United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued November 8, 2005 Decided June 23, 2006
No. 04-1400
MANHATTAN CENTER STUDIOS, INC.,
PETITIONER
v.
NATIONAL LABOR RELATIONS BOARD,
RESPONDENT
No. 04-1417
MANHATTAN CENTER STUDIOS, INC.,
CROSS-RESPONDENT
v.
NATIONAL LABOR RELATIONS BOARD,
CROSS-PETITIONER
On Petition for Review and Cross-Application for
Enforcement
of an Order of the National Labor Relations Board
Peter D. Stergios argued the cause for the petitioner/cross-
respondent. Patrick M. Collins was on brief.
2
Stacy G. Zimmerman, Attorney, National Labor Relations
Board, argued the cause for the respondent/cross-applicant.
Arthur F. Rosenfeld, Acting General Counsel, Margery E.
Lieber, Acting Assistant General Counsel, Aileen A. Armstrong,
Deputy Associate General Counsel, and Jill A. Griffin,
Attorney, National Labor Relations Board, were on brief.
Before: HENDERSON and GRIFFITH, Circuit Judges, and
WILLIAMS, Senior Circuit Judge.
Opinion for the Court filed PER CURIAM.
Dissenting opinion filed by Circuit Judge HENDERSON.
PER CURIAM: Petitioner Manhattan Center Studios (MCS)
seeks review of an order of the National Relations Board (NLRB
or Board) finding that it committed an unfair labor practice
(ULP) in refusing, inter alia, to bargain with a union certified by
employee vote. After the certification election, MCS learned
that one of its supervisory employees had, before the election,
improperly distributed union authorization forms and solicited
the unit employees to sign them. MCS refused to bargain on
that basis, contending the election was not valid. It claimed that
its supervisory employee’s subsequently discovered misconduct
constituted an affirmative defense to the ULP charge. The
Board disagreed. Before us, MCS argues that, in denying it the
opportunity to contest the validity of the election, the Board
misapplied its precedent regarding newly discovered evidence.
The Board cross-petitions for enforcement of its order. Because
we find that the Board erred in applying its “due diligence”
standard—used to permit an untimely election challenge based
on newly discovered evidence—to the facts of this case, we
remand for further proceedings.
3
I.
MCS is a corporation based in New York City that offers its
facility for rent for theatrical and musical productions.1 On
February 19, 2003, stagehands and production staff (production
employees) employed by MCS voted by a 5-1 margin to certify
Theatrical Stage Employees Local No. One (Union or Local
One) as the collective bargaining representative for their seven-
employee bargaining unit. See Tally of Ballots, NLRB Case No.
2-RC-22677 (Feb. 19, 2003), reprinted at Joint Appendix (JA)
10. MCS did not file an objection to the election within seven
days after the election as required by 29 C.F.R. § 102.69(a).2
Eight days later, on February 27, the Board certified the Union
as the representative of the production employees’ bargaining
unit and, on March 7, the Union wrote to MCS’s CEO Russell
Arnold requesting both available dates to begin bargaining and
information on terms and conditions of employment needed to
formulate its bargaining proposals.
On March 20, MCS responded to the Union’s request,
refusing to bargain or to turn over any employee information.
Its letter stated that “it has recently come to our attention that an
1
Unless otherwise noted the facts are taken from the Board’s
order, Manhattan Center Studios, Inc., 342 NLRB No. 131 (2004),
reprinted at Joint Appendix (JA) 79. Also all dates refer to 2003
unless otherwise noted.
2
29 C.F.R. § 102.69(a) provides: “Within 7 days after the tally of
ballots has been prepared, any party may file with the Regional
Director an original and five copies of objections to the conduct of the
election or to conduct affecting the results of the election, which shall
contain a short statement of the reasons therefor.”
4
MCS supervisor was improperly involved in organizational
activities on behalf of Local One. As a result, it appears that
Local One is not validly and lawfully certified as the bargaining
representative of an uncoerced majority of MCS’s stagehands
and production employees.” Letter from Russell Arnold, CEO,
MCS, to James J. Claffey, Jr., Legitimate Theater Business
Manager, JA 13. The Union then filed two ULP charges against
MCS and on May 30 the Board issued a complaint charging
MCS with a violation of sections 8(a)(1) and (5) of the National
Labor Relations Act (Act), 29 U.S.C. § 158(a)(1), (5), in
refusing the Union’s requests to bargain and to provide
information following a valid certification.3 JA 18. In its
answer to the complaint MCS admitted it had refused to bargain
but offered an affirmative defense to the ULP charges—namely,
that the “Union’s election petition was tainted by unfair labor
practices, including improper supervisory involvement in the
organizing campaign.” JA 48. MCS maintained that after the
Union was certified on February 27—and, significantly, after the
period to object had expired, see 29 C.F.R. § 102.69(a)—it
learned that one of its supervisory employees, Technical
Coordinator Gustavo Garces, had distributed the Union’s
authorization cards before the election and solicited employees
to sign them, thereby tainting the unit employees’ exercise of
their “right to bargain collectively through representatives of
their own choosing” in violation of section 8(b)(1) of the Act.
3
Section 8(a)(1), in pertinent part, forbids an employer to
“interfere with, restrain, or coerce employees in the exercise of the
rights guaranteed” under section 7 of the Act to organize and bargain
collectively. 29 U.S.C. § 158(a)(1). Section 8(a)(5), in pertinent part,
forbids an employer “to refuse to bargain collectively with the
representative of his employees.” Id. § 158(a)(5).
5
See 29 U.S.C. § 158(b)(1);4 JA 63. MCS learned of Garces’s
organizing activities from Michael Spony, a non-unit employee,
sometime in March. JA 52. According to the affidavits of
Spony and CEO Arnold, Spony told Arnold that Garces had
boasted to Spony of Garces’s “spearhead[ing] the Union’s
campaign to organize [MCS’s] production employees” during a
conversation the two had had in November 2002. JA 53, JA 15.
Because the information regarding Garces’s misconduct “was
not previously available” to MCS, MCS argued that,
notwithstanding the representation proceeding had closed when
the unit employees voted to certify the Union as their
representative and the period for filing objections had expired,
it could nonetheless properly raise the issues of his misconduct
and its effect on the election in the then-pending ULP
proceeding in order to challenge the validity of the Union’s
certification and thus undergird its refusal to bargain. MCS
Mem. of Law in Opp’n to Mot. for Summ. J. at 12, JA 67.
Because it was unaware of Garces’s misconduct until March, it
could not have timely objected to the election on that basis.
Nonetheless, MCS argued, it remained free to challenge the
election because, in its words, “a party is entitled to litigate
representation issues concerning coercive pre-election conduct
if the party has obtained newly discovered evidence or did not
otherwise have an opportunity to litigate the issues in the prior
4
Section 8(b)(1) provides in relevant part that “[i]t shall be [a
ULP] for a labor organization or its agents to restrain or coerce
employees in the exercise of the rights guaranteed in section 157”, 29
U.S.C. § 158(b)(1), including “their right to select their [bargaining]
representative,” NLRB v. Int’l Ass’n of Bridge, Structural, &
Ornamental Iron Workers, 434 U.S. 335, 344 (1978).
6
representation proceeding.” JA 64 (citing San Antonio Portland
Cement Co., 240 N.L.R.B. 1168 (1979)). Its evidence was new,
MCS claimed, because it did not learn of the supervisory taint
until after the seven-day period. Id.
On September 24, 2004, the Board issued its Decision and
Order granting summary judgment to the General Counsel.
Manhattan Ctr. Studios, Inc., 342 NLRB No. 131 (2004) (MCS),
JA 79. It began by noting “the Respondent did not file any
objections to the conduct of the election” within seven days
thereafter; the representation proceeding had therefore closed
and could be “reopened to litigate [election impropriety] issues
only if [MCS] could establish that it has newly discovered
evidence.” Id., slip. op. at 2. It found that MCS had not met
that burden. The Board described newly discovered evidence as
evidence of facts that existed at the time of the representation
proceeding “which could not be discovered by reasonable
diligence.” Id. (citing APL Logistics, Inc., 341 N.L.R.B. No.
132, slip op. at 1 (2004)). It then concluded:
[T]he Respondent has failed to present any
information indicating that prior to the expiration of
time in which to file objections to the election, it
engaged in an attempt to uncover any potential
improprieties in that proceeding. Thus, the Respondent
has failed to establish that the evidence at issue could
not have been discovered earlier through the exercise
of reasonable diligence.
Id. at 2, JA 80 (emphasis added). Because MCS had no
affirmative defense to its refusal to bargain with the Union, no
genuine issue of material fact existed as to MCS’s refusal to
bargain and, accordingly, the General Counsel was entitled to
summary judgment. MCS timely petitioned for review.
7
II.
We review the Board’s order to determine “whether the
Board acted arbitrarily or otherwise erred in applying
established law to the facts of the case.” Antelope Valley Bus
Co., Inc. v. NLRB, 275 F.3d 1089, 1092 (D.C. Cir. 2002)
(quotations omitted). The Board cannot “ignore its own relevant
precedent but must explain why it is not controlling.” BB&L,
Inc. v. NLRB, 52 F.3d 366, 369 (D.C. Cir. 1995). “[W]here an
agency departs from established precedent without a reasoned
explanation, its decision will be vacated as arbitrary and
capricious.” ANR Pipeline Co. v. FERC, 71 F.3d 897, 901 (D.C.
Cir. 1995). If we conclude that the Board misapplied or
deviated from its precedent, we often remand with instructions
to remedy the misapplication/deviation. Lee Lumber & Bldg.
Material Corp. v. NLRB, 117 F.3d 1454, 1460 (D.C. Cir. 1997)
(remanding to resolve inconsistency between Board standard
and its application therein).
As noted, under the Board’s regulations, a party has seven
days after the tally of ballots in a certification election to file
“objections to the conduct of the election or to conduct affecting
the results of the election.” 29 C.F.R. § 102.69(a). The Board’s
seven-day deadline reflects its long-standing policy favoring
finality in election results in order to further industrial peace.
See NLRB v. A.J. Tower Co., 329 U.S. 324, 331–32 (1946).
Section 102.48(d)(1) of the Board’s regulations, however,
permits a party to move for reconsideration or reopening of the
record after the expiration of the specified period based on
“newly discovered evidence.” 29 C.F.R. § 102.48(d)(1).5 Board
5
29 C.F.R. § 102.48(d)(1) provides that “[a] party to a
proceeding before the Board may, because of extraordinary
8
precedent interpreting section 102.48(d)(1) sets forth two
requirements for newly discovered evidence: one is
straightforward and the other constitutes the nub of this case.
First, newly discovered evidence must be evidence of facts in
existence at the time of the proceeding in question. See MCS,
342 N.L.R.B. No. 131, slip. op. at 1. Second, the moving party
must have been “excusably ignorant” of the existence of the
evidence. See Seder Foods Corp., 286 N.L.R.B. 215, 216
(1987). To find excusable ignorance, the Board applies a “due
diligence”/“reasonable diligence” standard whose aim is to
ensure that the moving party could not have discovered and
brought the evidence to the Board’s attention during the seven-
day period.6 See Fitel/Lucent Techs., Inc., 326 N.L.R.B. 46, 46
n.1 (1998) (party “seeking to introduce evidence as newly
circumstances, move for reconsideration, rehearing, or reopening of
the record after the Board decision or order. . . . Only newly
discovered evidence, evidence which has become available only since
the close of the hearing, or evidence which the Board believes should
have been taken at the hearing will be taken at any further hearing.”
6
In providing an avenue for relief based on new evidence, the
Board sought to mirror Rule 60(b)(2) of the Federal Rules of Civil
Procedure. See F.R. Civ. P. 60(b)(2) (allowing relief from final
judgment or order based on newly discovered evidence which by due
diligence could not have been discovered in time to move for new trial
under Rule 59(b)); Pace Oldsmobile, Inc., 256 N.L.R.B. 1001, 1003
(1981) (petition for reopening of proceedings based on new evidence
premised on same considerations as under Rule 60(b)(2)). Relief
under Rule 60(b)(2) requires that the moving party show, among other
requirements, that he was diligent in discovering the new evidence.
See Jones v. Lincoln Elec. Co., 188 F.3d 709, 732–35 (7th Cir. 1999).
9
discovered must also show facts from which it can be
determined that the movant acted with reasonable diligence to
uncover and introduce the evidence”).
Board precedent includes at least two formulations of the
due/reasonable diligence standard: one—which we dub the
“conducted investigation” version—to be used if the moving
party asserts its due diligence to establish that subsequently
discovered facts constitute new evidence, see, e.g., Superior
Prot., Inc., 341 NLRB No. 86, slip. op. at 4 (2004) (Superior
Protection) (“[i]n order to establish that evidence is ‘newly
discovered,’ the movant must show facts indicating that it ‘acted
with reasonable diligence to uncover and introduce the
evidence’ and that it was therefore ‘excusably ignorant’ of the
evidence previously”) (internal citations omitted); and
another—which we dub the “hypothetical investigation”
version—to be used in circumstances where due diligence was
not exercised, in which case the Board asks whether the exercise
of due diligence would have timely uncovered the evidence.
See, e.g., APL Logistics, 341 NLRB No. 132, slip. op. at 1
(2004) (defining new evidence as “evidence of facts in existence
at the time of the hearing which could not be discovered by
reasonable diligence”); Jason/Empire, 212 N.L.R.B. 137, 138
(1974) (“[A]lthough the alleged [offer to waive union initiation
fees] was made at a preelection union meeting, the Respondent
has failed to show that with due diligence it could not have
uncovered the evidence in time to file timely objections . . . .”);
see also Amalgamated Clothing Workers of Am. v. NLRB, 424
F.2d 818, 827 (D.C. Cir. 1970) (affirming Board determination
that employer’s evidence was not new because “no explanation
was offered as to why this evidence was not discovered or could
not have been discovered by the exercise of due diligence”)
(emphasis added).
10
Apart from the two formulations of the Board’s due
diligence standard, the Board has been less than clear as to
which one it is applying in a particular case. The decision in
Dickerson Florida, Inc., 272 N.L.R.B. 63 (1984) is an example.
In that case, after the seven-day period closed and the employer
refused to bargain, it asserted as an affirmative defense to the
ULP charge that the election was invalid due to election
improprieties including a threat by a union member and the
union’s pre-election offer to waive initiation fees. As in this
case, a non-unit employee subsequently advised the employer of
the threat and the offer and the employer sought to use both as
newly discovered evidence. The Board found that the employer
had not demonstrated “that the facts of the alleged threat and
unlawful offer of waiver were not previously discoverable [by
the employer] through the exercise of due diligence” and
therefore disallowed them. Id. at 63. Whether the Board meant
that the employer had not shown that the evidence was not
discoverable earlier because it had not exercised due diligence
or because the evidence would not have been discovered had the
employer exercised due diligence is not clear.
If, as the Board argues here, the standard is that an
employer has an affirmative duty to exercise due diligence to
discover any evidence of irregularity in any election in order to
use that evidence to permit the untimely reopening of the
representation proceeding, the employer will almost certainly
run a risk inasmuch as a post-election investigation conducted
within the seven-day period, as the Board order counsels, see
MCS, 342 NLRB No. 131, slip. op. at 2, without specific
evidence of misconduct would almost always involve
questioning of employees. See 29 U.S.C. § 158(a)(1); cf.
Crossing Recovery Sys., Inc., 2005 NLRB LEXIS 375, *73
(2005) (employer questioning employees regarding upcoming
11
certification vote constituted coercive conduct and unlawful
interrogation in violation of section 8(a)(1)); Overnite Transp.
Co., 254 N.L.R.B. 132, 133 (1981) (employer questioning
employees before and immediately after certification vote
violated section 8(a)(1) because it “implied surveillance of the
employees’ union activities”).7 Moreover, employer-side
counsel might have to advise their client to communicate with
its supervisors and perhaps even its employees during the
organizational campaign whether or not the employer has cause
7
The Board points to decisions in which it has “allowed
management representatives to conduct post-election interviews of
employees for purposes of seeking information in support of
objections.” Resp’t’s Br. 22–23 n.5 (citing Johnnie’s Poultry Co., 146
N.L.R.B. 770, 774–76 (1964), enforcement denied, 344 F.2d 617 (8th
Cir. 1965); W.T. Grant Co., 185 N.L.R.B. 88 n.1 (1970); Summa
Corp., 220 N.L.R.B. 877, 879–80 (1975)). Those cases give an
employer a limited privilege to question its employees regarding
election irregularities without incurring section 8(a)(1) liability “where
an employer has a legitimate cause to inquire.” Johnnie’s Poultry
Co., 146 N.L.R.B. at 774 (emphasis added). An employer’s good faith
doubt regarding the certification election results has been found to be
“a legitimate cause to inquire,” see Summa Corp., 220 N.L.R.B. at
879–80. Here, however, the Board apparently decided that the
obligation to inquire attaches whether or not the employer has cause
to do so. In Summa Corp., the employer interviewed unit employees
two days after the certification election in response to a rumor
regarding the union’s misrepresentation made at a precertification
meeting. Summa Corp., 220 N.L.R.B. at 878. In W.T. Grant, the
employer interviewed unit employees to investigate rumors regarding
pre-election threats made by pro-union employees on the workroom
floor. What distinguishes those employers from MCS is that they had
cause to inquire; MCS did not.
12
to believe anything is amiss.8 A union would be exposed to
similar risks. See 29 U.S.C. § 158(b)(1); cf. Am. Postal Workers
Union, 328 NLRB 281, 282 (1999) (union member interrogating
employee regarding her union support violated section 8(b)(1)).
Because the Board has been less than clear in applying its
newly discovered evidence standard, it is unlikely that an
employer in MCS’s circumstances knows if it must make an
effort to uncover a problem of any kind in order to mount an
untimely challenge to an election or whether, consistent with
APL Logistics, it will be required to show that it could not have
with due diligence discovered the particular evidence it seeks to
submit as newly discovered. The first interpretation is
deceptively straightforward: the employer either conducted an
investigation or it did not. But what makes an investigation
diligent enough to meet the standard?9 Does the employer have
to show that it interviewed all of its supervisors? Here, that
8
It appears that this was the course of action offered by the
Board’s counsel at oral argument. See Oral Arg. Tr. 14 (“Well, I think
in that case [where the employer had no reason to suspect election
impropriety] they would have to come to the Board and say that they
found out about this misconduct and, you know, make some sort of
representation about, oh, [how] they were–you know, maybe–you
know, communicating with employees or something to that extent. I
mean, generally in these situations when you have a company that is
involved in the organization campaign they use their supervisors as a
way to keep their employees informed about the company’s position
and things.”).
9
The Board’s counsel acknowledged at oral argument that the
Board has never expressly declared what an employer must do to
establish that it was reasonably diligent. See Oral Arg. Tr. 12–13.
13
probably would have been futile because the supervisor Garces
was himself the culprit.10 The second interpretation, on the other
hand, requires the employer to prove a negative: that the
evidence could not have been discovered had due diligence been
exercised. One would assume under this interpretation that, if
a non-investigating employer could show the evidence was not
discoverable even with due diligence, such as where the
employer had no reasonable way of knowing or discovering
whether improprieties had occurred, its burden would be met.
But this is unclear from the Board’s order here. Instead of
choosing either the “conducted investigation” version or the
“hypothetical investigation” version of the due diligence
standard and explaining its choice, the Board confused the two,
treating them as if they were the same.
MCS argues that it was excusably ignorant of Garces’s
actions and should therefore be allowed to submit evidence of
those actions as newly discovered evidence because it had no
reason to inquire of Spony or any other employee about election
improprieties before March and it acted with reasonable
diligence to proffer the evidence once it learned of them from
Spony. See Pet’r’s Br. 12–13. And even if it had investigated
for any impropriety either before the election or within the
seven-day period, MCS maintains that it would be reasonable to
10
The Board has found that conduct similar to Garces’s alleged
conduct “interfered with employees’ freedom of choice to such an
extent that it materially affected the outcome of the election.” Chinese
Daily News, 344 N.L.R.B. No. 132, slip. op. at 3–5 (2005) (unit
supervisor distributing union authorization cards to unit employees
“interfered with employees’ freedom of choice to such an extent that
it materially affected the outcome of the election”).
14
assume, given Garces’s supervisory status, that neither he nor
his subordinates would have voluntarily disclosed his
involvement in the organizing drive. Id. at 12. On the other
hand, MCS contends, if it is held to the Superior Protection
iteration of the test, according to which it must show that “it
acted with reasonable diligence to uncover and introduce the
[newly discovered] evidence” and “was therefore excusably
ignorant of the evidence previously,” Superior Prot., Inc., 341
NLRB No. 86, slip. op. at 4 (quotations omitted), it is effectively
foreclosed from using the newly discovered evidence rule
because it did not know, nor have reason to know, of Garces’s
misconduct. It argues therefore that it should not be held to
have failed to exercise due diligence to investigate an election
irregularity of which it was excusably ignorant.
In response the Board points to rumors circulating among
employees in late 2002 regarding Garces’s support of the Union,
alluded to in Spony’s affidavit as Garces’s own claim that he
“[did]n’t care who kn[ew]” about his pro-Union actions.
Resp’t’s Br. 17; JA 15. The Board suggests that MCS cannot
use the newly discovered evidence rule because, given the
rumors and small size of the bargaining unit, due diligence
would have uncovered Garces’s misconduct. See Resp’t’s Br.
17 (“MCS offers no explanation why, in a bargaining unit of
only seven employees, it could not have discovered earlier that
its own supervisor was ‘spearheading’ the union campaign,
especially given MCS’s own assertion that rumors about
Garces’s involvement were circulating among its employees
months before the election.”). But the Board mischaracterizes
MCS’s “own assertion”; it was Spony, not MCS, who stated that
he knew that rumors regarding Garces’s misconduct were
circulating among employees in late 2002. MCS did not hear of
15
these rumors until March 2003.11 See Spony Decl. ¶ 3, JA 15;
Arnold Decl. ¶ 7, JA 54.
It is true that in Soft Drink Workers Union Local 812 v.
NLRB, 937 F.2d 684 (D.C. Cir. 1991), we stated that in order to
challenge election results in a ULP proceeding based on newly
discovered evidence, the moving party “ ‘must have made some
effort to obtain the evidence at the time’ ” challenges could have
been made, that is, within the seven-day period. Id. at 688
(quoting Teamsters Local 911 (General Felt), 275 N.L.R.B. 980,
981 (1985)). But that statement was based on circumstances
absent here: evidence of impropriety, or leading to a showing of
impropriety, was in fact timely discoverable. The union in Soft
Drink Workers, in addition to arguing that the picketing it
engaged in after it lost a certification election did not violate the
Act, sought to offer evidence showing that the employer had
padded the payroll with sufficient replacement employees to
ensure the union would lose. Before the election, however, the
employer had given the union an Excelsior list12 of all
11
Garces’s own knowledge of his misconduct plainly cannot be
imputed to MCS because his interest was adverse to MCS’s. See
Comprehensive Care Corp. v. RehabCare Corp., 98 F.3d 1063,
1066–67 (8th Cir. 1996) (“Knowledge obtained by a corporation’s key
employees, officers, and directors, obtained in the course of their
duties, is generally imputed to the corporation. We recognize, of
course, that if the employee, officer, or director has an interest adverse
to the corporation, his knowledge is not to be imputed.”) (citations
omitted).
12
Under Excelsior Underwear, Inc., 156 N.L.R.B. 1236, 1240–41
(1966), an employer must provide the union with the names and
addresses of all employees eligible to vote in a bargaining unit
16
replacement workers. We concluded that, because the union had
that list, “[b]oth the number of replacement workers and their
possible effect upon the election were thus apparent to the Union
as of the time of the representation proceeding. Having failed
then to raise its objection to the election, or to ‘ma[k]e some
effort to obtain the evidence’ necessary to make good such an
objection, the Union cannot be heard now to complain of its
preclusion.” Id. (alteration in original). The union’s failure to
inquire into the validity of the list before the representation
proceeding barred it from using the list as newly discovered
evidence. MCS, however, had no reason to suspect pre-election
misconduct that, according to the Board, it was required to
exercise due diligence to uncover—much less did it possess
evidence on which it could have based its exercise of due
diligence.
On remand, the Board should explain (1) the relationship
between the “conducted investigation” and “hypothetical
investigation” iterations of the due diligence standard, (2) which
iteration it is applying here and why it chose that iteration under
the facts of this case, (3) if the Board is applying the “conducted
investigation” iteration of the standard, whether there is a
minimum level of investigation in the absence of notice of a
violation or, alternatively, whether that standard requires
specific inquiries in the absence of some notice of misconduct,
and, if so, what these inquiries must be and how they are to be
conducted without engaging in coercive and unlawful
interrogation or interfering with the election in violation of § 8
(a)(1) or § 8 (b)(1), and (4) if the Board is applying the
certification election.
17
“hypothetical investigation” iteration, how a party in MCS’s
position—that is, an employer without notice—shows that the
information sought to be admitted as new could not have been
discovered in the exercise of due diligence.
For the foregoing reasons, we remand to the Board for
further proceedings consistent with this opinion.
So ordered.
KAREN LECRAFT HENDERSON, Circuit Judge, dissenting:
I dissent from the remand because I believe the Board erred
as a matter of law in concluding that an employer without notice
of management misconduct that tainted an election is not
excusably ignorant under the due diligence test. Accordingly,
I would grant MCS’s petition for review and vacate the Board’s
order.
If a Board decision is contrary to law, we are well within
our authority to grant a petition for review. See Int’l Alliance of
Theatrical and Stage Employees v. NLRB, 334 F.3d 27, 34 (D.C.
Cir. 2003) (International Alliance) (granting petition for review
and vacating unfair labor practice finding because Board
interpretation of “any employee who engages in a strike” under
section 8(d) of Act was “in conflict with both interpretive
precedent and the statute’s structure” and produced “internal
inconsistency” and “irrational results in practice”); see also
Detroit Typographical Union v. NLRB, 216 F.3d 109, 122 (D.C.
Cir. 2000) (granting petition for review because Board
conclusion constituted legal error). Legal error can take the
form of an inconsistent application of relevant precedent, see
BB&L, Inc. v. NLRB, 52 F.3d 366, 369 (D.C. Cir. 1995), an
unreasonable interpretation of the agency’s enabling statute, see
Jacoby v. NLRB, 325 F.3d 301, 308 (D.C. Cir. 1994) (citing
Chevron U.S.A. v. Natural Res. Def. Council, Inc., 467 U.S. 837,
842–45 (1984)), or an “unreasoned” extension of a standard to
the facts of a particular case, see Detroit Typographical Union,
216 F.3d at 118 (Board committed legal error in applying
doctrine disallowing employer’s implementation of standardless
merit pay plan after impasse to case where merit pay plan
standard was known to union).
I believe the Board erred if, as it appears, it applied the
“conducted investigation” version of the due diligence standard
here. The “conducted investigation” iteration cannot apply if
the employer had no reason to know of any
impropriety—including any rumors that might have spurred it
to investigate any impropriety—and, for that reason, did not
2
exercise due diligence. To conclude that MCS must have
conducted a far-flung investigation into any irregularity in order
to use the newly discovered evidence rule directly contradicts
the Johnnie’s Poultry Co. line of cases, see maj. op. at 20 note
7, which authorizes an employer to conduct an investigation
only if it has cause to inquire. The Board should have found
MCS excusably ignorant due to lack of notice regarding
Garces’s conduct. Whether this resolution fits under the
“hypothetical investigation” label fashioned by the majority I do
not know but, because I believe remand is unwarranted in view
of the Board’s error of law, I see no need to tell the Board
anything other than “you got it wrong.” Here MCS has
explained why the evidence “could not have been
discovered”—it had no notice of the existence of the facts on
which the evidence it now seeks to submit as new are based and
therefore did not investigate. It has established its excusable
ignorance of the existence of those facts and should now be
permitted to introduce evidence based on them as newly
discovered.
Like the Board’s decision in International Alliance, its
decision here is “in conflict with both interpretive precedent and
the [Act]’s structure,” “set[s] a standard that could never be
met” on these facts, and leads to “irrational results in practice,”
International Alliance, 334 F.3d at 34–35, 37. Accordingly,
because I would grant MCS’s petition for review and deny the
Board’s cross-petition for enforcement, I respectfully dissent.