Seyfarth Synopsis: On March 15, 2018, the Second Circuit Court of Appeals issued its decision in Novelis Corp., et al. v. NLRB, et al., upholding several unfair labor practices against Novelis Corp., but due to passage of time and changed circumstances, halting the National Labor Relations Board’s efforts to issue a Gissel bargaining order against the Company.

Background

In December 2013, aluminum manufacturer Novelis Corp. announced to employees at its Oswego, New York facility that they would no longer receive Sunday premium pay and that holiday and vacation days would no longer count towards overtime eligibility. In response, several employees began a union organizing campaign, and obtained union-authorization cards from a majority of eligible employees. In early January 2014, after declining the union’s request for voluntary recognition, Novelis restored Sunday and holiday pay.

In its efforts to resist organizing, the Company reminded employees that Novelis’ unionized plant in Quebec had closed while its plant in non-unionized Oswego continued to flourish. The Company also suggested that unionization would lead to loss of business.

Novelis narrowly prevailed in the February 2014 election by a vote of 287 to 273. After the election, pro-union employee Everett Abare posted a vulgar remark on Facebook complaining about his paycheck and criticizing those who did not vote for the union. In response, Novelis demoted Abare.

After a hearing, Administrative Law Judge Michael A. Rosas found Novelis committed numerous unfair labor practices. Specifically, the Company violated Section 8(a)(1) by restoring Sunday and holiday pay, removing union literature, interrogating employees, and prohibiting employees from wearing union paraphernalia. The ALJ also found that Novelis threatened employees with wage loss, plant closure, and more difficult working conditions if they were to unionize. Finally, the ALJ found Novelis violated Sections 8(a)(1) and 8(a)(3) by demoting Abare after his Facebook post. The ALJ recommended several forms of relief, but most notably, he recommended a Gissel bargaining order because, in his view, “traditional remedies … would be insufficient to alleviate the impact reasonably incurred by eligible unit employees[.]”

Novelis filed exceptions with the NLRB, seeking to introduce evidence of significant employee and management turnover since the alleged unfair labor practices, and arguing that changed circumstances rendered the bargaining order inappropriate. In August 2016, even though more than two years had passed, the Board adopted the ALJ’s findings and refused to reopen the record. Specifically, the Board noted that it “does not consider turnover among bargaining unit employees or management officials and the passage of time in determining whether a Gissel [bargaining] order is appropriate.”

Discussion

While the Court upheld the Board’s findings as to the unfair labor practices, it disagreed as to the appropriateness of the bargaining order. In NLRB v. Gissel Packing Co., 395 U.S. 575 (1969), the Supreme Court held that sufficiently serious violations of the NLRA can justify an order requiring an employer to bargain with a union that did not win an organizing election. However, the Second Circuit has “repeatedly held” that bargaining orders are a rare remedy which are warranted only when it is clearly established that traditional remedies such as a secret ballot rerun election cannot eliminate the effects of the employer’s past unfair labor practices. Thus, employees should not have unions imposed upon them when, by exercise of their own free will, they might choose otherwise.

The Court found that the Board failed to consider changed circumstances in determining whether to hold a rerun election. And the Court specifically disagreed with the Board’s contention that it should not consider turnover and passage of time in determining whether a bargaining order is appropriate. Indeed, “relevant circumstances must be measured at the time of the issuance of the bargaining order and not at the time of the election.”

Several key factors led the Court to hold that a bargaining order was not a suitable remedy: (1) Novelis took numerous remedial actions since committing the unfair labor practices; (2) two years had passed between the election and the Board’s decision, and a “substantial lapse of time casts doubt” on whether a majority of employees would choose to unionize; (3) the Board ignored key turnover in company leadership; and (4) the Board failed to consider significant employee turnover since the election. It was thus inappropriate to impose union membership absent a finding that a new, fair election more than three years after the violations was not reasonably possible.

Key Takeaways

This case is instructive for several reasons. First, employers should take caution when responding to organizing activity. Novelis committed several avoidable unfair labor practices through its union avoidance techniques. On the other hand, the case reaffirms that bargaining orders are extreme forms of relief, and should not be issued without careful consideration of whether changed circumstances render such an order inappropriate.