YAPP USA AUTOMOTIVE SYSTEMS, INC. v. NATIONAL LABOR RELATIONS BOARD, JENNIFER ABRUZZO, LAUREN M. McFERRAN, MARVIN E. KAPLAN, GWYNNE A. WILCOX, DAVID M. PROUTY, and ARTHER AMCHAN
Case No. 24-12173
UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION
September 9, 2024
Honorable
ECF No. 29, PageID.305
OPINION AND ORDER DENYING PLAINTIFF‘S MOTION FOR PRELIMINARY INJUNCTION [4]
Congress passed the National Labor Relations Act as part of a series of New Deal-era legislation in 1935. See
The NLRB faced opposition and constitutional challenges early on in its history. But in 1935, the Supreme Court upheld the constitutionality of for-cause removal restrictions for Commissioners of the Federal Trade Commission—a similarly structured, independent, multi-member executive agency. Humphrey‘s Ex‘r v. United States, 295 U.S. 602, 620 (1935). And two years later, in 1937, the Court upheld the constitutionality
Until now. A few years ago, the Supreme Court ruled in Seila Law LLC v. Consumer Financial Protection Bureau, 591 U.S. 197, 218 (2020), that the single-director structure of the CFPB was unconstitutional when the single director could only be removed for cause. Like the CFPB director, the NLRB Board members can also only be removed for cause. So recently, several cases have been filed across the country seeking to enjoin NLRB proceedings as unconstitutional.1
This is one such case. Plaintiff YAPP USA Automotive Systems, Inc., was charged in two NLRB cases with committing alleged unfair labor practices in violation of Section 8 of the NLRA. On August 6, 2024, the NLRB Regional Director for Region 7 combined the cases, issued a consolidated amended complaint, and noticed an administrative hearing before an NLRB Administrative Law Judge on September 10, 2024.
Two weeks later, on August 19, 2024, YAPP filed the present action, seeking a permanent injunction to stop the administrative proceedings on the grounds that the NLRB‘s structure, and thus its administrative proceedings, are unconstitutional. (ECF No. 1.) That same day, YAPP filed a motion for a temporary restraining order and expedited preliminary injunction, seeking to stay the September 10, 2024, hearing until final resolution of this case. (ECF No. 4.) Given the time constraints and substantial briefing (see ECF Nos. 4, 24, 27)2 the Court considers the motion without further argument, see E.D. Mich. LR 7.1(f).
For the reasons that follow, the Court will DENY YAPP‘s motion for a preliminary injunction.
I. Background
A.
To begin, an overview of the NLRB‘s authority, structure, and administrative process is helpful.
The Board is made up of five members who serve staggered terms that can last up to five years.
The NLRA divides responsibility over administration of private-sector federal labor law between the Board and the General Counsel of the Board. See
The NLRB reviews and adjudicates objections to conduct during a union election process. See
If the NLRB determines that an employer has engaged in conduct prohibited by the NLRA, the Board may “seek enforcement of its order[s] in a federal court of appeals.” Glacier Nw., Inc. v. Int‘l Bhd. of Teamsters Loc. Union No. 174, 598 U.S. 771, 776 (2023) (citing
B.
With that background, the Court will turn to the facts of this case.
YAPP USA Automotive Systems, Inc., is a Tennessee corporation that designs, manufactures, and supplies automotive fuel systems. (ECF No. 1, PageID.3.) In 2023,
A short time later, on July 31, 2023, the Local 174 filed a Certification of Representative Petition, seeking an election for a bargaining unit consisting of all full-time and part-time production and maintenance employees at the YAPP Romulus facility. (Id.) The election was held in September 2023, with the majority voting against electing the Local 174 as their exclusive representative. (Id.; see ECF No. 4-2, PageID.89.) In February 2024, Local 174 filed another charge with the NLRB alleging that YAPP committed various unfair labor practices related to the election. (ECF No. 1, PageID.6.)
The Regional Director investigated the initial charge and on April 9, 2024, issued a complaint against YAPP alleging that Dowling‘s termination, among other things, violated Section 8(a)(1) of the Act. (Id.; see ECF No. 4-2, PageID.91–97.) A hearing before an NLRB ALJ was initially set for July 16, 2024, and adjourned by agreement of the parties to September 10, 2024, while they worked to try to resolve the matter. (ECF No. 1, PageID.6; ECF No. 4-2, PageID.96; ECF No. 27, PageID.260.) On August 6, 2024, the Regional Director merged the two cases against YAPP, issued a consolidated amended complaint, and kept the September 10, 2024, hearing date. (ECF No. 1, PageID.6–7; ECF No. 4-2, PageID.101–110.) The amended complaint alleges that YAPP violated the NLRA by discharging an employee for engaging in NLRA-protected activities, interfering with employees’ NLRA rights through threats and other coercive conduct, and refusing to recognize and bargain with the union. (See ECF No. 4-2, PageID.101–110.) Of relevance, the Regional Director included in the complaint a request to “make whole” employees who suffered “direct or foreseeable pecuniary harms” as a result of YAPP‘s alleged unlawful conduct. (Id. at PageID.108.)
YAPP does not believe it should be subject to this administrative proceeding. In short, YAPP claims that the NLRB‘s Board members and its ALJs are unconstitutionally shielded from Presidential removal such that this Court should invalidate that proceeding. YAPP also contends that the damages being sought in the administrative proceeding violate its Seventh Amendment right to a jury trial. So YAPP seeks a preliminary injunction staying the September 10, 2024, hearing pending final resolution of this case. (ECF No. 4.)
II.
A “preliminary injunction is an extraordinary and drastic remedy, one that should not be granted unless the movant, by a clear showing, carries the burden of persuasion.” Enchant Christmas Light Maze & Mkt. Ltd. v. Glowco, LLC, 958 F.3d 532, 539 (6th Cir. 2020) (citation omitted); see also Higuchi Int‘l Corp. v. Autoliv ASP, Inc., 103 F.4th 400, 404 (6th Cir. 2024) (“The issuance of a preliminary injunction is the exception, rather than the rule.“).
In evaluating whether to grant YAPP preliminary injunctive relief, the Court must consider and balance four factors: (1) YAPP‘s likelihood of success on the merits, (2) whether YAPP will suffer irreparable injury without an injunction, (3) whether granting the injunction will
III. Likelihood of Success
Start with likelihood of success on the merits. YAPP raises the following constitutional claims: (1) that the NLRB‘s Board Members and ALJS are unconstitutionally insulated from removal by the President, (2) that YAPP is being deprived of its right to a jury trial for the allegedly legal remedies being sought by the NLRB, and (3) that the structure of the NLRB violates the separation of powers and YAPP‘s due process rights. (ECF No. 4, PageID.38.) The Court will address each in turn.
A. Removal Protections
YAPP maintains that two features of the structure of the NLRB violate
Neither of these arguments, however, are likely to succeed in invalidating the NLRB proceedings.
1.
As relevant here, one exception, established in Humphrey‘s Executor, “permitted Congress to give for-cause removal protections to a multimember body of experts, balanced along partisan lines, that performed legislative and judicial functions and was said not to exercise any executive power.” See id. at 218 (citing Humphrey‘s Ex‘r, 295 U.S. at 620). And another exception permits for-cause removal protections “for inferior officers with limited duties and no policymaking or administrative authority.” Id. at 218 (“These two exceptions . . . ‘represent what up to now have been the outermost constitutional limits of permissible congressional restrictions on the President‘s removal power.‘” (quoting Free Enter. Fund v. Pub. Co. Acct. Oversight Bd., 537 F.3d 667, 686 (D.C. Cir. 2008) (Kavanaugh, J., dissenting),
First, the NLRB appears to fall comfortably within the Humphrey‘s Executor exception. As mentioned, in Humphrey‘s Executor, the Supreme Court upheld a statute that protected the Commissioners of the FTC from removal except for “inefficiency, neglect of duty, or malfeasance in office.” Humphrey‘s Ex‘r, 295 U.S. at 620 (quoting
While Humphrey‘s Executor involved the commissioners of the FTC, it sheds helpful light on the analysis of the removal protections of the NLRB members. As the Court explained in Seila Law:
The Court [in Humphrey‘s Executor] identified several organizational features that helped explain its characterization of the FTC as non-executive. Composed of five members—no more than three from the same political party—the Board was designed to be “non-partisan” and to “act with entire impartiality.” The FTC‘s duties were “neither political nor executive,” but instead called for “the trained judgment of a body of experts” “informed by experience.” And the “Commissioners’ staggered, seven-year terms enabled the agency to accumulate technical expertise and avoid a “complete change” in leadership “at any one time.”
See Seila L., 591 U.S. at 218 (citing Humphrey‘s Ex‘r, 295 U.S. at 619–20, 624) (cleaned up).
Like the FTC, the NLRB is a multi-member independent, expert agency. The Board members, similar to the Commissioners, are balanced along partisan lines, serve staggered multi-year terms, and exercise quasi-legislative and quasi-judicial power. What is more, the NLRB‘s structure is not novel or new like the agencies at issue in the Supreme Court‘s recent removal power cases. See Calcutt, 37 F.4th at 314 (“In concluding that the CFPB Director was unconstitutionally shielded from removal, the Seila Law Court emphasized two key features: the historical novelty of an agency headed by a single director removable only for cause, and the inconsistency of this design with constitutional structure.” (citation omitted)). Indeed, the NLRB was itself modeled after the FTC, and the NLRA was modeled after the FTC Act.3
The NLRA was signed into law on July 5, 1935, just one month after the Supreme Court decided Humphrey‘s Executor. See Free Enter. Fund, 561 U.S. at 547 (Breyer, J., dissenting) (“[O]nly one month after Humphrey‘s Executor was decided, Congress returned to its pre-Myers practice of including such [for-cause removal] provisions in statutes creating independent commissions. See . . .
YAPP disagrees that Humphrey‘s Executor applies to the NLRB‘s removal protections. According to YAPP, Board members exercise “significant executive power,” and thus, under Seila Law, they are not eligible to receive such removal protections.
YAPP interprets Humphrey‘s Executor and Seila Law too narrowly. And its interpretation has recently been rejected by the Fifth and Tenth Circuits. See Consumers’ Rsch. v. Consumer Prod. Safety Comm‘n, 91 F.4th 342, 355–56 (5th Cir. 2024) (“The Supreme Court, while it has limited Humphrey‘s, has not yet overruled it. Nor, of course, can we. ... As best we can gather, the Supreme Court has not yet limited that decision to the FTC alone. Rather . . . the exception still protects any ‘traditional independent agency headed by a multimember board‘—and thus still protects the [Consumer Product Safety] Commission.“), petition for cert. filed, No. 23-1323 (June 18, 2024); Leachco, 103 F.4th at 761–63 (concluding that CPSC Commissioners are distinguishable from the CFPB director, whose removal protections were struck down in Seila Law, for at least three reasons: “the CPSC‘s structure is well-grounded in historical precedent—it is structured similarly to many other independent, multimember agencies,” “the CPSC is not headed by a single director,” and Commissioners’ “staggered terms mean that each President has an opportunity to influence the CPSC‘s leadership, and the President can also influence the CPSC through the budgetary process“).4
Similarly, in response to YAPP‘s argument that the NLRB wields substantial executive power, “the Supreme Court‘s statements in Morrison suggest that the exercise of some arguably ‘executive’ functions does not undermine the constitutionality of tenure protections for officers of an expert, non-partisan agency.” Leachco, 103 F.4th at 762 (citing Morrison v. Olson, 487 U.S. 654 (1988)); see also Seila L., 591 U.S. at 216 (“To the extent that [the FTC] exercise[d] any executive function[,] as distinguished from executive Power in the constitutional sense,’ it did so only in the discharge of its ‘quasi-legislative or quasi-judicial powers.‘” (alterations in original) (quoting Humphrey‘s Executor, 295 U.S. at 628)); cf. Seila L., 591 U.S. at 278 n.7 (Kagan, J., concurring in part and dissenting in part) (“The majority is quite right that today we view all the activities of administrative agencies as exercises of the ‘executive Power.’ But we well understand, just as the Humphrey‘s Court did, that those activities may ‘take “legislative” and “judicial” forms.’ The classic examples are agency rulemakings and adjudications, endemic in agencies like the FTC and CFPB.” (quoting City of Arlington v. FCC, 569 U.S. 290, 305 (2013))).
In sum, Humphrey‘s Executor remains binding and continues to apply to traditional independent agencies led by a multimember board, including the NLRB. See United States v. SunSetter Prods. LP, No. 23-10744, 2024 WL 1116062, at *4 (D. Mass. Mar. 14, 2024) (”Humphrey‘s Executor remains binding and continues to apply to any traditional independent agency headed by a multimember board, . . . like the CPSC.” (internal quotation marks and citations omitted)). Accordingly, YAPP has not demonstrated a likelihood of success on the merits of its claim that the NLRB‘s for-cause removal protections are unconstitutional.
So too for YAPP‘s claim about the NLRB‘s ALJs’ removal protections. Generally speaking, it is constitutional for Congress to protect inferior officers with “good cause” removal restrictions. Morrison, 487 U.S. at 692–93; Free Enter. Fund, 561 U.S. at 495. And ALJs are inferior officers. Lucia v. SEC, 585 U.S. 237, 244 n.3 (2018). True, in Free Enterprise Fund the Supreme Court concluded that Congress violated
Subsequently, several circuits have found that Congress may shield ALJs performing purely adjudicatory functions from at-will removal, even where there are two layers of good-cause protection. See Leachco, 103 F.4th at 764 (finding ALJ removal restrictions valid as ALJs performed “a purely adjudicatory function, Congress did not statutorily require that the CPSC use ALJs for administrative adjudications, and the good cause standard in the provision restricting—but not precluding—ALJs’ removal is a ‘lesser impingement’ than the standard at issue in Free Enterprise Fund” (citation omitted)); Decker Coal Co. v. Pehringer, 8 F.4th 1123, 1132-36 (9th Cir. 2021) (upholding DOL ALJs’ removal restrictions for similar reasons).
In line with these holdings, the Sixth Circuit has expressed serious “doubt[s]” that those subject to agency enforcement proceedings “could establish a constitutional violation from the ALJ removal restrictions” enacted by Congress. Calcutt, 37 F.4th at 319 (citation omitted), rev‘d on other grounds, 598 U.S. 623 (2023). The Calcutt Court was specifically addressing removal restrictions for Federal Deposit Insurance Corporation ALJs, but its reasoning is
YAPP attempts to distinguish this case from Calcutt in two ways. Neither persuades.
First, YAPP says “NLRB ALJs have greater decisional authority than FDIC ALJs.” (ECF No. 4, PageID.63.) More specifically, says YAPP, NLRB ALJs’ final orders “automatically become the decision and order of the Board” when no exceptions are filed.
These minor differences aside, Calcutt makes clear that the permissibility of ALJs’ removal protections “centers on their status as adjudicatory officials that issue non-final recommendations to an agency.” Calcutt, 37 F.4th at 320. NLRB ALJs fit comfortably within that description.
Also, like the FDIC, the NLRB is not required to assign a given case to an ALJ. The NLRB is instead empowered to preside over a hearing itself. See
Second, it is true that a split Fifth Circuit panel in Jarkesy v. SEC, 34 F.4th 446, 463 (5th Cir. 2022), aff‘d on other grounds, 144 S. Ct. 2117 (2024), found that the SEC‘s ALJs’ removal protections were unconstitutional. And two Texas district courts bound by that decision recently found the NLRB‘s ALJs’ removal protections were unconstitutional. See Energy Transfer, 2024 WL 3571494, at *3; Space Expl., 2024 WL 3512082, at *6. But this Court is bound by the Sixth Circuit‘s ruling in Calcutt, which it reads as not invalidating ALJ removal protections like those applicable to NLRB ALJs.
In sum, NLRB ALJs perform purely adjudicatory functions, issue non-final recommendations to the NLRB, and enjoy good-cause protections that are a “lesser impingement” than the removal standard at issue in Free Enterprise Fund. Additionally, Congress did not mandate that the NLRB use ALJs in its administrative proceedings. So it appears that the two-level removal protections here are valid under existing precedent.
2.
At the end of the day, however, the Court does not need to get further bogged down in the constitutionality of the removal protections for NLRB Board members and ALJs. Even if they were deemed unconstitutional, YAPP has failed to show that it suffered the requisite causal harm necessary to bring its removal claims.
Thus, directs the Sixth Circuit, Collins “provides a clear instruction: To invalidate an agency action due to a removal violation, that constitutional infirmity must cause harm to the challenging party.” Calcutt, 37 F.4th at 316 (collecting cases in agreement from other circuits). Importantly, such a showing cannot be satisfied by “vague, generalized allegations,” instead, “a more concrete showing [i]s needed.” Id. at 317.
Once again, YAPP‘s efforts to distinguish Calcutt (and a number of other cases Defendants cite) is unavailing. YAPP says these cases only addressed the plaintiffs’ entitlement to retrospective relief, and therefore they are not applicable to YAPP‘s request for prospective relief. (See ECF No. 27, PageID.558.) But this is not a fair reading of those cases. In Calcutt, the Sixth Circuit specifically explained:
That distinction does not matter here. The Collins inquiry focuses on whether a “harm” occurred that would create an entitlement to a remedy, rather than the nature of the remedy, and our determination as to whether an unconstitutional removal protection “inflicted harm” remains the same whether the petitioner seeks retrospective or prospective relief (particularly when we review an adjudication that has already ended). In other words, Collins instructs that we must ask whether the FDIC Board‘s for-cause protections “inflicted harm,” such as by preventing superior officers from removing Board members when they attempted to do so, or possibly by altering the Board‘s behavior. The Removal and Prohibition Order‘s prospective effect does not change a court‘s ability to conduct that inquiry.
Calcutt, 37 F.4th at 316 (citations omitted). Several other circuits agree. See CFPB v. Law Offs. of Crystal Moroney, P.C., 63 F.4th 174, 180–81 (2d Cir. 2023), cert. denied, 144 S. Ct. 2579 (2024) (declining to read ”Collins so narrowly” as to only apply to claims for retrospective, and not prospective, relief); Cmty. Fin. Servs. Ass‘n of Am., Ltd. v. CFPB (CFSA), 51 F.4th 616, 631 (5th Cir. 2022) (”Collins did not rest on a distinction between prospective and retrospective relief.“), rev‘d and remanded on other grounds, 601 U.S. 416 (2024); Leachco, 103 F.4th at 757 (same).
Thus, Calcutt makes clear that to succeed on a removal restriction claim, YAPP must “show that the removal restriction specifically impacted the agency actions of which they complain[]” even where the relief sought is prospective. Calcutt, 37 F.4th at 314. YAPP has failed to do so. It simply argues that being subjected to an unconstitutional agency‘s proceedings is a “here and now” injury under the Supreme Court‘s ruling in Axon Enterprise, Inc. v. FTC, 598 U.S. 175 (2023). But this argument is also contrary to Collins and Calcutt
To start, Axon only addressed whether the petitioners, who were respondents in administrative enforcement actions before the SEC and FTC, could initially bring collateral challenges to the constitutionality of those agencies’ structures in federal district court. Axon, 598 U.S. at 175. “To answer that strictly jurisdictional question,” the Court applied the jurisdictional factors from Thunder Basin Coal Co. v. Reich, 510 U.S. 200 (1994), “to determine whether the constitutional claims brought by the petitioners were of the type that Congress intended to allocate exclusively to the agency, or whether those claims could be initiated in federal district court.” Leachco, 103 F.4th at 758 (citing Axon, 598 U.S. at 186). The Supreme Court did not address issues of relief or injury. Id.
True, the Court in Axon referred to being subject to proceedings before an unconstitutionally structured agency as a “here-and-now injury” that is “impossible to remedy once the proceeding is over.” Axon, 598 U.S. at 191; see also id. at 192 (“Axon and Cochran will lose their rights not to undergo the complained-of agency proceedings if they cannot assert those rights until the proceedings are over.“). But the Court made those statements in the context of determining whether the district court had jurisdiction to hear the petitioners’ constitutional claims, and not in the context of the Collins harm requirement for unconstitutional removal claims.
On that specific question, clear Sixth Circuit and Supreme Court precedent govern. And it does not endorse YAPP‘s “here and now injury.” In other words, to establish harm under Collins and Calcutt, YAPP would need to make a showing that because the NLRB members and ALJs are unconstitutionally shielded from removal by the President, this actually impacted, or will impact, the administrative proceedings against it—merely being subjected to a hearing before an ALJ (or Board members) protected by unconstitutional removal protections is not enough.5 Calcutt,
37 F.4th at 317; see also CFSA, 51 F.4th at 632; Collins, 594 U.S. at 259–60. But YAPP has failed to make any showing that, but for the allegedly unconstitutional removal provisions, the Board members or ALJ would have been removed, the NLRB proceedings against it would not be occurring, or the proceedings would be different in any way.
Accordingly, because YAPP has failed to show the harm required for an unconstitutional removal restriction claim, it is not likely to succeed on the merits of this claim.
YAPP‘s Seventh Amendment claim that the damages being sought in the NLRB proceedings deprives it of a right to a jury trial does not fare much better. Indeed, the Court appears to lack jurisdiction to even address this claim. And YAPP‘s argument is contrary to the Supreme Court‘s holdings in NLRB v. Jones & Laughlin Steel Corp., 301 U.S. 1 (1937), and SEC v. Jarkesy, 144 S. Ct. 2117 (2024).
1.
The Court begins with jurisdiction. District courts “have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States.”
appeals providing judicial review,” id., “like the NLRA does for unfair labor practice claims,” Burnett Specialists v. Abruzzo, No. 22-00605, 2023 WL 5660138, at *5 (E.D. Tex. Aug. 31, 2023).
To determine whether a statute prevents judicial review at the district court level, the Court engages in a two-step inquiry. Cochran v. SEC, 20 F.4th 194, 206 (5th Cir. 2021). The Court asks whether “a statutory scheme displays a fairly discernible intent to limit jurisdiction” and “whether the claims at issue are of the type Congress intended to be reviewed within th[e] statutory structure.” Id. (alteration in original) (internal quotation marks omitted) (quoting Free Enter. Fund, 561 U.S. at 489).
Start with the first Cochran step. It is clear that “Congress intended that the NLRA limit [district court] jurisdiction.” See Dismissal Order at 6, Nexstar Media, Inc., Grp., v. NLRB, No. 24-01415 (N.D. Ohio Aug. 26, 2024), ECF No. 17. The NLRA‘s statutory scheme does not allow for district court review of unfair labor practice claims—the proceedings go to the Board, and then the Board‘s final order is appealable to an appropriate federal court of appeals.
The second Cochran step involves determining whether the NLRA‘s statutory scheme covers the precise claim at issue. To do so, says the Supreme Court, this Court must consider the following:
First, could precluding district court jurisdiction “foreclose all meaningful judicial review” of the claim? . . . Next, is the claim “wholly collateral” to the statute‘s review provisions? . . . And last, is the claim “outside of the agency‘s expertise“? When the answer to all three questions is yes, “we presume that Congress does not intend to limit jurisdiction.” But the same conclusion might follow if the factors point in different directions. The ultimate question is how best to understand what Congress has done—whether the statutory review scheme, though exclusive where it applies, reaches the claim in question.
Axon, 598 U.S. at 186 (citations omitted).
The NLRB recently authorized its Regional Directors to seek make-whole relief for “direct or foreseeable pecuniary harm” arising from an unfair labor practice. Thryv, Inc., 372 N.L.R.B. No. 22, 2022 WL 17974951, at *1 (Dec. 13, 2022). YAPP‘s
First, would the absence of district court jurisdiction preclude meaningful judicial review of this claim? Axon, 598 U.S. at 190. YAPP‘s Seventh Amendment claim is a challenge to the remedies being sought in the administrative proceeding. It is not, as the NLRB points out, “a ‘structural’ challenge attacking the very nature of the agency.” (ECF No. 24, PageID.231.) True, the Supreme Court has concluded
that when the plaintiffs’ claim was that they were “being subjected to an illegitimate proceeding,” a court of appeals could not provide meaningful review, because the harm from being subject to the illegitimate proceeding could not be undone once the proceeding happened. Axon, 598 U.S. at 190.
But here, YAPP would not be deprived of such meaningful judicial review.6 If the ALJ awards the Thryv remedy that YAPP contests, YAPP can raise the Seventh Amendment issue before the Board and then the Court of Appeals, which can invalidate the award of those remedies (should they find merit in the constitutional claim) without disturbing the otherwise valid administrative process—exactly as Congress intended.
Turning to the second Axon factor, YAPP‘s claim is not “wholly collateral” to the function of the NLRB. Determining what remedy is warranted for particular NLRA violations is a core aspect of the NLRB‘s quasi-adjudicatory and quasi-legislative functions. The Court agrees with Defendants that YAPP‘s claim “presents a question of ‘how [the NLRB‘s] power [is] wielded,’ not the agency‘s ‘power generally.‘” (ECF No. 24, PageID.231 (alterations in original) (quoting Axon, 598 U.S. at 193).) What is more, YAPP itself contends that the Thryv remedies at issue exceed
the NLRB‘s statutory authority. Surely, determining what type of remedies are appropriate or permissible under the NLRA is not “wholly collateral” to the functioning of the NLRB.
As for the third Axon factor, the NLRB‘s power to fashion remedies has long been recognized by the Supreme Court as a core area of Board expertise. Phelps Dodge Corp. v. NLRB, 313 U.S. 177, 194 (1941) (“[I]n the nature of things Congress could not... define the whole gamut of remedies to effectuate these policies in an infinite variety of specific situations. Congress met these difficulties by leaving the adaptation of means to end to the empiric process of administration . . . committed to
Lastly, the ALJ hearing this case, or the Board on review, might determine that YAPP has not committed any unfair labor practices, or that the requested remedies are not warranted. Such statutory determinations by the agency would obviate any need to address the constitutional issue. See Elgin v. Dep‘t of Treasury, 567 U.S. 1, 22-23 (2012) (finding lack of subject matter jurisdiction where “preliminary questions unique to the employment context may obviate the need to address the constitutional challenge“).
For these reasons, therefore, the Court questions whether it has jurisdiction to address YAPP‘s Seventh Amendment argument.
2.
But even if the Court does have jurisdiction, YAPP‘s Seventh Amendment claim is not likely to succeed on the merits.
Again, YAPP argues that, in seeking a make-whole remedy that includes “direct and foreseeable” damages, the NLRB is attempting to grant “private relief” in violation of the Seventh Amendment‘s right to a jury trial. (ECF No. 4, Page ID.65.) YAPP relies, in large measure, on the ruling in Jarkesy, in which the Supreme Court held that the SEC‘s decision to order civil penalties for securities fraud through administrative proceedings, rather than seeking them through a jury trial in federal court, violated the Seventh Amendment. Jarkesy, 144 S. Ct. at 2127–28. But this case involves the NLRB and not the SEC. And the Supreme Court also held in 1937 that the Seventh Amendment right to a jury trial does not attach to NLRB proceedings. Jones & Laughlin, 301 U.S. at 33. Jarkesy actually reinforces this ruling (more on this later). Additionally, the NLRB‘s decision to allow direct and “foreseeable damages” in Thryv does not alter the Jones & Laughlin ruling, either.
First, to implicate the Seventh Amendment, the challenged administrative proceeding must involve a statutory claim that is “legal in nature.” Jarkesy, 144 S. Ct. at 2128 (quoting Granfinanciera, S.A. v. Nordberg, 492 U.S. 33, 53 (1989)). This turns on an examination of the cause of action and the remedy that it provides. Id. at 2129. But Jarkesy reaffirmed that Congress could properly insulate even legal remedies from the Seventh Amendment right to a jury trial where the underlying proceeding involves “public rights.” Id. at 2131.
And almost a century ago the Supreme Court held that the Seventh Amendment does not apply to unfair labor practice proceedings, which involve statutory rights “unknown to the common law” and which fall under the public-rights
exception. Jones & Laughlin, 301 U.S. at 48; see id. at 48–49 (explaining that “[t]he [NLRB] proceeding is one unknown to the common law” and that the Seventh Amendment “has no application to cases where recovery of money damages is an incident to equitable relief” and concluding that the Amendment was thus inapplicable to remedies “imposed for violation of the [NLRA]“); see also Atlas Roofing Co. v. OSHRC, 430 U.S. 442, 453–56 (1977) (discussing Jones & Laughlin as an example of Congress having created a public-rights scheme outside the reach of the Seventh Amendment); Curtis v. Loether, 415 U.S. 189, 194–95 (1974) (distinguishing the public-rights scheme at issue in Jones & Laughlin from other newly created statutory rights). Jarkesy, dealing with very different remedies awardable in an SEC proceeding, did not displace this longstanding
YAPP‘s claim fails for another reason—the NLRB‘s Thryv remedies are equitable in nature and thus are distinguishable from the SEC‘s civil penalties at issue in Jarkesy. The Supreme Court in Jarkesy clarified that statutory claims that only provide equitable relief are not the sort of legal causes of action to which the Seventh Amendment right attaches. Jarkesy, 144 S. Ct. at 2129 (“To determine whether a suit is legal in nature, we directed courts to consider the cause of action and the remedy it provides. Since some causes of action sound in both law and equity, we concluded
that the remedy was the ‘more important’ consideration.” (citation omitted)). The Court observed that “monetary relief can be legal or equitable,” and that a determinative question is whether the remedy is “designed to punish or deter the wrongdoer, or, on the other hand, solely ‘restore the status quo.‘” Id. (citation omitted); accord Tull v. United States, 481 U.S. 412, 422 (1987) (distinguishing civil penalties from equitable monetary relief “intended simply to extract compensation or restore the status quo“); see Jones & Laughlin, 301 U.S. at 48 (noting that the Seventh Amendment has “no application to cases where recovery of money damages is an incident to equitable relief even though damages might have been recovered in an action at law“).
Recall that under Thryv the NLRB established that its “make-whole remedy shall expressly order respondents to compensate affected employees for all direct or foreseeable pecuniary harms that these employees suffer as a result of [a] respondent‘s unfair labor practice.” See Thryv, Inc., 372 N.L.R.B. No. 22, 2022 WL 17974951, at *1 (Dec. 13, 2022). As explained at length in the Board‘s decision, this make-whole remedy, that YAPP challenges here, was designed to “restore the victim[s]” of unfair labor practices rather than to punish respondents. Jarkesy, 144 S. Ct. at 2129; see also Thryv, 2022 WL 17974951, at *17 (“[O]ur make-whole remedies do not punish bad actors, but rather implement the statutory principles of rectifying the harms actually incurred by the victims of unfair labor practices and restoring them to where they would have been but for the unlawful conduct.“). Indeed, the Board declined to limit such remedies to only egregious violations of the Act to
avoid the risk of such remedies becoming punitive. Thryv, 2022 WL 17974951, at *17 (“Issuing a remedial order for such relief in all cases will permit the Board to satisfy its statutory duty to make employees whole, while ensuring that our make-whole remedy, applied equally to all respondents, is not unlawfully punitive.” (citing Mitchell v. Robert DeMario Jewelry, Inc., 361 U.S. 288, 293 (1960) (“[T]he public remedy is not thereby rendered punitive, where the measure of reimbursement is compensatory only.“))).
This, again, is distinguishable from the $300,000 in civil fines under the anti-fraud provisions of the relevant securities statutes that were at issue in Jarkesy. 144 S. Ct. at 2127. That remedy was deemed legal (rather than equitable) because the civil penalty was based on the “perceived need to punish the defendant rather than to restore the victim.” Id. at 2129. Accordingly, Jarkesy confirms that the challenged remedy at issue here is not legal in nature. And thus, the Seventh Amendment does not apply.
NLRA framework—i.e., raised before the NLRB in the first instance and then the Circuit Court on review. Nonetheless, given the applicability of the public-rights exception, and the Court‘s finding that the Thryv remedies are equitable in nature, YAPP has failed to show a likelihood of success on the merits of a Seventh Amendment claim.
C. Separation of Powers
YAPP‘s final claim is somewhat difficult to discern—it appears to merely restate its Seventh Amendment claim under the guise of a separation of powers or combination of functions title. (See id. at PageID.69.) Specifically, YAPP says the NLRB usurps the power of the judiciary by adjudicating private rights when it seeks Thryv-type remedies. (Id.) YAPP also takes issue with the NLRB‘s decision to engage in policy-making through adjudication rather than rulemaking, as it did in Thryv. (Id.) Longstanding Supreme Court precedent, however, makes clear that the Board is not precluded from engaging in policy-making through adjudicative proceedings. NLRB v. Bell Aerospace Co., 416 U.S. 267, 294 (1974) (“[T]he Board is not precluded from announcing new principles in an adjudicative proceeding and... the choice between rulemaking and adjudication lies in the first instance within the Board‘s discretion.“).
In any event, for the same reasons stated in the Court‘s Seventh Amendment analysis, this claim is not likely to succeed on the merits.
D.
In sum, YAPP is not likely to succeed on the merits that it is about to be subject to an unconstitutional proceeding. The removal restrictions applicable to the NLRB
members and to NLRB ALJs appear to be constitutionally valid. Even if they were not, YAPP has failed to demonstrate the requisite harm. With respect to YAPP‘s Seventh Amendment claim, it is questionable whether the Court has jurisdiction to consider it and, even if so, a jury trial is not warranted. And YAPP‘s separation of powers claim seems to be indistinguishable from its Seventh Amendment claim. Thus, YAPP is not entitled to a preliminary injunction.
IV. Irreparable Harm
YAPP‘s motion fails for another reason—it has not established the requisite irreparable harm necessary to justify a preliminary injunction.
This issue overlaps with the merits analysis and has basically been covered. To summarize, YAPP‘s only theory of irreparable harm on its removal claims is its alleged “here and now” injury of being subjected to an administrative proceeding carried out by an unconstitutionally structured agency. The Court has already found that YAPP has “failed to show under prevailing law that its mere subjection to administrative proceedings before an agency whose officials possess unconstitutional removal protections, alone, constitutes irreparable harm.” Leachco, 103 F.4th at 753. Indeed, “while violations of certain individual constitutional
removal protections made a difference in its case. See Calcutt, 37 F.4th at 317. YAPP has failed to make that showing here. See Leachco, 103 F.4th at 753.
YAPP also fails to show irreparable harm on its Seventh Amendment claim. As the Defendants point out, it is possible that the ALJ, or NLRB on review, never reach the issue of Thryv remedies or find them inappropriate here. And merely being subject to a proceeding before an ALJ where a particular remedy sought is allegedly unconstitutional or not statutorily permissible does not leave YAPP without a remedy. Any damage award ultimately imposed at the administrative level is not effective until enforced by a federal court of appeals. Stated differently, under the NLRA, Board orders are not self-executing; the Board must seek an order from the court of appeals to execute its orders. See
seeking Thryv-type remedies in YAPP‘s administrative proceeding, not halting the entire administrative process.
V.
For these reasons, YAPP is not entitled to the extraordinary relief of preliminarily enjoining the September 10, 2024, administrative hearing before an 89-year-old executive branch agency. YAPP‘s motion for a preliminary injunction (ECF No. 4) is DENIED.
IT IS SO ORDERED.
Dated: September 9, 2024
s/Laurie J. Michelson
LAURIE J. MICHELSON
UNITED STATES DISTRICT JUDGE