Third Circuit Backs NLRB in FedEx Freight Unit Ruling

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By Lawrence E. Dubé

Aug. 9 — The National Labor Relations Board's Specialty Healthcare standard for determining appropriate units in representation elections survived a challenge in the U.S. Court of Appeals for the Third Circuit, which held that the board properly applied the standard to certify a unit of drivers at a FedEx Freight Inc. terminal ( NLRB v. FedEx Freight, Inc., 3d Cir., No. 15-2585, 8/9/16 ).

The ruling is the latest in a string of appellate court decisions to back the 2011 NLRB ruling on appropriate unit standards under the National Labor Relations Act.

Judge Anthony J. Scirica, writing for the court Aug. 9, held that the board's community-of-interest test is consistent with NLRB precedent and doesn't violate the National Labor Relations Act.

The court also found that the board properly applied the test in certifying an International Brotherhood of Teamsters local to represent a unit of terminal drivers that excluded dockworkers working at the same facility.

NLRB Certified Union Election Win

Teamsters Local 701 filed a petition in August 2014 seeking an election in a unit of road and city drivers at the company's terminal in Monmouth Junction, N.J. FedEx argued the unit wasn't appropriate under the NLRA because it didn't include dockworkers who loaded and unloaded freight at the same terminal.

An NLRB regional director found the unit requested by the Teamsters local was appropriate, and he directed an election, which Local 701 won. The board denied a request for review, and Local 701 was certified to represent the drivers.

The NLRB found FedEx unlawfully refused to bargain with the union (362 N.L.R.B. No. 91, 203 LRRM 1322 (2015)) and the board petitioned for court enforcement of its order that the company bargain with Local 701. FedEx petitioned to set aside the board's order.

FedEx Challenges Specialty Healthcare

In Specialty Healthcare & Rehabilitation Center of Mobile, 357 N.L.R.B. No. 83, 191 LRRM 1137 (2011), the NLRB held that it would find appropriate a unit sought by a petitioning union if employees in the proposed unit constitute a readily identifiable group sharing a community of interest.

Under the 2011 ruling, such a finding can be overcome only if the employer establishes that the proposed unit excludes other workers who share an “overwhelming community of interest” with the employees covered by the union's petition.

FedEx urged the Third Circuit to overrule Specialty Healthcare, but the NLRB argued the company waived its right to challenge the precedent in court by failing to properly make the assertion when it asked the board to review the regional director's decision.

Scirica wrote for the court that the employer didn't “vigorously” argue for the NLRB to overrule Specialty Healthcare, but FedEx told the board in a footnote that it was contending Specialty Healthcare was wrongly decided.

Scirica said the NLRB had “adequate notice” of the company's position and that FedEx didn't waive its challenge of the board decision.

Third Circuit Backs NLRB Approach

Turning to the merits of the dispute over Specialty Healthcare, the Third Circuit joined several other courts in upholding the board's appropriate unit test.

In Kindred Nursing Centers East LLC v. NLRB, 727 F.3d 552, 196 LRRM 2545 (6th Cir. 2013), the U.S. Court of Appeals for the Sixth Circuit enforced an NLRB order based on the certification issued in Specialty Healthcare.

The Eighth Circuit then upheld the NLRB's reliance on Specialty Healthcare in FedEx Freight, Inc. v. NLRB, 816 F.3d 515, 205 LRRM 3475 (8th Cir. 2016), as did the Fourth Circuit in Nestle Dreyer's Ice Cream Co. v. NLRB, 2016 BL 131875, 206 LRRM 3089 (4th Cir. 2016), finding the board “reasonably explained” its reasoning in adopting its overwhelming community of interest test.

In June, a Fifth Circuit panel upheld the board standard in Macy's, Inc. v. NLRB, 2016 BL 175991, 206 LRRM 3375 (5th Cir. 2016). Macy's has petitioned for rehearing en banc, but the court hasn't yet acted on the petition.

Scirica wrote for the Third Circuit that Specialty Healthcare was an adaptation or modification of NLRB precedent, and it “was not an abuse of discretion.”

Driver-Only Unit Was Within Board's Discretion

The appeals court rejected FedEx's argument that the “overwhelming community-of-interest” standard violates Section 9(c)(5) of the NLRA, which prohibits the board from giving controlling effect in unit decisions to the extent of organization by a labor union.

Enforcing the NLRB's unfair labor practice finding against the employer, the court also said the regional director and the board didn't err in finding that the FedEx dock employees didn't have an overwhelming community of interest that required including them in a voting unit with the road and city drivers.

Judge Thomas L. Ambro joined in the court's opinion. Judge Kent A. Jordan concurred in the judgment, but wrote separately to state his view that FedEx waived its challenge to Specialty Healthcare by failing to “squarely” raise the validity of the precedent in the board proceeding.

NLRB attorney Milakshmi V. Rajapakse in Washington argued for the board. FedEx Freight attorney Ivan Rich in Memphis, Tenn., argued for the employer.

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

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