In a 2-1 decision, the Eleventh Circuit Court of Appeals (the “Eleventh Circuit”) largely upheld the National Labor Relations Board’s (the “Board”) decision that an automobile manufacturer violated the National Labor Relations Act (the “Act”) by 1) maintaining an overly broad rule prohibiting solicitation and distribution and 2) prohibiting employees not on working time from distributing union literature in its mixed-use atrium. Mercedes-Benz U.S. International, Inc. v. NLRB, Case No. 15-10291 (11th Cir. October 3, 2016). The Eleventh Circuit, however, reversed the Board’s conclusion that the automobile manufacturer unlawfully barred distribution of union literature in its team centers, finding that the Board engaged in a faulty mixed-use analysis and ordered an overly broad remedy.

The automobile manufacturer maintained a rule that prohibited solicitation and/or distribution of non-work related materials during work time or in working areas. The Board found this rule presumptively unlawful because it could reasonably be read to prohibit solicitation in work areas by employees not on working time. The Board also found that the automobile manufacturer failed to rebut the presumption of unlawfulness even though it “generally allowed employees to discuss the union in the workplace” and “truly sought to be neutral” toward the union. The Eleventh Circuit agreed, concluding that the automobile manufacturer’s attitude of neutrality did not “clearly convey” its intent to permit protected solicitation in work areas by employees not on working time. Although it affirmed the Board’s finding, the Eleventh Circuit explicitly rejected the General Counsel’s argument that the “mere maintenance” of an overly broad non-solicitation policy violates the Act without regard to an employer’s communications permitting protected solicitations.

The Eleventh Circuit also affirmed the Board’s finding that the automobile manufacturer violated the Act when it reprimanded two employees for distributing handbills in the atrium even though the automobile manufacturer subsequently rescinded the reprimand and informed the employees that it would permit distribution in the atrium. Before the administrative law judge, the automobile manufacturer argued that any interference with the employees’ rights under the Act was de minimis because it was corrected within hours. On appeal to the Eleventh Circuit, however, the employer argued that the conclusion that the atrium was a mixed-use area was erroneous. The Eleventh Circuit declined to consider this argument because the automobile manufacturer waived it by failing to raise it before the Board.

The appellate court, however, held that the Board erred in concluding that the automobile manufacturer unlawfully barred employees from distributing literature in one of its team centers and compounded its error by imposing its remedial order on all nineteen team centers at the plant. The manufacturer’s team centers, the majority of which are located adjacent to the production line, serve several functions, including offices for line-level managers, observation posts for engineers and quality control personnel, “second offices” for human resources staff and upper management, and rooms for pre-production meetings. The team centers also are equipped with refrigerators, microwaves, and picnic tables, and employees occasionally use the team centers during shift and meal breaks. Based on evidence pertaining to one team center, the administrative law judge concluded, and the Board agreed, that all of the team centers are mixed-use areas, such that the automobile manufacturer could not prohibit distribution of union literature. The Eleventh Circuit disagreed with both the Board’s analysis and its remedy.

Reviewing Board and federal court precedent, the Eleventh Circuit faulted the Board for failing to recognize the difference between “converted” and “permanent” mixed-use areas. The appellate court explained that when a production area is converted to a non-work area (e.g., during lunch), an employer cannot prohibit distribution during the non-work period. “This is the essence of the distinction between converted mixed-use areas and permanent mixed-use areas,” the Eleventh Circuit stated. The court concluded that the Board erroneously treated the team center as a permanent mixed-use area without making the requisite findings as to the volume and nature of work and non-work activity. Noting that Board precedent may support a finding that the team centers were converted mixed-use areas during certain non-work times, the Eleventh Circuit remanded the case for the Board to consider whether the evidence supports such a finding. The Eleventh Circuit also found the Board’s remedy of requiring the automobile manufacturer to cease and desist prohibiting the distribution of literature in all nineteen team centers was overly broad “by a factor of 19,” as the Board considered evidence pertaining to one team center only.

Judge Martin dissented from the majority opinion on the grounds that “[t]he Board does not impose this distinction [between converted and permanent mixed-use areas] on its factfinders” and that it was beyond the court’s “institutional role to create these categories and require the Board to apply them.”

The United States Court of Appeals for the District of Columbia Circuit issued a scathing rebuke to the National Labor Relations Board for “abusive tactics and extremism” and ordered the Board to pay an employer nearly $18,000 in legal fees incurred due to the Board’s “bad faith litigation” in Heartland Plymouth Court MI, LLC v. NLRB, No. 15-1034, decided September 30, 2016.

The Board sued employer Heartland on the theory that the employer unlawfully refused to bargain on a matter allegedly within the scope of a collective bargaining agreement without a “clear and unmistakable” waiver. D.C. Circuit precedent has consistently rejected that theory, regarding the contents of a CBA to be a question of “contract coverage.” Heartland appealed the Board’s adverse order to the D.C. Circuit in 2013. That decision was held in abeyance pending the Supreme Court’s ruling in NLRB v Noel Canning. When the Supreme Court found the recess appointments of two Board members unconstitutional, the Board set aside its order against Heartland. A new Board panel readopted its prior order. Heartland appealed the order again.

Rather than attempting to transfer the appeal to the Sixth Circuit — which embraces the Board’s “clear and unmistakable” waiver policy and covers Michigan where the conduct underlying the dispute occurred — the Board doubled down on its challenge to the D.C. Circuit’s precedent and cross-petitioned for enforcement in that Court. “In lieu of its legitimate options,” the D.C. Circuit wrote, “the Board chose obstinacy.”

Worse, in a responsive brief filed late in the litigation, the Board for the first time asserted a policy of “nonacquiescence,” claiming a prerogative to “stake out its own position contrary” to any circuit, or all circuits. The D.C. Circuit was unimpressed, characterizing this as the Board’s “general policy of flouting any circuit’s NLRA interpretation with which the Board disagrees.” Noting that “nonacquiescence is justifiable only as a means to judicial finality, not agency aggrandizement,” the Court observed that the Board not only declined to transfer the case to the friendly Sixth Circuit, but also had steadfastly refused to seek certiorari review in the Supreme Court. This tactic, the Court observed, amounted to “an evasion of finality in the name of hegemony.”

In principle, nonacquiescence allows the Board to oppose adverse circuit court decisions and bring national labor law questions to the Supreme Court for resolution, thus achieving a uniform and orderly administration of the NLRA. But proper nonacquiescence is justifiable only as a means to judicial finality, where the agency preserves its arguments against adverse precedent to preserve them for Supreme Court review. Far from pursuing this goal, the D.C. Circuit observed, the Board’s history reveals “its primary goal is . . . to see its interpretation of the federal labor laws prevail in as many cases as possible, rather than to change contrary law in particular circuits or . . . serve as a percolator for the Supreme Court.” Thus, the Board’s nonacquiescence argument in this case amounted to an attempt to “make legal contentions not warranted by existing law and supported by no argument for modifying, reversing, or establishing new law.” This position, the Court declared, is “intolerable.” Further, the Board’s choice to “pretend” that its Order did not conflict with the Court’s precedent amounted to a “lack of candor” and was “nonsensical.”

In the most forceful passage of its decision, the Court excoriated the Board for a “lack of candor,” and for this “obstinacy” that “forced Heartland to waste time and resources fighting for a freedom the Board knew our precedent would provide.” The Board’s conduct, the D.C. Circuit observed, was clearly intended to chill opposition to the Board:

It is clear enough that the Board’s conduct was intended to send a chilling message to Heartland, as well as others caught in the Board’s crosshairs.

Thus, it held an award of fees to Heartland was justified, and left no doubt as to its view of the Board’s conduct:

We recognize the Board’s unimpeded access to the public fisc means these modest fees can be dismissed as chump change. But money does not explain the Board’s bad faith; “the pleasure of being above the rest” does. See C.S. Lewis, MERE CHRISTIANITY 122 (Harper Collins 2001). Let the word go forth: for however much the judiciary has emboldened the administrative state, we “say what the law is.” Marbury, 5 U.S. (1 Cranch) at 177. In other words, administrative hubris does not get the last word under our Constitution. And citizens can count on it.

This is not the first time a Circuit Court has awarded attorneys’ fees against the Board for asserting “nonacquiescence” on an issue the court had already decided — but Heartland highlights the Board’s increasingly aggressive agenda to trample legitimate opposition from employers. And in an era of increasing regulation by administration, reiterates firm judicial limitations thereon. Time will tell whether the Board heeds the clear warning of the Court.