Case Information
*3 Before MURPHY, SMITH, and BENTON, Circuit Judges.
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MURPHY, Circuit Judge.
The International Brotherhood of Teamsters locals in Charlotte, North Carolina
and Croydon, Pennsylvania petitioned the National Labor Relations Board (NLRB)
seeking to represent collective bargaining units including both city and road drivers
who work at terminals operated by FedEx Freight, Inc. FedEx proposed that the units
should also include the dockworkers at the terminals. In considering the proposal the
NLRB regional director applied a two step analysis from Specialty Healthcare and
Rehabilitation Center of Mobile,
FedEx now petitions for review of the Board's orders forcing it to bargain with the unions, arguing that the Specialty Healthcare standard violates the National Labor Relations Act, our own circuit law, and the Administrative Procedure Act. The Board petitions for enforcement of its orders. After full consideration, we deny the FedEx petitions and grant the Board's petitions for enforcement.
I.
FedEx operates freight terminals across the country. The terminal in Charlotte, North Carolina includes a main building containing a dock with 224 operational doors surrounded by a yard. FedEx employs approximately 115 city drivers, 106 road drivers, and 186 dockworkers at this terminal. The city drivers pick up and deliver freight to and from customers in the area while the road drivers transport freight between the terminal and other FedEx facilities. All these drivers are employed full time and must possess a commercial driver license and wear a uniform while driving. FedEx maintains separate seniority lists for each class of driver. While city drivers occasionally do road driving, road drivers rarely do city driving.
The dockworkers load and unload freight from the trailers and move freight around the dock using forklifts. This work takes place exclusively at the terminal. One hundred and fourteen of the 186 dockworkers are "supplemental" part time employees and are not on a seniority list. The other 72 dockworkers work full time. These individuals are part of a one year "dock to driver" program in which they work full time on the dock while taking a course to obtain their commercial driver license. Eighteen of the 221 drivers are graduates of this program. The full time dockworkers have a seniority list. The only requirement for employment as a dockworker is being at least 18 years of age; they are not required to wear uniforms.
Around one quarter of the drivers performed some dock work during the six month period surveyed in the stipulated record. City drivers also occasionally perform "hostling" work, which involves moving trailers and other equipment around the yard. Road drivers rarely do hostling work. Dock and hostling work take up a total of around 5% of the city drivers' time and less than 1% of the road drivers' time. Although dockworkers do not do any driving work, they use specialized trucks that do not require a commercial driver license to perform hostling work.
The terminal in Croydon, Pennsylvania (referred to as the East Philadelphia terminal) is smaller than the one in Charlotte, having only 51 operational doors. FedEx employs about 29 city drivers, 14 road drivers, and 19 part time supplemental dockworkers in East Philadelphia. Seven of these drivers are graduates of the dock to driver program. In comparison to the Charlotte terminal, more of the East Philadelphia dock work is done by drivers. Approximately 34% of the dock and hostling hours there are worked by drivers. Forty one of the 43 drivers performed dock or hostling work, and 13 of the drivers performed over 100 hours of dock work in six months.
The Teamsters locals in both cities petitioned the Board to represent bargaining units for both the city drivers and the road drivers. FedEx contended that such units were inappropriate because they did not include the dockworkers. After hearings, the NLRB regional director employed the Specialty Healthcare two step analysis and found that the proposed units were appropriate but that FedEx had not met its burden to show the dockworkers must be included in these units. FedEx filed requests for review of the regional director's decisions which the Board summarily denied. After the drivers in both cities voted to unionize, FedEx contested the certification of the bargaining units by refusing to bargain. See NLRB v. St. Clair Die Casting, LLC, 423 F.3d 843, 848 (8th Cir. 2005). The Board's general counsel filed refusal to bargain complaints against FedEx, and the Board granted the general counsel's motions for summary judgment and ordered FedEx to bargain with the unions. Now before us are petitions for review by FedEx and for enforcement by the Board. We have jurisdiction over the matter under 29 U.S.C. § 160(e), (f) because FedEx transacts business in this circuit. [1]
II.
The first question raised is whether FedEx preserved its challenges to the Specialty Healthcare framework. The Board argues that in the proceedings below FedEx failed to raise and preserve an argument against Specialty Healthcare. An objection to a Board decision cannot be heard unless it has been "urged before the Board, its member, agent, or agency" such that the Board has "received adequate notice of the basis for the objection." Nathan Katz Realty, LLC v. NLRB, 251 F.3d 981, 985 (D.C. Cir. 2001); 29 U.S.C. § 160(e).
FedEx stated in a footnote in each of its requests for review of the
determinations by the regional director that "Specialty Healthcare was decided
erroneously" for the reasons stated in Board member Hayes' dissent. See 357 NLRB
No. 83 at *15 (Hayes, dissenting). FedEx indicated that it would focus its briefing
assuming that the Board would not revisit its decision. FedEx later incorporated its
arguments in its responses to the Board's show cause orders in the refusal to bargain
cases. The Board was aware of the FedEx challenge to Specialty Healthcare, as
shown by member Johnson's concurring statements attached to the two summary
affirmance orders by the Board. By adopting member Hayes' dissent, FedEx signaled
that it might bring a challenge to the Specialty Healthcare framework if the Board
were to apply it. This gave the Board adequate notice that FedEx was objecting to
the regional director's use of the Specialty Healthcare framework. We therefore have
jurisdiction to review the FedEx claims. See Nathan Katz Realty,
The central question here is whether the Board's Specialty Healthcare analysis
comports with the National Labor Relations Act (the Act), our own case law applying
the Act, and the Administrative Procedure Act (the APA). Section 9 of the Act "gives
the Board the power to determine the unit appropriate for the purpose of collective
*7
bargaining." NLRB v. St. Clair Die Casting, LLC,
*8 Next, the Board described what would be required "to demonstrate that a proposed unit consisting of employees readily identifiable as a group who share a community of interest is nevertheless not an appropriate unit because the smallest appropriate unit contains additional employees." Specialty Healthcare, 357 NLRB No. 83 at *10 (emphasis in original). Merely showing that another unit is appropriate or even more appropriate than the proposed unit "is not sufficient." Id. Thus, when the proposed unit is shown to be prima facie appropriate under the community of interest test, a "heightened showing" by the party opposing the proposed unit is required. Id. at *11. The party favoring the larger unit must demonstrate "that employees in the larger unit share an overwhelming community of interest with those in the petitioned-for unit." Id. at 12–13.
On appeal, the Sixth Circuit enforced the Board's decision in Kindred Nursing
Ctrs. E., LLC v. NLRB,
A.
The Specialty Healthcare decision comports with section 9(b) of the Act and
our cases interpreting that statute. In the first step, the Board evaluates whether the
employees in the proposed unit are "readily identifiable as a group" and "share a
community of interest."
[W]hether the employees are organized into a separate department; have distinct skills and training; have distinct job functions and perform distinct work, including inquiry into the amount and type of job overlap between classifications; are functionally integrated with the Employer's other employees; have frequent contact with other employees; interchange with other employees; have distinct terms and conditions of employment; and are separately supervised.
Id. at *9 (quoting United Operations, Inc., 338 NLRB 123, 123 (2002)). These
factors parallel our previous description of the community of interest test. Cedar
Valley Corp.,
FedEx contends that Specialty Healthcare is a departure from precedent
because it examines the proposed unit in isolation, but the community of interest test
does in fact compare the interests and characteristics of the workers in the proposed
unit with those of other workers. The factors listed by the Board question whether
the employees in the proposed unit have characteristics that are "distinct" and
"separate," and compare the employees to "other employees."
FedEx suggests that the Board must consider other possible units before
determining whether the union's proposed unit is appropriate, but nothing in the Act
*10
prohibits the Board from focusing its analysis on the proposed unit. The language of
section 9(a) "implies that the initiative in selecting an appropriate unit resides with
the employees," and "suggests that employees may seek to organize 'a unit' that is
'appropriate'—not necessarily the single most appropriate unit." Am. Hosp. Ass'n v.
NLRB,
Healthcare that "[i]n deciding the appropriate unit, the Board first considers the
union's petition and whether that unit is appropriate." Overnite Transp. Co., 322
NLRB 723, 723 (1996). If the Board concludes that the petitioned for unit is "an
appropriate unit," it has fulfilled the requirements of the Act and need not look to
alternative units. See Boeing Co.,
*11 FedEx also contends that the "overwhelming community of interest" standard applied in the second step of the Specialty Healthcare analysis is a departure from precedent. The Board has however repeatedly required a heightened showing to challenge a proposed unit found appropriate under the community of interest test. In Engineered Storage Products Co., the Board explained that under this step in the analysis:
[C]ontrary to the Employer's contentions, the fact that [other employees] may share a community of interest with the petitioned-for employees does not mean that they must be included in the unit or that the petitioned for unit is inappropriate. Rather, the test is whether the community of interest they share with the solely employed employees is so strong that it requires or mandates their inclusion in the unit.
The courts have also imposed a heightened standard on parties seeking to show
that a group of employees has been improperly excluded from a bargaining unit. Our
*12
court has held that "[t]o set aside a Board certified unit, the employer must show that
the designated unit is not appropriate. It is not enough to show that another kind of
unit would have been more appropriate." NLRB v. Metal Container Corp., 660 F.2d
1309, 1313 (8th Cir. 1981). Like the Board, our requirement for a heightened
showing stems from the Act's requirement that the Board must certify an appropriate
bargaining unit. In Arlington Hotel Co. v. NLRB, the union petitioned for a unit
consisting of various hotel employees but excluding four categories of employees
such as front desk personnel and clerical workers.
Other circuits have also applied a heightened standard. Most instructive is the
D.C. Circuit's comprehensive opinion in Blue Man Vegas, LLC v. NLRB, a case
decided three years before Specialty Healthcare.
If the employees in the proposed unit share a community of interest, then the unit is prima facie appropriate. In order successfully to challenge that unit, the employer must do more than show there is another appropriate unit because “more than one appropriate bargaining unit logically can be defined in any particular factual setting.” Rather, as the *13 Board emphasizes, the employer's burden is to show the prima facie appropriate unit is “truly inappropriate.”
Id. at 421 (quoting Country Ford Trucks, Inc. v. NLRB,
A unit is truly inappropriate "if, for example, there is no legitimate basis upon
which to exclude certain employees from it," such as employees who "share an
overwhelming community of interest with the included employees." Id. The Blue
Man Vegas "truly inappropriate" standard closely resembles our use of a "totally
inappropriate" requirement. See Arlington Hotel,
In summary, the Specialty Healthcare framework is a reasonable interpretation of how the Board should apply section 9(b) and decide on an appropriate unit, and is therefore an interpretation to which we must defer. St. John's Mercy Health Sys., 436 F.3d at 846. We conclude that the overwhelming community of interest standard articulated in Specialty Healthcare is not a material departure from past precedent and is consistent with the requirements of section 9(b) of the Act.
B.
FedEx next contends that the Specialty Healthcare standard violates section 9(c)(5) of the Act, which states that when the Board is determining an appropriate *14 bargaining unit, "the extent to which the employees have organized shall not be controlling." We disagree.
The Supreme Court has stated that the extent of organization may be
considered by the Board as one factor in the Board's determination, so long as it is not
given controlling weight. NLRB v. Metro. Life Ins. Co.,
FedEx also argues that Specialty Healthcare violates section 9(c)(5) because
it creates an impossible standard, and that in practice the union's choice of a
bargaining unit is "sure to prevail." In at least one case however the Board has
applied Specialty Healthcare to find that the employer successfully challenged a
union's proposed unit. Odwalla, Inc.,
C.
FedEx also contends that the Board violated the APA by announcing the
overwhelming community of interest standard in the course of adjudicating Specialty
Healthcare rather than by notice and comment rulemaking. The Supreme Court has
*16
held that "the Board is not precluded from announcing new principles in an
adjudicative proceeding," and that "the choice between rulemaking and adjudication
lies in the first instance within the Board's discretion." NLRB v. Bell Aerospace Co.
Div. of Textron, Inc.,
D.
Having approved of the Specialty Healthcare standard, we next ask whether in
this case substantial evidence supported the Board's unit determinations under that
standard. See St. Clair Die Casting,
Most importantly, the drivers and dockworkers are hired to do substantially different jobs. Drivers are required to have a commercial driver license. The qualifications to become a dockworker are minimal. Although drivers occasionally work on the dock, their primary role is to transport freight between the distribution centers and other centers or customers. Moreover, the drivers are all full time employees, whereas all (in East Philadelphia) or a majority (in Charlotte) of the dockworkers are part time. FedEx asserts that the "best evidence of the total *17 integration" of the drivers and dockworkers is the amount of dock work performed by drivers. Although the drivers in East Philadelphia perform about one third of the dock work, the more important fact is that dock workers cannot and do not perform driving work for FedEx. These differences support the Board's determination that the dockworkers do not share an overwhelming community of interest with the drivers. We conclude that the Board's decisions to certify bargaining units consisting of the road and city drivers were supported by substantial evidence and were not arbitrary, capricious, or an abuse of discretion.
IV.
For these reasons we deny FedEx's petitions for review and grant the Board's petitions for enforcement.
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Notes
[1] FedEx has also filed a petition for review raising the same issues as here in a case about driver unionization at its terminal in Monmouth Junction, New Jersey. FedEx Freight, Inc. v. NLRB, No. 15-2712 (3d Cir. filed July 16, 2015).
[2] This principle has long been applied by the other circuits as well. Friendly Ice
Cream Corp. v. NLRB,
