Last year the NLRB demonstrated an increased willingness to award negotiation costs as a remedy for bad faith bargaining in cases that are far less egregious than those where the remedy historically was given. Hospital of Barstow, Inc., 361 NLRB No. 34 (2014); Fallbrook Hospital, 360 NLRB No. 73 (2014). On May 8, 2015, the D.C. Circuit Court of Appeals upheld the award of negotiating expenses in Fallbrook Hospital, finding under a clear abuse of discretion standard that the Board’s decision was “amply supported by substantial evidence in the record and has a rational basis in the law.” Fallbrook Hospital Corp. v. NLRB, Case No. 14-1056 (D.C. Cir. May 8, 2015).
The Board has held that “[i]n cases of unusually aggravated misconduct . . . where it may fairly be said that a respondent’s substantial unfair labor practices have infected the core of a bargaining process to such an extent” that traditional remedies will not eliminate their effects, an award of negotiation expenses is warranted to “make the charging party whole for the resources that were wasted because of the unlawful conduct, and to restore the economic strength that is necessary to ensure a return to the status quo ante at the bargaining table.” Frontier Hotel & Casino, 318 NLRB 857, 859 (1995) (emphasis added), enf’d in rel. part sub nom., Unbelievable, Inc. v. NLRB, 118 F.3d 795 (D.C. Cir. 1997). For example, in Pacific Beach Hotel, 356 NLRB No. 182 (2011), negotiation expenses were awarded in light of: bad faith bargaining (including but not limited to insisting on recognition, management rights and grievance proposals that gave the union no role in representing employees), discriminatory discharges, unilateral changes to working conditions, overbroad rules, illegal polling, an improper withdrawal of recognition, and failures to provide information.
Fallbrook Hospital was not Pacific Beach Hotel. In Fallbrook Hospital, the employer engaged in bad faith bargaining by: (i) refusing for the first 8 bargaining sessions to submit proposals or counterproposals until the union submitted an entire contract proposal; (ii) leaving 2 of 11 bargaining sessions early (one without explanation, the other because it considered a promoted union bargaining team member to be a member of management and thus ineligible to participate); (iii) declaring impasse, refusing to bargain, and leaving another session after 15 minutes given the union continued to have employees use union-provided and implemented assignment-despite-objection (ADO) forms to document unsafe situations; (iv) refusing to respond to union requests for bargaining dates after declaring impasse; (v) refusing to bargain over employees who were terminated; and (vi) refusing to respond to 1 of 12 information requests regarding one of the discharges (a request for 3 years of nurse disciplinary history, thus seeking what was arguably non-bargaining unit data).
Although the Administrative Law Judge hearing the case considered it a close call, she declined to award negotiation costs because the conduct was not as egregious as that warranting costs in prior cases. The Board, over Member Johnson’s disagreement, reversed, finding in 5 short paragraphs that the conduct had so infected the core of the bargaining process such that its effects could not be eliminated solely by the application of an affirmative bargaining order.
In enforcing the decision, the D.C. Circuit stated that it has no business second-guessing the Board’s judgment regarding remedies, and that its choice of remedies was entitled to a high degree of deference. The Court noted that there must be so gross an abuse of power as to be arbitrary before it would reverse a Board-ordered remedy. Here, the Court found no such abuse.
The Court nevertheless took 19 pages to explain how it was that the award was supported by the record and had a rational basis in law. The Court focused specifically on the characterizations made by the ALJ and the Board as to the employer’s actions, such that it was clear the employer had no intent to bargain, that it acted in an “obstinate and pugnacious manner,” that it put up “a series of roadblocks” to delay the bargaining, and that its attempts to challenge the Board’s certification (presumably by raising as an affirmative defense the propriety of the certification) made it clear it did not welcome the union. The Court made a point of noting that the “entire record” of the employer’s unfair labor practices was “quite extensive,” and that given this “litany of misconduct” showed the employer’s “deliberate attempts” to prevent any actual bargaining, the award of negotiation costs was supported by substantial evidence in the record.
Critically, the Court rejected claims that the decision was contrary to the law in that the employer’s conduct was not as egregious as that in prior decisions. The Court found that the Board did not set a particular bar for the award of negotiation expenses in prior decisions, but that its approach in each case is to weigh the facts to determine whether the remedy is appropriate to make the charging party whole for the resources wasted because of the unlawful conduct and to restore the economic strength necessary to return to the status quo ante at the bargaining table. In short, the Court noted that there are no per se rules regarding when reimbursement of negotiation expenses will be ordered.
The Court’s enforcement and, indeed, justification of the Board’s award gives the NLRB pretty much carte blanche to award costs in cases far less egregious than in the past. Employers need to take greater care to avoid missteps at the bargaining table or else face a potentially expensive remedial surprise.
How low will the Board lower the bar? Is there a point at which the courts will cry foul? Will unions be subject to the same loosened standards for their bad faith actions?