Seyfarth Synopsis: Overturning 25 years of precedent, the NLRB rules that an ALJ may only enter an order approving and incorporating settlement terms proposed by a respondent over the objections of the General Counsel and charging party if it provides a full remedy for all of the violations alleged in the complaint.

In United States Postal Service, 364 NLRB No. 116 (Aug. 27, 2016), the NLRB in a 2-1 decision took away from Administrative Law Judges the ability to approve substantial compliance settlements directly with a respondent over the objections of the General Counsel and the charging party. For 25 years, ALJs have had this ability provided the offer substantially remedied the violations alleged in the complaint under the criteria set forth in Independent Stave Co., 287 NLRB 740, 743 (1987): (1) whether the parties and individual discriminatees have agreed to be bound, and the position taken by the General Counsel; (2) whether the settlement is reasonable in light of the nature of the violations alleged, litigation risks, and the stage of the litigation; (3) whether there has been any fraud, coercion, or duress by any of the parties in reaching the settlement; and (4) whether the respondent has engaged in a history of violations or breached previous settlement agreements.

The ALJ in United States Postal Service applied Independent Stave to issue a settlement in the form of a consent decree in a Section 8(a)(1) threat case where the employer, in return for a non-admission clause, agreed to post the appropriate remedial notice for the required 60 days at the facility where the violation occurred, and to the entry of a default judgment if there was a failure to comply with the agreement for a six month period from the closure of the case on compliance. The ALJ believed the offer reasonable in light of the minor and isolated nature of the violation, the risks of litigation, and the fact that the relief agreed upon was almost the same as if there had been a judgment. The General Counsel and union opposed the settlement because of the notice posting was limited to the location of the violation, instead of being posted district-wide, and the General Counsel objected to the six month sunset provision on enforcement.

The Board majority reversed, and overturned twenty-five year old precedent applying Independent Stave to such consent orders. The majority found that the Independent Stave standard was specifically formulated for evaluating a non-Board settlement between a charging party and respondent to which the General Counsel was not a party. In those situations, the majority concluded, a judge could justify approving a settlement that contained less than full relief in deference to the charging party’s judgment concerning its own interests and the well-established policy favoring private dispute resolution. Those considerations did not come into play where only the respondent was willing to settle.

Instead, the majority applied what it considered to be the standard in Electronic Workers IUE Local 201 (General Electric Co.), 188 NLRB 855, 957 (1971), that a judge could only agree to such a resolution over the objections of both the charging party and General Counsel if it provided “a full remedy for all of the violations alleged in the complaint.” Here, the majority did not consider the six month sunset provision on enforcement to be full relief since there would not have been such a limitation had the General Counsel won the case. Thus, the majority set aside the order and remanded the case for a hearing.

Member Miscimarra dissented. Among other points, Member Miscimarra: (i) questioned how a judge could reasonably reject a settlement found reasonable under Independent Stave; (ii) noted the Board intended to apply Independent Stave to these cases given the criteria included taking into consideration who was agreeable to the settlement; (iii) rejected the idea that Independent Stave favored resolution of cases only where the charging party desired to settle; and (iv) pointed out the Board in General Electric never declared full relief was a pre-requisite for a judge-approved settlement. Member Miscimarra also noted that the only relief the Board took issue with, the sunset provision, was not even something to which the union even objected. Moreover, he claimed the sunset provision did not make the settlement less than a full remedy given it related more to the process of enforcing a breach, the aggrieved party did receive full relief, and such sunset clauses were expressly permitted in informal settlements.

The consent order in United States Postal Service was no different than the terms of many informal Board settlements, and better than many non-Board settlements. It resolved the case without the cost and expense of a trial, and provided full relief — or if not something very close to it — to effectuate the purposes and policies of the Act. Many counsel for the General Counsel and unions would have settled this case on those terms anyway. By taking away a judge’s ability to enter into such a consent order, and instead requiring full relief, the Board is giving General Counsel and charging parties more leverage in determining whether cases settle and, if so, on what terms. This will result in more cases going to trial.