Last week, in Ozark Auto. Distribs., Inc. v. NLRB, the D.C. Circuit rejected the National Labor Relations Board’s attempt to enforce a bargaining order against an employer who had refused to bargain with a newly certified union. The court found that during the post-election proceedings, the NLRB improperly revoked the employer’s subpoenas which sought documents concerning whether the union could be held responsible for pre-election threats to voters. The court ruled that the NLRB used “flawed” reasoning and failed to adequately balance employees’ confidentiality interests against the company’s need for the requested information.

Background on the Dispute

Ozark Automotive Distributors is a California-based parts retail distributor that does business as O’Reilly Auto Parts. In 2010, a Teamsters Local filed a petition seeking to represent the company’s drivers. Following a close election in which the union prevailed by a 17-14 vote, the company filed objections to the election claiming that employees acting as union agents had engaged in pre-election threats, harassment, coercion and appeals to racial prejudice which warranted setting the election aside.

During the objections proceedings, the company subpoenaed documents from the union and the four alleged union agents. The subpoenas requested several categories of documents, including records of phone conversations between the union and the employees whom the company claimed were acting as union agents and had engaged in misconduct. The union moved to revoke the subpoenas and, without reviewing any of the responsive documents, the NLRB hearing officer granted the request on the basis of protecting employee privacy. The hearing officer subsequently found in favor of the union and recommended that the NLRB overrule the company’s election objections. The company then filed exceptions to the hearing officer’s decision.

The NLRB adopted the hearing officer’s findings and recommendations and certified the union as the employees’ bargaining representative. In ruling in favor of the union and ordering the employer to bargain with the newly certified union, the NLRB found that the interest of employees in keeping their union activity confidential was an “important aspect” of union organizing. In contrast, the company’s interest in obtaining the subpoenaed documents was not “paramount.” Thus, the NLRB concluded that the hearing officer had properly revoked the company’s subpoenas. To obtain judicial review of the NLRB’s decision, the company subsequently refused to bargain with the newly-certified union.

Court Rejects NLRB’s Flawed Reasoning

On appeal, the court found that the NLRB’s reasoning was “flawed”, and that it failed to adequately balance employees’ privacy interests against the company’s countervailing interest in the requested documents. The company’s subpoenas requested relevant information “bearing on the question whether several of its employees who supported the union had actual or apparent authority to act on the union's behalf.” If the employees had such authority, their misconduct would have been attributable to the union, and the company’s burden in seeking to overturn the election would have been lower.

The court noted that disclosing some of the requested documents would not have compromised employee confidentiality. And to the extent that others might arguably have done so, the documents could have easily been redacted to protect individual employees. Yet, both the hearing officer and the NLRB failed to consider either of these possibilities as an alternative to outright rejecting the subpoenas. In the court’s view, this failure was even more inexcusable based on the fact that this course of action is spelled out in the NLRB’s own guidance document for hearing officers.

Due to these fundamental errors in the NLRB’s decision, the court refused to enforce the NLRB’s bargaining order. The court remanded the case to the NLRB for further proceedings. On remand, the employer will have the opportunity to make its case that the election results were tainted and should be set aside.