Notice & Comment

D.C. Circuit Review – Reviewed: Tough Week for the NLRB

The D.C. Circuit decided three cases — and the NLRB lost in two of them. Throw in the NLRB’s loss last week and it has been a rough stretch for the agency.

In ABM Onsite Services – West, Inc. v. NLRB, Judge Griffith — joined by Judges Srinivasan and Millett — addressed whether workers who process baggage for airlines fall within the scope of the National Labor Relations Act or the Railway Labor Act. It turns out that this matters a lot: “For example, the NLRB can initiate unfair-labor-practice proceedings and issue orders to employers, but the National Mediation Board (NMB), which administers the RLA, performs no law enforcement function. The NMB’s role is limited mainly to determining whether employees in the airline and railway industries have chosen union representation and then mediating collective bargaining.”

The relationship between the NLRB and the NMB is peculiar: “The NLRB frequently refers the jurisdictional question to the NMB for an advisory opinion and then defers to the NMB’s view, based on the NMB’s expertise in administering the RLA.” Anyway, to make a long story short, the NMB used to have a test that focused on whether the air carrier “exercise[d] some significant influence” over employees, but in 2013 the NMB began requiring that air carriers exercise greater control for the RLA to kick in. The NLRB decided to follow the more recent NMB approach, even though the NMB never formally disavowed the old approach. Judge Griffith determined that was not okay: “Given the NLRB’s previous endorsement of the prior approach, it was not enough for the NLRB simply to follow suit without an explanation for why it, too, was leaving behind settled precedent.”* Here is the holding:

Because the NLRB follows the NMB’s lead in interpreting and applying the RLA, the question becomes how to treat an unacknowledged and unexplained deviation from precedent by the NLRB that is precipitated by a likewise unacknowledged and unexplained deviation from precedent by the NMB. We hold that, under such circumstances, the NLRB is not free to simply adopt the NMB’s new approach without offering a reasoned explanation for that shift. Indeed, an agency cannot avoid its duty to explain a departure from its own precedent simply by pointing to another agency’s unexplained departure from precedent. This is a corollary of the rule that an agency cannot justify a departure from its precedentsimply by pointing to another one of its cases that departed from precedent, if that other case does not itself announce the new standard or a supporting rationale for it.

In Scomas of Sausalito v. NLRB, Judge Henderson (joined by Judges Edwards and Sentelle) also ruled against the NLRB. Here, certain restaurant employees signed a petition requesting that the employer cease to recognize the union. Because a majority of signatures were on the petition, the employer stopped bargaining with the union–not aware that the union had already convinced some of the signers to disavow their signatures. The union then claimed that the employer committed an unfair labor practice. The NLRB sided with the union and barred the employer from “raising a question concerning the Union’s majority status for a reasonable time.” The D.C. Circuit rejected the NLRB’s remedy: “A bargaining order is an extraordinary remedy that, on these facts, is out of keeping with the Act’s purposes. It rewards the Union for sitting on its hands. It punishes Scomas for acting unwarily but in good faith. And it ‘give[s] no credence whatsoever to employee free choice,’ unduly delaying an election to determine majority status.”

Judge Henderson also concurred to warn the agency against rewarding “gamesmanship at the expense of transparency.” I suspect her concurrence will be closely read at the NLRB.

Finally, in Nanko Shipping v. Alcoa, Inc., Judge Pillard, joined by Judge Rogers, addressed an unusual fact pattern. This is how she begins her opinion:

The Republic of Guinea is one of the world’s principal sources of bauxite, an aluminum ore. After Guinea declared independence from France in the middle of the last century, it sought to ensure that the exploitation of its natural resources would not only provide business for multinational corporations based overseas that invested in the ore’s extraction, but would also benefit the Guinean economy. Plaintiff Nanko Shipping Guineé (Nanko) claims to be the beneficiary of one of Guinea’s legal undertakings to that end, and contends in this case that defendants (collectively, Alcoa) violated corresponding obligations. . . . The district court granted Alcoa’s motion to dismiss the complaint under Federal Rule of Civil Procedure 12(b)(7) for failure to join Guinea, which Alcoa asserts is a Rule 19 required party. The district court concluded that Guinea could not be joined because it is entitled to sovereign immunity. But it is not apparent why Guinea is a required party and, if it is, whether Nanko’s allegations bring Guinea within the commercial-activity exception to foreign sovereign immunity such that its joinder would be feasible. We accordingly reverse and remand for further proceedings.

Judge Brown dissented on grounds that the district court did not abuse its discretion by concluding that plaintiffs had not contested that “Guinea is protected from suit by sovereign immunity.” She also addressed the merits: “In fact, no facts presented in the complaint suggest Alcoa intentionally discriminated against Nanko on account of race.” (The majority said there was enough alleged to survive a motion to dismiss. Judge Brown didn’t buy it.)

So there you go — all in all, a nice, quiet week at the D.C. Circuit, albeit a bad one for the NLRB!

* There probably is an obvious answer to this question, but why isn’t the jurisdictional test here a de novo issue for the D.C. Circuit? Put another way, what happens if the NLRB and the NMB disagree?

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