NY NY v. NLRB

                  United States Court of Appeals

               FOR THE DISTRICT OF COLUMBIA CIRCUIT

       Argued October 17, 2002   Decided December 24, 2002 

                           No. 01-1351

                  New York New York, LLC, d/b/a 
               New York New York Hotel and Casino, 
                            Petitioner

                                v.

                 National Labor Relations Board, 
                            Respondent

            Local Joint Executive Board of Las Vegas, 
              Culinary Workers Union, Local 226 and 
                  Bartenders Union, Local 165, 
                            Intervenor

                        Consolidated with 
                           No. 01-1352

         On Petitions for Review and Cross-Applications 
                for Enforcement of Orders of the 
                  National Labor Relations Board

                            ---------

     Gary C. Moss argued the cause for petitioner.  With him 
on the briefs was Celeste M. Wasielewski.

     Steven B. Goldstein, Attorney, National Labor Relations 
Board, argued the cause for respondent.  With him on the 
brief were Arthur F. Rosenfeld, General Counsel, John H. 
Ferguson, Associate General Counsel, Aileen A. Armstrong, 
Deputy Associate General Counsel, and Margaret A. Gaines, 
Supervisory Attorney.

     Michael T. Anderson and Richard G. McCracken were on 
the brief for intervenor.

     Before:  Edwards, Randolph, and Tatel, Circuit Judges.

     Opinion for the Court filed by Circuit Judge Randolph.

     Randolph, Circuit Judge:  The issue in these consolidated 
petitions for review of orders of the National Labor Relations 
Board is whether employees of contractors working on a 
casino's property have labor organizing rights equivalent to 
those possessed by the casino's employees.  The Board seeks 
enforcement of its orders, and the union--Local Joint Execu-
tive Board of Las Vegas, Culinary Workers Union, Local 226 
and Bartenders Union, Local 165--has intervened in support 
of the Board.  Our decision in ITT Industries, Inc. v. NLRB, 
251 F.3d 995 (D.C. Cir. 2001), controls the outcome.

     New York New York Hotel and Casino is located on the 
Strip in Las Vegas, Nevada.  NYNY has leased space in its 
hotel and casino complex to independent restaurant manage-
ment companies to run food service facilities.  One of the 
companies, Ark Las Vegas Restaurant Corporation, operates 
two restaurants and several fast food outlets in a food court 
on NYNY's premises.

     NYNY permits Ark employees, when they are off-duty, to 
visit and patronize the casino and restaurants, and to enter 
the complex through NYNY's public entrances, but they may 
not wear their uniforms, and the bars are off limits at all 
times.  NYNY presented evidence that it had a policy against 
solicitation of any sort on its premises.

     Although NYNY has a collective bargaining agreement 
with the union, the agreement does not include Ark or its 
employees.  In February 1997, the union launched a cam-
paign to organize the Ark employees working on NYNY's 
property.  The following events were part of that campaign.  
On July 9, 1997, three off-duty Ark employees stood on 
NYNY property outside the main entrance, distributing union 
handbills to customers entering and exiting the casino and 
hotel.  The handbills stated that Ark paid its employees less 
than comparable unionized workers and urged the customers 
to tell Ark to sign a union contract.  Shortly after the 
handbilling began, a NYNY security supervisor, joined by a 
member of NYNY's management, told the Ark employees 
that they were trespassing and that they were not allowed to 
distribute literature on NYNY's property.  After the Ark 
employees protested that they had a right to be on the 
property and refused to leave, NYNY's security guards sum-
moned local law enforcement officers, who issued trespass 
citations to the handbillers.  The union then filed an unfair 
labor practice charge with the Board, alleging that NYNY 
had violated s 8(a)(1) of the National Labor Relations Act, in 
response to which the Board's regional director issued a 
complaint.

     On April 7, 1998, four off-duty Ark employees entered 
NYNY and distributed handbills to customers inside the 
complex.  Two of the handbillers stood outside America, one 
of the Ark-operated restaurants;  the other two stood in front 
of Gonzales y Gonzales, another of Ark's restaurants.  After 
they refused a request to stop handbilling, NYNY summoned 
the authorities, who issued trespass citations to three of the 
employees.  Another incident occurred two days later, on 
April 9, 1998, when two off-duty Ark employees (one of whom 
had received a trespass citation for the handbilling on April 7) 
stood outside NYNY's main entrance again, distributing 
handbills to passing customers.  After a sequence of events 
similar to those of July 9, 1997, these Ark employees also 
received trespass citations.  (All of the trespass citations 
issued to the Ark employees in 1998 were dropped.)  On 
April 20, 1998, the union filed unfair labor practice charges, 

alleging that NYNY had violated s 8(a)(1) of the Act;  the 
regional director issued another complaint.

     The Board's General Counsel argued in each case that 
under s 7 of the Act, 29 U.S.C. s 157, the Ark employees had 
a right to handbill at NYNY in non-work areas during 
nonwork times and that NYNY therefore violated s 8(a)(1) of 
the Act, 29 U.S.C. s 158(a)(1), when it prevented them from 
engaging in protected activity.  NYNY countered that be-
cause the employees worked for Ark, not NYNY, they had no 
s 7 rights against NYNY and that NYNY validly applied its 
restriction on activities on its premises.

     In separate proceedings Administrative Law Judges found 
in favor of the Ark employees, holding that when employees 
of a contractor work regularly and exclusively on the owner's 
property, their s 7 rights are equivalent to those of the 
employer's own employees.  New York New York Hotel LLC 
d/b/a New York New York Hotel & Casino, 28-CA-14519, 
1998 WL 1985077 (June 29, 1998);  New York New York Hotel 
LLC d/b/a New York New York Hotel & Casino, 28-CA-
15148, 1999 WL 33452907 (Apr. 9, 1999).  The Board affirmed 
in both cases, agreeing that the s 7 rights of the Ark 
employees were equivalent to those of NYNY's employees, 
and that in both cases the Ark employees were engaging in 
organization activities in non-work areas of NYNY's property.  
New York New York Hotel LLC d/b/a New York New York 
Hotel & Casino, 334 N.L.R.B. No. 87 (July 25, 2001);  New 
York New York Hotel LLC d/b/a New York New York Hotel 
& Casino, 334 N.L.R.B. No. 89 (July 25, 2001).

     Section 7 of the National Labor Relations Act guarantees 
employees "the right to self-organize, to form, to join, or 
assist labor organizations."  29 U.S.C. s 157.  Section 8(a)(1) 
enforces s 7, making it an "unfair labor practice" for an 
employer "to interfere with, restrain, or coerce employees in 
the exercise of the rights guaranteed in" s 7.  29 U.S.C. 
s 158(a)(1).  In recognition of the property rights of employ-
ers and the s 7 rights of employees to organize, the Supreme 
Court has drawn a distinction between employees and nonem-
ployees.  In Republic Aviation Corp. v. NLRB, 324 U.S. 793 

(1945), the Court sustained the Board's rulings that off-duty 
employees have s 7 rights to engage in organizing activities 
on their employer's premises in non-work areas--rights the 
employer may not infringe absent a showing that the ban is 
necessary to maintain workplace order and discipline.  Id. at 
803.  On the other hand, the Court held in NLRB v. Babcock 
& Wilcox Co., 351 U.S. 105, 112 (1956), that "an employer 
may validly post his property against nonemployee distribu-
tion of union literature" to employees, at least if the nonem-
ployee union organizers may reach the employees through 
other means.  Id. at 112.  Highlighting the difference be-
tween the rights of employees and nonemployees, the Court 
explained in a later case that a "wholly different balance [is] 
struck when the organizational activity [is] carried on by 
employees already rightfully on the employer's property, 
since the employer's management interests rather than his 
property interests [are] there involved."  Hudgens v. NLRB, 
424 U.S. 507, 521-22 n.10 (1976).

     This court's opinion in ITT Industries, Inc. v. NLRB, 251 
F.3d 995, 1000-03 (D.C. Cir. 2001), thoroughly analyzed these 
Supreme Court decisions and others.  There, we explained 
that although there were suggestions in Supreme Court 
opinions that the controlling distinction for s 7 purposes was 
between invitees and trespassers, see Eastex, Inc. v. NLRB, 
437 U.S. 556, 571 (1978);  Hudgens, 424 U.S. at 521-22, the 
Court's most recent pronouncement in Lechmere, Inc. v. 
NLRB, 502 U.S. 527 (1992), reaffirmed the principle an-
nounced in Babcock & Wilcox that the National Labor Rela-
tions Act confers rights upon employees, not nonemployees, 
and that employers may restrict nonemployees' organizing 
activities on employer property.  See ITT, 251 F.3d at 1002-
03;  see also United Food & Commercial Workers v. NLRB, 
74 F.3d 292, 295 (D.C. Cir. 1996).

     The Supreme Court has never addressed the s 7 rights of 
employees of a contractor working on property under another 
employer's control, and the Board's New York New York 
decisions shed little light on the important issues this factual 
pattern raises.  The Board provided no rationale to explain 
why, in areas within the NYNY complex but outside of Ark's 

leasehold, Ark's employees should enjoy the same s 7 rights 
as NYNY's employees.  Instead, the Board relied upon two of 
its previous decisions, Southern Services, 300 N.L.R.B. 1154 
(1990), and MBI Acquisition Corp. d/b/a Gayfers Dep't Store, 
324 N.L.R.B. 1246 (1997).  New York New York, 334 
N.L.R.B. No. 87 at 1;  New York New York, 334 N.L.R.B. No. 
89 at 1 n.3.  While the Board is certainly entitled to invoke its 
precedents to justify a given result, the court's responsibility 
is to examine those precedents to make sure they supply the 
reasoning lacking in the Board's opinion under review.  See 
ITT, 251 F.3d at 1004.  Here, neither Southern nor Gayfers 
fills the gap, a point on which we are in agreement with the 
Fifth Circuit in NLRB v. Pneu Elec., Inc., 309 F.3d 843, 850-
55 (5th Cir. 2002), handed down after oral argument in this 
case.  The Board decided Southern before the Supreme 
Court issued Lechmere;  Gayfers came after the Court's 
opinion.  Neither Board decision takes account of the princi-
ple reaffirmed in Lechmere that the scope of s 7 rights 
depends on one's status as an employee or nonemployee.

     In Southern, the Board ruled that an employee of a janito-
rial subcontractor that serviced Coca-Cola's manufacturing 
site had the same s 7 rights as Coca-Cola's employees.  
Therefore, despite the company's no solicitation rule, the 
subcontractor's employee had a s 7 right to distribute leaflets 
to fellow janitorial employees in non-work areas of Coca-
Cola's property after reporting to work but while she was off-
duty.  The Board interpreted the Supreme Court's opinions 
in Republic Aviation and Babcock & Wilcox as resting on a 
distinction between situations in which the union organizers 
were "properly on company property pursuant to the employ-
ment relationship" (Republic Aviation) and those in which 
they were "strangers to the employer's property" and "tres-
pass[ed] to facilitate activity covered by" s 7 (Babcock & 
Wilcox).  300 N.L.R.B. at 1155.  Because the subcontractor's 
employee "did not seek to 'trespass' on Coke's property" and 
"was 'already rightfully on [Coke's] property' " when she 
distributed union literature, the Board ruled that the case fell 
under Republic Aviation and that Coca-Cola thus violated 
her s 7 rights by preventing her from engaging in protected 

activity on company property. Southern, 300 N.L.R.B. at 
1155.

     The Eleventh Circuit enforced the Board's order.  South-
ern Services, Inc. v. NLRB, 954 F.2d 700, 704 & n.5 (11th Cir. 
1992).  In ITT Services we took note of the Eleventh Circuit's 
decision but viewed it as unpersuasive.  Although the opinion 
issued a month after Lechmere, it did not mention the Su-
preme Court's decision, and it therefore did "not account for 
Lechmere's express reaffirmation of the employee/nonemploy-
ee distinction."  ITT Services, 251 F.3d at 1003.

     The opinion of the court of appeals in Southern was con-
trary to Lechmere in other respects.  The Eleventh Circuit 
stated:

          Nor does the conduct of distributing union literature 
     transform the status of a subcontract employee ... 
     from that of a business invitee to that of a mere 
     trespasser.  Coca-Cola ... urge[s] this theory, but 
     suggest[s] no principled barrier against the argu-
     ment that a similar transformation occurs when the 
     regular employee of an employer such as Coca-Cola 
     engages in distribution activity.
     
Southern, 954 F.2d at 704.  At this point the court dropped a 
footnote citing Montgomery Ward & Co. v. NLRB, 692 F.2d 
1115, 1126 & n.12 (7th Cir. 1982).  The quoted passage 
appears to bare some confusion about trespass.  While the 
actions of the subcontractor's employee may not have fit 
within the ancient tort of trespass quare clausum fregit, her 
violation of the company's no solicitation rule nonetheless 
made her a trespasser.  As the Restatement puts it, a 
"conditional or restricted consent to enter land creates a 
privilege to do so only in so far as the condition or restriction 
is complied with."  Restatement (Second) of Torts s 168 
(1965).  The union organizers in Lechmere were in a similar 
position.  They were handing out leaflets in a shopping center 
parking lot jointly owned by Lechmere, which had a store in 
the center.  No one doubted that the organizers were tres-
passers because they violated Lechmere's no solicitation poli-
cy.  See 502 U.S. at 530, 540.  The Southern court could find 

no principled reason why, if the subcontractor's employee 
were a trespasser, employees of Coca-Cola would not also be 
trespassers when they handed out union literature on compa-
ny property.  But that is the very point of Lechmere, as we 
explained in ITT Industries:  the s 7 rights of employees 
entitle them to engage in organization activities on company 
premises.  See 502 U.S. at 537.  Nonemployees do not have 
comparable rights.  Id.  The Seventh Circuit case Southern 
cited--Montgomery Ward--is no longer good law.  On its 
facts it was nearly identical to Lechmere, yet it held that 
nonemployees could enter a store and distribute union litera-
ture to employees in violation of the employer's rule against 
it-just the opposite of what the Supreme Court later held in 
Lechmere.  See Montgomery Ward, 692 F.2d at 1126-27.

     The other opinion cited by the Board in these cases--
Gayfers--is also lacking.  There, the Board considered the 
s 7 rights of employees of an electrical subcontractor tempo-
rarily hired by Gayfers to perform remodeling work at its 
shopping mall.  Addressing the argument raised by Gayfers 
that the subcontractor's "employees were not employees of 
Gayfers and therefore [were] nonemployees within the mean-
ing of Babcock & Wilcox and Lechmere," the Board once 
again equated "nonemployee" with "trespasser," and "em-
ployee" with "invitee," relying upon the Supreme Court's pre-
Lechmere statement that " 'the nonemployees in Babcock & 
Wilcox sought to trespass on the employer's property, where-
as the employees in Republic Aviation did not.' "  Gayfers, 
324 N.L.R.B. at 1249 (quoting Eastex, 437 U.S. at 571).  The 
Board found that the subcontractor's employees "were not 
'strangers' to the Respondent's property, but rightfully on it 
pursuant to their employment relationship," and concluded 
that, as in Southern, the subcontractor's employees enjoyed 
s 7 rights "established by the standard of Republic Aviation 
and not ... Babcock & Wilcox and Lechmere."  Gayfers, 324 
N.L.R.B. at 1250.

     The Board's decisions in Southern and Gayfers, and thus 
its decisions in these consolidated cases, purport to rest on 
the Board's interpretation of Supreme Court opinions.  As 
such, the Board's judgment is not entitled to judicial defer-
ence.  "We are not obligated to defer to an agency's interpre-

tation of Supreme Court precedent under Chevron or any 
other principle."  Univ. of Great Falls v. NLRB, 278 F.3d 
1335, 1341 (D.C. Cir. 2002) (quoting Akins v. Fed. Election 
Comm'n, 101 F.3d 731, 740 (D.C. Cir. 1996) (en banc), vacated 
on other grounds, 524 U.S. 11 (1998)).  As our opinion in ITT 
Industries foreshadowed in its discussion of Southern, the 
critical question in a case of this sort is whether individuals 
working for a contractor on another's premises should be 
considered employees or nonemployees of the property own-
er.  Our analysis of the Supreme Court's opinions, unlike the 
Board's in Southern and Gayfers, yields no definitive answer.

     No Supreme Court case decides whether the term "employ-
ee" extends to the relationship between an employer and the 
employees of a contractor working on its property.  No 
Supreme Court case decides whether a contractor's employ-
ees have rights equivalent to the property owner's employ-
ees--that is, Republic Aviation rights to engage in organiza-
tional activities in non-work areas during non-working time so 
long as they do not unduly disrupt the business of the 
property owner--because their work site, although on the 
premises of another employer, is their sole place of employ-
ment.

     This leaves a number of questions in this case unanswered.  
Without more, does the fact that the Ark employees work on 
NYNY's premises give them Republic Aviation rights 
throughout all of the non-work areas of the hotel and casino?  
Or are the Ark employees invitees of some sort but with 
rights inferior to those of NYNY's employees?  Or should 
they be considered the same as nonemployees when they 
distribute literature on NYNY's premises outside of Ark's 
leasehold?  Does it matter that the Ark employees here had 
returned to NYNY after their shifts had ended and thus 
might be considered guests, as NYNY argues?  Is it of any 
consequence that the Ark employees were communicating, 
not to other Ark employees, but to guests and customers of 
NYNY (and possibly customers of Ark)?  Compare United 
Food & Commercial Workers, 74 F.3d at 298.  (Derivative 
access rights, the Supreme Court has held, stem "entirely 

from on-site employees' s 7 organizational right to receive 
union-related information."  ITT Industries, 251 F.3d at 997.)

     It is up to the Board to answer these questions and others, 
not only by applying whatever principles it can derive from 
the Supreme Court's decisions, but also by considering the 
policy implications of any accommodation between the s 7 
rights of Ark's employees and the rights of NYNY to control 
the use of its premises, and to manage its business and 
property.  The Board did not perform that function in these 
cases.  We will therefore grant the petitions for judicial 
review without reaching the other issues NYNY has present-
ed, deny enforcement of the Board's orders, and remand to 
the Board for further proceedings.

                                                            So ordered.