NEW CONCEPTS FOR LIVING, INC. v. NATIONAL LABOR RELATIONS BOARD
Nos. 22-3301 and 22-3426
United States Court of Appeals for the Third Circuit
March 4, 2024
2024 Decisions 169
PRECEDENTIAL
On Petition for Review from a decision of the National Labor Relations Board NLRB Nos: 1 : 22-CA-187407; 1 : 22-CA-195819; 1 : 22-CA-197088; 1 : 22-CA-205843; 1 : 22-CA-208390
Before: KRAUSE, AMBRO, and SMITH, Circuit Judges
(Filed: March 4, 2024)
Maurice Baskin [ARGUED]
Emily Carapella
Littler Mendelson
815 Connecticut Avenue NW
Suite 400
Washington, DC 20006
Counsel for New Concepts for Living, Inc.
Ruth E. Burdick
Elizabeth A. Heaney
Joel Heller [ARGUED]
National Labor Relations Board
Appellate and Supreme Court Litigation Branch
1015 Half Street SE
Washington, DC 20570
Counsel for the National Labor Relations Board
OPINION OF THE COURT
New Concepts for Living, Inc. (“New Concepts“) seeks review of an order of the National Labor Relations Board (“NLRB” or the “Board“) determining that New Concepts engaged in unfair labor practices by pushing to decertify its employees’ union. An administrative law judge (“ALJ“) dismissed all eight charges against New Concepts. Although the Board affirmed the ALJ‘s dismissal of three of those charges, the Board reversed his dismissal of five others by a two-to-one vote. New Concepts petitioned for review, and the NLRB cross-petitioned for enforcement. After a thorough review of the record, we hold that the Board majority‘s five reversals are not supported by substantial evidence. We will therefore grant New Concepts’ petition for review and deny the NLRB‘s cross-application for enforcement.
I. Factual Background
New Concepts is a nonprofit corporation that provides services for people with disabilities at several facilities located in northern New Jersey. In 2007, the Communications Workers of America, Local 1040 (the “Union“), began representing a bargaining unit of approximately 90 New Concepts employees. The most recent collective bargaining agreement (“CBA“) between New Concepts and the Union (“the parties“) expired on June 30, 2014. Thereafter, for nearly two years, a series of Union representatives failed to request that New Concepts commence negotiations aimed at reaching a successor agreement. The result of that inactivity was that members were, understandably, dissatisfied with their Union.
Meanwhile, New Concepts CEO Steve Setteducati spoke at a series of staff meetings in October and answered questions posed by employees. In the wake of those meetings, Marshall filed a decertification petition with the NLRB. New Concepts then informed the Union that it would suspend bargaining, reasoning that the petition gave rise to a good faith doubt that the Union was actually supported by a majority of the unit. The NLRB scheduled a decertification vote which, in turn, led the Union to file an unfair labor practice charge. Filing of the charge blocked further processing of the petition and resulted in an indefinite postponement of the vote. Marshall then chose to withdraw the decertification petition.
On December 28, 2016, New Concepts distributed to its employees a memorandum (the “December Memo“) which informed them of their right to resign from the Union. The December Memo began by stating that New Concepts had “received numerous questions” from employees concerning the deduction of union dues from their paychecks. R. 1434. The Memo went on to state that more than two years had passed since the CBA had expired and that the employees’ payment of dues remained voluntary. Id. The Memo also cautioned that “[employees] have the right to resign from membership in the
Approximately 90% of the employees (80 individuals) signed and returned the form letter to New Concepts, which, in turn, forwarded the letters to the Union. Though the Union regarded the form letter as not binding, it nonetheless suspended the collection of dues from all employees, whether or not they had signed the form letter.
The parties resumed bargaining in January 2017 and continued those efforts through much of that year. It “is undisputed” that, throughout this time, New Concepts “push[ed] for negotiations to move faster” and for bargaining sessions to take place more frequently. J.A. 41. Still, no final agreement was reached.
On August 15, 2017, Setteducati distributed to employees a memorandum (the “August Memo” and, together with the December Memo, the “Memos“) instructing them on how they could resume or start paying dues. R. 1435. The August Memo began by reminding employees that New Concepts had, in 2016, received “numerous questions” from employees about dues deductions, and that since then, “over 95%” of New Concepts employees, including both “new” and “long term staff,” had chosen not to pay dues. Id. The August Memo went on to explain the impetus behind its having been
In September 2017, New Concepts announced its intention to poll employees as to their support for the Union. By letter, New Concepts informed the Union that it had a good faith doubt of the Union‘s majority status. Specifically, New Concepts pointed to: (1) unit employees’ lack of participation at bargaining sessions; (2) the fact that nearly every employee had elected to stop paying dues; (3) the fact that no employees opted to resume dues deduction after New Concepts circulated the August Memo; and (4) the claim that roughly 50% of unit employees had backed Marshall‘s decertification petition. The poll was conducted on September 21 and mimicked the process used in an NLRB election. Voting was by secret ballot and included oversight by a retired judge. The Union declined an invitation to participate in any way or to even have an observer present. With approximately 85 employees remaining eligible to participate in the election, the Union lost the vote by 61 to 9. New Concepts then withdrew its recognition of the Union
II. Procedural History
The NLRB‘s General Counsel filed a complaint against New Concepts alleging, in eight respects, that New Concepts violated Sections 8(a)(1) and 8(a)(5) of the National Labor Relations Act (the “Act“).
The ALJ conducted a hearing in the fall of 2018 during which he heard testimony and made credibility determinations. He found all of New Concepts’ witnesses to be credible. Specifically, he found Setteducati “to have been straightforward in answering questions without regard for any
The General Counsel and the Union filed exceptions to the ALJ‘s decision. The Board upheld the ALJ‘s credibility determinations and affirmed the dismissals of the first three of the General Counsel‘s charges. However, a two-member majority of the Board reversed the ALJ‘s dismissal of the other five. The majority concluded that the December and August Memos were coercive and that New Concepts engaged in overall bad faith bargaining. As to the September 2017 poll, the Board decided that it was not grounded in a good faith doubt about the Union‘s majority status, that it failed to adhere to two required safeguards, and that it did not provide an adequate basis for the withdrawal of recognition from the Union. Board member Ring dissented from the reversal of those five dismissals.
This appeal followed.
The Board had jurisdiction over this matter pursuant to
We are “highly deferential” in our review of orders of the Board. Trimm Assocs., Inc. v. NLRB, 351 F.3d 99, 102 (3d Cir. 2003). This Court “will uphold the Board‘s interpretation of the NLRA so long as it is rational and consistent with the Act.” Litton Fin. Printing Div. v. NLRB, 501 U.S. 190, 201 (1991) (internal citation and quotation marks omitted). We “exercise plenary review over questions of law and the Board‘s application of legal precepts” and accept the Board‘s factual determinations if they are “supported by substantial evidence.” Spectacor Mgmt. Grp. v. NLRB, 320 F.3d 385, 390 (3d Cir. 2003) (internal citation omitted). Substantial evidence requires “more than a scintilla[,]” which means such evidence that “a reasonable mind might accept as adequate to support a conclusion.” Adv. Disposal Servs. E., Inc. v. NLRB, 820 F.3d 592, 606 (3d Cir. 2016) (internal citation omitted).
The Supreme Court has clarified that “a reviewing court is not barred from setting aside a Board decision when it cannot conscientiously find that the evidence supporting that decision is substantial, when viewed in the light that the record in its entirety furnishes, including the body of evidence opposed to the Board‘s view.” Universal Camera Corp. v. NLRB, 340 U.S. 474, 488 (1951). And “evidence supporting a conclusion may
IV. Forfeiture
The General Counsel argues that New Concepts has forfeited arguments under
Section 10(e) of the NLRA states that “[n]o objection that has not been urged before the Board . . . shall be considered by the court, unless the failure or neglect to urge such objection shall be excused because of extraordinary circumstances.”
Here, the General Counsel filed detailed exceptions to the ALJ‘s decision. New Concepts, as the prevailing party, filed a letter with the Board urging it to uphold the ALJ‘s order and attaching the brief it had initially filed with the ALJ. On appeal, the General Counsel argues that New Concepts has forfeited numerous arguments because it did not adequately raise them before the Board.2 New Concepts counters that its arguments are preserved.3
Section 10(e) does not preclude our review of the key issues in this case related to the alleged unfair labor practices. First, the General Counsel‘s reliance on Oldwick is misplaced; there, “petitioner never even filed an answer to the amended complaint.” 732 F.2d at 342 (emphasis in original). Second, the Board was clearly on notice of the key issues in the case before us. For example, Space Needle, LLC, 362 NLRB 35 (2015), features prominently within the Board‘s own written opinions. The Board majority, rather than raise Space Needle as part of an entirely new argument, addressed Space Needle to respond to the ALJ‘s discussion of the standard for “employer communications regarding dues deduction and resignation of union membership.” J.A. 7.4 The General Counsel‘s own exceptions, as well as the ALJ‘s opinion, also referenced
As to New Concepts’ other allegedly forfeited arguments, many are simply expansions upon portions of the record. For example, the NLRB claims that “New Concepts . . . belatedly challenges the Board‘s factual finding that no employees asked New Concepts for help resigning from [the Union].” NLRB Br. 26. But the ALJ‘s opinion explicitly addressed the existence of “employee questions[.]” J.A. 42. New Concepts, rather than challenging an undisputed finding of the Board, seeks on appeal to clarify the existence and nature of those questions. Any remaining arguments are ordinary rebuttals to the Board majority‘s reasoning.5
The “crucial question in a section [10](e) analysis is whether the Board received adequate notice of the basis for the objection.” NLRB v. FedEx Freight, Inc., 832 F.3d 432, 437 (3d Cir. 2016) (internal citation and quotation marks omitted). Here, we are satisfied that this notice requirement has been met.
V. Departure from Precedent
New Concepts argues that, in applying Space Needle, the Board departed from its own precedent in Peoples Gas System, Inc., 275 NLRB 505 (1985). We do not agree.
The Board has construed the Act to require employers to walk a fine line when engaging with employees on matters concerning union representation. On the one hand, the Act protects employees’ right to resign from a union, as well as employers’ ability to “inform employees of their rights[.]” Peoples Gas, 275 NLRB at 508. On the other hand, employers must refrain from creating an “atmosphere . . . of coercion, intimidation, or union animus.” Id. (internal citation omitted). An employer “may lawfully provide neutral information to employees regarding their right to withdraw their union support, provided that the employer offers no assistance, makes no attempt to monitor whether employees do so, and does not create an atmosphere wherein employees would tend to feel peril in refraining from withdrawing.” Space Needle, 362 NLRB at 36 (cleaned up).
The Board distinguished Peoples Gas in its Space Needle decision. In the latter case, the employer distributed to its employees a letter “advising employees of their options regarding the payment of dues, including the revocation of
New Concepts primarily argues that Space Needle “departed from Board precedent.” New Concepts Br. 20.6 Yet New Concepts hedges by arguing that, “regardless of its
Regardless of the nature of New Concepts’ arguments concerning Board precedent, it is enough that we simply conclude that Space Needle is distinguishable on its facts from Peoples Gas.9 The employer in Peoples Gas had both a
Notes
We conclude, then, that the Board majority‘s application of Space Needle did not represent a departure from its own precedent.
VI. Substantial Evidence Analysis
The Board majority determined that New Concepts engaged in unfair labor practices when it solicited employees to resign from the Union, bargained in bad faith, polled employees’ Union support, and, ultimately, withdrew
“the Board‘s decision[] in . . . Peoples Gas [is] inconsistent with the standard applied in Space Needle.” J.A. 9, 10-11. Though New Concepts objects to the Board majority‘s application of Space Needle, any argument that the Board majority failed to explain its reasoning is unsupported by the record.
A. The December Memo
The Board majority decided that the December Memo violated the Act. In reaching that conclusion, it determined that New Concepts lacked a contractual basis for sending the Memo because neither the Union‘s own communications nor the most recent CBA imposed a December 30 deadline for revoking dues authorization. The majority also determined that New Concepts lacked an extracontractual basis for sending the Memo. In the majority‘s view, New Concepts tracked the identities of employees who chose to resign, and its Memo failed to provide adequate assurances against reprisals.
These determinations lack support in the record. As to a December 30 deadline, although employees who signed New Concepts’ authorization form “might have been able to revoke their authorizations at any time,” many of the unit members “were still bound to the Union‘s dues-deduction card.” J.A. 27, n.19. The card permitted revocation of dues-checkoff authorizations only twice a year after December 31. Id. Further, the December Memo simply stated that “the Union may take the position that you can only revoke your Union Dues payroll deduction authorizations twice a year,” and that “[employees] may be forced to pay Union Dues for another 6 months.” R. 1434 (emphases added). In advising of that possibility, New Concepts correctly sounded a note of caution. For at least some employees, a deadline did appear to exist. And even if it did not, the use of “may” is hardly a declaration that a deadline actually loomed. In short, New Concepts had a
With respect to tracking employee responses, the Board majority took issue with New Concepts’ role as the intermediary charged with submitting completed dues forms to the Union. As such, their opinion declared that New Concepts knew “exactly which employees chose to resign their union membership and thereby further pressured employees to make that choice.” J.A. 8. We agree with the ALJ that there was “no evidence” to support the assertion that New Concepts “maintained a list of those who had withdrawn and those who had not for purposes beyond payroll administration.” Id. at 43. True, Setteducati had access to the completed resignation letters and the total number of employees withdrawing. But he used that data merely to inform the Union of employees’ choices to cease paying dues and to acknowledge New Concepts’ legal obligation to stop deducting them. And unlike in Space Needle, New Concepts did not require “resignation letters to be requested directly from management,” did not track which employees requested letters, and did not instruct management to convey its antipathy to union-dues collection. 362 NLRB at 37. Simply performing administrative acts of distribution, collection, and forwarding to the Union of completed forms does not equate to tracking.10
New Concepts’ distribution of the December Memo did not violate the Act, and the Board majority‘s conclusion to the contrary was not supported by substantial evidence.
B. The August Memo
The Board majority determined that the August Memo also violated the Act. In support, it repeated the conclusions it advanced about the December Memo with respect to alleged tracking and inadequate assurances against reprisals. And it concluded that New Concepts lacked “any dues-based justification” for distribution of the August Memo. J.A. 12. None of these determinations find support in the record.
As was the case with the December Memo, there was no evidence of tracking. Not a single employee returned a completed card authorizing the payment of union dues. New Concepts’ mere awareness of that fact, due to its administrative role in deducting dues payments, is hardly sufficient to make out a case for tracking. With respect to reprisals, the August Memo was just as clear as the December Memo had been: dues payments were voluntary, “[t]here [was] no reward for NOT
The Board majority‘s determinations with respect to the August Memo are thus not supported by substantial evidence.
C. Bargaining Conduct
Section 8(a)(5) of the Act prohibits an employer from “refus[ing] to bargain collectively with the representatives of [its] employees[.]”
The Board has long held that, “in some cases, the content of specific proposals” is relevant to determining whether the proposal was made in good faith. Altura Commc‘n Sols., LLC, 369 NLRB No. 85, 1 (2020). As relevant here, the Board may consider “regressive bargaining” tactics in
As the Board has previously recognized, “[r]egressive bargaining . . . is not unlawful in itself; rather, it is unlawful if it is for the purpose of frustrating the possibility of agreement.” Id. at 225. The Board has long construed the duty to bargain in good faith to include “conduct[] both at and away from the bargaining table.” Pub. Serv. Co. of Okla., 334 NLRB 487, 487 (2001) (internal citation omitted). The Board has found violations of that duty where a party‘s “conduct away from the bargaining table confirms that it was focused more intently on eliminating its bargaining obligation . . . than on successfully negotiating a collective-bargaining agreement.” Id. at 489.
Here, the Board majority concluded that New Concepts’ “proposals on three issues — a wage freeze, elimination of dues checkoff and union security, and elimination of arbitration — were regressive and offered for the purpose of frustrating agreement.” J.A. 13. The ALJ had concluded otherwise, characterizing these proposals as “no more than hard bargaining on the part of an employer who knew it had
As a starting point, both parties reserved the right to modify their proposals over the course of their bargaining.12 With respect to wages, New Concepts’ prioritization of merit pay and later wage reopener proposals reflected the reality of rising costs in the midst of stagnant state funding. And New Concepts obviously knew it had the upper hand after the decertification petition was filed. It is true that, in its first bargaining proposal, New Concepts proposed a merit pay system, but later proposed a wage freeze with a possible reopener upon receiving additional funding from the state. Yet the Board majority‘s conclusion — that this “unexplained decision to withdraw its merit pay proposal is especially glaring,” J.A. 13 — blinks reality. As the ALJ noted, “[t]he wage freeze and reopener proposal . . . came after [the] initial proposal for merit pay was dismissed out-of-hand by the Union.” Id. at 44. This was no more than the ordinary give and take of nearly all bilateral negotiations.
With respect to arbitration, it is true that New Concepts proposed to remove or alter the arbitration provision from the contract. Witnesses for New Concepts testified that “cost concerns motivated . . . opposition to arbitration,” a contention that may seem counterintuitive to those familiar with transaction costs inherent in traditional litigation. And it is also true that the parties “had never arbitrated a dispute, so there [was] no history of expensive arbitrations . . . [a]nd it is generally understood that arbitration is less expensive than litigation.” J.A. 15. We agree with the ALJ that arbitration “is among the most powerful tools in a collective bargaining agreement, when it is negotiated.” Id. at 44. But we also agree
Finally, the Board majority determined that New Concepts’ conduct away from the bargaining table focused on elimination of its bargaining duty rather than on negotiation. It relied on the fact that, after two months of bargaining, New Concepts suspended bargaining “1 day after the decertification petition was filed[.]” J.A. 15. The majority also relied, in large part, on the alleged unlawfulness of the December and August Memos to further demonstrate bad faith away from the bargaining table. But the suspension of bargaining after the decertification petition could reasonably be interpreted to reflect a desire to suspend negotiations while the Union‘s future was in doubt. And, as we have concluded supra, the December and August Memos were lawful.
The Board majority‘s determination with respect to bargaining is not supported by substantial evidence.
D. Poll and Withdrawal
As the ALJ acknowledged, “[a]bsent unusual circumstances, the polling of employees by an employer will be violative of . . . the Act” because it is an attempt “to ascertain employee views and sympathies regarding unionism,” which “tends to cause fear of reprisal[.]” J.A. 44 (citing Struksnes Constr. Co., 165 NLRB 1062, 1063 (1967)). But, if an employer has “a reasonable doubt about a union‘s continued majority status,” it may “test the accuracy of that doubt” by
The Board majority concluded that the September 2017 poll of employees was inconsistent with the requirements under Struksnes and that New Concepts thus unlawfully withdrew recognition from the Union. In support, it determined that New Concepts lacked a good faith doubt as to the Union‘s majority status, and that New Concepts violated Struksnes safeguards three (assurances against reprisals) and five (other unfair labor practices or coercive atmosphere).
While we fully recognize that the polling of employees is disfavored, we agree with the ALJ that “this is the unusual case where [New Concepts] was lawfully able to poll its employees.” J.A. 45. New Concepts had a good faith doubt about the Union‘s majority status. A decertification petition had been filed, few unit members attended bargaining sessions, over 90% of the unit had withdrawn authorization for dues checkoffs over eight months earlier, and not a single employee requested dues to be deducted in response to New Concepts’ offer to do so. Although we agree that “[n]one of these items would support an employer‘s withdrawal of recognition, individually or even taken together[,]” they do “support a
VII. Conclusion
While it is a common human trait to want to get something for nothing, almost no one wants to pay something and receive nothing in return. As the ALJ concluded, the “General Counsel‘s position ignores the fundamental truth underlying this case, that it was the Union‘s own absence over the span of multiple years that ultimately led to its loss of support.” J.A. 45. For the reasons set forth above, we conclude that the Board majority‘s determinations regarding the alleged unfair labor practices are not supported by substantial evidence. We will therefore grant New Concepts’ petition for review and deny the NLRB‘s cross-application for enforcement.
I join Judge Smith‘s excellent majority opinion without reservation. I write separately, however, to call attention to an argument that continues to be invoked by the National Labor Relations Board (“NLRB” or the “Board“) and that exposes a troubling gap between Section 10(e) of the National Labor Relations Act (“NLRA“), and the Board‘s regulation at
In the former, Congress excluded from judicial consideration any “objection” to the ALJ‘s decision that was not “urged before the Board” absent extraordinary circumstances,
That is a dubious proposition for two reasons. First, the regulation appears neither a reasonable nor an administrable interpretation of the statute, and, to the extent it purports to restrict (or the General Counsel argues it restricts) judicial review beyond the bounds of the statute, it would be ultra vires. Second, it is not clear that the exhaustion requirement is, in fact, jurisdictional. In Santos-Zacaria v. Garland, 143 S. Ct. 1103, 1111-14 (2023), the Supreme Court demarcated the line between jurisdictional requirements and claim-processing rules in a way that casts doubt on the continued vitality of Woelke and suggests that the exhaustion requirement may be nonjurisdictional. I address each of these issues below.
I. The Regulation Is Not Entitled to Deference
The prerequisites to judicial review imposed by the regulation are far more numerous and expansive than the statute, raising the question whether the regulation is entitled
A. The Conflict Between Section 10(e) and the Board‘s Regulation
The NLRA authorizes the Board to “make, amend, and rescind . . . such rules and regulations as may be necessary to carry out the provisions” of the Act.
To “carry out” the purpose of Section 10(e)‘s exhaustion requirement—that is, ensuring that parties “first give the Board an opportunity to rule upon all material issues in a case,” NLRB v. Cardox Div. of Chemetron Corp., 699 F.2d 148, 152 n.10 (3d Cir. 1983)—the Board promulgated
In response to exceptions, the adverse party—presumably the prevailing party before the ALJ—“may file” an answering brief or file “cross-exceptions” of its own that conform with the precise requirements of the regulation. Id. § 102.46(b)-(c). But though phrased in permissive terms, a party that fails to file an answering brief or cross-exceptions, or, upon an adverse ruling, to file for reconsideration so that it can raise its own exceptions before the Board, may have lost its day in court: Should the General Counsel press the point on appeal, the regulation provides that “[m]atters not included in exceptions or cross-exceptions may not thereafter be urged before the Board, or in any further proceeding.”3 Id. § 102.46(f) (emphasis added).
By its terms, then, the Board‘s regulation imposes different, more cumbersome, and less straightforward requirements on a litigant to preserve its opportunity for judicial review. While the statute requires merely that a party “urge[]” an “objection” before the Board,
B. The Practical Consequences of The Board‘s Regulation
Confronted with a regulation that is inconsistent in many respects with the statute it purports to interpret, the courts and litigants have struggled to understand what suffices to satisfy issue-exhaustion under Section 10(e) and whether the administrative exhaustion scheme, purporting to implement what under Woelke is a jurisdictional statutory requirement, itself defines the courts’ jurisdiction. The conclusions have been conflicting and confounding.
For starters, the courts diverge on whether fair notice to the Board or compliance with the regulatory specifications is the sine qua non of issue exhaustion under Section 10(e). Some have focused on the notice function,4 considering an
Other points of contention resulting from the regulation‘s imprecision include whether a party who prevailed before the ALJ must still file “exceptions” to preserve an issue for appeal;7 the specificity of pleading required to satisfy
The most profound confusion spawned by the regulation, however, concerns the extent to which it defines the courts’ subject matter jurisdiction. Because the Supreme Court has held Section 10(e)‘s issue-exhaustion requirement to be jurisdictional and the regulation purports to expound on that requirement, a number of courts have opined that regulatory noncompliance itself strips the court of jurisdiction.11 This has
C. Whether the Regulation Is Owed Deference
Under the APA, we “hold unlawful and set aside agency action, findings, and conclusions found to be . . . arbitrary, capricious, [or] an abuse of discretion.”
It is true, of course, that “the doctrine of administrative exhaustion should be applied with a regard for the particular
Even accepting that Congress “empowered [the Board] to create a scheme of administrative exhaustion,” it “did ‘not empower the [agency] to regulate the scope of the judicial power vested by the statute.‘” Id. 1778-79 (quoting Adams Fruit Co., 494 U.S. at 650). To the contrary, in Section 10(e), Congress exercised that power itself, requiring only that an objection be “urged before the Board” as a precondition to judicial review. 29 U.S.C. § 160(e). By its plain terms, then, Section 10(e) makes only fair presentation of an issue to the Board a jurisdictional prerequisite, see Urge, Webster‘s New International Dictionary of the English Language (2d ed. 1937) (defining the verb “urge” to mean “to present in an earnest or pressing manner; to press upon attention; to insist upon; to plead or allege“); Urge, Webster‘s 1913, https://www.websters1913.com/words/Urge (last visited Feb. 19, 2024) (defining “urge” to mean “to be pressing in argument; to insist; to persist“).12 And there is no question of Chevron deference to the regulation‘s purported expansion of that jurisdictional bar, for Chevron deference “‘is premised on the theory that a statute‘s ambiguity constitutes an implicit delegation from Congress to the agency to fill in the statutory gaps.’ The scope of judicial review, meanwhile, is hardly the kind of question that [we] presume[] that Congress implicitly delegated to an agency.” Smith, 139 S. Ct. at 1778 (citation omitted) (quoting King v. Burwell, 576 U.S. 473, 485 (2015)). So to the extent 29 C.F.R. § 102.46(a)(1) presents its requirements as jurisdiction-stripping, the regulation is
Viewed as a nonjurisdictional administrative exhaustion scheme, however, the regulation is within the agency‘s purview to promulgate. See id. 1777 (recognizing that the SSA “is empowered to define the steps claimants must generally take” to satisfy administrative exhaustion). But even where gap filling is permissible, the agency‘s response must be “based on a permissible construction of the statute” and not be “unreasonable, arbitrary, capricious, or contrary to the plain language of the [statute],” Armstrong World Inds., Inc. v. Comm‘r, 974 F.2d 422, 430, 442 (3d Cir. 1992) (quoting Chevron, 467 U.S. at 843); see also 5 U.S.C. § 706(2)(A) (arbitrary and capricious regulations impermissible under the APA). Yet the widespread confusion in applying 29 C.F.R. § 102.46 and the inconsistency with which it appears to be enforced by the General Counsel, see supra Section II(B), suggest the regulation falls into the latter category.
The Board, for example, can use § 102.46(a) as a regulatory shield to protect the agency on appeal and further its policy prerogatives, exercising its discretion to deem parties’ arguments forfeited as it pleases, all with the knowledge that its discretion directly affects our ability to hear an argument. See, e.g., Special Touch Home Care Servs., Inc., 349 N.L.R.B. 759, 760 (2007). At the same time, the Board can wield § 102.46 as a regulatory sword, claiming parties forfeited arguments by failing to adhere to Board procedure, even though the General Counsel made no motion before the Board to strike deficient filings for noncompliance and the Board itself elected to proceed below without requiring such strict adherence. And that is precisely what happened here: New
Such tactics have serious consequences for parties, who, having invested years litigating unfair-labor-practice claims, may lose their right to appeal due to technicalities, and in such circumstances, the Courts of Appeals may have occasion to question the validity of the regulatory requirements themselves. At a minimum, we should not apply them reflexively. See, e.g., McCarthy v. Madigan, 503 U.S. 140, 153 (1992) (refusing to enforce prison-grievance exhaustion requirements against a prisoner, particularly because of their “rapid filing deadlines” that could “trap . . . the inexperienced and unwary inmate, ordinarily indigent and unrepresented by counsel, with a substantial claim“); Bowen v. City of New York, 476 U.S. 467, 482-83 (1986) (waiving administrative exhaustion requirements in a class action against the SSA where claimants “would be irreparably injured” if exhaustion were enforced); Ritz-Carlton Hotel Co v. NLRB, 123 F.3d 760, 763 (3d Cir. 1997) (concluding that
In sum, whether viewed as ultra vires to the extent it purports to impose jurisdictional limitations or unreasonable to the extent it is unclear and inconsistently applied,
II. Section 10(e)‘s Exhaustion Requirement May Not Be Jurisdictional
Four decades ago, the Court held in Woelke that Section 10(e)‘s exhaustion requirement is “jurisdictional.”13 456 U.S. at 665-66. Over two decades ago, it again referenced its holding in Woelke that “the Court of Appeals lacked jurisdiction to review objections not raised before the [NLRB].” Sims, 530 U.S. at 107-08 (citing Woelke in discussion of administrative exhaustion in the Social Security Act to illustrate that the “requirements of administrative issue exhaustion are largely creatures of statute“). But in more recent years, the Supreme Court has undertaken to “ward off profligate use” of the term “jurisdictional,” Fort Bend County v. Davis, 139 S. Ct. 1843, 1849 (2019) (quoting Sebelius v. Auburn Reg‘l Med. Ctr.
The distinction matters because “[h]arsh consequences attend the jurisdictional brand.” Santos-Zacaria, 143 S. Ct. at 1112 (quoting Davis, 139 S. Ct. at 1849). Unlike claim-processing rules, “[j]urisdictional requirements cannot be waived or forfeited, must be raised by courts sua sponte, and . . . do not allow for equitable exceptions.” Boechler, 142 S. Ct. at 1497. For that reason, the Court held in Arbaugh v. Y&H Corp. that we should impose those consequences only if Congress “clearly states that a threshold limitation on a statute‘s scope shall count as jurisdictional.” 546 U.S. 500, 515-16 (2006). A “plausible or even preferable reading is not enough to make [such] a statement clear.” Jaludi v. Citigroup & Co., 57 F.4th 148, 152 (3d Cir. 2023) (citing Boechler, 142 S. Ct. at 1499). Rather, because exhaustion is “a quintessential claim-processing rule” that is ordinarily not jurisdictional, “we would need unmistakable evidence, on par with express language addressing the court‘s jurisdiction.” Santos-Zacaria, 143 S. Ct. at 1112-13. And if a statute is susceptible to “multiple plausible interpretations . . . —only one of which is jurisdictional—it is difficult to make the case that the jurisdictional reading is clear.” Boechler, 142 S. Ct. at 1498.
Section 10(e)‘s exhaustion requirement may also be ripe for reconsideration. Indeed, the Sixth Circuit, albeit nonprecedentially, has observed that “[S]ection 10(e)‘s exhaustion requirement strikes us as a nonjurisdictional claim-processing rule[]” and has characterized Woelke as the type of
Starting with the text, Section 10(e) states that “[n]o objection that has not been urged before the Board, its member, agent, or agency, shall be considered by the court, unless the failure or neglect to urge such objection shall be excused because of extraordinary circumstances.”
The exhaustion requirement‘s statutory context within Section 10(e) also indicates it is nonjurisdictional. As apparent in Attachment A, the first few sentences of Section 10(e) do speak clearly to the jurisdiction of the Courts of Appeals, providing that upon the filing of a petition for review and notice to the respondent, “the court . . . shall have jurisdiction of the proceeding and of the question determined therein, and shall have power to grant such [relief].”
In short, it is not clear that Section 10(e)‘s exhaustion requirement is properly considered jurisdictional at all, but if it is, as the Board continues to assert, that only confirms the propriety of a narrow—not expansive—interpretation in
[ . . . ]
(e) Petition to court for enforcement of order; proceedings; review of judgment
The Board shall have power to petition any court of appeals of the United States, or if all the courts of appeals to which application may be made are in vacation, any district court of the United States, within any circuit or district, respectively, wherein the unfair labor practice in question occurred or wherein such person resides or transacts business, for the enforcement of such order and for appropriate temporary relief or restraining order, and shall file in the court the record in the proceedings, as provided in section 2112 of title 28. Upon the filing of such petition, the court shall cause notice thereof to be served upon such person, and thereupon shall have jurisdiction of the proceeding and of the question determined therein, and shall have power to grant such temporary relief or restraining order as it deems just and proper, and to make and enter a decree enforcing, modifying and enforcing as so modified, or setting aside in whole or in part the order of the Board. No objection that has not been urged before the Board, its member, agent, or agency, shall be considered by the court, unless the failure or neglect to urge such objection shall be excused because of extraordinary circumstances. The findings of the Board with respect to questions of fact if supported by substantial evidence on the record considered as a whole shall be conclusive. If either party shall apply to the court for leave to adduce additional evidence and shall show to the satisfaction of the court that such additional evidence is material and that there were reasonable grounds for the failure to adduce such evidence in the hearing before the Board, its member, agent, or agency, the court may order such additional evidence to be taken before the Board, its member, agent, or agency, and to be made a part of the record. The Board may modify its findings as to the facts, or make new findings by reason of additional evidence so taken and filed, and it shall file such modified or new findings, which findings with respect to questions of fact if supported by substantial evidence on the record considered as a whole shall be conclusive, and shall file its recommendations, if any, for the modification or setting aside of its original order. Upon the filing of the record with it the jurisdiction of the court shall be exclusive and its judgment and decree shall be final, except that the same shall be subject to review by the appropriate United States court of appeals if application was made to the district court as hereinabove provided, and by the Supreme Court of the United States upon writ of certiorari or certification as provided in section 1254 of title 28.
(f) Review of final order of Board on petition to court
Any person aggrieved by a final order of the Board granting or denying in whole or in part the relief sought may obtain a review of such order in any United States court of appeals in the circuit wherein the unfair labor practice in question was alleged to have been engaged in or wherein such person resides or transacts business, or in the United
(a) Exceptions and brief in support. Within 28 days, or within such further period as the Board may allow, from the date of the service of the order transferring the case to the Board, pursuant to § 102.45, any party may (in accordance with Section 10(c) of the Act and §§ 102.2 through 102.5 and 102.7) file with the Board in Washington, DC, exceptions to the Administrative Law Judge‘s decision or to any other part of the record or proceedings (including rulings upon all motions or objections), together with a brief in support of the exceptions. The filing of exceptions and briefs is subject to the filing requirements of paragraph (h) of this section
(1) Exceptions. (i) Each exception must:
(A) Specify the questions of procedure, fact, law, or policy to which exception is taken;
(B) Identify that part of the Administrative Law Judge‘s decision to which exception is taken;
(C) Provide precise citations of the portions of the record relied on; and
(D) Concisely state the grounds for the exception. If a supporting brief is filed, the exceptions document must not contain any argument or citation of authorities in support of the exceptions; any argument and citation of authorities must be set forth only in the brief. If no supporting brief is filed, the exceptions document must also include the citation of authorities and argument in support of the exceptions, in which event the exceptions document is subject to the 50-page limit for briefs set forth in paragraph (h) of this section.
(ii) Any exception to a ruling, finding, conclusion, or recommendation which is not specifically urged will be deemed to have been waived. Any exception which fails to comply with the foregoing requirements may be disregarded.
(2) Brief in support of exceptions. Any brief in support of exceptions must contain only matter that is included within the scope of the exceptions and must contain, in the order indicated, the following:
(i) A clear and concise statement of the case containing all that is material to the consideration of the questions presented.
(ii) A specification of the questions involved and to be argued, together with a reference to the specific exceptions to which they relate.
(b) Answering briefs to exceptions. (1) Within 14 days, or such further period as the Board may allow, from the last date on which exceptions and any supporting brief may be filed, a party opposing the exceptions may file an answering brief to the exceptions, in accordance with the filing requirements of paragraph (h) of this section.
(2) The answering brief to the exceptions must be limited to the questions raised in the exceptions and in the brief in support. It must present clearly the points of fact and law relied on in support of the position taken on each question. Where exception has been taken to a factual finding of the Administrative Law Judge and the party filing the answering brief proposes to support the Judge‘s finding, the answering brief must specify those pages of the record which the party contends support the Judge‘s finding.
(c) Cross-exceptions and brief in support. Any party who has not previously filed exceptions may, within 14 days, or such further period as the Board may allow, from the last date on which exceptions and any supporting brief may be filed, file cross-exceptions to any portion of the Administrative Law Judge‘s decision, together with a supporting brief, in accordance with the provisions of paragraphs (a) and (h) of this section.
(d) Answering briefs to cross-exceptions. Within 14 days, or such further period as the Board may allow, from the last date on which cross-exceptions and any supporting brief may be filed, any other party may file an answering brief to such cross-exceptions in accordance with the provisions of paragraphs (b) and (h) of this section. Such answering brief must be limited to the questions raised in the cross-exceptions.
(e) Reply briefs. Within 14 days from the last date on which an answering brief may be filed pursuant to paragraphs (b) or (d) of this section, any party may file a reply brief to any such answering brief. Any reply brief filed pursuant to this paragraph (e) must be limited to matters raised in the brief to which it is replying, and must not exceed 10 pages. No extensions of time will be granted for the filing of reply briefs, nor will permission be granted to exceed the 10-page limit. The reply brief must be filed with the Board and served on the other parties. No further briefs may be filed except by special leave of the Board. Requests for such leave must be in writing and copies must be served simultaneously on the other parties.
(f) Failure to except. Matters not included in exceptions or cross-exceptions may not thereafter be urged before the Board, or in any further proceeding.
(g) Oral argument. A party desiring oral argument before the Board must request permission from the Board in writing simultaneously with the filing of exceptions or cross-exceptions. The Board will notify the parties of the time and place of oral
(h) Filing requirements. Documents filed pursuant to this section must be filed with the Board in Washington, DC, and copies must also be served simultaneously on the other parties. Any brief filed pursuant to this section must not be combined with any other brief, and except for reply briefs whose length is governed by paragraph (e) of this section, must not exceed 50 pages in length, exclusive of subject index and table of cases and other authorities cited.
(i) Amicus curiae briefs. Amicus curiae briefs will be accepted only by permission of the Board. Motions for permission to file an amicus brief must state the bases of the movant‘s interest in the case and why the brief will be of benefit to the Board in deciding the matters at issue. Unless the Board directs otherwise, the following procedures will apply.
(1) The Board will consider motions to file an amicus brief only when: (a) A party files exceptions to an Administrative Law Judge‘s decision; or (b) a case is remanded by the court of appeals and the Board requests briefing from the parties.
(2) In circumstances where a party files exceptions to an Administrative Law Judge‘s decision, the motion must be filed with the Office of the Executive Secretary of the Board no later than 42 days after the filing of exceptions, or in the event cross-exceptions are filed, no later than 42 days after the filing of cross-exceptions. Where a case has been remanded by the court of appeals, the motion must be filed no later than 21 days after the parties file statements of position on remand. A motion filed outside these time periods must be supported by a showing of good cause. The motion will not operate to stay the issuance of a Board decision upon completion of the briefing schedule for the parties.
(3) The motion must be accompanied by the proposed amicus brief and must comply with the service and form prescribed by § 102.5. The brief may be no more than 25 pages in length.
(4) A party may file a reply to the motion within 7 days of service of the motion. A party may file an answering brief to the amicus brief within 14 days of issuance of the Board‘s order granting permission to file the amicus brief. Replies to an answering brief will not be permitted.
(5) The Board may direct the Executive Secretary to solicit amicus briefs. In such cases, the Executive Secretary will specify in the invitation the due date and page length for solicited amicus briefs, and the deadline for the parties to file answering briefs. Absent compelling reasons, no extensions of time will be granted for filing solicited amicus briefs or answering briefs.
Compare
See, e.g., Indep. Elec. Contractors of Hous., Inc. v. NLRB, 720 F.3d 543, 551 (5th Cir. 2013) (noting that procedural requirements “can be measured in context,” and following other courts who have held that “‘when the policies underlying [Section 10(e)] are not implicated,’ issues not directly raised to the Board may be considered on appeal” (citation omitted)); IBEW v. NLRB, 973 F.3d 451, 461 (5th Cir. 2020) (same); Facet Enters., Inc., 907 F.2d 963, 970-72 (10th Cir. 1990) (collecting cases where courts considered issues not previously raised to the Board because Section 10(e)‘s underlying policies were not implicated).
See, e.g., Oldwick Materials, 732 F.2d at 343 & nn.1-2 (holding failure to file exceptions under
The Courts of Appeals have interpreted a number of other statutes’ exhaustion requirements phrased similarly to Section 10(e) to require merely fair notice to the agency. See, e.g., Power Plant Div., Brown & Root, Inc. v. Occupational Safety & Health Rev. Comm‘n, 659 F.2d 1291, 1293-94 (5th Cir. Unit B Oct. 1981) (holding that the issue-exhaustion provision of the Occupational Safety and Health Act of 1970,
The Courts of Appeals necessarily followed suit. See, e.g., Kava Holdings, LLC v. NLRB, 85 F.4th 479, 489 (9th Cir. 2023) (expressly noting that Section 10(e) is jurisdictional); Intl. Bhd. of Elec. Workers, Local Union 43 v. NLRB, 9 F.4th 63, 74 n.60 (2d Cir. 2021) (same); Atl. City Elec. Co., 5 F.4th at 307 (same); Advancepierre Foods, Inc. v. NLRB, 966 F.3d 813, 818 (D.C. Cir. 2020) (same); Dolgencorp, LLC v. NLRB, 950 F.3d 540, 549-50 (8th Cir. 2020) (same).
See, e.g., Culp v. Comm‘r., 75 F.4th 196, 202 (3d Cir. 2023) (classifying
Two other aspects of the text bear mention. First, while the term jurisdictional “is generally reserved for prescriptions delineating the classes of cases a court may entertain (subject-matter jurisdiction) and the persons over whom the court may exercise adjudicatory authority (personal jurisdiction),” Section 10(e) speaks only in terms of objections to particular issues. Davis, 139 S. Ct. at 1849; see Sysco Grand Rapids, 825 Fed. App‘x at 357 (because Section 10(e) “speaks to the issues courts may consider . . . , not the classes of cases it may entertain” it is likely a claim-processing rule (emphasis omitted)). Second, Section 10(e) contemplates a carveout for “extraordinary circumstances,” which is consistent with a waivable claim-processing rule but not with a jurisdictional requirement. See Boechler, 142 S. Ct. at 1497; Ruehl v. Viacom, Inc., 500 F.3d 375, 384 (3d Cir. 2007).
In the past, some courts reasoned that the proximity of the exhaustion requirement to Section 10(e)‘s jurisdictional grant rendered it a jurisdictional requirement, see, e.g., Chevron Mining, Inc. v. NLRB, 684 F.3d 1318, 1329 (D.C. Cir. 2012); Pub. Serv. Co., 692 F.3d at 1076-77 (Gorsuch, J.), but Boechler makes clear that alone is not sufficient. Boechler, 142 S. Ct. at 1499.
The broader context of Section 10(e) itself reinforces this conclusion. That subsection, which concerns appeals filed by the Board, works in tandem with Section 10(f), which governs appeals filed by the “person[s] aggrieved by a final order of the Board.” The latter confers on the Courts of Appeals “the same jurisdiction to grant [relief]” as subsection (e), but groups the exhaustion requirement with other nonjurisdictional aspects of the proceeding in stating that “the court shall proceed in the same manner as in the case of an application by the Board under subsection (e).”
While not dispositive, I note that Congress has made no effort to amend the NLRA to reflect a different understanding. See Davis, 139 S. Ct. at 1849 (indicating the Court may opt to “treat a requirement as ‘jurisdictional’ when ‘a long line of [its] decisions left undisturbed by Congress’ attached a jurisdictional label to the prescription” (quoting Union Pac. R.R. Co. v. Bhd. of Locomotive Eng‘rs, 558 U.S. 67, 82 (2009))).