D.C. Circuit Overturns Portion of NLRB Register-Guard Decision

Posted on July 13, 2009 by Brian Hall

Back in December 2007, we wrote about the NLRB's decision in The Guard Publishing Company, d/b/a The Register-Guard, 351 NLRB No. 70, which held that employees do not have a protected right to use employer email systems for solicitations or communications regarding union-related topics. In addition, the Board applied a new standard for determining when employers discriminatorily enforce email policies and, thus, violate Section 8(a)(3) of the NLRA. Specifically, as to the 8(a)(3) standard, the Board held that, in determining whether a policy had been discriminatorily enforced against the union, it looked to whether there had been "unequal treatment of equals."  Then, the Board upheld Register-Guard's enforcement of its email policy against an employee who was soliciting support for the union because there was no evidence that the company had permitted solicitation on behalf of other non-union groups (even though it had permitted various other personal uses of the email system, including personal solicitations for sports tickets and the like.) 

On July 7, 2009, however, the Court of Appeals for the D.C. Circuit refused to uphold the Board's conclusion as to whether the employer discriminatorily enforced its email policy but did not explicitly overrule the standard announced by the Board in December.   (On appeal, the union did not challenge the lawfulness of the email policy itself).   In short, the court held that the the company's discipline of an employee for using the email system to solicit employees to wear green in support of the union and to seek volunteers to help with the union's entry in a city parade violated 8(a)(3). Calling the distinction between organizational and personal solicitation a "post-hoc invention" that did not actually exist in the company's email policy, the court found that the company policy prohibiting non-work-related solicitations "made no distinction between solicitations for groups and for individuals."  Equally significant, the court noted that the company’s disciplinary warning" did not invoke the organization-versus-individual line drawn by the Board. To the contrary, the company told the employee in question to “refrain from using the Company’s systems for union/personal business.”

Because it is so fact-specific, the court's decision should not cause employers much concern.   In fact, the email policy at issue, which prohibited use of the company's communications systems “to solicit or proselytize for commercial ventures, religious or political causes, outside organizations, or other non-job-related solicitations,” would seem to be equally applicable to personal solicitations of a non-work nature as it is to organizational solicitations.   The good news here is that the court's decision does not disturb the underlying premise that employers may prohibit union access to its email system so long as it does so in a nondiscriminatory manner.  

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Second Circuit Agrees with First and Seventh Circuits that the Two-Member NLRB Had Authority to Issue Opinions

Posted on June 25, 2009 by Jamie LaPlante

As we reported earlier, there is a split in the federal courts of appeals regarding whether the National Labor Relations Board (NLRB) has authority to issue binding opinions while it is operating with only two members. Since that post, another federal circuit has weighed in on the issue.

 

The NLRB is the federal agency charged with governing relations between private employers and unions and administering the National Labor Relations Act (NLRA). Ordinarily, the NLRB has five members and frequently delegates power to issue rulings and opinions to three-member panels. In order for the NLRB itself to act, it must have a three-member quorum. In late December 2007, the NLRB had one vacancy and two members whose terms were nearing expiration. Congress and the President clashed on the nomination of replacement NLRB members, and filling the vacancies became unlikely (and still has not occurred). Just before the expiration of the two members’ terms, the four-member NLRB delegated all of its power to a three-member panel, which included the two members whose terms were not set to expire. After the two departing members’ terms expired, the two remaining members of the three-member panel continued to issue opinions, relying on statutory language in the NLRA allowing a three-member panel to proceed as a quorum in the absence of one of its members. 

During this period of time and to the date of this post, the two-member quorum of the panel has issued more than 400 opinions. Those opinions were challenged in several federal court actions arguing that, in order for two members of a three-member panel to proceed as a quorum, the NLRB itself must have a quorum of three members; otherwise, the NLRB and the panel lack authority to act. The First and Seventh Circuits held that the two-member panel had authority to issue opinions. The D.C. Circuit, however, held that it did not. 

 

In Snell Island SNF LLC v. NLRB, No. 08-3822 (2d Cir. June 17, 2009), the U.S. Court of Appeals for the Second Circuit joined the First and Seventh Circuits on this issue holding that the two remaining members of the panel did have authority to issue binding opinions. It reached this result by relying on slightly different reasoning from that of the First and Seventh Circuits. Those courts relied primarily on the unambiguous plain text of the statute. The Second Circuit, instead, held that the plain text was ambiguous and deferred to the NLRB’s interpretation of the NLRA. The Court deferred to the NLRB’s interpretation under the United States Supreme Court’s decision in Chevron USA, Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837 (1984), which requires deference to agency statutory interpretation,because the NLRB is the agency charged with administering the NLRA, and the court found the NLRB’s interpretation reasonable.

 

On May 27, 2009, the NLRB filed a petition with the D.C. Circuit for re-hearing by the entire D.C. Circuit (en banc) of the decision holding that the NLRB lacked authority.

Given the split in authority and the potential impact on the more than 400 NLRB decisions issued in 2008 and 2009, it is likely that the United States Supreme Court will weigh in on this issue. Unless and until that happens, employers should proceed with caution when relying on NLRB decisions issued after December 31, 2007 by this two-member quorum.
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Two Conflicting Federal Circuit Court Decisions Issued Today Call Into Question all NLRB Opinions Issued in the Past Year

Posted on May 1, 2009 by Jamie LaPlante

 As a result of two contradictory opinions issued today, over 300 decisions issued by the National Labor Relations Board (NLRB or “Board”) in 2008 are potentially in jeopardy because, according to one federal circuit, they were issued by a two-member panel without the authority to issue binding opinions. 

By way of background, the NLRB is a federal agency that administers the National Labor Relations Act (NLRA), which governs the relations between private employers and unions. It is made up of five members. Yet, the NLRA allows for the five-member Board to delegate power to issue rulings and opinions to a three-member panel. On December 28, 2007, the Board had only four members. On that date, the four-member Board voted to delegate all of its power to a three-member panel. Just three days later, the terms of two of the four members that made the vote to delegate expired, leaving only two remaining members. During all of 2008 and early 2009, the Board had three vacancies for which Congress and the President clashed on the nomination of replacement Board members. Yet the two-member panel issued over 300 published and unpublished opinions in the labor relations area, proceeding as a quorum of the three-member panel—with two of the three required members of the three-member panel to whom the Board delegated its power.

 

The U.S. Court of Appeals for the D.C. Circuit ruled today that those decisions were invalid because the Board, including the panel to whom it delegated its power, lacked authority to act without at least three members. Laurel Baye Healthcare of Lake Lanier, Inc. v. NLRB, Nos. 08-1162, 08-1214 (D.C. Cir. May 1, 2009).  In reaching this conclusion, the D.C. Circuit relied on a provision of the NLRA requiring the Board to have a quorum of the Board itself (i.e. three members) “at all times” in order to be able to act. The D.C. Circuit held that, in order for two members of a three-member panel to act as a quorum under the statute, the Board itself must have at least three members; otherwise, the panel’s power is suspended along with the power of the Board itself. This decision invalidated all of the NLRB opinions issued in 2008 and early 2009.

 

The U.S. Court of Appeals for the Seventh Circuit reached the opposite conclusion in another decision issued today, New Process Steel, L.P. v. NLRB, Nos. 08-3517, 08-3518, 08-3709 & 08-3859 (7th Cir. May 1, 2009). It held that the opinions of the two remaining members were valid because the plain meaning of the statute permits the Board to delegate power to a three-member panel and then also permits a three-member panel to proceed as a quorum despite the absence of one of the members. The Seventh Circuit ignored the quorum requirement provision for the Board itself in its reasoning. 

 

The First Circuit also reached this same conclusion in March 2009. See Northeastern Land Servs. Ltd. d/b/a NLS Group v. NLRB, No. 08-1878 (1st Cir. Mar. 13, 2009). The Second and Eighth Circuits also have pending cases on this same issue. Given the split in authority and the potential impact of these decisions, it is likely that the U.S. Supreme will weigh in on this issue. In the meantime, employers should proceed with caution in relying on NLRB opinions issued in 2008 and early 2009 in taking actions.
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Reminder to Unionized Businesses: You May Have a Duty to Bargain With Union Over Layoff Decisions

Posted on March 5, 2009 by Franck Wobst

The recent decision by the United States Court of Appeals for the First Circuit in Pan American Grain Co. v. NLRB serves as a good reminder for unionized businesses contemplating layoffs: They may be obligated to bargain with the union that represents their employees not only over the effects of the layoff on employees but, possibly, the decision itself.

In Pan American, the court affirmed the NLRB’s ruling that a Puerto Rico grain company violated federal labor law by laying off 15 striking workers in February 2002 without giving their union an opportunity to bargain over the decision. Approximately 40 employees had been on strike for about two months when the employer announced that 15 of the striking employees would laid off “due to economic reasons and as a result of a substantial decrease in production and sales.” During the unfair labor practice proceedings that ensued following the union’s unfair labor practice charge filing, the employer claimed that the layoffs were prompted due to a combination of its efforts to modernize its operations and reduced sales. The NLRB ruled, and the court agreed, that in situations where there are multiple motives for a layoff, the employer has a duty to bargain with the union over the layoff decision as long as it is based at least partially on labor costs.

As a remedy for the employer’s violation of its duty to bargain, the NLRB ruled that the employer was liable for full back pay to the 15 employees who had been laid off. Pan American argued to the court that full back pay to the 15 employees dating back to 2002 would constitute an undue burden on the company and noted that it had not increased its workforce since the February 2002 layoffs. On review, the court stated that the employer should be allowed to introduce evidence to the NLRB at the compliance proceedings to show that the reinstatement and full back pay of the 15 employees would be unduly burdensome.

The Pan American case serves as a potentially very expensive lesson for one employer that, even in these economically-troubling times, no unionized business can afford to overlook the possibility that it may be required under federal labor law to bargain with a union over the decision to layoff employees. The decision makes clear that the duty to bargain over a layoff decision exists even if labor cost savings are only one factor among many. An employer can satisfy its decision-bargaining obligation by giving the union timely notice that a layoff decision is being contemplated. If the union asks for more information about the factors behind the decision and/or to bargain over the decision, the employer may be obligated to provide the information and/or to bargain with the union over the decision before the employer becomes irrevocably committed to implementing the layoff. Decision bargaining could include being willing to consider alternatives proposed by the union to achieve the desired cost savings. Decision bargaining does not require that the employer and union reach agreement. However, at a minimum, the employer and union must have bargained to a bona fide, good faith impasse before the employer can implement its decision.

 

All unionized businesses should also keep in mind that they have a duty to bargain with a union over the effects of a layoff. Effects bargaining might include the number and order of layoffs, severance pay, health insurance, bumping rights, preferential hiring at other facilities, and job search assistance, among other things. In some instances, some or all effects bargaining issues are already addressed in the collective bargaining agreement between an employer and a union.

Tough economic times sometimes call for difficult workforce decisions. Employers should be careful not to make a bad situation worse by risking unfair labor practice liability.
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