Election Rule Challenges Face Headwinds; Court Questions Early Lawsuits, Alternatives

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By Lawrence E. Dubé

May 15 — Business groups are aggressively challenging the National Labor Relations Board's amended representation case regulations, but a federal judge's early comments at a May 15 hearing suggested she has not yet been persuaded to resolve the objections to the agency's rulemaking action.

The U.S. Chamber of Commerce and several other groups filed a lawsuit to challenge the NLRB rule changes in the U.S. District Court for the District of Columbia. That case has been consolidated with an action filed by a Washington construction contractor. Judge Amy Berman Jackson heard arguments in the cases after the parties filed extensive briefs.

Allyson N. Ho of Morgan, Lewis & Bockius LLP, representing the Chamber and allied groups, told the court the NLRB rule changes represent “a vastly overdrawn solution to a narrow problem” that is inconsistent with the representation case provisions of the National Labor Relations Act.

However, Jackson repeatedly questioned whether she could find that there are no possible circumstances in which the NLRB could lawfully apply the new rules. She also questioned the challengers' assertions that the NLRB rules improperly preclude employers from litigating bargaining unit issues before the agency conducts secret-ballot elections on union representation.

NLRB Rule Changes Now in Effect

The board approved the rule changes (RIN 3142-AA08) in December on a 3-2 vote.

The Senate and House disapproved the NLRB regulatory action, but President Barack Obama vetoed their Congressional Review Act resolution March 31, allowing the rule changes to go into effect April 14.

On May 5, the Senate tabled President Obama's veto message, effectively ending any effort to override the president's action.

Legal Challenges Await Rulings

The Chamber, joined by the Coalition for a Democratic Workplace, National Association of Manufacturers, National Retail Federation, and Society for Human Resource Management, filed its lawsuit Jan. 5, before the NLRB rule changes became effective.

Baker DC LLC, a concrete contractor, filed its lawsuit (Baker DC, LLC v. NLRB, D.D.C., No. 1:15-cv-571) April 17. Baker was one of the first employers to receive a union representation petition that was filed pursuant to the NLRB's new rules.

Jackson denied Baker's motion for a temporary restraining order April 22, and ordered that the case be consolidated with the Chamber lawsuit for further proceedings. Several of Baker's employees are participating as plaintiffs in the litigation.

Another lawsuit challenging the NLRB rules, Associated Builders & Contractors of Texas, Inc. v. NLRB, W.D. Tex., No. 1:15-cv-26, remains pending. Summary judgment motions were argued in the Texas case April 24, but the court has not yet issued a ruling.

Judge Matches Rule Provisions and Challenges

In the Chamber litigation, Jackson said she has been trying to chart the positions of each party on every portion of the NLRB rules that has been challenged in their lawsuits, including whether in each case the plaintiffs are asserting that a provision conflicts with the NLRA, the Administrative Procedure Act or the U.S. Constitution.

Jackson said she has been trying to chart the positions of each party on every portion of the NLRB rules that has been challenged in their lawsuits, including whether in each case the plaintiffs are asserting that a provision conflicts with the NLRA, the Administrative Procedure Act or the U.S. Constitution.

Understanding the specific claims of the parties is important, she stressed, because if a challenge is based on the NLRA, her task is to determine whether the regulation violates the labor law statute. On the other hand, she said, finding a violation of the APA would require her to find that in adopting its rule changes the agency abused its discretion to which she would normally defer.

Jackson observed that the organizations have not challenged every provision in the amended rules. For example, she said, no party registered an objection to new regulatory language about electronically filing and serving documents.

Judge Questions Ripeness for Judicial Action

The judge said reaching a decision that the NLRB rule amendments are ripe for a court challenge may require her to consider not only the text of the final rules, but also whether further agency action under a new regulation might clarify the agency's position on how the rules are to be applied or enforced.

Jackson noted that one of the issues in contention is whether the NLRB rule changes improperly restrict employers from submitting evidence in pre-election hearings on bargaining unit issues, such as unit inclusions or exclusions that are not required for a determination of whether a question concerning representation exists.

However, the judge pointed out, regional directors have discretion under the new rules to permit such evidence, even if the rules do not require it and do not give employers an “automatic right” to submit such evidence.

Jackson asked why she should try to resolve the debate about submitting evidence in pre-election hearings if it turns out that regional directors will in fact allow such evidence.

Chamber Argues Rules Clash With NLRA

Ho argued that there are no circumstances in which the NLRB rules can lawfully be applied by the board because the rules are simply not consistent with Section 9(c)(1) of the NLRA.

That statutory provision requires the board to investigate a representation petition “and if it has reasonable cause to believe that a question of representation affecting commerce exists shall provide for an appropriate hearing upon due notice.”

However, Jackson said the board's regulations provide for postelection appeals to the board by parties who are not satisfied with an NLRB regional director's actions. If a party is precluded from litigating a unit issue before an election, but can raise it in a postelection proceeding, the judge said, the question might become whether that would satisfy the NLRA's requirement of an “appropriate hearing.”

NLRB Notes Employer Appeal Options

Attorney Dawn L. Goldstein, arguing for the board, told the court that the new NLRB rules will allow an employer to pursue claims that it was improperly denied an opportunity to present evidence during a pre-election hearing.

The board would have discretion to consider an appeal prior to an election, and a regional director's denial of an opportunity would be documented in a pre-election hearing record that would include an employer's statement of position, a transcript of hearing and an offer of proof on the disputed evidence.

An employer can preserve an issue by filing objections after an election is held, and an employer will be able to argue to the board that evidence was improperly limited in a pre-election hearing.

Jackson, who heard arguments from the other parties at the May 15 hearing, has not indicated when she will issue a decision on the pending motions.

The U.S. Chamber and allied groups are represented by Allyson N. Ho of Morgan, Lewis & Bockius LLP in Dallas, and David R. Broderdorf, Jonathan C. Fritts, and Michael W. Steinberg in the firm's Washington office. Baker DC LLC is represented by Maurice Baskin of Littler Mendelson, P.C., in Washington. Glenn M. Taubman of the National Right to Work Legal Defense Foundation in Springfield, Va., represented the employee-plaintiffs. The NLRB is represented by Nancy E. Kessler Platt, Dawn L. Goldstein, and Kevin P. Flanagan in Washington.

To contact the reporter on this story: Lawrence E. Dubé in Washington at ldube@bna.com

To contact the editor responsible for this story: Susan J. McGolrick at smcgolrick@bna.com