District Court Abused Discretion When Granting Partial Rather than Full NLRA Section 10(j) Relief: Seventh Circuit

Practical Law Legal Update 1-526-6386 (Approx. 5 pages)

District Court Abused Discretion When Granting Partial Rather than Full NLRA Section 10(j) Relief: Seventh Circuit

by PLC Labor & Employment

Key Litigated Issues

In Harrell v. American Red Cross, the key litigated issue was whether a district court improperly failed to order rescission for all of an employer's unilateral changes to represented employees' terms and conditions of employment after finding that the union was entitled to injunctive relief under Section 10(j) of the NLRA (29 U.S.C. § 160(j)).

Background

A union was elected to represent blood collection specialists for the American Red Cross (ARC) in 2007 and certified in 2010. During the delay between election and certification, lengthened by ARC's election objections which were later overruled by the NLRB, ARC made several unilateral changes to its bargaining unit employees' terms and conditions of employment. Without providing notice or an opportunity to bargain to the union, ARC made changes that included:

Suspending employees' merit pay increases.
Discontinuing ARC's matching contributions to the employees' 401(k) plan.
Closing ARC's defined pension plan to new employees.
Changing health insurance benefits.
Decreasing the number of personal time-off hours an employee can carry over from year to year.
Other changes to the work responsibilities of unit and non-unit employees.

Due to these changes, worker involvement in union activities dramatically declined. In response, the union filed unfair labor practice (ULP) charges and requested that the NLRB seek interim injunctive relief under section 10(j) of the NLRA (29 U.S.C. § 160(j)). Section 10(j) authorizes the NLRB to seek temporary injunctions against employers and unions in federal district courts to enjoin ULPs while ULP complaints are litigated before an NLRB administrative law judge (ALJ) and the panel (Board) heading the NLRB's judicial functions. The temporary injunctions are used to restore the pre-bargaining status quo to ensure meaningful negotiations and that the Board's ultimate remedies are not moot.

The NLRB filed suit, seeking temporary injunctive relief from ARC's unilateral changes under Section 10(j) of the NLRA pending completion of the NLRB's administrative proceedings against ARC. The NLRB ALJ held that the ARC's actions constituted a ULP under Section 8(a)(5) of the NLRA.

Reviewing the record in the administrative proceeding, the district court:

Held that the NLRB satisfied the criteria for temporary injunctive relief under Section 10(j), having shown a likelihood of success on the merits and irreparable harm to the union.
Ordered a rescission only of ARC's failure to grant merit pay increases to union-represented employees, reasoning that a rescission of the other changes would create practical problems and force the court to "micro-manage" employment relationships.

Both parties appealed to the Seventh Circuit, with ARC seeking to lift the injunction, and the NLRB seeking an order for rescission of the remaining ARC actions.

Outcome

On April 23, 2013, the US Court of Appeals for the Seventh Circuit issued an opinion in Harrell v. American Red Cross, affirming the district court's conclusion that injunctive relief was proper, but holding that the court abused its discretion in failing to order ARC to rescind all of the unilateral actions.

The court first held that the district court correctly concluded that the NLRB had satisfied the criteria for injunctive relief under Section 10(j), because the NLRB had shown:

That the Board would likely find that ARC's actions constituted ULPs, noting that:
- the ALJ's finding of ULPs supports this conclusion; and
- ARC's argument that its changes were not unlawful because they were made before the union was certified was contrary to well-established NLRB law.
Likely harm to employees resulting from ARC's unilateral changes.
That relief to individual employees ordered by the ALJ was not adequate to address the harms to the union caused by ARC's actions.
That the harm to the union outweighed any countervailing public interest considerations.

Although the district court granted relief only as to the suspension of the merit pay increases, the Seventh Circuit concluded that the same analysis was applicable to ARC's other unilateral changes as well. In reaching this conclusion, the Seventh Circuit reasoned that:

The intent of Section 10(j) is to restore the status quo as it existed before the commission of the ULPs (Electro-Voice). Failing to reestablish the status quo, by contrast, would require the union to bargain back previously attained rights.
The district court's finding that there would be practical difficulties in ordering rescission of other changes, or that it would be required to micro-manage employment relationships, was not supported by any specific evidence. Instead, complete rescission would simply restore the status quo prior to the changes.

In light of these conclusions, the Seventh Circuit remanded the case to the district court to order rescission of all unilateral changes made by ARC.

Practical Implications

The Seventh Circuit's decision appears to establish an all-or-nothing approach in the context of Section 10(j) temporary injunctions against unilateral actions. Where a district court concludes that a party has satisfied the criteria for injunctive relief, under the Seventh Circuit's reasoning, it will have little choice but to order rescission for all of the employer's unilateral actions in order to restore the status quo.

District Court Abused Discretion When Granting Partial Rather than Full NLRA Section 10(j) Relief: Seventh Circuit | Practical Law