United Svc Auto Assn v. NLRB

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United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued October 4, 2004 Decided November 9, 2004

No. 03-1371

UNITED SERVICES AUTOMOBILE ASSOCIATION,
PETITIONER

v.

NATIONAL LABOR RELATIONS BOARD,
RESPONDENT

Consolidated with
No. 04-1001

On Petition for Review and Cross–Application
for Enforcement of an Order of the
National Labor Relations Board

Andrew M. Kramer argued the cause for petitioner. With
him on the briefs was Michael D. Malfitano.

Bills of costs must be filed within 14 days after entry of judgment.
The court looks with disfavor upon motions to file bills of costs out
of time.
 2

Joan E. Hoyte, Attorney, National Labor Relations Board,
argued the cause for respondent. With her on the brief were
Arthur F. Rosenfeld, General Counsel, John H. Ferguson,
Associate General Counsel, and Aileen A. Armstrong, Deputy
Associate General Counsel. Charles P. Donnelly, Superviso-
ry Attorney, entered an appearance.
Before: ROGERS, TATEL and GARLAND, Circuit Judges.
Opinion for the Court filed by Circuit Judge ROGERS.
ROGERS, Circuit Judge: When an employee anonymously
distributed fliers after working hours expressing coworkers’
concerns about the company’s layoffs of long-term employees,
the company interrogated her about who was involved. Fear-
ing retaliation, she was evasive in her responses. When she
later admitted to the general manager of the company that
she had distributed the fliers, she was discharged for lying
during the interrogation. The National Labor Relations
Board ruled that the company violated section 8(a)(1) of the
National Labor Relations Act (‘‘the Act’’), 29 U.S.C.
§ 158(a)(1) (2000), by interrogating the employee about con-
certed activity protected under section 7 of the Act, id. § 157,
and by terminating the employee for engaging in such activi-
ty. The company contends on appeal that the employee’s
concerted activity was not protected under section 7 because
it violated the company’s valid workplace rules, and that even
if the activity was protected, the company did not violate
section 8(a)(1) because it had legitimate business reasons for
questioning the employee about her hours and work. Fur-
ther, the company contends that it properly discharged the
employee for lying, irrespective of her concerted activity.
We deny the petition for review. The company fails to
show that the Board erred in finding that the workplace rules
were invalid because overly broad or not clearly disseminated
to employees. The company also fails to show that the Board
erred in finding, without relying on the Bourne factors,1 that
the interrogation was coercive in view of the company’s
admissions and the questions asked. Finally, the company
fails to show that the Board erred in not engaging in the
1 Bourne v. NLRB, 332 F.2d 47 (2d Cir. 1964).
 3

Wright Line analysis2 when the evidence showed that the
employee was discharged for a single unlawful purpose. Ac-
cordingly, we grant the Board’s cross-application for enforce-
ment of its order.

I.
The United Services Automobile Association, a non-union
business, provides insurance and financial services to the
military community. Headquartered in Texas, the company
has a regional office in Tampa, Florida, consisting of a six-
story gated compound with security guards and cameras
monitoring the entrance. The company employs approxi-
mately 1600 employees who work various shifts, normally
between 7:30 a.m. and 6:30 p.m. Because many employees
keep claimants’ confidential information on their desks, it is
common knowledge that employees may not look through the
work files on each other’s desks unless they have a business
need to do so. The company’s employee handbook, issued
March 2001, contained a ‘‘Workplace Solicitation’’ policy that
stated: ‘‘Advertising or distributing any non-[company] print-
ed information including fliers, business cards, brochures, or
catalogs is not permitted at any time in the work area and
only during non-working hours in non-work areas.’’
On July 31, 2001, Loretta Williams, an insurance adjuster
at the company, anonymously distributed approximately 1300
fliers throughout the building between 8 p.m. and 11 p.m.
after normal working hours. This followed several weeks of
discussion with her coworkers regarding their dissatisfaction
with the manner in which the company was laying off long-
term employees pursuant to a reorganization plan. The fliers
criticized the company’s layoffs and requested employees
wear a red ribbon in support of their former colleagues.
Williams placed the fliers on employees’ desks, at the ends of
hallways, and in employees’ mailboxes. The following day,
August 1, the Senior Vice President and General Manager of
2 Wright Line, 251 N.L.R.B. 1083 (1980), enforced, 662 F.2d 899
(1st Cir. 1981).
 4

the company, General Thomas V. Draude, sent an email to
the managers instructing them not to remove the fliers, to let
employees ‘‘grieve’’ the loss of laid-off employees, and to
advise employees that distributing non-company printed in-
formation in the workplace violated the no-solicitation policy.
The following week, on August 6, General Draude left a voice-
mail message for all employees explaining that managers had
begun to collect the fliers because of the no-solicitation policy.
On August 9, Williams’s supervisor, Eileen Hale, asked
Williams to accompany her to the personnel office. There
Williams was introduced to Sheila Christy–Martin, the di-
rector of the human resources advisory team, who proceeded
to question Williams for the next hour about safety, overtime,
and a possible breach of security with regard to distribution
of the fliers. Christy–Martin told Williams that she had been
clocked leaving the building at 11 p.m. and asked if she had
been working during that time. Williams responded that she
had been working on her files. When asked if she had seen
anything unusual, Williams said no and that even if she had
she would not say because she was afraid of retaliation.
Upon further interrogation, Williams became upset and said
that she was very uncomfortable with the line of questioning
and did not think the questioning was valid. She also said
that she did not want to answer any questions about the fliers
because she thought she needed an attorney. Christy–Mar-
tin then told Williams that the company’s only concern was
that the distribution violated the company’s no-solicitation
policy, and that Williams had been seen on the security
camera entering the building at 7 p.m carrying a large box.
When asked about the contents of the box, which held the
fliers, Williams said it contained ‘‘papers.’’ Williams then
stated that she did not want to answer any more questions,
and she refused to give Hale her July 31 overtime hours as
she had repeatedly explained during the interrogation that
she was not claiming overtime.
Six days later, Williams told General Draude that she was
responsible for distributing the fliers. Although Williams
explained that she was purposefully evasive during the inter-
rogation due to fear of retaliation, General Draude fired her,
 5

effective immediately, for lying during the interrogation.
Williams subsequently received a check for the overtime on
July 31 that she did not claim. In November 2001, the
company modified its no-solicitation policy, replacing the
words ‘‘working hours’’ with ‘‘working time.’’
The Board, adopting the findings and conclusions of the
Administrative Law Judge (‘‘ALJ’’), concluded that the com-
pany violated section 8(a)(1) of the Act by unlawfully interro-
gating Williams and another employee, Andrew Snyder, re-
garding concerted activity that was protected under section 7,
and by unlawfully discharging Williams for engaging in that
activity. The Board also found that the company had main-
tained an unlawful no-solicitation policy that was overly
broad. The Board ordered the company to, among other
things, rescind the policy and to offer Williams full reinstate-
ment. The company petitioned for review, and the Board
filed a cross-application for enforcement of its order.

II.
An employer violates section 8(a)(1) of the Act by coercive-
ly interrogating an employee about concerted activity that is
protected under section 7 of the Act. See Perdue Farms,
Inc. v. NLRB, 144 F.3d 830, 835 (D.C. Cir. 1998); Turnbull
Cone Baking Co. v. NLRB, 778 F.2d 292, 296 (6th Cir. 1985),
cert. denied, 476 U.S. 1159 (1986). In deciding whether an
interrogation violates section 8(a)(1), the Board must make
three determinations. First, the Board must determine
whether the employee engaged in concerted activity protected
under section 7 of the Act. Because such a determination
‘‘implicates [the Board’s] expertise in labor relations, a rea-
sonable construction by the Board is entitled to considerable
deference’’ by this court. NLRB v. City Disposal Sys. Inc,
465 U.S. 822, 829 (1984). Second, the Board must determine
whether, ‘‘under all the circumstances,’’ the employer’s inter-
rogation ‘‘reasonably ‘tends to restrain, coerce, or interfere
with rights guaranteed by the Act.’ ’’ Perdue Farms, 144
F.3d at 835 (quoting Rossmore House, 269 N.L.R.B. 1176,
1177 (1984), aff’d sub nom. Hotel Employees & Rest. Employ-
 6

ees Union, Local 11 v. NLRB, 760 F.2d 1006 (9th Cir. 1985)).
To reach that conclusion, the Board need not find that the
employer’s ‘‘language or acts were coercive in actual fact,’’
Medeco Sec. Locks, Inc. v. NLRB, 142 F.3d 733, 745 (4th Cir.
1998), but only that it had a ‘‘tendency to coerce’’ employees.
Avecor, Inc. v. NLRB, 931 F.2d 924, 932 (D.C. Cir. 1991);
accord Teamsters Local Union No. 171 v. NLRB, 863 F.2d
946, 954 (D.C. Cir. 1988). Third, the Board must determine
whether the employee’s interests in exercising section 7
rights are outweighed by the employer’s ‘‘substantial and
legitimate business justification[s]’’ for interfering with those
rights. Medeco, 142 F.3d at 745. Because Congress has
vested the Board, and not the courts, with the primary
responsibility ‘‘to strike the proper balance between the as-
serted business justifications and the invasion of employee
rights in light of the Act and its policy,’’ NLRB v. Fleetwood
Trailer Co., 389 U.S. 375, 378 (1967) (quoting NLRB v. Great
Dane Trailers, 388 U.S. 26, 33–34 (1967)), the court will deny
a petition for review if the Board’s balancing is rational and
consistent with the Act. See Beth Israel Hosp. v. NLRB, 437
U.S. 483, 504 (1978).
The Board’s factual findings, if supported by substantial
evidence in the record as a whole, are conclusive even if a
reviewing court on de novo review would reach a different
result. Universal Camera Corp. v. NLRB, 340 U.S. 474, 487–
88 (1951); Perdue Farms, 144 F.3d at 834–35. The court will
uphold the Board’s adoption of an ALJ’s credibility determi-
nations unless ‘‘those determinations are ‘hopelessly incredi-
ble,’ ‘self-contradictory,’ or ‘patently unsupportable.’ ’’ Cad-
bury Beverages, Inc. v. NLRB, 160 F.3d 24, 28 (D.C. Cir.
1998) (quoting Capital Cleaning Contractors, Inc. v. NLRB,
147 F.3d 999, 1004 (D.C. Cir. 1998); and Elastic Stop Nut
Div. of Harvard Indus., Inc. v. NLRB, 921 F.2d 1275, 1281
(D.C. Cir. 1990)).
As the Board states in its brief, ‘‘all the factors of a classic
independent Section 8(a)(1) unlawful interrogation are pres-
ent in this case.’’ Resp’t’s Br. at 30. Although the company
admits in its reply brief that Williams engaged in concerted
activity when she distributed the fliers, the company contends
 7

that such activity was unprotected by the Act. General
Draude’s August 1 email instructed the managers to let the
employees ‘‘grieve,’’ implicitly referencing employees’ con-
cerns about the layoffs. The director of human resources
Christy–Martin nevertheless interrogated Williams about her
after-hours activities on July 31 because the company sus-
pected she was responsible for distributing the fliers address-
ing the layoffs and wanted to know who else was involved.
We are unpersuaded the interrogation was lawful because
Williams lost the protection afforded by the Act when she
distributed the fliers in violation of valid workplace rules.

A.
The Board’s finding that Williams’s anonymous distribution
of the fliers was concerted activity protected under section 7
of the Act3 is supported by substantial evidence in the record.
The fliers urged employees to show support for laid-off
colleagues and criticized management’s selection of employees
for layoff. As this court has recognized, concerted activity
includes ‘‘circumstances where individual employees seek to
initiate or to induce or to prepare for group action.’’ Meyers
Indus., 281 N.L.R.B. 882, 887 (1986). Similarly, ‘‘an individu-
al who brings a group complaint to the attention of manage-
ment is engaged in concerted activity.’’ Prill v. NLRB, 755
F.2d 941, 954 (D.C. Cir. 1985).
The company’s contention that Williams’s concerted activity
was unprotected under section 7 because it violated the
company’s no-solicitation policy is unavailing. It is long
settled that a rule prohibiting employee solicitation and distri-
bution of materials during non-work time and in non-work
3 Section 7 of the Act provides that ‘‘[e]mployees shall have the
right to TTT engage in TTT concerted activities for the purpose of
collective bargaining or other mutual aid or protection.’’ 29 U.S.C.
§ 157. Section 8(a)(1) of the Act enforces section 7 rights by
making it an unfair labor practice for an employer ‘‘to interfere
with, restrain, or coerce employees in the exercise of [those] rights’’
Id. § 158(a)(1); see Am. Postal Workers Union v. NLRB, 370 F.3d
25, 26–27 (D.C. Cir. 2004).
 8

areas is presumptively invalid ‘‘absent a showing by the
employer that a ban is necessary to maintain plant discipline
or production.’’ Eastex, Inc. v. NLRB, 437 U.S. 556, 571
(1978) (citing Republic Aviation Corp. v. NLRB, 324 U.S. 793,
798–99 (1945)); Rest. Corp. of Am. v. NLRB, 827 F.2d 799,
806 (D.C. Cir. 1987). The company’s employee handbook of
March 2001 contains a written policy prohibiting solicitation
and distribution of non-company materials ‘‘at any time in the
work area and only during non-working hours in non-work
areas.’’ Under Board precedent, a no-distribution rule using
the term ‘‘working hours’’ (as opposed to ‘‘working time’’) is
presumptively invalid. Our Way, Inc., 268 N.L.R.B. 394
(1983). As interpreted and explained by General Draude in
his August 1 email to the managers, the policy prohibits
‘‘distributing non-[company] printed information in the work-
place’’ (emphasis added) (internal quotation marks omitted)—
meaning in both work and non-work areas during work and
non-work time. One manager, David Huffman, sent excerpts
of that email to his employees, noting that the no-solicitation
policy banned distribution of non-company materials ‘‘in the
workplace.’’ General Draude’s company-wide voice mail of
August 6 likewise advised employees that managers picked up
the fliers ‘‘because the company’s non-solicitation policy says
you can’t distribute non-[company] material in the building’’
(emphasis added). Thus, there was substantial evidence from
which the Board could properly conclude that the policy, as
interpreted and communicated by the management to the
employees, is presumptively unlawful because it operates as a
blanket prohibition of employee solicitation and distribution of
non-company materials, even during non-work time, such as
during breaks and mealtimes, and in non-work areas, such as
in lunchrooms and lounge areas. See Mercury Marine–Div.
of Brunswick Corp., 282 N.L.R.B 794, 794–95 (1987).
Rather than offer evidence of special business circum-
stances related to production, efficiency, or discipline to justi-
fy the management’s interpretation of the no-solicitation poli-
cy, the company contends that the Board erred in finding the
entire policy invalid, as the written policy has a valid compo-
nent restricting solicitation and distribution in ‘‘work areas.’’
 9

This contention defends the legality of the company’s written
policy, rather than the policy as explained to employees by
management. The Board correctly noted that the company
did not except to the ALJ’s failure to rule expressly on the
legality of the written policy in the March 2001 handbook, and
hence that issue was not before it. While the company may
nevertheless rebut the presumptive invalidity of its policy by
showing that it applied or communicated the policy ‘‘in such a
way as to convey an intent to permit solicitation during
nonworking time,’’ Our Way, Inc., 268 N.L.R.B. at 411, or in
non-work areas, General Draude’s email and voice mail, as
well as Huffman’s email excerpting General Draude’s email,
make clear that the ban is not limited to work areas. The
existence of a revised written policy does not moot the
Board’s remedial order directing the company to rescind its
unlawful policy. Although the Board noted that the company
admitted in its brief to the Board that its written policy in the
March 2001 handbook ‘‘may have been overly broad,’’ by
challenging the Board’s decision, the company has failed to
show that it has repudiated its former policy, much less
assured employees that it will not apply the policy in the
future to interfere with their protected rights. See Ark Las
Vegas Rest. Corp. v. NLRB, 334 F.3d 99, 108 (D.C. Cir. 2003).
The company’s contention that Williams’s activity lost sec-
tion 7 protection because it violated the company’s unwritten
no-access policy also fails. The Board found that the compa-
ny had not shown that its no-access policy was ‘‘clearly
disseminated’’ to employees, and its finding is supported by
substantial evidence in the record. Id. at 109 (quoting Tri–
County Med. Ctr., Inc., 222 N.L.R.B. 1089, 1089 (1976)). The
ALJ dismissed the company’s evidence that its supervisors
had met with and notified employees about restrictions on
building access because the only supervisor at the hearing,
Hale, could not explain how or when this policy had been
disseminated to employees. The ALJ credited Williams’s
testimony, and that of another employee, Valerie Toloday,
that they had previously accessed the work areas of other
employees to distribute non-company materials and had never
been questioned. Other evidence indicated that employees
 10

routinely accessed each other’s desks, break rooms, and
restrooms throughout the building, distributing invitations,
magazine articles, Avon catalogs, and the like. To overcome
this damaging evidence, the company takes out of context
Williams’s testimony that she understood she was not to rifle
through confidential matters on other employees’ desks,
which the company makes no claim she did. In sum, the
Board properly found that the company failed to demonstrate
that the no-access policy had been clearly disseminated to
employees or enforced by the company.

B.
Because the company interrogated Williams to identify the
employees involved in section 7 concerted activity, the Board
reasonably concluded that the interrogation was unlawful.
Cf. TRW–United Greenfield Div. v. NLRB, 637 F.2d 410, 418
(5th Cir. 1981); NLRB v. Solboro Knitting Mills, Inc., 572
F.2d 936, 939–40 (2d Cir. 1978). The unlawful nature of the
interrogation is evidenced by General Draude’s testimony
that the company had already concluded that an employee
had written the fliers, and that Williams was the ‘‘strongest
candidate’’ for having distributed the fliers because the July
31 security records showed Williams entering the building
with a large box and leaving after authorized work hours.
General Draude admitted that Williams was questioned be-
cause the company wanted to know who else was involved in
distributing the fliers. Christy–Martin, the director of hu-
man resources who conducted the interrogation, testified
similarly that, because the fliers were in the work area, the
company wanted to know who had handed them out. There
is, then, substantial evidence in the record to support the
Board’s finding that the employees could reasonably believe
that the company had only one objective in questioning
Williams and the other employee:4 to identify, with certainty,
4 Although the company may not have preserved its challenge
regarding Snyder because the company raises the issue only in a
footnote to its brief, see Hobson v. Wilson, 737 F.2d 1, 50 n.144
(D.C. Cir. 1984); cf. Cal. Dep’t of Water Res. v. FERC, 306 F.3d
 11

who had engaged in the protected concerted activity. See
Allegheny Ludlam Corp. v. NLRB, 104 F.3d 1354, 1359 (D.C.
Cir. 1997).
Contrary to the company’s contention, the Board did not
err by failing to apply the five-factor test set forth in Bourne
v. NLRB, 332 F.2d 47 (2d Cir. 1964), in evaluating whether
the interrogation of Williams was coercive. As the court has
stated, the ‘‘flexibility and deliberately broad focus of this test
make clear that the Bourne criteria are not prerequisites to a
finding of coercive questioning, but rather useful indicia that
serve as a starting point for assessing the ‘totality of the
circumstance.’ ’’ Perdue Farms, 144 F.3d at 835 (quoting
Timsco Inc. v. NLRB, 819 F.2d 1173, 1178 (D.C. Cir. 1987)).
Requiring the Board to address each of the Bourne factors
where the employer has admitted an unlawful motive for the
interrogation would transform a flexible tool for organizing
section 8(a)(1) analysis into a rigid hurdle divorced from its
purpose of ensuring that non-threatening interrogation is not
deemed an unfair labor practice. See Bourne, 332 F.2d at 48;
see also NLRB v. Milco, Inc., 388 F.2d 133, 137 (2d Cir.
1968).
The company’s admission of its unlawful motive for inquir-
ing into its employees’ concerted activity belies its contention
that it interrogated Williams for legitimate business reasons.
See NLRB v. Hale Container Line, Inc., 943 F.2d 394, 401 &
n.50 (4th Cir. 1991) (citing L’Eggs Prod., Inc. v. NLRB, 619
F.2d 1337, 1343 (9th Cir. 1980)). The Board did not fail, as
the company contends, to strike an appropriate balance be-
tween the company’s asserted business justifications and its

1121, 1126 (D.C. Cir. 2002) (citing Carducci v. Regan, 714 F.2d 171,
177 (D.C. Cir. 1983)), we need not address that question. The
company states in its brief that it is challenging the Board’s finding
that it unlawfully interrogated Snyder on the same grounds as it
challenges the finding regarding Williams’s interrogation. Petition-
er’s Br. at 39 n.9. Based on the reasoning underlying our disposi-
tion of the company’s challenge to the Board’s finding regarding
Williams, we affirm the Board’s finding that the company unlawfully
interrogated Snyder.
 12

interference with Williams’s exercise of her section 7 rights.
It found that the company’s justifications were pretextual,
and its finding is supported by substantial evidence in the
record. The ALJ discredited as ‘‘not believable’’ General
Draude’s testimony that concerns about building security and
overtime pay prompted the interrogation of Williams. The
Board reasonably came to the ‘‘inescapable’’ conclusion that
the security concern was pretextual ‘‘because, from [the com-
pany’s] own security records, the [company] already knew the
employees who were in the building that evening.’’ As for
overtime pay, the company cites federal regulations preclud-
ing an employer from accepting the benefits of an employee’s
work without paying for it, 29 C.F.R. §§ 785.11, 785.13 (2004),
but the regulations do not authorize an employer to coercively
interrogate an employee. Furthermore, the company fails to
show that it ever questioned another employee about failing
to claim overtime for remaining in the building after a shift,
or forced an employee over objection to claim overtime.

C.
The company’s contention that it could lawfully terminate
Williams for lying during the interrogation, even if her dis-
charge was also motivated by retaliation against her for
distributing the fliers, is without merit. See Spartan Plas-
tics, 269 N.L.R.B. 546, 552 (1984). There was substantial
evidence in the record to support the Board’s finding that
Williams had responded evasively during the interrogation
because she feared retaliation against her for engaging in
protected concerted activity. The Board was thus warranted
in concluding that Williams had no obligation to respond to
the questions in any particular manner and that her dishones-
ty about her protected concerted activity did not constitute a
lawful reason to discharge her. See id.; Jay Foods, Inc. v.
NLRB, 573 F.2d 438, 444 (7th Cir.), cert. denied, 439 U.S. 859
(1978). The cases on which the company relies—Aroostook
County Regional Ophthalmology Center v. NLRB, 81 F.3d
209 (D.C. Cir. 1996), and Earle Industries, Inc. v. NLRB, 75
F.3d 400 (8th Cir. 1996)—are inapplicable because they in-
volved employees who violated their employers’ lawful poli-
 13

cies. While the Eighth Circuit in Earle stated that the
Board’s ‘‘leeway’’ for misconduct connected to protected con-
certed activity was ‘‘too blunt an instrument when applied
without regard to the situation in which the misconduct took
place,’’ in that case the employee had engaged in ‘‘flagrant’’
misconduct, disrupting operations at the employer’s plant and
defying the personnel manager in front of a crowd of employ-
ees, in the course of asserting her section 7 rights. Id. at
405, 407; Spartan Plastics, 269 N.L.R.B. at 551. Here, by
contrast, Williams’s section 7 activity did not violate any
lawful company policy, and the company does not contend her
conduct was flagrant. Because there was substantial evi-
dence in the record to show that the company had a single
unlawful motive for questioning Williams, the Wright Line
analysis is inapplicable. Felix Indus., 331 N.L.R.B. 144, 146
(2000), rev’d on other grounds, 251 F.3d 1051 (D.C. Cir. 2001).
Further, the Board reasonably rejected the company’s
contention that it would have discharged Williams even if she
had not distributed the fliers, because of its core value of
honesty. Although the company had previously terminated
employees for falsifying time and attendance records and for
petty theft, none of those employees were engaged in protect-
ed activity, and their outright dishonesty was not comparable
to Williams’s failure to volunteer information during an un-
lawful interrogation. The ALJ credited evidence, moreover,
that the company’s core value was malleable, including a
former manager’s testimony that the company had urged him
to turn a blind eye to charges of sexual harassment. The
ALJ therefore concluded that the company’s asserted busi-
ness justifications for discharging Williams were pretextual.
As the Board explained, quoting Spartan Plastics, 269
N.L.R.B. at 552, ‘‘it can be no defense to [the company] to
recite a wrong [by Williams] in responding to an action of [the
company] which itself constituted a violation of law.’’
Accordingly, we deny the petition for review and grant the
Board’s cross-application for enforcement of its order.