Failure to Exhaust Bars Challenge to Union’s Defectively Served NLRB Subpoena: Ninth Circuit | Practical Law

Failure to Exhaust Bars Challenge to Union’s Defectively Served NLRB Subpoena: Ninth Circuit | Practical Law

In NLRB v. Fresh and Easy Neighborhood Market, Inc., the US Court of Appeals for the Ninth Circuit upheld a district court's order enforcing a subpoena served on an employer before a National Labor Relations Board (NLRB) hearing. The Ninth Circuit held that the union's defective service of the subpoena on the employer's counsel was insufficient to excuse the employer from its obligation to petition to revoke the subpoena according to agency procedure.

Failure to Exhaust Bars Challenge to Union’s Defectively Served NLRB Subpoena: Ninth Circuit

by Practical Law Labor & Employment
Published on 17 Nov 2015 • USA (National/Federal)
In NLRB v. Fresh and Easy Neighborhood Market, Inc., the US Court of Appeals for the Ninth Circuit upheld a district court's order enforcing a subpoena served on an employer before a National Labor Relations Board (NLRB) hearing. The Ninth Circuit held that the union's defective service of the subpoena on the employer's counsel was insufficient to excuse the employer from its obligation to petition to revoke the subpoena according to agency procedure.
On November 13, 2015, in NLRB v. Fresh and Easy Neighborhood Market, Inc., the US Court of Appeals for the Ninth Circuit upheld a district court's order enforcing a subpoena duces tecum served on an employer before an NLRB hearing. The Ninth Circuit held that the union's defective service of the subpoena on the employer's counsel was insufficient to excuse the employer from its obligation to petition to revoke the subpoena according to agency procedure. The employer failed to exhaust its available administrative remedies, depriving the NLRB the opportunity to decide the subpoena matters before reaching a decision on the merits. Because the employer suffered no prejudice, the defective service did not excuse it from that exhaustion requirement. ( (9th Cir. Nov. 13, 2015).)
In January 2011, the United Food and Commercial Workers Union filed an unfair labor practice (ULP) charge against Fresh and Easy, alleging that the employer posted and maintained signs restricting the exercise of employees' rights under the NLRA. The General Counsel for the NLRB filed a complaint against Fresh and Easy before the Board.
In preparation for a hearing before an administrative law judge (ALJ), the union sought and was granted a subpoena duces tecum, which it served on Fresh and Easy, but failed to properly serve on Fresh and Easy's counsel. Fresh and Easy's counsel did not file a petition to revoke that subpoena with the ALJ, despite having the improper service ground available. Instead, Fresh and Easy simply failed to produce the subpoenaed documents.
In later enforcement proceedings in a California federal district court, Fresh and Easy did not produce the subpoenaed documents and challenged enforcement of the subpoena, asserting that it was invalid because it had not been served on counsel.
The Ninth Circuit affirmed the district court's order enforcing the subpoena and held that:
  • The union did not validly serve the subpoena because service on counsel is required (29 C.F.R. § 102.113(f)). The district court erred by holding the service was valid.
  • Fresh and Easy was not excused from the requirement under the NLRA and corresponding Board regulations that it petition within five days for revocation of the subpoena because of union's defective service (29 U.S.C. § 161; 29 C.F.R. § 102.31(b)).
  • Failure to serve a subpoena on counsel does not constitute grounds for revoking the subpoena, unless the subpoenaed party makes a showing of prejudice (Fresh & Easy Neighborhood Market, Inc. & United Food & Commercial Workers Int'l Union, , at *2 (N.L.R.B. Nov. 16, 2011)).
  • Despite invalid service, Fresh and Easy was required to produce the subpoenaed documents because:
    • an exhaustion requirement allows the agency (which is closer to the underlying dispute's facts) to have the first opportunity to interpret and administer authorizing substantive legislation (E.E.O.C. v. Lutheran Soc. Servs., 186 F.3d 959, 965 (D.C. Cir. 1999)); and
    • Fresh and Easy suffered no prejudice that would excuse it from the exhaustion requirement. Absent a petition for revocation of the subpoena, Fresh and Easy could not credibly claim prejudice.