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Aug. 11 — The members of the National Labor Relations Board disagree about how the agency's regional directors can use investigative subpoenas in unfair labor practice cases where a charging party alleges that two or more entities are joint employers under federal labor law.
The question is whether a regional office should have enough evidence to make a threshold showing of a joint employer relationship before the NLRB issues its often-extensive subpoenas for documents and testimony to business entities.
In several recent cases, the NLRB's three Democrats have relied on the board's broad investigative authority to uphold the use of subpoenas, while the board's sole Republican member has argued that regional directors should have more than a bare allegation of a joint employer relationship before launching such information demands. The fifth seat on the board currently is vacant.
Several management attorneys told Bloomberg BNA they share the dissenting board member's concern about the NLRB's use of subpoenas, while a union lawyer said subpoenas are critical to untangling business relationships and structures that are often obscure.
The board's use of investigative subpoenas has an immediate practical impact for many businesses and industries.
The NLRB expanded its joint employer standards in Browning-Ferris Industries of California, Inc., 362 N.L.R.B. No. 186, 204 LRRM 1154 (2015), holding that a business may be liable as a joint employer if it indirectly controls an employment relationship or has reserved the right to do so.
Benjamin E. Stockman, who represents management in Venable LLP's labor and employment group, told Bloomberg BNA Aug. 9 that the board made it clear in Browning-Ferris that its analysis of joint employer relationships will be very fact-intensive.
If the board uses investigative subpoenas to probe potential joint employment relationships, the agency will be looking not only at contracts between organizations, but how multiple companies implement those contracts.
“That's really where the rubber meets the road,” Stockman said. Subpoenas focused on such practical realities are likely to be more complex and potentially burdensome than simple inquiries about the formal relationships between organizations, he said.
Stockman also expects NLRB regional offices will not just seek documents related to joint employer claims, but will use subpoenas to obtain testimony about possible joint employer relationships. Fielding such inquiries during the investigation of an unfair labor practice case is “obviously concerning for employers,” he said.
Section 11 of the National Labor Relations Act, 29 U.S.C. § 161, empowers the NLRB to issue subpoenas for the attendance of witnesses and production of evidence in board proceedings, including “all hearings and investigations” and covering “any matter under investigation or in question.”
Section 11(1) and board regulations (29 C.F.R. § 102.31) allow petitions to revoke subpoenas and provide for appeals of subpoena rulings, but they do not set standards for the issuance of subpoenas.
Section 11(1) requires the board to revoke a subpoena that “does not relate to any matter under investigation” or that “does not describe with sufficient particularity the evidence whose production is required.”
In Dolchin Pratt, LLC, 2015 BL 366867, NLRB, No. 5-CA-135334, order 11/6/15, an NLRB regional office was investigating charges filed by a Baltimore unit of the Industrial Workers of the World against Dolchin Pratt LLC, an operator of Jimmy John's sandwich shops, and several other entities.
The organizations filed petitions to revoke regional office subpoenas that sought information about the relationships between the companies.
In a 2-1 order, Chairman Mark Gaston Pearce and Member Kent Y. Hirozawa denied the petitions. The board members said the subpoenas sought information relevant to the matters under investigation, and they met the requirement of describing the evidence sought with sufficient particularity
Member Philip A. Miscimarra dissented. He said the NLRA “requires more in this case then merely stating the name of a possible single or joint employer on the face of the charge.”
Miscimarra cited Section 10054.4 of the NLRB's Casehandling Manual as the board's own statement that regional offices should obtain “additional and more complete evidence, including all relevant documents” if a charging party's own evidence and preliminary information “suggests a prima facie case.”
The dissenting board member said he would grant the petitions to revoke the subpoenas because the NLRB general counsel “failed to articulate an objective, factual basis for investigating possible single or joint employer relationships between Jimmy John's Franchise, LLC and the other Petitioners.”
Miscimarra said he would support the general counsel's issuance of the subpoenas “if he can establish an objective, factual basis supporting such an inquiry, beyond the mere allegation in the second amended charges that Jimmy John's is a joint and/or single-employer with the other Petitioners.”
Ronald Meisburg, a former NLRB member and general counsel, is now special counsel at Hunton & Williams in Washington, where he represents employers. He told Bloomberg BNA Aug. 10 that Miscimarra's objection was “well-taken.”
Meisburg, who served as NLRB general counsel from January 2006 to June 2010, said the general counsel’s office has traditionally required charging parties to produce evidence sufficient to make a prima facie showing of an unfair labor practice before utilizing investigative subpoenas.
Even when the agency is investigating cases that depend heavily on proving facts known only to the charged parties, “something more than a bare allegation of a legal conclusion is needed,” he said.
Meisburg said joint employer cases can be extremely expensive to investigate and litigate—both for employers and for the NLRB. Employers and taxpayers should not be forced to shoulder such burdens based on “a bare allegation of joint employer status,” he said.
Stockman called Miscimarra's dissent “common sense” and said employers hope NLRB regional directors always engage in meaningful deliberations before they approve subpoenas that can be extensive and burdensome.
An employer can petition to revoke a subpoena that is overbroad or burdensome, but a choice between costly subpoena compliance and expensive litigation “can be cold comfort,” the attorney said.
However, a union-side lawyer stressed the importance of NLRB subpoenas in joint employer cases.
Barbara J. Chisholm, a partner in Altshuler Berzon LLP in San Francisco, told Bloomberg BNA Aug. 11 her firm's experience has been that without access to information about how franchiser systems work, it is “difficult to untangle” how business relationships are structured and whether a joint employer relationship exists.
Employers often contend such information is confidential, and obtaining relevant information without a subpoena may simply not be practicable, Chisholm said.
Pearce and Hirozawa responded to Miscimarra's dissent that nothing in the NLRA or the board's regulations imposes a requirement that a regional director articulate an objective, factual basis to support the issuance of a subpoena.
Federal courts have a long history of deferring to the use of subpoenas by the NLRB and other agencies, and Pearce and Hirozawa relied on that tradition in refusing to revoke the Dolchin Pratt subpoenas.
The U.S. Supreme Court has “decisively rejected the contention that a demonstration of probable cause or other threshold factual showing is a prerequisite to the exercise of the subpoena power of an administrative agency in the course of a legitimate investigation to determine whether and against whom proceedings should be initiated,” Pearce and Hirozawa wrote.
In orders much the same as the one approved in Dolchin Pratt, the board permitted investigative subpoenas on joint or single employer issues in 2-1 rulings over Miscimarra's dissents in Strategic Staffing Solutions, 2016 BL 182605, NLRB, No. 31-CA-159135, order 6/8/16, and DT Management, LLC, 2016 BL 222990 and 2016 BL 222992, NLRB, No. 31-CA-160946, orders 7/12/16.
However, in Panera Bread, LLC, 2015 BL 402047, NLRB, No. 7-CA-136917, order 12/8/15, the board (Members Miscimarra, Hirozawa, and Lauren McFerran) agreed to deny a petition to revoke a subpoena in a case where Panera LLC was alleged to be a joint or single employer with other corporate entities.
The board, in a brief order, said the subpoena sought information that was relevant to the proceeding, and described the information with sufficient particularity.
Miscimarra wrote in a footnote that he stood by the position he articulated in Dolchin Pratt, but found “an adequate basis” for the subpoenas in Panera because “preliminary information” included one or more agreements between business entities alleged by a union to be joint or single employers.
The board's most recent order on a joint employer subpoena was issued in Microsoft Corp., 2016 BL 231125, NLRB, No. 19-CA-162985, order 7/19/16.
The board refused to revoke a subpoena, and Members Hirozawa and McFerran restated the board majority's position that the regional director who issued the document subpoena to Microsoft acted within “the Board's broad investigative authority.”
Miscimarra filed essentially the same dissent as in Dolchin Pratt, concluding that an unfair labor practice charge by Temporary Workers of America alleging that Microsoft and Lionbridge Technologies are joint employers did not give the NLRB general counsel an “objective factual basis for subpoenas documents regarding the possible joint employer relationship.”
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