After the D.C. Circuit held the recess appointments to the NLRB unconstitutional (Recess Appointments at NLRB Unconstitutional, Federal Appeals Court Rules), we began to speculate about the Board’s next move. The Board is now appealing that ruling to the U.S. Supreme Court. Read about it at Healthcare Workplace Update: NLRB Recess Appointment Question to be Appealed to U.S. Supreme Court.
Author: Robert Murphy
The U.S. Supreme Court has been asked to decide whether a neutrality agreement between a Florida greyhound track and a union improperly delivered a “thing of value” in violation of the Labor Management Relations Act.
Traditionally, when a union has sought to organize the employees of an employer and the employer decided it wanted to oppose the effort, the employer exercised its rights under Section 8(c) of the National Labor Relations Act to educate its employees about unionization. Sometimes, however, particularly in connection with a “corporate campaign,” an employer decides to relinquish its rights under Section 8(c) and, instead, to remain neutral about the union in its communications to its employees. Such a decision, of course, makes it much easier for a union to prevail in a subsequent National Labor Relations Board election, since employees then will decide how to vote (“no” – against unionization; “yes” – for unionization) based almost exclusively on information they receive from the union. Invariably, that information will paint the union and unionization in the best possible light. That could change if the U.S. Supreme Court grants certiorari and affirms the decision of the U.S. Court of Appeals for the Eleventh Circuit in Mulhall v. UNITE HERE Local 355, 667 F.3d 1211 (11th Cir. 2012), finding a neutrality agreement violated the Labor Management Relations Act.
The case arises out of an action filed by Martin Mulhall, an employee of Hollywood Greyhound Track Inc., d/b/a Mardi Gras Gaming, to enjoin an agreement between his employer and UNITE HERE Local 355 (“Union”). The agreement provided the Union access to non-public work areas of the employer’s property, confidential information about the employees, including their addresses, and a commitment by the employer to remain neutral in any union organizing efforts. The agreement also provided that the Union would support a local ballot initiative regarding casino gaming favored by the employer and, once recognized by the employer, would refrain from striking.
Mulhall asserted the agreement violated Section 302 of the Labor Management Relations Act because it improperly “delivered” or “paid” a “thing of value” to the Union. Section 302 makes it unlawful for an employer to “pay, lend or deliver any money or other thing of value to any labor organization...which seeks to represent... any of the employees of such employer.” 29 U.S.C. 186.
The U.S. District Court, Southern District of Florida, initially dismissed the action on the ground that Mulhall lacked standing to sue. After that decision was reversed by the Eleventh Circuit Court of Appeals and returned to the lower court, the District Court ruled that Mulhall had failed to state a claim for relief. The Eleventh Circuit again reversed, holding that “organizing assistance can be a thing of value that, if demanded or given as payment, could constitute a violation of Section 302.” By so holding, the Circuit Court declined to follow rulings of the Third and Fourth Circuit Courts of Appeals. The Third Circuit had held in Adcock v. Freightliner LLC, 550 F.3d 369, 374 (4th Cir. 2008), that organizing assistance was not a “thing of value.” The Fourth Circuit had held in Hotel Employees and Restaurant Employees Union, Local 57 v. Sage Hospitality Res., 390 F.3d 206, 219 (3d Cir. 2004), that organizing assistance did not qualify as a “payment, loan or delivery.”
In reaching its decision, the Eleventh Circuit Court noted that organizing assistance can be a “thing of value” and that a thing of value can be intangible, but that intangible organizing assistance cannot be loaned or delivered. The Court also stated with respect to neutrality agreements:
It is too broad to hold that all neutrality and cooperation agreements are exempt from the prohibitions in Section 302. Employers and unions may set ground rules for an organizing campaign, even if the employer and the union benefit from the agreement. But innocuous ground rules can become illegal payments if used as valuable consideration in a scheme to corrupt a union or extort a benefit from an employer.
The Union has petitioned for certiorari on whether organizing assistance can be a “thing of value.” Mulhall has cross-petitioned on whether intangible things can be “delivered.”
If the Supreme Court grants certiorari and rules against the Union (on the value issue, the delivery issue, or both), the effect on UNITE HERE and other unions that rely heavily on neutrality agreements as their preferred method of organizing could be dramatic. Indeed, such a ruling might compel them to return to traditional methods of organizing that are more expensive and less likely to be successful.
The National Labor Relations Board was told by the U.S. Supreme Court in June that it had lacked authority to issue hundreds of decisions and orders from January 2008 through April 2010 with only two members in office. At the time of the High Court’s ruling in New Process Steel, L.P. v NLRB, 130 S.Ct. 2645 (2010), nearly 100 cases were pending in the Supreme Court or the courts of appeals involving such Board decisions. It was clear then that these cases would have to be revisited by the Board having a proper quorum. That process has now begun. However, it is hardly reassuring.
On August 5, the Agency issued four brief decisions and orders in these previously heard cases. In three of them, the courts of appeals had denied enforcement to the Board’s orders on the authority of New Process Steel. In the fourth, the appellate court had remanded the case to the agency for further proceedings before the case was decided. The decisions are virtual clones. Dutifully reciting that the current three-member panel had considered the administrative law judge’s decision in light of the exceptions and briefs (filed earlier), the NLRB panel summarily reaffirmed its previous two-member decision in each of the cases, for the reasons already stated, incorporating by reference the earlier decision in the new determination. Chairman Liebman and Member Schaumber, who had issued the earlier, defective decisions and orders, were members of the panel in each instance, joined by Member Pearce. They explained:
Consistent with the Board’s general practice in cases remanded from courts of appeals, and for reasons of administrative economy, the panel includes the members who participated in the original decision. Furthermore, under the Board’s standard procedures applicable to all cases assigned to a panel, the Board members not assigned to the panel had the opportunity to participate in the adjudication of this case any time up to the issuance of this decision.
This explanation is consistent with a press release issued earlier explaining the Board’s intentions.
The Board plainly is giving short shrift to its compulsory reexamination. It is going through the motions. It is reassigning these matters to the same two members who considered them originally, and evidently is not soliciting any further briefing or argument. The results are easily foretold. Rubber stamps are the order of the day.
Does this numbing exercise suffice? We don’t know, but the Board’s cursory treatment is likely to produce its own spate of appeals. The circuit courts, and perhaps the Supreme Court, then have a chance to consider whether the Board has made amends for its past mistakes.
With Contributions from Roger Kaplan
The Solicitor General of the United States, on behalf of the NLRB, has filed a petition with the United States Supreme Court, asking the Court to settle the dispute among the Circuit Courts as to whether the NLRB is authorized to render decisions with only two members in office. The District of Columbia Circuit in Laurel Baye Healthcare v. NLRB this past May had held that the Board lacked such authority. Three other circuits, however, have reached an opposite conclusion (the First, Second and Seventh Circuits, in Boston, New York and Chicago, respectively). The Board in Laurel Baye, and employers in each of the other cases, petitioned the Court for a writ of certiorari to review the particular Circuit Court opinion.
The Board on September 29 asked the Court to determine whether National Labor Relations Act authorizes the agency to act when only two of its five positions are filled, if the Board previously delegated its full powers to a three-member group that included the two remaining members. On the same day, the NLRB responded to the petition in the Seventh Circuit case — New Process Steel — asking the Justices to grant review there, too, on the same issue.
Since January 2008, the Board has been functioning with only two members, Chairman Wilma Liebman and Member Peter Schaumber. Shortly before, four members, including two recess appointments about to expire, delegated the Board’s powers to a three-member panel; when Board membership shrank to two, the agency said the NLRA allowed it to operate in that fashion. (Despite professing to carry on its duties as usual, the two-member Board may have been hedging its bets until an undisputed quorum again is present. Students of the agency have suggested there may have been fewer decisions, and those often are in “soft,” non-controversial cases. In a number of instances, one member or the other has suppressed disagreement with Board precedent “for institutional reasons,” we have been told.)
President Barack Obama has nominated three candidates, including Craig Becker, to fill the empty seats on the Board. These nominees are awaiting confirmation by the Senate.
In view of the clear conflict among Circuits and the Board’s and the employers’ desire to have the quorum issue settled, not to mention the Second Circuit’s observation that the High Court will have to have the last word on this subject, many believe the Supreme Court will grant certiorari. The Court begins its new Term October 5.
We will keep you posted.