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NLRB Failed to Explain Basis For Waiving Part of Ordered Remedies in Settlement: DC Circuit
Practical Law Legal Update 4-617-5652 (Approx. 5 pages)
NLRB Failed to Explain Basis For Waiving Part of Ordered Remedies in Settlement: DC Circuit
by Practical Law Labor & Employment
| Published on 22 Jul 2015 • USA (National/Federal) |
In Dupuy v. NLRB, the US Court of Appeals for the DC Circuit vacated a decision by the National Labor Relations Board (NLRB) that approved a unilateral settlement agreement between the NLRB and an employer. The court found that the NLRB's decision failed to explain how the settlement agreement adequately provided for reinstatement and backpay with interest for an unlawfully terminated employee.
On July 17, 2015, in Dupuy v. NLRB, the US Court of Appeals for the District of Columbia Circuit vacated a decision by the NLRB that approved a unilateral settlement agreement between the NLRB and an employer. The court found that the NLRB's decision failed to explain how the settlement agreement adequately provided for reinstatement and backpay with interest for an unlawfully terminated employee, which remedy the NLRB earlier specified in an order that the US Court of Appeals for the First Circuit enforced. (No. 14-1001, (D.C. Cir. July 17, 2015).)
Background
In 2001, Northeastern Land Services terminated Jamison Dupuy's employment for disclosing his compensation terms to a Northeastern client in violation of Dupuy's confidentiality agreement with Northeastern. Dupuy filed an unfair labor practice (ULP) charge with the NLRB. Ultimately the panel (Board) heading the NLRB's judicial functions decided that Northeastern's prohibition on disclosing compensation terms violated the NLRA. In 2011, the First Circuit issued a decision enforcing the Board's order (NLRB v. Northeastern Land Servs., Ltd., 645 F.3d 475 (2011)). The First Circuit ordered Northeastern to:
- Fully reinstate Dupuy to his former job or to a substantially equivalent job.
- Make Dupuy whole by paying him full backpay, along with accrued interest to be computed in accordance with the Board's decision in New Horizons for the Retarded(283 N.L.R.B. 1173 (1987)).
Following the First Circuit's affirmance of the Board's decision, the NLRB negotiated a settlement with Northeastern without Dupuy's approval. The settlement provided for Dupuy's reinstatement with backpay of $201,788.50 plus $77,673.17 in accrued interest, to be paid out over 11 years. The settlement agreement included Dupuy's waiver of any claim to interest accruing during the eleven-year payment period, depriving him of $41,906.78 in compensation and contradicting the First Circuit's order that interest be computed according to New Horizons for the Retarded.
In December 2011, Northeastern offered reinstatement to Dupuy. In January 2012, Dupuy notified Northeastern and the NLRB's Regional Director that he did not agree to the settlement because the NLRB was unlawfully waiving his claim to interest during the payment period and that Northeastern's reinstatement offer was insufficient. Despite Dupuy's objections, an NLRB regional director issued a decision formally accepting the settlement agreement. After the NLRB's Acting General Counsel denied Dupuy's appeal of the regional director's action, Dupuy appealed to the Board. In 2013, the Board issued a one-paragraph opinion stating that the regional director "did not err" in accepting the settlement agreement (Order, Northeastern Land Servs., Ltd., (N.L.R.B. Sept. 4, 2013)). Dupuy appealed the NLRB's final decision to the DC Circuit.
Outcome
The DC Circuit vacated the NLRB's one-paragraph decision and remanded. The court held that the NLRB's decision failed to provide any basis or explanation for:
- Modifying and waiving the interest-payment terms required in the NLRB's original order as enforced by the First Circuit's decision.
- Finding that Northeastern's reinstatement offer provided employment terms and conditions sufficiently equivalent to Dupuy's old job.
The DC Circuit noted that:
- Circuit courts of appeals will reverse an NLRB decision that relies upon unsupported findings or departs from precedent without a reasonable justification (E.I. Du Pont De Nemours & Co. v. NLRB, 682 F.3d 65, 67 (D.C. Cir. 2012)).
- The NLRB has acknowledged that it lacks authority to modify an NLRB order that has already been enforced by a circuit court of appeals (Willis Roof Consulting, Inc., 355 N.L.R.B. 280 n. 1 (2010); D.L. Baker, Inc., 351 N.L.R.B. 515, 525 n. 31 (2007)).
The DC Circuit found that the settlement approved by the NLRB could not stand because:
- The settlement failed to conform with the remedy section in the NLRB's original order (as approved by the First Circuit) requiring that interest on Dupuy's backpay award be computed based on New Horizons.
- The NLRB failed to provide any explanation for allowing the settlement agreement to deviate from the NLRB's original order (Scepter, Inc. v. NLRB, 448 F.3d 388 (D.C. Cir. 2006)).
- The settlement agreement's waiver was not justified by any need for litigation efficiency, especially since Dupuy had waited eleven years for relief.
- Northeastern's reinstatement offer contained terms and conditions (aside from compensation) that were not necessarily substantially equivalent to what other similarly situated employees receive. On remand the NLRB must consider all material terms and conditions of employment in Northeastern's reinstatement offer the to determine whether the offer was sufficient.
Practical Implications
The DC Circuit's decision in Dupuy illustrates that:
- Courts take a different approach to a judicially-affirmed NLRB decision approving a settlement, as distinguished from a settlement the NLRB obtained before a federal court judgment enforcing the NLRB.
- Parties to an NLRB settlement should recognize that those settlements may face appellate court scrutiny. Agreements containing extremely favorable terms to one party may ultimately be vacated, as may agreements that do not closely conform to a circuit court order's express requirements.