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NLRB Misapplied Specialty Healthcare When Excluding Workers from Voting Unit: Second Circuit
Practical Law Legal Update w-004-7387 (Approx. 6 pages)
NLRB Misapplied Specialty Healthcare When Excluding Workers from Voting Unit: Second Circuit
by Practical Law Labor & Employment
| Published on 29 Nov 2016 • USA (National/Federal) |
In Constellations Brands, U.S. Operations, Inc. v. NLRB, the US Court of Appeals for the Second Circuit joined other circuits in validating the NLRB's framework from Specialty Healthcare & Rehabilitation Center of Mobile for evaluating proposed bargaining units, but held that the National Labor Relations Board (NLRB) misapplied that framework when it approved a petitioned-for bargaining unit without first considering whether members of the petitioned-for unit had an interest that was "separate and distinct" from all other employees.
On November 21, 2016, in Constellations Brands, U.S. Operations, Inc. v. NLRB, the US Court of Appeals for the Second Circuit joined other circuits in validating the NLRB's Specialty Healthcare framework for evaluating proposed bargaining units, but held that the NLRB misapplied that framework when it approved a petitioned-for bargaining unit without first considering whether members of the petitioned-for unit had an interest that was "separate and distinct" from all other employees. The Second Circuit determined that the NLRB approved an NLRB regional director's (RD) pre-election bargaining unit determinations (and the subsequent election results) where the RD recited the Specialty Healthcare standard without conducting the required analysis, including explaining why the petitioned-for unit had distinct interests from other employees sufficient to have it certified as a separate bargaining unit. ( (2d Cir. Nov. 21, 2016).)
Background
Constellation Brands, a winery operator, has a cellar operations department comprised of two types of employees:
- Outside cellar employees.
- Barrel employees.
Teamsters Local Union 601 petitioned the NLRB for an election, seeking to represent the outside cellar employees as a bargaining unit. Constellation argued that the appropriate bargaining unit should include all production and maintenance employees or at least all employees in the cellar operations department, not just the outside cellar employees. An NLRB RD agreed with the union that the outside cellar employees were an appropriate bargaining unit. The NLRB denied Constellation's request to review the RD's decision.
The outside cellar employees voted for representation by the union, the RD certified the union as the outside cellar employees' representative, and Constellation refused to bargain with the union. The NLRB granted the General Counsel's motion for summary judgment in an unfair labor practice (ULP) proceeding springing from Constellation's refusal to bargain. Constellation petitioned the Second Circuit for review of the Board's ULP decision to challenge the NLRB's underlying election proceedings, and the Board cross‐petitioned for enforcement of that decision.
Outcome
The Second Circuit:
- Granted Constellation's petition for review and denied the NLRB's cross-petition for enforcement.
- Held that the:
- NLRB's Specialty Healthcare framework for evaluating proposed bargaining units was valid and did not, as Constellation argued, create a presumption in favor of "micro unions" that would be inconsistent with the NLRA; and
- RD, with the NLRB's approval, misapplied the Specialty Healthcare framework by not requiring the union to make a prima facie showing that the interests of the outside cellar employees were sufficiently distinct from excluded employees' interests to warrant establishing the outside cellar employees as bargaining unit separate from other production and maintenance employees.
- Remanded to the NLRB to properly apply the Specialty Healthcare framework.
The Second Circuit noted that:
- An RD considers a proposed bargaining unit and has discretion to approve any appropriate unit if the members of the proposed unit share a "community of interests distinct from their interests as employees of the whole institution" (Staten Island Univ. Hosp. v. NLRB, 24 F.3d 450, 454 (2d Cir. 1994); Am. Hosp. Ass'n v. NLRB, 499 U.S. 606, 610 (1991); 29 U.S.C. § 159(b)).
- The NLRB's decision in Specialty Healthcare clarified the standard an RD must apply when evaluating proposed bargaining units, putting forward a two-step framework in which a RD and ultimately the Board must consider:
- at step one, whether a prima facie showing has been made that members of the proposed unit have an interest that is "separate and distinct" from all other employees; and
- at step two (conducted if the prima facie showing has been made in step one), the party opposing certification of the petitioned-for bargaining unit must demonstrate that the excluded employees it seeks to include in the bargaining unit share an "overwhelming community of interest" with the petitioned-for unit of employees.
- Six circuit courts of appeal have reviewed and affirmed the NLRB's use of the Specialty Healthcare framework and standard (see Kindred Nursing Ctrs. E., LLC v. NLRB, 727 F.3d 552 (6th Cir. 2013); FedEx Freight, Inc. v. NLRB, ‐‐‐F.3d‐‐‐, (7th Cir. Oct. 12, 2016); NLRB v. FedEx Freight, Inc., 832 F.3d 432 (3d Cir. 2016); Nestle Dreyer's Ice Cream Co. v. NLRB, 821 F.3d 489 (4th Cir. 2016); Macy's, Inc. v. NLRB, 824 F.3d 557 (5th Cir. 2016); FedEx Freight, Inc. v. NLRB, 816 F.3d 515 (8th Cir. 2016)).
- To properly apply the Specialty Healthcare framework, at step one the RD (and ultimately the NLRB) must do more than recite similarities and differences between the petitioned-for bargaining unit and excluded employees. Instead, they must analyze the relevant facts to:
- identify shared interests among members of the petitioned‐for unit; and
- explain why excluded employees have meaningfully distinct interests in the context of collective bargaining that outweigh similarities with the petitioned-for unit members.
- The analysis required at step one of the Specialty Healthcare framework is intended to avoid:
- creating arbitrary lines separating petitioned-for bargaining units with other employees; and
- having the framework itself become a rubber stamp of the unit which the union petitioned to represent.
The Second Circuit found that the RD:
- Recited the Specialty Healthcare standard and mentioned certain facts suggesting that outside cellar employees had distinct interests from other employees.
- Failed to conduct the required analysis that Specialty Healthcare demands.
- Did not explain at step one the relevance of certain factual findings and why certain differences found between outside cellar employees and other employees (physically separate locations, having separate front‐line and immediate supervisors) should outweigh certain similarities found between outside cellar employees and other employees (similar job functions and duties, identical skills and training requirements).
- The RD partially provided those factual explanations but only did that:
- at step two of the Specialty Healthcare framework; and
- to rebut Constellation's attempt to make a heightened showing that the excluded employees share an "overwhelming community of interest" with the presumptively appropriate petitioned‐for unit.
Practical Implications
The Second Circuit's decision in Constellation Brands joins six other Circuits in approving the Specialty Healthcare framework for evaluating proposed bargaining units. The decision shows that employers may succeed in challenging an election where the NLRB fails to explain why excluded employees (who the employer asserted should be part of the voting unit) have meaningfully distinct interests in the context of collective bargaining that outweigh similarities with unit members.