DC Circuit Awards Attorneys' Fees for NLRB's Bad Faith Litigation and Slams Board's "Roguish" Nonacquiescence Policy | Practical Law

DC Circuit Awards Attorneys' Fees for NLRB's Bad Faith Litigation and Slams Board's "Roguish" Nonacquiescence Policy | Practical Law

In Heartland Plymouth Court MI, LLC v. NLRB, the US Court of Appeals for the District of Columbia Circuit granted an employer's motion for attorneys' fees, holding that the National Labor Relations Board (NLRB) demonstrated bad faith through actions that went beyond the limited justification for nonacquiescence.

DC Circuit Awards Attorneys' Fees for NLRB's Bad Faith Litigation and Slams Board's "Roguish" Nonacquiescence Policy

by Practical Law Labor & Employment
Published on 05 Oct 2016 • USA (National/Federal)
In Heartland Plymouth Court MI, LLC v. NLRB, the US Court of Appeals for the District of Columbia Circuit granted an employer's motion for attorneys' fees, holding that the National Labor Relations Board (NLRB) demonstrated bad faith through actions that went beyond the limited justification for nonacquiescence.
In Heartland Plymouth Court MI, LLC v. NLRB, the US Court of Appeals for the District of Columbia Circuit granted an employer's motion for attorneys' fees, holding that the NLRB engaged in bad faith litigation through its actions that went beyond the limited justification for nonacquiescence ( (D.C. Cir. Sept. 30, 2016)).

Background

The NLRB found that Heartland violated its collective bargaining agreement (CBA) by failing to bargain over the effects of reducing employee hours. This order was based on the NLRB's view that an employer's refusal to bargain on a matter allegedly within a CBA requires a "clear and unmistakable" waiver, which occurs when a union knowingly and voluntarily relinquishes its right to bargain about a matter. The DC Circuit, however, has consistently rejected the NLRB's view, holding instead that the content of a CBA is a question of "contract coverage." Under this precedent, where the matter is covered by the CBA, the union has exercised its bargaining right and the question of waiver is irrelevant.
Given the DC Circuit's "contract coverage" precedent, Heartland successfully appealed the NLRB's order, and the DC Circuit denied the NLRB's cross-application to enforce its order.
Heartland then moved for an award of attorneys' fees. In response, the NLRB continued to defend its nonacquiescence policy, arguing that it would be justified in refusing to apply the law of any circuit.

Outcome

The DC Circuit granted Heartland's motion for attorneys' fees and awarded it $17,649, holding that the Board's nonacquiescence against Heartland amounted to bad faith.
The DC Circuit first described the history of nonacquiescence, which occurs when the NLRB does not defer to the contrary views of a circuit court of appeals with the goal of:
  • Ensuring a nationally uniform labor policy.
  • Permitting the Board to bring national labor law questions to US Supreme Court resolution.
  • Allowing an issue to "percolate" among the circuits and generate a circuit split that can improve the likelihood of certiorari being granted by the Supreme Court.
The DC Circuit also set forth three characteristics of proper nonacquienscence, which are the NLRB:
  • Actually seeking Supreme Court review of adverse circuit court of appeals decisions.
  • Clearly asserting its nonacquiescence and specifying its arguments against adverse precedent to preserve them for Supreme Court review, which the court describes as having "candor in its application."
  • Invoking venue uncertainty to justify its action in cases where the appeal implicates a statute's multi-venue provision.
After providing this analysis, the DC Circuit admonished the NLRB for its improper nonacquiescence in this case, noting that the NLRB:
  • Never sought certiorari on the issue of contract coverage.
  • Did not seek a transfer to the Sixth Circuit, which embraces the Board's "clear and unmistakable" waiver policy.
  • Chose obstinacy by:
    • cross-petitioning the DC Circuit to enforce its Order;
    • spending several pages of its brief asking the DC Circuit to uphold its "clear and unmistakable" waiver policy; and
    • forcing Heartland to waste resources in replying.
The DC Circuit found that:
  • The Board demonstrated persistent nonacquiescence without either candor or the pursuit of judicial finality.
  • The Board's lack of candor was evident in its handling of DC Circuit "contract coverage" precedent. Rather than admit the error of its order against Heartland, the Board's brief:
    • urged the "reasonableness" of its "clear and unmistakable" waiver analysis; and
    • pretended there was no conflict between its order and DC Circuit law.
  • The Board knew ruling against Heartland would prompt an appeal to the DC Circuit.
  • If the Board did not want to sacrifice its order against Heartland or defend nonacquiescence before the DC Circuit, it still had the viable option of transferring the case to the Sixth Circuit. The facts favored a transfer because:
    • the Sixth Circuit accepted the Board's "clear and unmistakable" waiver position;
    • the NLRA allowed the Sixth Circuit jurisdiction over Heartland's appeal;
    • Heartland's operations were within the Sixth Circuit; and
    • the underlying conduct took place within the Sixth Circuit.
  • The Board cross-petitioned for enforcement in the DC Circuit to be punitive, not because of venue uncertainty.
  • The Board's candor-free approach to nonacquiescence asked the DC Circuit to let the Board make legal contentions:
    • not warranted by existing law; and
    • not supported by any argument for modifying, reversing, or establishing new law.
Therefore, the DC Circuit found that an award of attorneys' fee was warranted, noting that:
  • The Board's conduct of nonacquiescence against Heartland was intolerable and amounted to bad faith litigation.
  • The standard for an award of attorneys' fees for bad faith is met "where the party receiving the award has been the victim of unwarranted, oppressive, or vexatious conduct on the part of his opponent and has been forced to sue to enforce a plain legal right" (Am. Hosp. Ass'n v. Sullivan, 938 F.2d 216, 222 (D.C. Cir. 1991)).
  • The Board's conduct manifested a stubborn refusal to recognize any law and its obstinacy forced Heartland to waste time and resources fighting for a ruling the Board knew DC Circuit precedent would provide.
  • It was clear that the Board's conduct was intended to send a chilling message to Heartland and others that "even if we think you will win, we will still make you pay," a "roguish" form of nonacquiescence that:
    • assured the Board's ploy was virtually cost-free;
    • allowed the Board to continue its adherence to the "clear and unmistakable" waiver policy without the Supreme Court ever telling it to stop, even with the occasional defeat in an adverse circuit; and
    • was a bald attempt at a litigation advantage that amounts to bad faith.
    (Am. Hosp. Ass'n, 938 F.2d at 222.)
  • Granting Heartland's motion for attorneys' fees "serve[s] the dual purpose of vindicating judicial authority ... and making the prevailing party whole for expenses caused by his opponent's obstinacy" (Chambers v. NASCO, Inc., 501 U.S. 32, 46 (1991)).
Circuit Judge Millett dissented and:
  • Disagreed that a bad faith award of all the fees that Heartland incurred in this appeal was warranted;
  • Noted that awarding fees for bad faith is an exceptional sanction that should only be employed "when extraordinary circumstances or dominating reasons of fairness so demand" (Nepera Chem., Inc. v. Sea–Land Serv., Inc., 794 F.2d 688, 702 (D.C. Cir. 1986)).
  • Argued that this especially stringent and demanding standard was not met in this case.
However, Judge Miller conceded that the majority opinion fairly called out the Board for:

Practical Implications

This decision showed that the Board is not impermeable to an attorneys' fees award against it for bad faith litigation against employers. The DC Circuit's decision is also a reminder of what constitutes proper nonacquiescence by the Board. Where the Board knows that the outcome of an order will be unfavorable in a particular circuit with adverse law but still attempts to enforce the order in that circuit, forcing an employer to spend time and resources on litigation, this nonacquiescence approach amounts to bad faith. Employers should call attention to any improper nonacquiescence by the Board in their briefs and move for attorneys' fees if warranted.