint for declaratory relief requesting Papke’s class arbi-
tration action be allowed to proceed only on an individual basis
and not as a class action. The court granted the Company’s
request holding the Company could not be forced to a class
action arbitration but proceed on an individual basis only. I
find the Agreement, as enforced by the Company, to be unlaw-
ful because it prohibits its employees from exercising their
Section 7 right to engage in concerted activity, which is a sub-
stantive right. Stated differently, the Company’s enforcement
of the Agreement prohibits employees from exercising their
statutory right to engage in collective action regarding terms
and conditions of their employment. There is nothing illegal or
unlawful in requiring, by agreement, that employees’ work
related claims be submitted to final and binding arbitration but
rather the illegality is established when it is required that all
work related claims be arbitrated individually. I am not un-
mindful, the Agreement is silent on the issue of allowing class
resolution of any claims subject to the Agreement, however, it
is clear from the position and intent of the Company that Papke,
and others, by signing the Agreement, agreed to arbitrate all
disputes relating to employment exclusively on an individual
basis.
In summary, the Agreement, as enforced, clearly inhibits and
interferes with employees’ Section 7 rights in that it requires
employees to waive their right to engage in concerted activity
for mutual aid and protection by prohibiting class or collective
action in any forum.
The Company asks that I reject the Board’s substantive anal-
ysis in D. R. Horton supra. In that regard the Company notes
that three Federal Circuit Courts of Appeals, namely, Owen v.
Bristol Care Inc., 702 F.3d 1050, 1052–1055 (8th Cir. 2013);
Richards v. Ernest & Young 734 F.3d 871, 873–874 (9th Cir.
2013), and, the direct appeal of D. R. Horton; D. R. Horton v.
NLRB, 737 F.3d 344 (5th Cir. 2013), have reviewed the
Board’s D. R. Horton decision, and all three have rejected the
Board’s substantive analysis. I, however, am bound by Board
precedent unless and until the Supreme Court or the Board
directs otherwise. Iowa Beef Packers, Inc., 144 NLRB 615,
616 (1963). Neither has done so thus D. R. Horton is the appli-
cable law here that I follow.
I find it appropriate to respond to other challenges the Com-
pany raises to D. R. Horton supra and I specifically reject such
challenges. First, the Company challenges D. R. Horton, supra,
because it is premised, in large part, on the Board’s finding the
Act provides employees an unwaivable substantive right to
collective action or litigation. The Company contends the Su-
preme Court in AT&T Mobility LLC v. Concepcion, 131 S.Ct.
1740, 1749 (2011), held the right to exercise class procedures is
in fact waivable.
The Board in D. R. Horton considered the Supreme Court’s
holding in AT&T Mobility LLC and concluded that decision
does not require a conclusion different from its holdings in D.
R. Horton. Accordingly, I follow the Board’s rational as set
forth in D. R. Horton and explained below;
A policy associated with the FAA and arguable in tension
with the policies of the NLRA was explained by the Supreme
Court in AT&T Mobility v. Concepcion, supra at 1748: The
“overarching purpose of the FAA . . . is to ensure the en-
forcement of arbitration agreements according to their terms
so as to facilitate streamlined proceedings.” The “switch form
bilateral to class arbitration,” the Court stated, “sacrifices the
principal advantage of arbitration–its informality.” Id. At
1750. But the weight of this countervailing consideration was
considerably greater in the context of AT&T Mobility than it is
here for several reasons. AT&T Mobility involved the claim
that a class-action waiver in an arbitration clause of any con-
tract of adhesion in the State of California was unconsciona-
ble. Here, in contrast, only agreements between employers
and their own employees are at stake. As the Court pointed
out in AT&T Mobility, such contracts of adhesion in the retail
and services industries might cover “tens of thousands of po-
tential claimants.” Id. at 1752. The average number of em-
ployees employed by a single employer, in contrast, is 20,
[footnote omitted] and most class-wide employment litiga-
tion, like the case at issue here, involves only a specific subset
of an employer’s employees. A class-wide arbitration is thus
far less cumbersome and more akin to an individual arbitra-
tion proceeding along each of the dimensions considered by
the Court in AT&T Mobility–speed, cost, informality, and
risk–when the class is so limited in size. 131 S.Ct. at 1751–
1752. Moreover, the holding in this case covers only one
type of contract, that between an employer and its covered
employees, in contrast to the broad rule adopted by the Cali-
fornia Supreme Court at issue in AT&T Mobility. According-
ly, any intrusion on the policies underlying the FAA is simi-
larly limited.
Thus, whether we consider the policies underlying the
two statues as part of the balancing test required to deter-
mine if a term of a contract is against public policy and
thus properly considered invalid under Section 2 of the
FAA, or a part of the accommodation analysis required by
Southern Steamship, Morton, and other Supreme Court
precedent, our conclusion is the same: holding that an em-
ployer violates the NLRA by requiring employees, as a
condition of employment, to waive their right to pursue
collective legal redress in both judicial and arbitral forums
accommodates the policies underlying both the NLRA and
the FAA to the greatest extent possible.
Next, the Company notes that in CompuCredit Corp. v.
Greenwood, 132 S.Ct. 665, 669 (2012), the Supreme Court held
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD12
the Federal Arbitration Act (FAA) requires governing bodies to
enforce arbitration agreements according to their terms, even if
the claims at issue are Federal statutory claims, absent “a con-
trary congressional command.” The Company here argues such
a “command” does not exist in the NLRA and the Board has no
authority to find the arbitration agreement here invalid.
CompuCredit Corp. v. Greenwood, supra, involved actions
brought by consumers against the marketer of credit cards and
the issuing bank alleging fees that were charged in connection
with the credit cards violated the Federal Credit Repair Organi-
zation Act (CROA). The Court held that CROA provisions
requiring credit repair organizations to disclose to consumers
their right to sue for violations of CROA and prohibiting waiv-
er of that right did not preclude enforcement of an arbitration
agreement the parties had executed. The Supreme Court con-
cluded the FAA required the parties’ arbitration agreement to
be enforced according to its terms. The Supreme Court specifi-
cally concluded that even when the claims at issue are Federal
statutory claims, the FAA’s mandate cannot be overridden un-
less “overridden by a contrary congressional command.” The
Company’s defense based on CompuCredit Corp. fails.
CompuCredit Corp., in part, addresses consumer rights involv-
ing credit cards and fees related thereto, and has nothing to do
with unilaterally imposed arbitration agreements in the context
of employee-employer relationships. The case does not discuss
how, if at all, the FAA may be applied to alter, by private arbi-
tration agreements, the core substantive rights protected by the
NLRA which are the foundation on which the NLRA and all
Federal labor law rests, D. R. Horton, supra. Simply stated, an
arbitration agreement that prospectively prohibits all class,
collective and joint efforts by employees to obtain relief or
redress for employment related concerns inhibits concerted
activity protected by Section 7 of the Act, and violates Section
8(a)(1) of the Act.
Finally, I address the Company’s contention the authority to
prosecute class actions is not provided by the NLRA, but rather
by the Federal Rules of Civil Procedure, Rule 23, and the col-
lective action procedures of substantive labor laws. The Com-
pany notes that in Deposit Guaranty National Bank v. Roper
100 S.Ct. 1166 (1980), the Supreme Court held class action
certification is a procedural right only, that is ancillary to the
litigation of substantive claims and the Company contends that
since it is a procedural right it is waivable. The Board ad-
dressed this issue in D. R. Horton, supra at 2285, and I am
bound by the Board’s conclusions. The Board’s rational, bind-
ing here, in part states; “Any contention that the Section 7 right
to bring a class or collective action is merely ‘procedural’ must
fail.” The Board continued, “The right to engage in collective
action–including collective legal action–is the core substantive
right protected by the NLRA . . .” The Board further noted,
“Whether a class is certified depends on whether the requisites
for certification under Rule 23 have been met.” The Board
considered the issue to be whether an employer may lawfully
condition employment on employees’ waiving their right under
the NLRA to take the collective action inherent in seeking class
certification, whether or not they are ultimately successful un-
der Rule 23. The Board held, Rule 23 may be a procedural
rule, but the Section 7 right to act concertedly by invoking Rule
23, Section 216(b), or other legal procedures is not.
Simply stated the Company’s contention that the authority to
prosecute class actions under the NLRA may be waived has
been rejected by the Board and binding here.
CONCLUSIONS OF LAW
1. The Company, Network Capital Funding Corporation, Ir-
ving, California is, and has been, an employer engaged in
commerce within the meaning of Section 2(6) and (7) of the
Act.
2. By maintaining a mandatory arbitration agreement, that
waives the right of its employees to maintain class of collective
actions in all forums, judicial or arbitral, the Company has en-
gaged in unfair labor practices affecting commerce within the
meaning of Section 2(6) and (7) of the Act and violates Section
8(a)(1) of the Act.
3. By enforcing the mandatory arbitration agreement on
June 11, 2013, by asserting the provisions in litigation brought
against the Company in Erik Papke v. Network Capital Fund-
ing Corp., Case No. 30–2013–0063857-CU-OE-CXC the
Company engaged in unfair labor practices affecting commerce
within the meaning of Section 2(6) and (7) of the Act and vio-
lates Section 8(a)(1) of the Act.
REMEDY
Having found the Company has engaged in certain unfair la-
bor practices, I shall recommend it cease and desist there from
and take certain affirmative action designated to effectuate the
policies of the Act.
I recommend the Company be ordered to rescind, modify, or
revise its Agreement to clearly inform its employees the agree-
ment does not constitute a waiver in all forums of their right to
maintain employment-related class or collective actions and
notify its employees the Agreement has been rescinded, modi-
fied, or revised and provide a copy of any modified or revised
Agreement to all employees.
I recommend the Company be required to reimburse Charg-
ing Party Papke for any litigation and related expenses, with
interest, to date and in the future, directly related to the Compa-
ny’s filings related to Erik Papke v. Network Capital Funding
Corporation et al. in the Superior Court of California, Orange
County. Determining the applicable rate of interest on the re-
imbursement will be as outlined in New Horizons, 283 NLRB
1173 (1987), (adopting the Internal Revenue Service rate for
underpayment of Federal taxes). Interest on all amounts due to
Charging Party Papke shall be computed on a daily bases as
prescribed in Kentucky River Medical Center, 356 NLRB 8
(2010). This remedy is specifically to include any direct legal
and other expenses incurred with respect to the Orange County
Superior Court Order directing Papke and others to pursue their
arbitration claims on an individual basis. See Federal Security,
Inc., 359 NLRB No. 1, slip op. at 14 (2012).
I recommend the Company be required upon request, to file
a joint motion with Charging Party Papke to vacate the Orange
County Superior Court Order compelling arbitration on an in-
dividual basis which the Court issued on October 10, 2013. See
Federal Security Inc., supra.
I lack authority to direct the Orange County Superior Court
NETWORK CAPITAL FUNDING CORP. 13
to vacate its Order; however, the Government has other venues
in which it may seek such relief.
On these findings of fact and conclusions of law and on the
entire record, I issue the following recommended5
ORDER
The Company, Network Capital Funding Corporation, Ir-
vine, California, it officers, agents, successors, and assigns,
shall
1. Cease and desist from
(a) Maintaining a mandatory arbitration agreement, that
waives employees’ right to maintain class or collective actions
in all forums; whether arbitral or judicial.
(b) Seeking to enforce such agreement by filings in any court
to compel individual arbitration pursuant to the terms of any
such agreement.
(c) In any like or related manner interfering with, restraining,
or coercing employees in the exercise of their right under the
Act.
2. Take the following affirmative action designed to effectu-
ate the policies of the Act.
(a) Within 7 calendar days after the Board enters its decision,
and upon request of Charging Party Papke, file with the Superi-
or Court of California, Orange County, a motion to vacate the
Court’s order compelling arbitration on an individual basis
issued by the Court on October 10, 2013.
(b) Reimburse Charging Party Papke for any legal and relat-
ed expenses incurred, todate and in the future, with respect to
Erik Papke v. Network Capital Funding Corporation et.al.,
with interest as described in the remedy section of this decision.
(c) Rescind, modify or revise the Agreement to ensure its
employees the Agreement does not contain or constitute a
waiver, in all forums, of their right to maintain employment-
related class or collective actions.
(d) Notify its employees of the rescinded, modified, or re-
vised Agreement and provide a copy of any modified or revised
Agreement to each employee and notify each employee that the
original Agreement has been removed from their personnel
records and destroyed.
(e) Within 14 days after service by the Region, post at its Ir-
vine, California facility, copies of the notice marked “Appen-
dix.”6 Copies of the notice, on forms provided by the Regional
Director for Region 21, after being signed by the Company’s
authorized representative, shall be posted by the Company and
maintained for 60 consecutive days in conspicuous places in-
cluding all places where notices to employees are customarily
posted. Reasonable steps shall be taken by the Company to
ensure that the notices are not altered, defaced, or covered by

5 If no exceptions are filed provided by Section 102.46 of the
Board’s Rules and Regulations, the findings, conclusions, and recom-
mended Order shall, as provided in Section 201.48 of the Rules, be
adopted by the Board and all objections to them shall be deemed
waived for all purposes.
6 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 Na-
tional Labor Relations Board” shall read “Posted Pursuant to a Judg-
ment the United States Court of Appeals Enforcing an Order of the
National Labor Relations Board.”
any other material. In addition to the physical posting of paper
notices, notices shall be distributed electronically, such as
email, posting on an intranet or an internet site, or other elec-
tronic means, if the Company customarily communicates with
its employees by such means. In the event that, during the
pendency of these proceedings, the Company has gone out of
business or closed the facility involved in these proceedings,
the Company shall duplicate and mail, at its own expense, a
copy of the notice to all current employees and former employ-
ees employed by the Company at any time since June 11, 2013.
Dated at Washington, D.C. March 5, 2014
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 no-
tice.
FEDERAL LAW GIVES YOU THE RIGHT TO
Form, join, or assist a union
Choose representatives to bargain with us on your be-
half
Act together with other employees for your benefit and
protection
Choose not to engage in any of these protected activi-
ties.
WE WILL NOT maintain or enforce our Agreement that waives
employees’ right to maintain class or collective action in all
forums, arbitral or judicial.
WE WILL NOT enforce, or attempt to enforce, any such
agreement by filing petition(s) in any court to compel you to
individually arbitrate your work related concerns.
WE WILL NOT in any like or related manner interfere with, re-
strain, or coerce employees in the exercise of their rights under
the Act.
WE WILL within 7 days after the Board Order and upon re-
quest of Charging Party Papke file a joint motion to vacate the
Superior Court of California, Orange County, Order issued on
October 10, 2013, compelling arbitration on an individual basis.
WE WILL reimburse Charging Party Papke any reasonable le-
gal and other expenses incurred related to our various legal
actions to compel arbitration on an individual basis, plus inter-
est.
WE WILL rescind, modify, or revise our Agreement to make
clear to our employees our Agreement does not constitute a
waiver in all forums of your right to maintain employment-
related class or collective actions.
WE WILL notify our employees we have rescinded, modified
or revised our Agreement and provide each a copy of any re-
vised or modified Agreement.
NETWORK CAPITAL FUNDING CORPORATION