MANHATTAN CENTER STUDIOS, INC., PETITIONER v. NATIONAL LABOR RELATIONS BOARD, RESPONDENT; MANHATTAN CENTER STUDIOS, INC., CROSS-RESPONDENT v. NATIONAL LABOR RELATIONS BOARD, CROSS-PETITIONER
No. 04-1400, No. 04-1417
United States Court of Appeals FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued November 8, 2005 Decided June 23, 2006
On Petition for Review and Cross-Application for Enforcement of an Order of the National Labor Relations Board
Before: HENDERSON and GRIFFITH, Circuit Judges, and WILLIAMS, Senior Circuit Judge.
Opinion for the Court filed PER CURIAM.
Dissenting opinion filed by Circuit Judge HENDERSON.
PER CURIAM: Petitioner Manhattan Center Studios (MCS) seeks review of an order of the National Relations Board (NLRB or Board) finding that it committed an unfair labor practice (ULP) in refusing, inter alia, to bargain with a union certified by employee vote. After the certification election, MCS learned that one of its supervisory employees had, before the election, improperly distributed union authorization forms and solicited the unit employees to sign them. MCS refused to bargain on that basis, contending the election was not valid. It claimed that its supervisory employee‘s subsequently discovered misconduct constituted an affirmative defense to the ULP charge. The Board disagreed. Before us, MCS argues that, in denying it the opportunity to contest the validity of the election, the Board misapplied its precedent regarding newly discovered evidence. The Board cross-petitions for enforcement of its order. Because we find that the Board erred in applying its “due diligence” standard used to permit an untimely election challenge based on newly discovered evidence to the facts of this case, we remand for further proceedings.
MCS is a corporation based in New York City that offers its facility for rent for theatrical and musical productions.1 On February 19, 2003, stagehands and production staff (production employees) employed by MCS voted by a 5-1 margin to certify Theatrical Stage Employees Local No. One (Union or Local One) as the collective bargaining representative for their seven-employee bargaining unit. See Tally of Ballots, NLRB Case No. 2-RC-22677 (Feb. 19, 2003), reprinted at Joint Appendix (JA) 10. MCS did not file an objection to the election within seven days after the election as required by
On March 20, MCS responded to the Union‘s request, refusing to bargain or to turn over any employee information. Its letter stated that “it has recently come to our attention that an
On September 24, 2004, the Board issued its Decision and Order granting summary judgment to the General Counsel. Manhattan Ctr. Studios, Inc., 342 NLRB No. 131 (2004) (MCS), JA 79. It began by noting “the Respondent did not file any objections to the conduct of the election” within seven days thereafter; the representation proceeding had therefore closed and could be “reopened to litigate [election impropriety] issues only if [MCS] could establish that it has newly discovered evidence.” Id., slip. op. at 2. It found that MCS had not met that burden. The Board described newly discovered evidence as evidence of facts that existed at the time of the representation proceeding “which could not be discovered by reasonable diligence.” Id. (citing APL Logistics, Inc., 341 N.L.R.B. No. 132, slip op. at 1 (2004)). It then concluded:
[T]he Respondent has failed to present any information indicating that prior to the expiration of time in which to file objections to the election, it engaged in an attempt to uncover any potential improprieties in that proceeding. Thus, the Respondent has failed to establish that the evidence at issue could not have been discovered earlier through the exercise of reasonable diligence.
Id. at 2, JA 80 (emphasis added). Because MCS had no affirmative defense to its refusal to bargain with the Union, no genuine issue of material fact existed as to MCS‘s refusal to bargain and, accordingly, the General Counsel was entitled to summary judgment. MCS timely petitioned for review.
We review the Board‘s order to determine “whether the Board acted arbitrarily or otherwise erred in applying established law to the facts of the case.” Antelope Valley Bus Co., Inc. v. NLRB, 275 F.3d 1089, 1092 (D.C. Cir. 2002) (quotations omitted). The Board cannot “ignore its own relevant precedent but must explain why it is not controlling.” BB&L, Inc. v. NLRB, 52 F.3d 366, 369 (D.C. Cir. 1995). “[W]here an agency departs from established precedent without a reasoned explanation, its decision will be vacated as arbitrary and capricious.” ANR Pipeline Co. v. FERC, 71 F.3d 897, 901 (D.C. Cir. 1995). If we conclude that the Board misapplied or deviated from its precedent, we often remand with instructions to remedy the misapplication/deviation. Lee Lumber & Bldg. Material Corp. v. NLRB, 117 F.3d 1454, 1460 (D.C. Cir. 1997) (remanding to resolve inconsistency between Board standard and its application therein).
As noted, under the Board‘s regulations, a party has seven days after the tally of ballots in a certification election to file “objections to the conduct of the election or to conduct affecting the results of the election.”
Board precedent includes at least two formulations of the due/reasonable diligence standard: one—which we dub the “conducted investigation” version—to be used if the moving party asserts its due diligence to establish that subsequently discovered facts constitute new evidence, see, e.g., Superior Prot., Inc., 341 NLRB No. 86, slip. op. at 4 (2004) (Superior Protection) (“[i]n order to establish that evidence is ‘newly discovered,’ the movant must show facts indicating that it ‘acted with reasonable diligence to uncover and introduce the evidence’ and that it was therefore ‘excusably ignorant’ of the evidence previously“) (internal citations omitted); and another—which we dub the “hypothetical investigation” version—to be used in circumstances where due diligence was not exercised, in which case the Board asks whether the exercise of due diligence would have timely uncovered the evidence. See, e.g., APL Logistics, 341 NLRB No. 132, slip. op. at 1 (2004) (defining new evidence as “evidence of facts in existence at the time of the hearing which could not be discovered by reasonable diligence“); Jason/Empire, 212 N.L.R.B. 137, 138 (1974) (“[A]lthough the alleged [offer to waive union initiation fees] was made at a preelection union meeting, the Respondent has failed to show that with due diligence it could not have uncovered the evidence in time to file timely objections . . . .“); see also Amalgamated Clothing Workers of Am. v. NLRB, 424 F.2d 818, 827 (D.C. Cir. 1970) (affirming Board determination that employer‘s evidence was not new because “no explanation was offered as to why this evidence was not discovered or could not have been discovered by the exercise of due diligence“) (emphasis added).
If, as the Board argues here, the standard is that an employer has an affirmative duty to exercise due diligence to discover any evidence of irregularity in any election in order to use that evidence to permit the untimely reopening of the representation proceeding, the employer will almost certainly run a risk inasmuch as a post-election investigation conducted within the seven-day period, as the Board order counsels, see MCS, 342 NLRB No. 131, slip. op. at 2, without specific evidence of misconduct would almost always involve questioning of employees. See
Because the Board has been less than clear in applying its newly discovered evidence standard, it is unlikely that an employer in MCS‘s circumstances knows if it must make an effort to uncover a problem of any kind in order to mount an untimely challenge to an election or whether, consistent with APL Logistics, it will be required to show that it could not have with due diligence discovered the particular evidence it seeks to submit as newly discovered. The first interpretation is deceptively straightforward: the employer either conducted an investigation or it did not. But what makes an investigation diligent enough to meet the standard?9 Does the employer have to show that it interviewed all of its supervisors? Here, that
MCS argues that it was excusably ignorant of Garces‘s actions and should therefore be allowed to submit evidence of those actions as newly discovered evidence because it had no reason to inquire of Spony or any other employee about election improprieties before March and it acted with reasonable diligence to proffer the evidence once it learned of them from Spony. See Pet‘r‘s Br. 12–13. And even if it had investigated for any impropriety either before the election or within the seven-day period, MCS maintains that it would be reasonable to
In response the Board points to rumors circulating among employees in late 2002 regarding Garces‘s support of the Union, alluded to in Spony‘s affidavit as Garces‘s own claim that he “[did]n‘t care who kn[ew]” about his pro-Union actions. Resp‘t‘s Br. 17; JA 15. The Board suggests that MCS cannot use the newly discovered evidence rule because, given the rumors and small size of the bargaining unit, due diligence would have uncovered Garces‘s misconduct. See Resp‘t‘s Br. 17 (“MCS offers no explanation why, in a bargaining unit of only seven employees, it could not have discovered earlier that its own supervisor was ‘spearheading’ the union campaign, especially given MCS‘s own assertion that rumors about Garces‘s involvement were circulating among its employees months before the election.“). But the Board mischaracterizes MCS‘s “own assertion“; it was Spony, not MCS, who stated that he knew that rumors regarding Garces‘s misconduct were circulating among employees in late 2002. MCS did not hear of
It is true that in Soft Drink Workers Union Local 812 v. NLRB, 937 F.2d 684 (D.C. Cir. 1991), we stated that in order to challenge election results in a ULP proceeding based on newly discovered evidence, the moving party ” ‘must have made some effort to obtain the evidence at the time’ ” challenges could have been made, that is, within the seven-day period. Id. at 688 (quoting Teamsters Local 911 (General Felt), 275 N.L.R.B. 980, 981 (1985)). But that statement was based on circumstances absent here: evidence of impropriety, or leading to a showing of impropriety, was in fact timely discoverable. The union in Soft Drink Workers, in addition to arguing that the picketing it engaged in after it lost a certification election did not violate the Act, sought to offer evidence showing that the employer had padded the payroll with sufficient replacement employees to ensure the union would lose. Before the election, however, the employer had given the union an Excelsior list12 of all
On remand, the Board should explain (1) the relationship between the “conducted investigation” and “hypothetical investigation” iterations of the due diligence standard, (2) which iteration it is applying here and why it chose that iteration under the facts of this case, (3) if the Board is applying the “conducted investigation” iteration of the standard, whether there is a minimum level of investigation in the absence of notice of a violation or, alternatively, whether that standard requires specific inquiries in the absence of some notice of misconduct, and, if so, what these inquiries must be and how they are to be conducted without engaging in coercive and unlawful interrogation or interfering with the election in violation of
For the foregoing reasons, we remand to the Board for further proceedings consistent with this opinion.
So ordered.
I dissent from the remand because I believe the Board erred as a matter of law in concluding that an employer without notice of management misconduct that tainted an election is not excusably ignorant under the due diligence test. Accordingly, I would grant MCS‘s petition for review and vacate the Board‘s order.
If a Board decision is contrary to law, we are well within our authority to grant a petition for review. See Int‘l Alliance of Theatrical and Stage Employees v. NLRB, 334 F.3d 27, 34 (D.C. Cir. 2003) (International Alliance) (granting petition for review and vacating unfair labor practice finding because Board interpretation of “any employee who engages in a strike” under section 8(d) of Act was “in conflict with both interpretive precedent and the statute‘s structure” and produced “internal inconsistency” and “irrational results in practice“); see also Detroit Typographical Union v. NLRB, 216 F.3d 109, 122 (D.C. Cir. 2000) (granting petition for review because Board conclusion constituted legal error). Legal error can take the form of an inconsistent application of relevant precedent, see BB&L, Inc. v. NLRB, 52 F.3d 366, 369 (D.C. Cir. 1995), an unreasonable interpretation of the agency‘s enabling statute, see Jacoby v. NLRB, 325 F.3d 301, 308 (D.C. Cir. 1994) (citing Chevron U.S.A. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 842-45 (1984)), or an “unreasoned” extension of a standard to the facts of a particular case, see Detroit Typographical Union, 216 F.3d at 118 (Board committed legal error in applying doctrine disallowing employer‘s implementation of standardless merit pay plan after impasse to case where merit pay plan standard was known to union).
I believe the Board erred if, as it appears, it applied the “conducted investigation” version of the due diligence standard here. The “conducted investigation” iteration cannot apply if the employer had no reason to know of any impropriety—including any rumors that might have spurred it to investigate any impropriety—and, for that reason, did not
Like the Board‘s decision in International Alliance, its decision here is “in conflict with both interpretive precedent and the [Act]‘s structure,” “set[s] a standard that could never be met” on these facts, and leads to “irrational results in practice,” International Alliance, 334 F.3d at 34–35, 37. Accordingly, because I would grant MCS‘s petition for review and deny the Board‘s cross-petition for enforcement, I respectfully dissent.