D.C. Circuit Says NLRB Must Explain Its Decision-Making

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Court Remands NLRB Decision for Failing to Distinguish Contrary Precedent

A shift in the political party at the White House generally means a corresponding shift in philosophy for the National Labor Relations Board (NLRB). Naturally then, the question many employers are asking is not “Will the NLRB swing to a pro-labor position?” but “How far will the pro-labor pendulum go?” Mercurial NLRB policy is, after all, nothing new. The agency’s five-member decision-making panel is typically comprised of three members aligned with the president’s political party. Following four years under a pro-business administration, employers are now bracing for the inevitable flip back under a president who has already pledged to be the “strongest labor president … ever.”

However, the D.C. Circuit’s decision in Davidson Hotel Co. v. NLRB offers some solace for employers fearing the Biden blues. In that case, the D.C. Circuit refused to enforce the NLRB’s bargaining unit determination because the agency failed to adequately distinguish relevant precedent cited by the employer. The decision serves as a strong reminder to the NLRB that it cannot ignore its own established precedent when rendering a decision, and that it must explain itself when departing from precedent that is contrary to its decision. Just because the board may disagree with its predecessors does not mean they can pretend their decisions did not exist.

What Happened

The union filed a petition at a full-service hotel seeking to represent a bargaining unit comprised of the hotel’s housekeeping and food and beverage employees but excluding the hotel’s front desk staff. A team of BakerHostetler attorneys, led by Partners Jay Krupin and Peter Fischer and assisted by Associate Michael Parente, argued that the petitioned-for bargaining unit was fractured and inappropriate under the NLRB’s traditional community-of-interest standard. The regional director agreed and dismissed the union’s petition.

The next day, the union filed two petitions seeking to represent the exact same employees: one petition for the food and beverage employees and one petition for the housekeeping employees. Despite the petitions’ covering the same employees, the regional director (and now interim NLRB general counsel) found the separate bargaining units were appropriate. In doing so, the union invited the NLRB to put form over substance by seeking to represent the very same unit of employees that had just been deemed inappropriate, but doing so with two separate filings that constituted nothing more than an administrative shuffling of the deck. The hotel declined to bargain with the union and appealed the decision to the D.C. Circuit.

The D.C Circuit refused to enforce the NLRB’s decision to certify the bargaining units, finding that the agency failed to distinguish “contrary Board precedents or the Regional Director’s first decision in this case.” Following the arguments of Partners Mark DeLaquil and Peter Fischer and Associates Renne Knudsen and Michael Parente, who worked on the appeal, the court ruled that the NLRB’s failure to distinguish prior cases was “fatal,” stating:

In addition, the Board failed to cite – let alone distinguish – a single contrary precedent even though Davidson cited several Board precedents that rejected separate units of hotel employees under similar circumstances. Despite that showing, there is no paragraph, sentence, citation, or footnote that distinguishes these decisions.

Takeaways

The case serves as a reminder that the NLRB must explain departures from current precedent and address relevant precedent when rendering its decision. As the court pointed out, this does not mean that the NLRB must distinguish every precedent, but “when faced with contrary precedent directly on point, the Board must distinguish it.”

Since the D.C. Circuit has jurisdiction over all NLRB decisions, employers should take comfort in the court’s admonishment of the NLRB’s failure to explain its reasoning and should know that abrupt changes in law without sufficiently explaining contrary precedent will receive a fair review upon appeal. NLRB decisions that lack reasoning and substance should be challenged, regardless of which way the political winds happen to blow.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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