Case Information
‐ ‐ ag, ‐ ‐ ag Constellation Brands, U.S. Operations, Inc. v. NLRB
In the
United States Court of Appeals
for the Second Circuit A UGUST T ERM Nos. ‐ ag, ‐ ‐ ag
C ONSTELLATION B RANDS , U.S. O PERATIONS , I NC ., DBA W OODBRIDGE
W INERY Petitioner–Cross Respondent N ATIONAL L ABOR R ELATIONS B OARD Respondent–Cross Petitioner T EAMSTERS L OCAL U NION 601,
Intervenor
Petitions review enforcement orders National Labor
Relations
A RGUED : A UGUST D ECIDED : N OVEMBER
Before: W ALKER C ABRANES L OHIER Circuit Judges
This case presents two questions. The first whether framework evaluating proposed bargaining units set forth in Specialty Healthcare & Rehabilitation Center Mobile (2011), unlawful. Under this framework, National Labor Relations Board (the “Board”) uses two step analysis determine whether union’s bargaining consists who share “community interests” does not arbitrarily exclude other employees. Several sister circuits recently approved this standard, but we yet opine this question. second question whether properly applied Specialty Healthcare framework in its order issue in this case.
We hold framework be valid, our sister circuits have, consistent with Court’s precedent. We conclude did not properly apply framework, however, decision order against Brands, U.S. Operations, Inc., d/b/a Woodbridge Winery. In approving petitioned collective unit, did analyze had meaningfully distinct members context outweigh similarities members.
Accordingly, we GRANT petition for review, DENY cross petition for enforcement, REMAND cause for further proceedings consistent record this matter opinion.
S HAY D VORETZKY (David Raimer, Willis J. Goldsmith, on brief ) Jones Day, Washington, DC, for Petitioner–Cross ‐ Respondent
G REG P. L AURO Attorney (Jennifer Abruzzo, Deputy General Counsel; John H. Ferguson, Associate General Counsel; Linda Dreeben, Deputy Associate General Counsel; Julie B. Broido, Supervisory Attorney, on brief ), Richard F. Griffin, Jr., General Counsel, National Labor Relations Board, Washington, DC, Respondent–Cross ‐ Petitioner.
M ATTHEW J. G INSBURG AFL CIO, Washington, DC (James B. Coppess, AFL ‐ CIO, Washington, DC; Robert Bonsall, Beeson, Tayer & Bodine, Sacramento, CA, brief ), Intervenor
J OSÉ A. C ABRANES , Circuit Judge :
This case presents two questions. The first whether framework evaluating proposed bargaining units set forth in Specialty Healthcare & Rehabilitation Center Mobile , 357 934 (2011), unlawful. Under this framework, National Labor Relations Board (the “Board”) uses two step analysis determine whether union’s consists who share “community interests” does not arbitrarily exclude other employees. Several sister circuits recently approved this standard, but we yet opine this question. [1] second question properly applied Specialty Healthcare framework its order issue in this case.
We hold Specialty framework be valid, our sister circuits have, consistent Court’s precedent. We conclude, however, did not properly apply decision order against Brands, U.S. Operations, Inc., d/b/a Woodbridge Winery (“Constellation”). In approving unit, did analyze whether employeеs had meaningfully distinct from members for context collective outweigh similarities with members.
Accordingly, we GRANT petition for review, DENY cross petition enforcement, and REMAND cause further proceedings consistent with record this matter and opinion.
BACKGROUND owns operates Woodbridge Winery
California, which employs about managers production maintenance employees. Its employees divided into various departments. This case concerns cellar operations department, which organized into two subgroups: “outsider cellar” with employees “barrel” emрloyees. parties dispute “outside cellar” form group sufficiently distinct “barrel” (as well from Constellation’s other employees) they may treated separately purposes under Section National Labor Relations Act (“NLRA”).
certification a bargaining falls largely to the Board’s Regional Directors (“RDs”), who appointed by the General Counsel and approved the Board, and to hearing officers the regional offices, who report tо the RDs. Parties seeking to determine whether a particular labor organization has majority support a workplace submit a petition for an election to Board’s regional office. Where parties do agree on an appropriate bargaining unit, a hearing officer will conduct a representation hearing to “determine appropriate purposes collective bargaining, to investigate and provide hearings, and determine a question representation exists, to direct an election take secret ballot . . . certify results thereof.” Based on hearing officer’s report, will decide petition and, if warranted, direct election prescribe its procedures. Although *7 parties the right appeal the RD’s decision a three member panel the Board, the Board’s review discretionary and granted only in limited circumstance. Following review, elections are held RD may certify results.
On September 2, 2014, Teamsters Local Union (the “Union”) filed a petition seeking represent Constellation’s outside cellar employees a unit. objected, arguing an appropriate should encompass all production maintenance or, a minimum, all cellar operations employees. Following a hearing, RD decided in favor Union directed an election be held. In determining Union’s outside cellar was appropriate, applied standard. On February a three member panel Board (Chairman Pearce, Member Hirozawa, Member McFerran) denied Constellation’s request review RD’s decision, stating *8 Constellation had “raise[d] no substantial issues warranting review.” Special App. 4.
In the Board ‐ ordered election, the outside cellar voted 31–13 to unionize certified the Union the ‐ representative those employees. Following usual procedure for contesting validity union election, Constellation refused bargain with Union, then filed an unfair labor ‐ practice charge. On July 29, 2015, three ‐ member Board panel granted General Counsel’s motion for summary judgment concluded Constellation had violated NLRA by refusing bargain. Constellation subsequently review decision, filed cross petition enforcement.
JURISDICTION
While both parties agree we jurisdiction, we nonetheless consider issue independently. The had *9 jurisdiction over the original petition under U.S.C. § 160(a)–(c), empowers the Board to prevent unfair labor practices. Since is a New York corporation and transacts business within this Circuit, we have jurisdiction over the petition review and the cross petition enforcement under U.S.C. § 160(f). U.S.C. § provides, 160(a)–(c) in relevant is part: “The Board empowered, as hereinafter provided, to prevent any person from engaging in any unfair labor practice (listed in section of this title) affecting commerce. . . . If upon the preponderance of the testimony taken the Board shall be of the opinion any person named in the complaint engaged in or engaging in any such unfair labor practice, then the Board shall state findings of fact and shall issue and cause be served such person an order requiring such person to cease desist such unfair labor practice, and take such affirmative action including reinstatement of or without back pay, will effectuate the policies of this subchapter . . . .”
DISCUSSION
A. The Legality Framework threshold question presented whether we, along six our sister circuits, [12] should also adopt framework. “[W]e review legal conclusions ensure they a reasonable basis in law.” [13]
When considering petition proposed unit, RD has discretion approve any appropriate unit, just “ single most appropriate unit.” To guide discretion, traditionally asked members share “community distinct from their intеrests whole institution.” In clarified this traditional approach by introducing new, two analysis. made entered upon pleadings, testimony, proceedings set forth in such transcript.” ante note 1. NLRB v. Special Touch Home Care Servs., Inc. F.3d 292, 296–97 (2d Cir.
2009) (quotation marks omitted). Am. Hosp. Ass’n v. NLRB U.S. (1991). This discretion
derived U.S.C. § 159(b) states, in relevant part: “The shall decide each case whether, order assure fullest freedom in exercising rights guaranteed subchapter, appropriate purposes .” Id. Staten Island Univ. Hosp. NLRB (2d Cir. 1994).
“[I]n step one, the Board [ i.e. the RD] performs community of ‐ interest analysis determine whether the unit is appropriate; if the is found appropriate, in two [the party opposing certification] must demonstrate the employees it wishes include share an ‘overwhelming community of interest’ the included employees.” [16]
While the RD’s discretion in determining the appropriateness of broad, it not unlimited. Section 9(c) of the NLRA explicitly states “[i]n determining appropriate the extent which the employees organized shall not controlling.” long disfavored fractured units may arbitrarily exclude certain groups of could invite “gerrymandering” of among employees. *12 Today, it is well established under Board precedent that “the Board does approve fractured units, i.e. , combinations too narrow in scope or no rational basis.” [19] “any arbitrary act in selecting unit is subject to check review court.” Id.
For many years, presumed store ‐ wide plant ‐ wide units be appropriate over multiple representation units within an employer.
See, e.g.
,
Laurel Assocs., Inc., d/b/a Jersey Shore Nursing & Rehab. Ctr.
,
This Circuit has long held preference consolidating units. See, e.g. , Staten Island Univ. Hosp , (“We regard single ‐ facility presumption as kind rebuttable presumption was beyond dispute American Hospital. ”); accord NLRB Phoenix Programs N.Y., Inc ., F. App’x 168–69 (2d Cir. 2001) (summary order) (affirming determination employer failed rebut “single facility presumption”). Seaboard Marine, Ltd. N.L.R.B. (1999) maintained governing apprоach following decision 2011. See, e.g. A.S.V., Inc. N.L.R.B. No. (2014) (applying rejecting proposed unit “fractured” thus inappropriate); Odwalla, Inc. (2011) (applying find recommended was an inappropriate “fractured unit” further suggest that, even if smaller constituent part would constitute appropriate free standing unit, may
Certain interested groups argue that test essentially creates presumption favor of “micro” unions, causing undue proliferation of bargaining units make it difficult for employеrs to settle labor disputes arbitrarily exclude certain employees. In addition increased costs employers of administering multiple contracts benefit plans reconciling conflicting demands separate units, “micro” unions may also, interested groups argue, diminish rights of employees. These groups argue proliferation of units can allow one disrupt operations of enterprise with unique demands shared other employees. “Micro” unions can also make it more difficult for access new opportunities across units may diminish overall power nevertheless become inappropriate if additional inclusion who less community interest another than do employees). See Brief Amici Curiae Coalition Democratic Workplace, Chamber Commerce United States America, National Association Manufacturers, National Retail Federation, Retail Litigation Center, Inc., Brands v. NLRB No. ag (2d Cir. Dec. 16, 2015), ECF No. 46. Cont’l Web Press, Inc. NLRB (7th Cir. 1984)
(“[B]reaking up work force into many small units creates danger some them will be so small powerless it will be worth no one’s while organize them, event members these units will left out process.”). *14 labor creating units so small that they lack influence. [22] Outside groups also echo Constellation’s objections that departure from decades cases [23] and inconsistent with NLRA. [24]
In present case, Constellation asserts two objections test. First, it argues test impermissibly gives controlling weight extent employees already been organized, thereby depаrting past precedent and contravening statutory language NLRA. Under prior framework, argues, had determine had interests “sufficiently distinct from” those part “community interest” analysis. [25] Under , contrast, determination “sufficiently distinct interests” postponed until two, at point employer must show employees shared an “ overwhelming community interest” with presumptively appropriate group. This heightened showing, argues, makes it nearly impossible an employer resist unions’ efforts to gerrymander units.
This concern misplaced. Step Specialty Healthcare expressly requires evаluate several factors relevant “whether group sought were sufficiently distinct those other warrant establishment separate unit.” For instance, must consider “[w]hether are organized into separate department; have distinct skills training; have distinct job functions perform distinct work . . . ; are functionally integrated Employer’s other employees; distinct terms conditions employment; separately supervised.” Accordingly, it seems us does significantly redefine showing required party seeking approval establishing unit. Nor does it contravene Section 9(c) NLRA giving union organizers inappropriate degrеe control. *16 Constellation’s second argument against adoption of rule of is that Board failed to provide a reasoned explanation new standard. [29] This argument is also unpersuasive. Step of adopts verbatim “community of interest” test on which Board has long relied. Step two is a novel formulation called “overwhelming community interest” test, but its substance consistent earlier Board precedents imposed a heightened burden a party who urgеs Board add otherwise been deemed appropriate. Moreover, phrase “overwhelming community interest” was taken from decision United States Court Appeals District Columbia Circuit, itself purported summarize relevant Board precedents. One might question desirability approach. Yet it seems implausible claim Board decision, announced page opinion (exclusive dissent) borrows heavily from appellate precedent, invalid because it failed explain itself.
*17 In sum, has failed meet its burden showing that Specialty Healthcare framework is inconsistent NLRA meaningfully departs from Board’s past precedents.
B. Did Correctly Apply ? We now turn application framework case. In reviewing Board’s decision unit appropriateness, we mindful that our task is not substitute our judgment that Board. [32] is empowered determine is appropriate purposes [33] “select from those possible arrangements reaching determination.” [34] Although determination appropriate “will stand unless arbitrary unreasonable,” [35] we conclude misapplied at one. *18 1. Step One: “Community Interest” Constellation argues that Specialty Healthcare standard improperly rubber stamps union’s organizing efforts by presumptively approving petitioned ‐ for unit creating too high burden objecting party. We rejected that argument above precisely because Specialty Healthcare indeed requires consider, at step one, whether members have an interest “separate distinct” from all other employees. But merely reciting repeating standard cannot substitute analysis Specialty Healthcare demands.
The RD (whose decision declined review) did not make step determination required by Specialty Healthcare Although he аppropriately recited community interest standard, declared “employees share distinct characteristics,” Special App. did explain why those employees had “sufficiently distinct *19 those of other employees warrant the establishment of a separate unit.” Rather, RD based his step ‐ one determination his finding “that employees in that unit are readily identifiable group, such that there rational basis for grouping them together unit.” Special App. 32. Reciting legal does not substitute for analysis of differences between unit ‐ members other employees, as required by . Indeed, as of our sister circuits stated, very purpose of step one “to guard against arbitrary exclusions” no purchase context bargaining.
To sure, RD made number factual findings tend show outside cellar employees had distinct other employees. But he never explained weight relevance those findings. For instance, RD did not explain why some factual findings, seemed indicate presence distinct intеrests, *20 e.g. , “physically separate locations” “separate front line [and] immediate supervisors,” should have outweighed other findings similarities, e.g. , similar “job functions and duties,” evidence “interchange” “work[ing] together,” “identical skills and training requirements.” Special App. 44 n.20. To extent that the did provide such explanations, it did so only at step two, i.e. , only rebut a heightened showing share “ overwhelming community interest” presumptively appropriate for unit. This misapplication requires us deny petition enforcement.
Our sister circuits accepted based on understanding it requires ensure, at step one, not inappropriately “excluded [from unit] basis meager differences.” To properly apply framework, must analyze at facts presented to: (a) identify shared interests among members of petitioned ‐ unit, (b) explain why excluded employees have meaningfully distinct interests in context of collective bargaining outweigh similarities members. Merely recording similarities differences between employees does not substitute an explanation of how why these collective interests relevant support conclusion. Explaining why employees distinct interests context of necessary avoid arbitrary lines demarcation to avoid making step framework mere rubber stamp.
While RD has discretion approve “ appropriate unit, most appropriate unit,” he may exercise discretion only after finding, upon analysis, petitioner met its “prima facie” burden under framework. failed do so here. Nоr did exercise power review ensure new was being appropriately applied. Without critical first framework, burden would exclusively on employer prove absence distinctions. Such burden inconsistent with NLRA Board’s past precedent.
2. Step Two: “Overwhelming Community Interests” Constellation argues it should also prevail at step two Specialty Healthcare framework, known as “overwhelming community interests” test, which requires Constellation show “that there no legitimate basis upon exclude” barrel unit. We need reach question. Since failed perform requisite analysis one, decision order dated July against Constellation cannot stand.
CONCLUSION
To summarize, we hold follows:
(1) Board’s framework set forth determining unit’s appropriateness consistent NLRA past precedent. failed show essentially creates presumption favor “micro” unions inappropriately placing burden opposing party prove absence distinction— which, if true, would have been departure from past precedent inconsistent with NLRA.
(2) Adopting framework, we conclude misapрlied framework. It failed require proponent unit meet “prima facie” burden showing why excluded employees had distinct interests employees petitioned for context collective bargaining, is, (a) identifying shared interests among for (b) explaining why meaningfully distinct context outweigh similarities with members.
Accordingly, we GRANT petition review, DENY cross petition enforcement, REMAND cause further proceedings consistent record this matter opinion.
Notes
[1] Kindred Nursing Ctrs. E., LLC v. NLRB , F.3d 552 (6th Cir. 2013) (enforcing original case); accord FedEx Freight, Inc. v. NLRB , ‐‐‐ F.3d ‐‐‐ , WL (7th Cir. Oct. 2016); NLRB v. FedEx Freight, Inc. F.3d (3d Cir. 2016); Nestle Dreyer’s Ice Cream Co. v. NLRB F.3d (4th Cir. 2016) (rejecting challenge under National Labor Relations Act Administrative Procedure Act); Macy’s, Inc. v. NLRB F.3d (5th Cir. 2016); FedEx Freight, Inc. NLRB (8th Cir. 2016).
[2] U.S.C. § (laying out procedures resolves question representation directs election).
[3] See id. § 153(b) (“The . . . authorized to delegate to its regional directors powers . . . determine appropriate purpose .”); C.F.R. § 102.64 (2015) (describing conduct hearings before hearing officers); id. § 102.67 (concerning proceedings before RDs). While substantial power been delegated RDs, General Counsel, Presidential appointee whose nomination subject advice consent Sеnate, retains ultimate authority respect “the investigation charges issuance complaints” under NLRA. See U.S.C. § 153(d).
[4] id. § 159(c) (requiring petition filed seek approval unit).
[5] Id. § 153(b).
[6] C.F.R. § 102.67(d) (2015) (“The will grant request review only where compelling reasons exist therefor. [R]eview may granted only upon or more following grounds: (1) That substantial question law or policy raised because of: (i) [t]he absence of; or (ii) [a] departure from, officially reported precedent. (2) That regional director’s decision on substantial factual issue clearly erroneous record such error prejudicially affects rights party. (3) That conduct any hearing or any ruling made connection proceeding resulted prejudicial error. (4) That there compelling reasons reconsideration important rule policy.”).
[7] well settled practice challenging appropriateness refusing bargain with then defending against an unfair labor practice charge ground inappropriate. See, e.g., NLRB v. Ky. River Cmty. Care, Inc ., U.S. (2001) (“Because dirеct judicial review representation determinations unavailable, respondent sought indirect review refusing bargain union, thereby inducing General Counsel file unfair labor practice complaint under §§ 8(a)(1) 8(a)(5) [of NLRA].” (citation omitted)).
[8] Brands No. (2015).
[9] See, e.g. Taylor Rogich n.2 (2d Cir. 2015).
[11] U.S.C. § 160(f) provides: “Any person aggrieved by a final order of granting or denying in whole or in part the relief sought may obtain review of such order in any United States court of appeals in circuit wherein unfair labor practice in question was alleged been engaged in or wherein such person resides or transacts business filing in such court written petition praying order of be modified or set aside.”); see also Boire Greyhound Corp. U.S. 476–79 (1964). In addition, U.S.C. § 159(d) stipulates record findings made in underlying representation proceeding part of record before this Court. It provides: “Whenever an order Board…is based in whole or in part upon facts certified following investigation pursuant subsection (c) this section there petition enforcement or review such order, such certification record such investigation shall be included in transcript entire record required be filed under subsection (e) or (f) section title, thereupon decree court enforcing, modifying, setting aside whole or part order shall
[16] Nestle Dreyer’s (emphasis omitted) (quoting 944).
[17] U.S.C. § 159(c)(5).
[18] Francis Biddle, architect of NLRA, the second Chairman of the National Labor (the predecessor Board), later, Attorney General United States, was vocal opponent fractured units during Senate committee hearings prior passage NLRA: “If themselves could make decision without proper consideration elements should constitute appropriate units they could any given instance defeat practical significance majority rule; and, breaking off into small groups, could make it impossible employer run his plant.” Hearings S. Before S. Comm. On Educ. & Lab. 74th Cong. (1935), (statement Francis Biddle), reprinted NLRA L EGISLATIVE H ISTORY 1458–59. He further recognized then there was always risk “of your gerrymandering carrying out purposes Board,” but noted
[22] NLRB Purnell’s Pride, Inc. , 1153, 1156 (5th Cir. 1980) (“[T]he designаtion small unit[s] exclude[] common skills, attitudes, economic may unnecessarily curtail union’s power may generate destructive factionalization fighting among employees.”).
[23] See, e.g. , ante notes (discussing historical preference employer wide units opposition fractured units); but see, e.g. Montgomery Ward & Co. N.L.R.B. (1964) (“[T]he held appropriateness overall does establish smaller inappropriate.”).
[24] U.S.C. § 159(b), (c)(5).
[25] See, e.g. Wheeling Island Gaming, Inc. (2010).
[26] Nestle Dreyer’s at (quoting N.L.R.B. at 944).
[27] Id. (brackets internal quotation marks omitted).
[28] (emphases added) (internal quotation marks omitted).
[29] See Serv. Emps. Int’l Union, Local 32BJ v. NLRB F.3d 435, (2d Cir. 2011) (“Where departs prior interpretations Act without explaining why departure necessаry appropriate, will exceeded bounds discretion.” (internal quotation marks omitted)).
[30] See Allied Chem. & Alkali Workers, Local Union No. v. Pittsburgh Plate Glass Co., Chem. Div. U.S. 172–73 (1971); Kalamazoo Paper Box Corp. 137.
[31] Blue Man Vegas, LLC NLRB 421–23 (D.C. Cir. 2008).
[32] Universal Camera Corp. v. NLRB , U.S. (1951) (“Congress merely made it clear reviewing court barred setting aside decision when it cannot conscientiously find evidence supporting decision substantial .”; see also Banknote Corp. Am. NLRB F.3d (2d Cir. 1996).
[33] U.S.C. § 159(b).
[34] Staten Island Univ. Hosp. F.3d at 455.; see also Universal Camera Corp. U.S. 488.
[35] Staten Island Univ. Hosp. 455.
[36] Constellation argues test created new legal standard. By deferring analysis other employees were unjustifiably until two, opposing party must now show excluded share “ overwhelming community interests” (not merely “community interests”). This higher showing, contends, violates Section 9(c) NLRA giving controlling weight extent already been organized. counters “clarified—rather than overhauled—its determination analysis.” Nestle Dreyer’s 500.
[37] 942.
[38] Nestle Dreyer’s F.3d at (internal quotation marks omitted).
[39] While RD purported identify differences between members petitioned ‐ other employees one, language was little more than boilerplate. It seems highly unlikely, example, only employees ‐ cellar “unlike sought Employer must demonstrate skills lower ‐ level job classifications before moving up higher level job classifications within department,” claims. Special App. 33. It seems implausible non cellar need “demonstrate skills” before being promoted. RD’s remaining findings differences similarly conclusory.
[40] Nestle Dreyer’s 499.
[41] cannot recite legal standard summarize factual record without any intervening explanation demonstrate it has performed analysis demanded its own caselaw. See, e.g. , Long Island Head Start Child Dev. Servs. v. NLRB , F.3d 254, 257–58 (2d Cir. 2006)(“[T]he agency must examine relevant data articulate satisfactory explanation action including rational connection between facts found choice made.” (quoting Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co. U.S. (1983)); see also New England Health Care Emps. Union F.3d (2d Cir. 2006) (“[W]e may not supply reasoned basis agency’s action agency itself given .” (internal quotation marks omitted)).
[42] Nestle Dreyer’s F.3d (internal quotation marks omitted); accord FedEx Freight 442–43.
[43] Cf. FedEx Freight F.3d at (requiring analysis “similarities between employees their interests were sufficiently distinct from other employees”); Staten Island Univ. Hosp. F.3d (describing determination as turning finding “the degree share community distinct their interests whole institution”).
[44] Staten Island Univ. Hosp. (citation omitted).
[45] (internal quotation marks omitted).