United States: Second Circuit Overturns NLRB Unit Determination And Admonishes NLRB For Misapplying Specialty Healthcare Standard

On November 21, 2016, the United States Court of Appeals for the Second Circuit handed an employer a rare victory in a challenge to a National Labor Relations Board ("NLRB" or "Board") unit determination confirming a petitioned-for bargaining unit. Constellation Brands, U.S. Operations, Inc. v. NLRB, Nos. 15‐2442, 15‐4106 (2d Cir. Nov. 21, 2016) ("Constellation Brands").

In 2011, the Board adopted a new standard for determining the appropriateness of the scope of a bargaining unit proposed by a union seeking to be elected and certified as that group's bargaining representative. See Specialty Healthcare & Rehabilitation Center of Mobile, 357 N.L.R.B. 932 (2011), enf'd sub nom Kindred Nursing Ctrs. East, LLC v. NLRB, 727 F.3d 552 (6th Cir. 2013) ("Specialty Healthcare"). Specialty Healthcare requires a two-step analysis by the Board's Regional Directors when determining the appropriateness of a proposed bargaining unit.

First, the Regional Director must assess whether the petitioned-for employees share a community of interest that is sufficiently distinct from that of excluded employees. Second, if the proposed unit is found to be appropriate, the Regional Director must assess whether the opposing party has shown that the excluded employees it wishes to include share an "overwhelming" community of interest with the employees included in the unit.

Employers have not been generally successful under Specialty Healthcare when attempting to broaden petitioned-for bargaining units. Many employers have expressed concern that Specialty Healthcare results in the Board merely rubberstamping units as defined by unions seeking to represent them and not appropriately assessing whether other groups of employees belong in the unit. The new standard has resulted in small bargaining units that may make it more difficult for employers to win representation elections and could fracture the workplace once represented, especially when similarly situated employees are excluded from the unit.

In Constellation Brands, the Second Circuit followed other courts of appeals—the Third, Fourth, Fifth, Sixth, Seventh, and Eighth Circuits—in upholding the NLRB's two-step standard for determining whether a petitioned-for bargaining unit is appropriate, as set forth in Specialty Healthcare. But unlike these other circuits, the Second Circuit insisted that step one of Specialty Healthcare be applied in a way that addresses employers' concerns described above.

The Second Circuit admonished the Board and an NLRB Regional Director for failing to adequately explain the legal significance of purported factual differences between employees within and outside the petitioned-for unit—here, the "outside cellar" employees at a single Constellation winery. Judge Cabranes, writing for the court, made clear that the Board cannot just rubberstamp the union's choice of unit. He noted that while Regional Directors have broad discretion in determining the appropriateness of a unit, that discretion is not unlimited.

The court confirmed that step one of Specialty Healthcare has teeth: it requires the Board to consider whether members of the proposed unit have interests that are "separate and distinct" from excluded employees. In this case, the court found that the Regional Director did not explain why, based on his factual findings, the petitioned-for group had distinct interests, or why any such interests outweighed similarities with excluded employees. In other words, he did not explain the weight or relevance of his factual findings. As such, the court could not rule out the possibility that other employees were arbitrarily excluded from the unit.

Specifically, the court instructed that:


the Board must analyze at step one the facts presented to: (a) identify shared interests among members of the petitioned‐for unit, and (b) explain why excluded employees have meaningfully distinct interests in the context of collective bargaining that outweigh similarities with unit members. Merely recording similarities or differences between employees does not substitute for an explanation of how and why these collective‐bargaining interests are relevant and support the conclusion. Explaining why the excluded employees have distinct interests in the context of collective bargaining is necessary to avoid arbitrary lines of demarcation and to avoid making step one of the Specialty Healthcare framework a mere rubber stamp.                        

p. 20-21 (emphasis in original).

The Regional Director's failure to engage in a full analysis prior to shifting the burden to the employer led the Second Circuit to remand the matter back to the Board to engage in the appropriate analysis.

This decision comes days after the Fifth Circuit denied Macy's, Inc.'s request for rehearing en banc in a case raising materially identical legal issues. Six judges dissented from that order, for reasons that mirror those in Constellation Brands. Judge Jolly, writing for the dissenters, explained that in certifying a unit of cosmetic and fragrance employees at a single Macy's retail location, the NLRB applied "an incorrect standard for analyzing the first prong of the Specialty Healthcare framework" by failing "to compare employees in the petitioned-for group with excluded employees." Macy's, Inc. v. NLRB, No. 15-60022, 2016 WL 6832944, at *2, *4 (5th Cir. Nov. 18, 2016) (Jolly, J., dissenting). Crucially, while the NLRB pointed to factual distinctions between included and excluded employees, it "did not explain how th[ose] distinction[s] w[ere] meaningful." Id. at *5. The result was "another example of the current National Labor Relations Board's ... determination to disregard established principles of labor law." Id. at *1.

Together, these opinions should encourage employers concerned that Specialty Healthcare creates a virtually irrebuttable presumption that the scope of a union's petition will be an appropriate unit. Such a presumption could arbitrarily exclude similarly situated employees and lead to difficult issues for employers dealing with multiple fractured units at a single facility.

Employer groups have opposed Specialty Healthcare, arguing, among other things, that it promotes "micro" units that are often so small that they can fragment the workforce, require employers to bargain with multiple employee groups at the same location, maintain multiple benefit plans, exclude employees arbitrarily, and generally make it more difficult for employers to win elections.

We reported in October 2013 that Specialty Healthcare had already been applied in approximately 90 cases that showed employers having difficulty meeting the overwhelming community of interest standard to successfully expand the scope of petitioned-for units. See " Circuit Court of Appeals Upholds the NLRB's New 'Overwhelming Community of Interest' Bargaining Unit Test," Jones Day Commentary, October 2013.

Constellation Brands and Macy's are important decisions because they set forth a roadmap for NLRB Regional Directors analyzing the appropriateness of bargaining units. The Board is now on notice that its unit determinations may not be enforced if—at step one of the Specialty Healthcare analysis—it does not adequately explain both the community of interest shared by petitioned-for employees and why those interests are sufficiently distinct from those of excluded employees. Employers facing petitions for units excluding similarly situated employees now have a stronger basis to contest a finding that the unit is appropriate if the Regional Director does not offer a thorough analysis that explains the legal significance of any factual distinctions it identifies.

Jones Day represented Constellation Brands before the Second Circuit Court of Appeals and Macy's, Inc. before the Fifth Circuit Court of Appeals.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.