National Labor Relations Board v. Northeastern Land Services, Ltd.

United States Court of Appeals
For the First Circuit

No. 10-2156

NATIONAL LABOR RELATIONS BOARD,

Petitioner,

v.

NORTHEASTERN LAND SERVICES, LTD.,
d/b/a THE NLS GROUP,

Respondent.

APPLICATION FOR ENFORCEMENT OF AN ORDER OF
THE NATIONAL LABOR RELATIONS BOARD

Before

Lynch, Chief Judge,
Lipez and Thompson, Circuit Judges.

Ruth E. Burdick, Supervising Attorney, Heather S. Beard,
Attorney, Lafe E. Solomon, Acting General Counsel, Celeste J.
Mattina, Acting Deputy General Counsel, John H. Ferguson, Associate
General Counsel, and Linda Dreeben, Deputy Associate General
Counsel, National Labor Relations Board, on brief for petitioner.
Richard D. Wayne and Hinckley, Allen & Snyder LLP on brief for
respondent.

June 22, 2011
 LYNCH, Chief Judge. On June 28, 2010, the Supreme Court

vacated our prior decision in this case, Ne. Land Servs., Ltd. v.

NLRB, 560 F.3d 36 (1st Cir. 2009), which had enforced a 2008 order

of the National Labor Relations Board (NLRB), Ne. Land Servs.,

Ltd., 352 N.L.R.B. 744 (2008). The Court's vacating of our

decision was accompanied by an order granting a petition for writ

of certiorari filed by Northeastern Land Services, Ltd. (NLS). Ne.

Land Servs., Ltd. v. NLRB, 130 S. Ct. 3498 (2010). The Court

remanded for reconsideration in light of its decision in New

Process Steel v. NLRB, 130 S. Ct. 2635 (2010), which held that a

delegee group of the Board must maintain a membership of three in

order to exercise the delegated authority of the Board. Id. at

2642.1

Upon the vacating of our prior decision and the return of

jurisdiction to this court, the NLRB filed a motion to remand the

case to the Board. On July 30, 2010, the case was so remanded by

order of this court. Ne. Land Servs., Ltd. v. NLRB, No. 08-1878,

2010 WL 4072835, at *1 (1st Cir. July 30, 2010).

On September 28, 2010, a three-member delegee group of

the Board exercised the authority delegated to it and affirmed the

ALJ's "rulings, findings, and conclusions" and adopted the

1
While Northeastern Land Services's petition challenged
both the authority of a delegee group composed of only two members
and the merits of its decision, the Court's remand order said
nothing about the merits, and its decision in New Process Steel v.
NLRB, 130 S. Ct. 2635 (2010), did not affect the merits.

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recommended order, but "only to the extent and for the reasons

stated in the decision reported at 352 N.L.R.B. 744 (2008), which

is incorporated herein by reference." Ne. Land Servs., Ltd., 355

N.L.R.B. No. 169 (Sept. 28, 2010). The three member panel in

effect adopted the Board's 2008 decision and order, which this

court had enforced, finding that NLS had violated section 8(a)(1)

of the National Labor Relations Act (NLRA), 29 U.S.C. § 158(a)(1),

by maintaining an overbroad confidentiality provision and by

discharging its employee Jamison Dupuy for violating that

provision.

On September 30, the Board applied for enforcement of the

order. NLS opposed the Board's application for enforcement.

The arguments by each side largely replicate the merits-

based arguments presented in the first round of this case. The

primary difference is that NLS no longer challenges the authority

of the Board to issue the order and calls our attention to interim

NLRB matters in another case, which are not on point. NLS also

raises new arguments before us for the first time. As these

arguments were not raised before the Board, we are without

jurisdiction to consider them. See 29 U.S.C. § 160(e).

As there has been no intervening controlling authority or

even persuasive authority provided to us, this panel reinstates as

follows the merits portion of our prior decision, with the matters

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overruled by New Process Steel excerpted, and grants the Board's

application for enforcement of its 2010 order.

I.

Because "the Board is primarily responsible for

developing and applying a coherent national labor policy, we accord

its decisions considerable deference." NLRB v. Boston Dist.

Council of Carpenters, 80 F.3d 662, 665 (1st Cir. 1996) (citation

omitted). The Board's judgment stands when the choice is "between

two fairly conflicting views, even though the court would

justifiably have made a different choice had the matter been before

it de novo." Universal Camera Corp. v. NLRB, 340 U.S. 474, 488

(1951). A Board order must be enforced if the Board correctly

applied the law and if its factual findings are supported by

substantial evidence on the record. 29 U.S.C. § 160(e), (f);

Yesterday's Children, Inc. v. NLRB, 115 F.3d 36, 44 (1st Cir.

1997). Where, as here, "the board has reached a conclusion

opposite of that of the ALJ, our review is slightly less

deferential than it would be otherwise." C.E.K. Indus. Mech.

Contractors, Inc. v. NLRB, 921 F.2d 350, 355 (1st Cir. 1990).

II.

The facts are not in dispute. NLS is a temporary

employment agency located in East Providence, Rhode Island, that

supplies workers to clients in the natural gas and

telecommunications industries, but pays its workers directly.

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Dupuy was employed twice by NLS as a right-of-way agent for the

acquisition of land rights by clients, from February to November

2000, and from July to October 2001. Dupuy obtained the 2001

placement by contacting Rick Lopez, a project manager for NLS

client El Paso Energy, who had once worked with Dupuy at NLS.

Lopez directed Dupuy to contact NLS, which soon placed him with El

Paso at its Dracut Expansion Project in Massachusetts.

Before both of Dupuy's placements by NLS, NLS required

Dupuy to sign a temporary employment contract which said, in

relevant part:

Employee . . . understands that the terms of
this employment, including compensation, are
confidential to Employee and the NLS Group.
Disclosure of these terms to other parties may
constitute grounds for dismissal.

This confidentiality provision is at the heart of this case.

Dupuy complained to NLS about repeated delays in

receiving his paycheck. He was particularly concerned because he

had to pay for expenses such as his hotel bills up front and later

seek reimbursement. After Dupuy tried to negotiate with NLS, and

even threatened to quit, Jesse Green, Executive Vice President and

Chief Operating Officer of NLS, agreed to call Lopez to see if El

Paso would either pay for Dupuy's hotel bill or provide a larger

per diem than NLS had offered to help with Dupuy's cash flow

problems. Although NLS ultimately billed most of Dupuy's expenses

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to El Paso, NLS was responsible for reimbursing Dupuy. Green told

Dupuy that Lopez would not agree to any alternative arrangements.

In early October 2001, Dupuy raised two additional

concerns about his job. The first arose when Dupuy contacted Lopez

to tell him that Dupuy's cell phone was not working. Dupuy asked

Lopez whether he might be able to work for El Paso through a

different employment agency because Dupuy had not been paid in a

timely manner by NLS. Lopez refused Dupuy's request and gave Dupuy

the contact information of Norm Winters, an agent of NLS, to

resolve the pay issues.

The second concern was the reimbursement for Dupuy's

work-related use of his personal computer. Dupuy had initially

arranged to receive a $15-per-day reimbursement for computer usage.

NLS treated this as a "pass-through" business expense for tax

purposes, which did not count as income to the employee, and on

which NLS did not pay Social Security taxes. On October 2,

however, Dupuy received an email from NLS's coordinator of human

resources, Susan Green, which referred to the computer usage

reimbursement rate as $12 per day. Dupuy replied that El Paso had

authorized, and he had been billing, $15 per day for computer

usage; he questioned the $12-per-day rate. Green told Dupuy that

NLS's accountants had determined that the computer usage cost

should be considered taxable compensation, rather than a pass-

through expense billed to El Paso. Green stated that the

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reclassification of the tax status of the computer usage fee had

increased NLS's overhead costs, requiring an offsetting reduction

of $3 per day.

Dupuy sent a reply email to Green, copying Lopez,

stating, "By copy of this email to Rick Lopez, I am asking El Paso

to offset your surcharge and additional tax burden." He said that

if he did not receive the offset, "I will no longer be using my

computer for this job. El Paso will have to furnish me with a

digital camera, and I will no longer be available by email . . . .

After today and until the matter has been resolved, my equipment is

offline."

On the evening of October 3, he sent an email to everyone

working with him on the El Paso project, including Rick Lopez,

saying, "Until further notice, my computer is offline and I will

not be accepting email. I can still be reached by the contact

telephone numbers that you have." Dupuy did not copy any NLS

managers on the email. Jesse Green testified that although he

tried to contact Dupuy numerous times by paging him, calling his

cell phone and leaving messages at his hotel and with other

employees, Dupuy did not call him back.

On October 11, 2001, Jesse Green spoke with Dupuy on the

phone. Green told Dupuy that NLS had tried to accommodate his

requests, but that it seemed that NLS could never make Dupuy happy

and, as a result, NLS thought it was best to terminate his

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employment. Dupuy replied that he would sue NLS for retaliatory

discharge, alleging that it fired him because he had threatened to

file a complaint against the company with the Massachusetts

Attorney General alleging violations of state wage laws.2 When

Dupuy pressed Jesse Green for the reason for his termination, Green

replied that NLS had cause to terminate Dupuy's employment, as

Dupuy had "not lived up to [his] end of the bargain with [NLS]."

Jesse Green later testified that his statement regarding

Dupuy's "failure to live up to his end of the bargain" was a

reference to Dupuy's failure to comply with the confidentiality

provision in the temporary employment agreement that required him

not to disclose the terms of his employment to outside parties.

Green, who had drafted the confidentiality provision, further

testified that in making the determination that Dupuy had violated

the confidentiality provision by contacting El Paso directly, Green

thought it was "inappropriate" for Dupuy to "approach a client with

[his] . . . problems [about salary], [because] then we're not

providing the services that we contracted to provide."

Dupuy filed an unfair labor practice charge on October

24, 2001, and filed an amended charge on December 17, 2001. The

complaint issued January 16, 2002, alleging that NLS violated

2
The alleged violations were NLS's failure to pay Dupuy
within six days of the end of the pay period and the deduction of
$3.00 from his compensation due to the change in the rate of
reimbursement for computer usage.

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section 8(a)(1) of the NLRA by maintaining and enforcing an

unlawful confidentiality clause in its employment contract that

discouraged employees from engaging in protected concerted

activities, and by terminating Dupuy's employment on October 11 for

violating the terms of that clause.

The ALJ found that although the provision did restrict

the employees' right to discuss their terms and conditions of

employment with third parties, "there are different gradations in

how seriously employees' Section 7 rights are affected." Relying

on his reading of Board precedent, the ALJ found that the

confidentiality provision did not violate section 8(a)(1),

explaining that "because [NLS] did not prohibit discussions of

terms and conditions of employment among fellow employees, I find

[NLS's] restriction a less serious infringement upon its employees'

Section 7 rights." Relying on language from Desert Palace Inc.,

336 N.L.R.B. 271 (2001), the ALJ explained that "[i]t is necessary

to strike a proper balance between employees' Section 7 rights and

an employer's business justifications." Noting the competitive

bidding process in NLS's industry, the ALJ found that NLS "had a

legitimate and substantial business justification for the rule

outweighing the restriction on the employees' Section 7 rights."

Dupuy appealed.

On September 28, 2010, the Board, by a three-member

panel, determined that under Martin Luther Memorial Home, Inc.

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(Lutheran Heritage), 343 N.L.R.B. 646 (2004), the confidentiality

provision was unlawful because employees reasonably would construe

it to prohibit activity protected by Section 7. As it explained in

the 2008 decision that it incorporated by reference, "the

[confidentiality] provision, by its clear terms, precludes

employees from discussing compensation and other terms of

employment with 'other parties.' Employees would reasonably

understand that language as prohibiting discussions of their

compensation with union representatives." Ne. Land Servs., Ltd.,

352 N.L.R.B. 744, 745 (2008). The Board determined that the

provision was overbroad and therefore in violation of section

8(a)(1), without relying on whether NLS had actually enforced the

rule.

As to the termination of Dupuy's employment for violating

the rule, the Board held, "Under extant Board precedent, an

employer's imposition of discipline pursuant to an unlawfully

overbroad . . . rule constitutes a violation of the Act." Id. NLS

had conceded that it dismissed Dupuy because he violated the

confidentiality provision. The Board concluded that "[NLS]'s

termination of Dupuy pursuant to [the confidentiality] provision

violated Section 8(a)(1)." Id. at 746. In a footnote to the

unlawful discharge analysis (which we understand to have been

reinstated in the 2010 Order), the Board explained that one member,

Chairman Schaumber,

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 agrees . . . that application of Double Eagle
Hotel & Casino dictates a finding that Dupuy's
termination violated Sec. 8(a)(1) of the Act.
However, he questions the theory that an
employer's imposition of discipline pursuant
to an unlawfully overbroad rule is necessarily
unlawful, such as in situations where the
discipline imposed is for a lawful reason
albeit under an overly broad, unlawful rule.
Nonetheless, he applies precedent for
institutional reasons for the purpose of
deciding this case.

Id. at 747 n.9.

The Board ordered, inter alia, that NLS rescind the

provision; that NLS notify its current and former employees under

the temporary employment agreement of the decision; that Dupuy be

reinstated to his former position or a substantially similar

position; that Dupuy be made whole "for any loss of earnings and

other benefits suffered as a result of the unlawful action taken

against him"; and that NLS ensure that the references to the

unlawful discharge be deleted from NLS's files. Id. at 746.

III.

We turn to the NLRB's application for enforcement of its

order and NLS's challenge.

A. Overbreadth of the Confidentiality Provision

Section 8 of the NLRA prohibits employers from

"interfer[ing] with, restrain[ing], or coerc[ing] employees in the

exercise of the rights guaranteed in" section 7 of the NLRA. 29

U.S.C. § 158(a)(1). Section 7 guarantees employees the right to

"self-organization, to form, join, or assist labor organizations,

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to bargain collectively through representatives of their own

choosing, and to engage in other concerted activities for the

purpose of collective bargaining or other mutual aid or

protection." 29 U.S.C. § 157.

Section 8(a)(1) has been read to bar employer

interference with employees' right to discuss the terms and

conditions of their employment with others under section 7 of the

NLRA. See Beth Israel Hosp. v. NLRB, 437 U.S. 483, 491 (1978)

("[T]he right of employees to self-organize and bargain

collectively established by § 7 . . . necessarily encompasses the

right effectively to communicate with one another regarding

self-organization at the jobsite."); Cent. Hardware Co. v. NLRB,

407 U.S. 539, 543 (1972) ("[O]rganization rights are not viable in

a vacuum; their effectiveness depends in some measure on the

ability of employees to learn the advantages and disadvantages of

organization from others.").

An employer violates section 8(a)(1) when it maintains a

work rule that "would reasonably tend to chill employees in the

exercise of their Section 7 rights." Lafayette Park Hotel, 326

N.L.R.B. 824, 825 (1998). Under the Board's caselaw, if the rule

is "likely to have a chilling effect on Section 7 rights, the Board

may conclude that [its] maintenance is an unfair labor practice,

even absent evidence of enforcement." Id.; see also Guardsmark,

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LLC v. NLRB, 475 F.3d 369, 374-80 (D.C. Cir. 2007) (explaining and

applying Lafayette Park "mere maintenance" rule).

NLS contends that the confidentiality provision did not

violate the NLRA because, as a factual matter, it did not prohibit

employees from discussing terms of employment among themselves and,

although it was enforced, it was not enforced in the face of union

activity. NLS asserts that mere broad wording, without evidence of

actual chilling of union activity, is insufficient to violate

section 8(a)(1).

NLS then makes a qualitatively different argument: that

the Board must engage in a balancing test. Here, NLS contends the

Board failed to consider the legitimate justification it had for

the confidentiality provision: labor costs were a key component of

its bids to clients, and NLS did not want its employees

jeopardizing its bids. NLS's arguments, however, are at odds with

current Board precedent.

After the ALJ ruling and before the Board rendered its

decision here, the Board decided Lutheran Heritage, 343 N.L.R.B.

646. Lutheran Heritage clarified the nature of the Board's inquiry

and confirmed the Board's prior caselaw that "mere maintenance" of

a rule that "would reasonably tend to chill employees in the

exercise of their Section 7 rights" is unlawful under Board

caselaw, Lafayette Park, 326 N.L.R.B. at 825, and that there need

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not be any evidence of actual chilling of union activity as NLS

claims.

In Lutheran Heritage, the Board articulated a two-step

framework for determining whether an employer's maintenance of a

work rule violates section 8(a)(1). First, if the rule explicitly

restricts section 7 activity, it is unlawful. Lutheran Heritage,

343 N.L.R.B. at 646. Second, even if the rule does not explicitly

restrict section 7 activity, it is nonetheless unlawful if "(1)

employees would reasonably construe the language [of the rule] to

prohibit Section 7 activity; (2) the rule was promulgated in

response to union activity; or (3) the rule has been applied to

restrict the exercise of Section 7 rights." Id. at 647.

Here, the Board relied on the first prong of the second

part of the test. It found that although the NLS rule did not

explicitly restrict section 7 activity, employees would reasonably

construe the language of the rule to prohibit section 7 activity

under Lutheran Heritage. The plain language of the confidentiality

provision provides: "Disclosure of these terms [of employment] to

other parties may constitute grounds for dismissal." The Board's

finding that this language could be fairly read to extend to

disclosure of terms of employment to union representatives is

supportable. The precise subject matter of the forbidden

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disclosure -- terms of employment, including compensation -- went

to a prime area of concern under section 7.3

The Board's interpretation was consistent with its prior

caselaw.4 See Cintas Corp., 344 N.L.R.B. 943, 943 (2005) (finding

overbroad a confidentiality provision prohibiting "the release of

'any information' regarding '[the company's] partners' [because it]

could be reasonably construed by employees to restrict discussion

of wages and other terms and conditions of employment with their

3
To the extent NLS asserts that the confidentiality
provision is lawful because the plain text of the provision did not
forbid employees from talking to each other or to union organizers,
the argument fails to address the Board's Lutheran Heritage
analysis, which holds that a provision is unlawful if employees
would reasonably believe it forbids such communication.
4
NLS argues that the Board's result is inconsistent with
the prior caselaw, as demonstrated by the ALJ's reading of the
caselaw. We find no such inconsistency.
In interpreting NLS's provision as a "less serious
infringement on its employees' Section 7 rights," the ALJ relied on
cases involving more narrowly drafted confidentiality provisions
than the one at issue here. See, e.g., K-Mart, 330 N.L.R.B. 263
(1999) (prohibition on disclosing "company business and documents"
did not by its terms include employee wages or working conditions
and made no reference to employee information); Lafayette Park
Hotel, 326 N.L.R.B. at 826 (rule banning discussion of
"hotel-private" information that did not on its face cover employee
wage discussion). Furthermore, under Lafayette Park and Lutheran
Heritage's "mere maintenance" rule, the Board did not need to
consider the employer's reasons for the rule. Cf. Desert Palace,
Inc., 336 N.L.R.B. 271, 272 (2001) (upholding employer's policy of
confidentiality on matters relating to its investigation of an
allegation that an employee was dealing drugs). Moreover, since
its 1990 decision in Kinder-Care Learning Ctrs., Inc., 299 N.L.R.B.
1171 (1990), the Board has consistently held that when a rule's
plain language restricts employees' ability to communicate their
conditions of employment to third parties it violates section
8(a)(1). Id. at 1172 (finding ban on "parent communication"
unlawful).

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fellow employees and with the Union"), enforced, 482 F.3d 463 (D.C.

Cir. 2007).

NLS argues that the Board should have considered that the

confidentiality provision was justified by legitimate business

reasons, citing Republic Aviation Corp. v. NLRB, 324 U.S. 793

(1945). See id. at 798 (noting that in section 7 analysis

"[o]pportunity to organize and proper discipline are both essential

elements in a balanced society"); see also Tex. Instruments, Inc.

v. NLRB, 637 F.2d 822, 833 (1st Cir. 1981). Nothing in Republic

Aviation compelled the Board to apply a balancing test here. While

the Board could have chosen to structure its rule differently and

engage in a balancing analysis, we owe deference to its decision

not to do so. Further, as a practical matter, a more narrowly

drafted provision would be sufficient to accomplish NLS's goal in

maintaining confidentiality in bidding for contracts. See, e.g.,

Cintas Corp. v. NLRB, 482 F.3d 463, 470 (D.C. Cir. 2007) ("A more

narrowly tailored rule that does not interfere with protected

employee activity would be sufficient to accomplish the Company's

presumed interest in protecting confidential information."). We

cannot say the Board's interpretation was unreasonable. Some may

think this result unattractive, but the Board's rule is intended to

be prophylactic and in any event is subject to deference.

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B. The Termination of Dupuy's Employment

NLS has conceded that its main witness, Executive Vice

President and Chief Operating Officer Jesse Green, testified that

Dupuy was dismissed for violating the confidentiality provision,

and the Board credited this testimony. "[W]here discipline is

imposed pursuant to an overbroad rule, that discipline is unlawful

regardless of whether the conduct could have been prohibited by a

lawful rule." Double Eagle Hotel & Casino, 341 N.L.R.B. 112, 112

n.3 (2004), enforced, 414 F.3d 1249 (10th Cir. 2005); see also

Opryland Hotel, 323 N.L.R.B. 723, 728 (1997). While Chairman

Schaumber indicated he might question the rule, he conceded he was

bound by the precedent set in Double Eagle Hotel.

NLS claims that the discharge was lawful, relying on

Wright Line, a Div. of Wright Line, Inc., 251 N.L.R.B. 1083 (1980),

enforced, 662 F.2d 899 (1st Cir. 1981), to argue that NLS can avoid

liability if it demonstrates that it would have discharged Dupuy

even in the absence of an unlawful reason. NLS contends that it

would have terminated Dupuy even in the absence of the

confidentiality provision because he was disruptive. It also

argues that even if its confidentiality provision was unlawful,

Dupuy's dismissal did not violate the Act because he was not

engaged in union or concerted protected activity. These arguments

misconstrue the Board's precedent.

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 Wright Line sets forth the test for assessing cases where

the dispute turns on employer motive: whether the employer

discharged an employee because of the employee's union affiliation,

or whether he acted because of some factor unrelated to the

employee's union status. 662 F.2d at 901. Wright Line, however,

does not govern here. Under the Board's precedent, where the Board

finds an employer rule is invalid, discharge for violating that

rule is invalid. See Saia Motor Freight Line, Inc., 333 N.L.R.B.

784, 785 (2001) ("Because [the employee] was disciplined for

violating the [employer]'s unlawful overly broad . . . rule, that

discipline itself constitutes a violation of Section 8(a)(3) and

(1), without consideration of Wright Line's dual-motivation

analysis.").

The Board did not err in not considering that Dupuy would

have been discharged in the absence of a violation of the

confidentiality provision. The Board supportably relied on its own

precedents to determine that any discharge pursuant to an unlawful

rule is itself unlawful. "The fact that one reason for [an

employee's] reprimand was lawful in no way diminishes the fact that

the other reason was unlawful." A.T. & S.F. Mem'l Hosps., Inc.,

234 N.L.R.B. 436, 436 (1978).

IV.

We direct entry of judgment enforcing the order of the

Board.

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