Quicken Loans, Inc. v. National Labor Relations Board
2016 U.S. App. LEXIS 13778
| D.C. Cir. | 2016Background
- Quicken Loans required mortgage bankers to sign an employment agreement containing a broad Confidentiality Rule (prohibiting disclosure of “non-public” business and personnel information, including names, addresses, phone numbers, rosters, handbooks, personnel files) and a sweeping Non‑Disparagement Rule (forbidding public criticism of the company, its products, policies, officers, or employees).
- Lydia Garza, a former mortgage banker who later worked for a competitor, filed an unfair labor practice charge with the NLRB alleging those rules violated Section 7 rights under the NLRA; the Regional Director filed a complaint.
- An NLRB ALJ excluded evidence about Garza’s subjective understanding of the agreement and certain company recruitment/internal‑website practices, then found both rules violated Section 8(a)(1) by chilling Section 7 activity and ordered rescission.
- The Board affirmed the ALJ on the Non‑Disparagement Rule and limited the remedy for the Confidentiality Rule to rescinding the portions covering personnel information; it left the ALJ’s evidentiary rulings intact.
- The D.C. Circuit reviewed whether the rules reasonably tend to chill Section 7 activity and whether the ALJ’s evidentiary exclusions were an abuse of discretion.
Issues
| Issue | Plaintiff's Argument (Quicken) | Defendant's Argument (NLRB) | Held |
|---|---|---|---|
| Whether Confidentiality Rule (as to personnel info) violates Section 7 by chilling concerted activity | Rule is reasonable to protect proprietary/confidential business information; employees didn’t actually construe or rely on it to prohibit Section 7 activity | Rule’s blanket prohibition on personnel lists, contact information, handbooks, and personnel files would reasonably be read to bar core Section 7 activity (sharing names, wages, contact info) | Confidentiality Rule (as applied to personnel information) unlawful; Board may excise offending language and leave other proprietary protections intact |
| Whether Non‑Disparagement Rule violates Section 7 by restricting protected criticism and concerted protest | Clause points employees to internal complaint procedures and permits litigation forum clauses; narrow exception for governmental statements shows intent to allow required disclosures | Rule’s broad ban on public criticism (including online, anonymous speech) would reasonably be read to forbid protected concerted criticism, protests, or outreach to third parties | Non‑Disparagement Rule unlawful and must be rescinded |
| Whether exclusion of evidence about Garza’s subjective understanding and company recruitment/internal website was reversible error | Excluded evidence (Garza’s subjective beliefs, whether she read the agreement, recruitment and internal posting practices) was relevant to whether employees actually construed the rule and to narrow its impact | Governing test is objective: whether a reasonable employee would construe the rule to chill Section 7 activity; subjective evidence or lack of enforcement is irrelevant and non‑probative | Exclusion was not an abuse of discretion and was not prejudicial |
Key Cases Cited
- Beth Israel Hospital v. NLRB, 437 U.S. 483 (1978) (Section 7 protects employee communication about collective action and organizing)
- Eastex, Inc. v. NLRB, 437 U.S. 556 (1978) (Section 7 protects employees seeking to improve terms through channels outside the employer relationship)
- Adtranz ABB Daimler‑Benz Transp. v. NLRB, 253 F.3d 19 (D.C. Cir. 2001) (test whether rules reasonably tend to chill Section 7 activity)
- Guardsmark, LLC v. NLRB, 475 F.3d 369 (D.C. Cir. 2007) (facial and reasonable‑interpretation analyses; mere maintenance of rule can violate NLRA)
- Cintas Corp. v. NLRB, 482 F.3d 463 (D.C. Cir. 2007) (objective inquiry: whether employees would reasonably construe rule to prohibit Section 7 activity)
- International Union of Electrical, Radio & Machine Workers v. NLRB, 502 F.2d 349 (D.C. Cir. 1974) (employer must provide employee list/address info as necessary for Section 7 rights)
- Frankl v. HTH Corp., 693 F.3d 1051 (9th Cir. 2012) (board decision on confidentiality of employee information enforced)
- Flex Frac Logistics, LLC v. NLRB, 746 F.3d 205 (5th Cir. 2014) (confidentiality rules forbidding discussion of wage information violate NLRA)
- Ridgley Manufacturing Co. v. NLRB, 510 F.2d 185 (D.C. Cir. 1975) (memorizing employee names/timecards to contact re: union representation is protected activity)