Landry's Inc. v. Flores: NLRB Ruling Bucks Trend, Hints that Non-Infringement Provisions in Employee Handbooks may be Lawful

by Neal, Gerber & Eisenberg LLP

On June 26, a National Labor Relations Board (NLRB) judge ruled that Landry’s Inc., parent of Bubba Gump Shrimp Co., did not violate federal labor laws with its policy governing employees’ use of social media. Administrative Law Judge Gerald A. Wacknov’s non-precedential ruling in Landry’s Inc. v. Flores, Case No. 32-CA-118213, if ratified by the full NLRB, may help employers in implementing policies to protect their intellectual property, as the ruling seemed to give tacit approval to a provision in Landry’s policy forbidding employees from infringing Landry’s trademarks or other intellectual property rights. Although Judge Wacknov did not rule specifically on the policy’s non-infringement provision, the opinion implied that the provision was lawful despite the fact that the policy did not specify that employees were free to make non-infringing use of Landry’s marks. Judge Wacknov’s ruling is potentially noteworthy in that it runs counter to a series of recent NLRB decisions striking down elements of employers’ social media policies.

At issue was whether Landry’s social media policy could reasonably be construed by employees to restrict activities covered by Section 7 of the National Labor Relations Act (NLRA), which protects employees’ right to form and join labor organizations and to bargain collectively. Flores, a former Bubba Gump Shrimp Co. server, was terminated after making negative statements about her employment on a social media website. The NLRB Regional Office determined that Flores’ conduct was not protected by Section 7 but that Landry’s social media policy at the time of her termination was unlawful. Landry’s employee handbook, revised in May 2012, urged employees not to post on social media any company or job-related information that “could lead to morale issues in the workplace or detrimentally affect the Company’s business.” The Regional Office found that employees would reasonably construe such language to forbid protected activities.

The policy further provided that without prior approval, “no employee shall use any words, logos, or other marks that would infringe upon the trademark, service mark, certification mark, or other intellectual property rights of the Company or its business partners.” The Regional Office argued that Landry’s employees had no legal training and could not be expected to distinguish forbidden infringing use of Landry’s marks from non-infringing use. Therefore, the Regional Office determined the provision to be unlawfully broad because it could cause employees to refrain from all use of Landry’s marks, even non-infringing use while engaged in protected Section 7 activities. Landry’s revised its policy again in October 2013, making substantial changes but leaving the non-infringement provision intact.          

Disagreeing with the Regional Office, Judge Wacknov ruled that it would not serve the purpose of the NLRA to find Landry’s policy in violation because (1) the policy from the May 2012 version of Landry’s employee handbook was no longer in effect and (2) there was no evidence that any of the challenged social media provisions of that version of the policy had been enforced against any employees. Therefore, even if any of the expired provisions violated the NLRA, sanctions against Landry’s at this point would be punitive rather than serving the remedial purpose of the NLRA.

Judge Wacknov did not reach the question of whether Landry’s non-infringement provision was lawful, noting that although the current text of the clause is identical to the challenged language, it may be perceived differently in light of the other policy revisions not before him. However, he described Landry’s provision as similar to a policy that was found lawful in an advice memorandum in Cox Communications, Inc., Case No. 17-CA-087612, Oct. 19, 2012. There, the provision forbade employees from “infring[ing] on Cox logos, brand names, taglines, slogans, or other trademarks” and instructed employees to cite copyrighted works identified in online communications. The NLRB General Counsel found that unlike a blanket provision against any online use of an employer’s trademarks or copyrighted material, even in a non-infringing manner (see, e.g., Rehabilitation Institute of Chicago, Case No. 13-CA-66487, Advice Memorandum of Dec. 20, 2011), “this rule does not prohibit the use, but merely urges employees to respect the laws.” Therefore, Cox’s employees could not reasonably understand the provision to restrict Section 7 activity. 

Landry’s policy, in Judge Wacknov’s view, would “cause a conscientious employee to carefully evaluate its applicability to union-related or concerted activity-related media postings.” The employee would have to determine whether such postings contain infringing use of Landry’s intellectual property. Despite the fact that the provision does not define “infringement” or provide examples of permissible non-infringing use, Wacknov declined to strike it down as overly broad. Considered along with Wacknov’s assertion that the provision is similar to the lawful clause in Cox Communications, this suggests tacit approval of social media policies that simply forbid employees’ infringing use without providing further guidance. If such provisions are permitted by the NLRB, it would give employers more latitude in implementing social media policies to protect their intellectual property. However, employers should note that such policies must not be promulgated in response to union activity or applied in a way that restricts employees’ rights under Section 7 of the NLRA.

If the ruling is ratified by the full NLRB, it would provide a more employer-friendly precedent than the Board’s holdings in recent social media policy cases. In Costco Wholesale Corporation, 358 NLRB No. 106 (NLRB 2012), for example, the Board struck down Costco’s policy prohibiting any statements that would “damage the Company, defame any individual or damage any person’s reputation.” In Karl Knauz Motors, Inc., 358 NLRB No. 164 (Sept. 28, 2012), the Board upheld the decision of the Administrative Law Judge who concluded that an auto dealership’s decision to discharge a salesperson for an inappropriate Facebook posting did not violate the NLRA. To the extent that Judge Wacknov’s ruling represents a departure from this trend, it bears monitoring. Neal Gerber Eisenberg will continue to update clients on any further developments in precedent affecting employers’ social media policies.

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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