Summary of NLRB Decisions for Week of September 5 – 8, 2017.
The Summary of NLRB Decisions is provided for informational purposes only and is not intended to substitute for the opinions of the NLRB. Inquiries should be directed to the Office of the Executive Secretary at 202‑273‑1940.
Summarized Board Decisions
ConAgra Foods, Inc. (09-CA-062889, et al.; 365 NLRB No. 102) Troy, OH, September 7, 2017.
Upon remand from the Eighth Circuit Court, the Board (Members Pearce and McFerran; Chairman Miscimarra concurring), in a Supplemental Decision and Order, denied the General Counsel’s Motion for Default Judgment asserting that the Respondent had defaulted on the terms of a settlement agreement. The Board found that the Respondent committed a postsettlement unfair labor practice by posting and maintaining a letter which employees would reasonably construe as restricting discussions about unions. The Board, however, found that default judgment was not appropriate on procedural due process grounds because the General Counsel did not advise the Respondent, before moving for default judgment, that the letter, if found unlawful as an overbroad rule, would warrant default judgment under the performance clause of the settlement agreement. Concurring, Chairman Miscimarra found that default judgment was also inappropriate based on the General Counsel’s failure to provide the Respondent 14 days’ advance notice and opportunity to remedy the alleged noncompliance as required by the settlement agreement. Accordingly, the Board remanded the case to the Regional Director for further appropriate action.
Charges filed by United Food and Commercial Workers Union, Local 75. Chairman Miscimarra and Members Pearce and McFerran participated.
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Outokumpu Stainless USA, LLC f/k/a Thyssenkrupp Stainless USA, LLC (15-CA-070319 and 15-CA-073053; 365 NLRB No. 127) Calvert, AL, September 7, 2017.
The Board (Members Pearce and McFerran; Chairman Miscimarra, dissenting) granted the General Counsel’s Motion for Default Judgment pursuant to the noncompliance provision of an informal settlement agreement. That settlement agreement resolved unfair labor practice charges filed against the Respondent and obligated it to take certain actions, including posting a notice to employees. While posting that notice, the Respondent also posted a “side letter” that minimized the effects of the Board’s notice by indicating that the Respondent did not believe it had violated any laws and suggesting that the posting of the Board’s notice was a mere formality. The Board found that the Respondent breached the terms of the settlement agreement by posting this side letter, triggering the agreement’s performance provision authorizing the entry of default judgment in case of noncompliance.
Chairman Miscimarra dissented from the entry of default judgment. While he agreed that the side letter improperly minimized the effect of the Board’s notice posted pursuant to the settlement and warranted setting aside the settlement agreement, he found that the agreement only authorized default judgment if the Respondent did not comply with “any of the terms of this Settlement Agreement” and that not posting a side letter was not one of those terms.
Charges filed by United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, AFL-CIO-CLC. Chairman Miscimarra and Members Pearce and McFerran participated.
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Unpublished Board Decisions in Representation and Unfair Labor Practice Cases
R Cases
Durham School Services, L.P. (19-RC-200871) Spokane, WA, September 5, 2017. The Board denied the Petitioner’s Request for Review of the Regional Director’s Decision and Direction of Election as it raised no substantial issues warranting review. The Regional Director had found that the Employer’s operations were seasonal and had scheduled an election for October 3, 2017. Petitioner – Amalgamated Transit Union Local 1015. Chairman Miscimarra and Members Pearce and McFerran participated.
Cranesville Block Co., Inc. (03-RC-190952) Amsterdam, NY, September 6, 2017. The Board (Members Pearce and McFerran; Chairman Miscimarra, dissenting) denied the Employer’s Request for Review of the Regional Director’s Supplemental Decision and Order on Challenged Ballot and Objections as it raised no substantial issues warranting review. The Regional Director had found that a mechanic is not a statutory supervisor under the Act and, accordingly, overruled the Employer’s objections based on the mechanic’s alleged pro-union supervisory conduct. Dissenting, Chairman Miscimarra would have granted review because, in his view, the record contained evidence that the mechanic has the authority to assign tasks to other mechanics, to responsibly direct them, and to effectively recommend discipline. Petitioner – International Brotherhood of Teamsters, Local 294. Chairman Miscimarra and Members Pearce and McFerran participated.
C Cases
Security Walls, LLC (13-CA-137736 and 13-CA-194819) Batavia, IL, September 6, 2017. The Board approved a formal settlement stipulation between the Respondent, the Charging Party, and the General Counsel, and specified actions the Respondent must take to comply with the Act. Charges filed by an individual. Chairman Miscimarra and Members Pearce and McFerran participated.
Apollo Health, Inc. (13-CA-189486) Chicago, IL, September 7, 2017. No exceptions having been filed to the July 26, 2017 decision of Administrative Law Judge Arthur J. Amchan’s finding that the Respondent had engaged in certain unfair labor practices, the Board adopted the judge’s findings and conclusions, and ordered the Respondent to take the action set forth in the judge’s recommended Order. Charge filed by an individual.
Marquez Brothers Enterprises, Inc. (21-CA-039581 and 21-CA-039609) City of Industry, CA, September 7, 2017. The Board granted the General Counsel’s Request for Special Permission to Appeal the Administrative Law Judge’s ruling prohibiting the General Counsel from questioning any witnesses other than the compliance officer concerning the discriminatees’ interim earnings. On the merits, the Board granted the appeal, finding that the judge abused her discretion by ordering an unduly harsh evidentiary sanction against the General Counsel based on the two unrepresented discriminatees’ failure to fully comply with a subpoena duces tecum issued to them. The Board noted that the General Counsel represents the public interest, not the private interests of the discriminatees. It urged the judge to consider less severe measures, such as permitting the General Counsel to elicit oral testimony from the discriminatees, in order to ensure a complete record. Chairman Miscimarra, dissenting in part, found that the judge had not abused her discretion, because the discriminatees had failed to comply with valid subpoenas seeking documents related to matters bearing on backpay. He also found that some of the alternative measures offered as substitutes for the preclusion sanction, including relying on oral testimony, constitute a reward rather than a sanction for subpoena non-compliance. Finally, Chairman Miscimarra stated that the General Counsel should not be immune from sanctions based on the discriminatees’ non-compliance, because in matters of backpay, the discriminatees’ interests are advanced by the General Counsel. Charges filed by individuals. Chairman Miscimarra and Members Pearce and McFerran participated.
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Appellate Court Decisions
No Appellate Court Decisions involving Board Decisions to report.
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Administrative Law Judge Decisions
Solarcity Corp. (32-CA-180523; JD(SF)-39-17) San Mateo, CA. Administrative Law Judge Eleanor Laws issued her decision on September 8, 2017. Charge filed by an individual.
Kalthia Group Hotels, Inc. and Manas Hospitality LLC d/b/a Holiday Inn Express Sacramento a single and/or joint employer (20-CA-176428, et al.; JD(SF)-38-17) Sacramento, CA. Administrative Law Judge John T. Giannopoulos issued his decision on September 8, 2017.
The Third Circuit Weighs in on The Warn Act
Cole Schotz PC – Myles MacDonald
USA September 18 2017
Short Summary
In In re AE Liquidation, Inc., 866 F.3d 515 (3d Cir. 2017), the Third Circuit answered two important legal questions under the Worker Adjustment and Retraining Notification Act of 1988 (the WARN Act). First, the Third Circuit held that when a corporation is sold as a going concern, there is a presumption that the sale involves the hiring of the seller’s employees, “regardless of whether the seller has expressly contracted for the retention of its employees.” Id. at 526. Second, the Third Circuit held that, under the WARN Act, in determining whether a mass layoff was caused by “unforeseeable business circumstances,” a mass layoff is “reasonably foreseeable” only if it is “probable.” Id. at 528. The Court’s holding is more thoroughly examined below.
The WARN Act
The WARN Act “was enacted by Congress in 1988 to provide limited protections to workers whose jobs are suddenly and permanently terminated [and] generally precludes an ‘employer’ from ordering a ‘plant closing or mass layoff’ until the expiration of a sixty-day period after giving written notice.” Laura B. Bartell, Why Warn?-the Worker Adjustment and Retraining Notification Act in Bankruptcy, 18 Bankr. Dev. J. 243, 243 (2002).
The WARN Act contains three exceptions to the this sixty-day notice period, but only one—the “unforeseeable business circumstances” exception—was presented to the Court in AE Liquidation. 29 U.S.C. § 2102(b)(2)(A) sets forth the “unforeseeable business circumstances” exception to the WARN Act’s notice requirements, and simply states that “[a]n employer may order a plant closing or mass layoff before the conclusion of the 60-day period if the closing or mass layoff is caused by business circumstances that were not reasonably foreseeable as of the time that notice would have been required.” As the Third Circuit explained, this “exception must be offered by the employer as an affirmative defense” and “the employer must demonstrate (1) that the business circumstances that caused the layoff were not reasonably foreseeable and (2) that those circumstances were the cause of the layoff.” AE Liquidation, 866 F.3d at 523.
The Code of Federal Regulations, at 20 C.F.R. § 639.9(b), provides additional guidance on this exception, explaining that (1) “[a]n important indicator of a business circumstance that is not reasonably foreseeable is that the circumstance is caused by some sudden, dramatic, and unexpected action or condition outside the employer’s control” and (2) “[t]he test for determining when business circumstances are not reasonably foreseeable focuses on an employer’s business judgment.” Id. at § 639.9(b)(1)-(2).
Factual Background
The plaintiffs-appellants were former employees of the Debtor, Eclipse Aviation Corporation (Eclipse), who were laid off when the Eclipse’s § 363 sale to its largest shareholder fell through. That sale, which would have allowed the Eclipse’s operations to continue as a going concern, was contingent upon funding from Vnesheconomban (VEB), a state-owned Russian Bank. As the Third Circuit explained, “[f]or a month, Eclipse waited for the deal to go through with almost daily assurances that the funding was imminent and the company could be saved, but eventually, as those assurances failed to bear fruit, the time came when it was forced to cease operations altogether.” AE Liquidation, 866 F.3d at 518. As a result, on February 24, 2009—nearly two weeks after Eclipse had become administratively insolvent—Eclipse’s board of directors instructed Eclipse’s attorneys to file a motion to convert the case to a Chapter 7 liquidation. Id. at 522. As soon as the motion was filed, Eclipse emailed all of its employees and informed them that Eclipse was being liquidating and all employees were being laid off. Id.
The Third Circuit’s Holding
The Third Circuit addressed two important legal questions left unresolved by the Code of Federal Regulations. The first was the question of causation—what proof is needed to show that the “allegedly unforeseeable event was, in fact, the cause of the layoff”? Id. at 525. The second was the question of foreseeability—“what makes a business circumstance ‘not reasonably foreseeable’”? Id. at 528.
The Court’s first ruling was simple—when a business is being sold as a going concern, the Court presumes that “that the sale ‘involves the hiring of the seller’s employees unless something indicates otherwise,’ regardless of whether the seller has expressly contracted for the retention of its employees.” Id. at 526. More importantly, the Court held that although the terms of the purchase agreement “freed ETIRC from any binding obligation to retain Eclipse’s employees and prevented it from incurring liabilities were it not to retain them,” this fact did not rebut the presumption. Id. at 527. As the Third Circuit explained, “[w]hile such boilerplate language perhaps signifies that the sustained employment of Eclipse’s workforce was not a foregone conclusion, it does not rebut the presumption in favor of continued employment in a going concern sale.” Id. By applying this presumption, the Third Circuit aligned itself with the Eighth and Ninth Circuit, which made similar holdings in Wilson v. Airtherm Prod., Inc., 436 F.3d 906 (8th Cir. 2006) and Int’l All. of Theatrical & Stage Employees & Moving Picture Mach. Operators, AFL-CIO v. Compact Video Servs., Inc., 50 F.3d 1464, 1468 (9th Cir. 1995).
The Court’s ruling on foreseeability similarly brought the Third Circuit in line with other Circuits. Citing to the Fifth Circuit’s holding in Halkias v. Gen. Dynamics Corp., 137 F.3d 333, 336 (5th Cir. 1998), the Third Circuit explained that “anything less than a probability would be ‘impracticable.’” AE Liquidation, 866 F.3d at 529. The Third Circuit examined this proposition, and agreed with the Fifth Circuit, explaining that “there are significant costs and consequences to requiring these struggling companies to send notice to their employees informing them of every possible ‘what if’ scenario and raising the specter that one such scenario is a doomsday… premature warning has the potential to accelerate a company’s demise and necessitate layoffs that otherwise may have been avoided.” Id. By so holding, the Third Circuit joined the Fifth, Sixth, Seventh, Eighth and Tenth Circuit in determining that “more probable than not” is the appropriate standard for foreseeability under the WARN Act. See Halkias, 137 F.3d 333; Watson v. Michigan Indus. Holdings, Inc., 311 F.3d 760, 765 (6th Cir. 2002); Roquet v. Arthur Andersen LLP, 398 F.3d 589 (7th Cir. 2005); United Steel Workers of Am. Local 2660 v. U.S. Steel Corp., 683 F.3d 882 (8th Cir. 2012); Gross v. Hale-Halsell Co., 554 F.3d 870 (10th Cir. 2009).
Applying these holdings to the facts of the case, the Court found that Eclipse had met its burden of demonstrating the “unforeseeable business circumstances” exception to WARN Act liability. As the Court explained, “[u]nder the circumstances, and taking account of the historical relationship between the [Eclipse and its majority shareholder], it was commercially reasonable for Eclipse to believe that the sale was still at least as likely to close as to fall through before February 24th, so that no WARN Act notice was required prior to that time.” In re AE Liquidation, Inc., 866 F.3d 515, 533 (3d Cir. 2017).
Conclusion
WARN Act issues arise often during bankruptcy proceedings. Although the facts of AE Liquidation present a rare scenario—where WARN Act liability arose as a result of a failed sale process—the Third Circuit’s holding in AE Liquidation addresses two fundamental issues in the “unforeseen business circumstances” exception to WARN Act liability—causation and foreseeability. The Third Circuit’s holding brings needed certainty to these issues and therefore greater certainty to the bankruptcy process.
Trump Announces Nomination For NLRB General Counsel – What It Means For Employers
Blog The Lone Star Employer Report
USA September 18 2017
The White House announced on Friday, September 15, 2017, that President Donald Trump has nominated Peter B. Robb to serve as the next General Counsel for the National Labor Relations Board. Robb is a management-side labor and employment attorney, who currently practices in Vermont. Robb previously worked as a field attorney for the NLRB, a supervisory attorney for the Federal Labor Relations Authority, and then as the Chief Counsel to former NLRB member Robert Hunter (a Republican), who was appointed to the Board in 1981 by President Reagan. In 1985, Robb began private practice representing company management in labor and employment law. As the General Counsel, Robb would decide which issues to put before the NLRB for resolution. A rollback of a number of union-friendly decisions is expected.
If confirmed, Robb will replace Richard Griffin, a union attorney appointed by former President Obama. Robb would be the first Republican to serve as NLRB General Counsel since 2010. What’s more, the transition from a Democratic to Republican General Counsel parallels recent Board appointments. Currently, the Board is comprised of two Republican representatives, Chairman Philip Miscimarra and Marvin Kaplan, and two Democratic representatives, Mark Pearce and Lauren McFerran. One seat is vacant. Although Miscimarra has announced that he will retire at the end of his term in December 2017, it is likely that President Trump will nominate another Republican to replace Miscamarra. Trump has already nominated Republican William Emanual to fill the currently vacant Board seat. If Emanual is confirmed, the NLRB would have a Republican majority for the first time in ten years.
Robb’s nomination, and the overall transition of the Board to a more company-sided majority, could have expansive impact on labor laws and affect business operations and employment related risks. The Democratic-led NLRB has decided several controversial issues, including broader joint employment liability, the appropriateness of small “micro units” of employees, and the enforceability of employee class action waivers. The NLRB has also taken a hard stance with employee handbooks (previously discussed here and here), holding that several common provisions have a “chilling” effect on employees’ exercise of Section 7 rights to communicate about their wages, hours, and other terms and conditions of employment, and thus are illegal.
The U.S. Supreme Court is scheduled to hear oral argument on October 2, 2017, on the issue of whether arbitration agreements that include class action waivers are legally enforceable under the National Labor Relations Act. Although current NLRB General Counsel Griffin is slated to argue on behalf of the NLRB, depending on the Court’s decision, the next General Counsel would determine how the Board applies its ruling. This will likely also be true on the issue of joint employment and how the NLRB responds to the appeal of its 2015 Browning-Ferris Industries decision, currently pending before the U.S. Court of Appeals for the District of Columbia Circuit. In Browning-Ferris, the Board held that a company may be found to be a joint employer even if it does not exercise direct and immediate control over the workers at issue.
Because the NLRB General Counsel has the authority to issue charges of alleged unfair labor practices against employers, as well as the authority to dismiss any charges, if confirmed, Robb would play a significant role in determining the issues the NLRB decides. Although it is impossible to know exactly how Robb would proceed as General Counsel, when coupled with the expected transition of the Board itself to a Republican majority, employers may soon see a more business-friendly NLRB.