NLRB Settlement Agreement Signed By Manager Who Lacked Authority Enforced; Employer's Affirmative Defenses Struck: NLRB | Practical Law

NLRB Settlement Agreement Signed By Manager Who Lacked Authority Enforced; Employer's Affirmative Defenses Struck: NLRB | Practical Law

The National Labor Relations Board (NLRB) granted summary judgment against an employer that defaulted on an informal settlement agreement to resolve a union's pending unfair labor practice (ULP) charges. The NLRB denied the employer's request for a hearing on the ULP charges and precluded the employer from contesting summary judgment based on its assertion that the settlement agreement was signed by a manager, who was not authorized to settle the matter. In Rogan Brothers Sanitation, the Board enforced the agreement, holding that the employer was bound by the terms of the settlement agreement and waived all arguments about the underlying ULP charges and that processing of the charges should be deferred to the parties' grievance arbitration system.

NLRB Settlement Agreement Signed By Manager Who Lacked Authority Enforced; Employer's Affirmative Defenses Struck: NLRB

by PLC Labor & Employment
Published on 13 Dec 2011 • USA (National/Federal)
The National Labor Relations Board (NLRB) granted summary judgment against an employer that defaulted on an informal settlement agreement to resolve a union's pending unfair labor practice (ULP) charges. The NLRB denied the employer's request for a hearing on the ULP charges and precluded the employer from contesting summary judgment based on its assertion that the settlement agreement was signed by a manager, who was not authorized to settle the matter. In Rogan Brothers Sanitation, the Board enforced the agreement, holding that the employer was bound by the terms of the settlement agreement and waived all arguments about the underlying ULP charges and that processing of the charges should be deferred to the parties' grievance arbitration system.

Key Litigated Issues

On December 9, 2011, the NLRB issued its decision in Rogan Brothers Sanitation, Inc., granting summary judgment against the employer. The key litigated issue was whether the NLRB should enforce an informal settlement agreement, despite the employer's contentions that the manager who signed the settlement lacked authority to bind the employer. The NLRB also ruled that the underlying ULP charge should not be deferred to the parties' grievance arbitration process.

Background

In 2010, the union representing Rogan Brother's Sanitation, Inc.'s employees filed unfair labor practice (ULP) charges alleging that the employer unlawfully discharged several employees. The union met with a manager of the employer who executed an NLRB informal settlement, which an NLRB regional director later approved. The settlement agreement required the employer to:
  • Make the discharged employees whole.
  • Expunge the discharged employees' employment records.
  • Post a notice to employees.
The agreement also included a provision which, in the event of any employer default, allowed the NLRB to file a complaint on the ULPs as well as a motion for summary judgment on those issues. The NLRB then would issue an Order to Show Cause why enforcement of the settlement terms should not be granted. The provision stated that in response to the NLRB's Order to Show Cause, the employer was only able to raise issues about the default and not the ULPs.
On February 1, 2011, the NLRB sent the Rogan Brothers's president a letter detailing its obligations under the settlement agreement and requesting compliance by February 18, 2011. The employer:
  • Requested that the settlement be withdrawn.
  • Noted that it would follow the settlement terms except for making the discharged employees whole.
  • Requested a hearing on the purportedly settled ULPs to show that back pay was not appropriate.
In March 2011, the NLRB sent a letter notifying the employer that it was in default of the settlement agreement. The employer responded noting that it complied with the notice provisions and expunged the personnel files, but refused to make the employees whole because the employer thought the agreement was prejudicial to its interests.
On March 23, 2011, the NLRB's General Counsel issued a complaint. The employer answered the complaint with affirmative defenses including:
  • The manager who signed the settlement agreement did not have actual or apparent authority to bind the company.
  • The allegedly unlawful discharges should be deferred to the grievance and arbitration mechanism in the parties' collective bargaining agreement (CBA).
The NLRB's General Counsel moved:
  • For the case to be transferred to the five-member panel (Board) heading the NLRB's judicial functions.
  • To strike portions of the employer's answer.
  • For summary judgment enforcing the terms of the informal settlement.
The Board granted the motion to transfer and took the case from the regional director to it. It also issued an Order to Show Cause why summary judgment should not be granted on the complaint and the employer's answer should not be struck, in part.

Outcome

By a 2-1 vote (Member Hayes, dissenting), a three-member panel of the Board:
  • Granted summary judgment against the employer, finding that even if the employer's manager did not have authority to bind the company, the employer ratified the settlement by failing to formally repudiate it in later communications with the NLRB.
  • Struck the employer's answer to the extent it raised defenses that were foreclosed by the terms of the informal settlement agreement.
The Board majority noted that the employer did not raise the lack of authority defense until after the NLRB approved the informal settlement agreement and issued a complaint when the employer defaulted. Because the Board majority found the agreement enforceable, it further held that:
  • Under the NLRB informal settlement agreement, the employer was foreclosed from contesting the ULPs settled by the agreement.
  • The employer voluntarily agreed to resolve the dispute about the allegedly unlawful discharges in the informal settlement and, therefore, waived its right to have the dispute in any other forum including arbitration provided for in the CBA.
Member Hayes, found that the employer's February and March letters made clear that the employer did not approve of or ratify the settlement terms because it requested:
  • That the settlement be withdrawn.
  • A hearing to resolve the ULP charge that was purportedly settled.

Practical Implications

In light of this decision, an employer should:
  • Clarify both internally and externally who has authority to respond to and settle NLRB ULP charges on its behalf.
  • If repudiating a settlement agreement, state clearly:
    • that it is repudiating the settlement and demanding a hearing on the ULP charge; and
    • why it is repudiating the settlement.
  • Consider raising affirmative defenses in pre-complaint communications with NLRB regional directors and investigators to preserve those defenses and avoid the Board striking affirmative defenses from a later answer as waived.
For information about the NLRB's process for handling ULP charges, see National Labor Relations Board Unfair Labor Practice Case Flowchart.

Court Documents

Rogan Brothers Sanitation, Inc., 357 N.L.R.B. No. 137 (Dec. 9, 2011).