Nestle Dreyer's Ice Cream Co. v. National Labor Relations Board

PUBLISHED

UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT

No. 14-2222

NESTLE DREYER’S ICE CREAM COMPANY,

Petitioner,

v.

NATIONAL LABOR RELATIONS BOARD,

Respondent,

and

INTERNATIONAL UNION OF OPERATING ENGINEERS LOCAL 501, AFL-
CIO,

Intervenor.

-------------

NATIONAL ASSOCIATION OF MANUFACTURERS; RETAIL LITIGATION
CENTER, INC.; THE CHAMBER OF COMMERCE OF THE UNITED STATES
OF AMERICA; COALITION FOR A DEMOCRATIC WORKPLACE;
INTERNATIONAL FOODSERVICE DISTRIBUTORS ASSOCIATION; NATIONAL
ASSOCIATION OF WHOLESALER-DISTRIBUTORS; NATIONAL COUNCIL OF
CHAIN RESTAURANTS; NATIONAL FEDERATION OF INDEPENDENT
BUSINESS; NATIONAL RETAIL FEDERATION; SOCIETY FOR HUMAN
RESOURCE MANAGEMENT,

Amicus Curiae.

No. 14-2339

NATIONAL LABOR RELATIONS BOARD,

Petitioner,
 v.

NESTLE DREYER’S ICE CREAM COMPANY,

Respondent.

-------------

NATIONAL ASSOCIATION OF MANUFACTURERS; RETAIL LITIGATION
CENTER, INC.; THE CHAMBER OF COMMERCE OF THE UNITED STATES
OF AMERICA; COALITION FOR A DEMOCRATIC WORKPLACE;
INTERNATIONAL FOODSERVICE DISTRIBUTORS ASSOCIATION; NATIONAL
ASSOCIATION OF WHOLESALER-DISTRIBUTORS; NATIONAL COUNCIL OF
CHAIN RESTAURANTS; NATIONAL FEDERATION OF INDEPENDENT
BUSINESS; NATIONAL RETAIL FEDERATION; SOCIETY FOR HUMAN
RESOURCE MANAGEMENT,

Amicus Curiae.

On Petition for Review of an Order of the National Labor
Relations Board. (31−CA−74297)

Argued: October 28, 2015 Decided: April 26, 2016

Before SHEDD, DIAZ, and HARRIS, Circuit Judges.

Petition for review denied and cross-petition for enforcement
granted by published opinion. Judge Diaz wrote the opinion, in
which Judge Shedd and Judge Harris joined.

ARGUED: Bernard J. Bobber, FOLEY & LARDNER LLP, Milwaukee,
Wisconsin, for Petitioner/Cross-Respondent. Gregory P. Lauro,
NATIONAL LABOR RELATIONS BOARD, Washington, D.C., for
Respondent/Cross-Petitioner. Matthew James Ginsburg, AFL-CIO,
Washington, D.C., for Intervenor. ON BRIEF: Ryan N. Parsons,
FOLEY & LARDNER LLP, Milwaukee, Wisconsin, for Petitioner/Cross-
Respondent. Jennifer Abruzzo, Deputy General Counsel, John H.
Ferguson, Associate General Counsel, Linda Dreeben, Deputy
Associate General Counsel, Jill A. Griffin, Supervisory
Attorney, NATIONAL LABOR RELATIONS BOARD, Washington, D.C., for
Respondent/Cross-Petitioner. Brian A. Powers, James B. Coppess,
Washington, D.C., for Intervenor. Bernard P. Jeweler,

2
Christopher R. Coxson, Harold P. Coxson, OGLETREE, DEAKINS,
NASH, SMOAK & STEWART, P.C., Washington, D.C.; Linda E. Kelly,
Patrick N. Forrest, MANUFACTURERS’ CENTER FOR LEGAL ACTION,
Washington, D.C., for Amicus The National Association of
Manufacturers. Deborah White, RETAIL LITIGATION CENTER, INC.,
Arlington, Virginia; Jason C. Schwartz, Thomas M. Johnson, Jr.,
Alexander K. Cox, GIBSON, DUNN & CRUTCHER LLP, Washington, D.C.,
for Amicus Retail Litigation Center, Inc. Mark Theodore, Los
Angeles, California, Ronald Meisburg, Joshua F. Alloy, PROSKAUER
ROSE, LLP, Washington, D.C.; Kate Comerford Todd, Steven P.
Lehotsky, U.S. CHAMBER LITIGATION CENTER, INC., Washington,
D.C., for Amici Coalition for a Democratic Workplace,
International Foodservice Distributors Association, National
Association of Wholesaler-Distributors, National Council of
Chain Restaurants, National Federation of Independent Business,
National Retail Federation, Society for Human Resource
Management, and The Chamber of Commerce of the United States.

3
DIAZ, Circuit Judge:

The National Labor Relations Board certified a collective-

bargaining unit consisting of all maintenance employees at an

ice-cream production facility operated by Nestle-Dreyer’s Grand

Ice Cream, Inc. Dreyer’s contends that (1) the Board applied a

legal standard that violated the National Labor Relations Act

(the “NLRA”) and otherwise represented an abuse of discretion;

and (2) under the proper legal standard as well as the incorrect

legal standard upon which the Board relied, production employees

must be included in the petitioned-for unit. Because the Board

did not violate the NLRA or abuse its discretion in certifying

the maintenance-only unit, we deny Dreyer’s petition for review

and grant the Board’s cross-petition for enforcement of its

order.

I.

A.

At a production facility in Bakersfield, California, 1

Dreyer’s manufactures ice-cream products: cartons, cones, bars,

and other frozen novelties. Known as the Bakersfield Operations

1 We have jurisdiction because Dreyer’s operates a
production facility in Maryland. See 29 U.S.C. § 160(f)
(permitting “[a]ny person aggrieved by a final order of the
Board” to obtain review where the person “resides or transacts
business”).

4
Center (the “BOC”), the facility contains a factory with twenty-

six production lines, a palletizing area and distribution

center, warehouses for dry goods and frozen goods, and a machine

shop for making and repairing parts for the production lines.

It also houses a research and development center.

At the time relevant to this litigation, the BOC employed

about 113 maintenance employees and 578 production employees.

Most production employees work on the production lines,

operating the manufacturing equipment, stacking the product on

pallets, and storing it for distribution. Others work in pre-

manufacturing, where they order materials and mix ingredients

for the lines. Production employees generally work on a

specific production line, and they do not work in the machine

shop or the research and development center.

The majority of maintenance employees work on the

production lines, where they are assigned to multiple production

lines or the adjacent palletizing areas. They perform routine

maintenance and as-needed repairs on the manufacturing

equipment. The rest of the maintenance employees perform a

variety of tasks throughout the BOC. Process technicians, who

work in pre-manufacturing, assist with the computer-controlled

mixing equipment and troubleshoot problems as they arise. The

utilities group maintains the BOC’s refrigeration systems, as

well as its electrical, heating, plumbing, and ventilation

5
systems. Other maintenance employees work as control

technicians, in facilities maintenance, or in the machine shop.

On the production lines and in pre-manufacturing,

maintenance and production employees sometimes work together.

While production workers are trained to solve minor or routine

technical problems—for example, simple packaging jams that can

be fixed by removing the jammed material—their technical

training is limited, and maintenance workers perform most

repairs and routine maintenance. When production employees

encounter technical problems they cannot solve, they call for

the assistance of a maintenance employee. The maintenance

employee diagnoses the problem and performs the repair, relying

on input from the production worker. Every third shift,

production workers disassemble the equipment for cleaning while

maintenance workers stand by to replace broken parts or address

problems that may occur during reassembly and start-up.

Maintenance and production employees have similar working

conditions. They receive the same employment benefits, annual

performance evaluations, and they use the same parking lots,

time clocks, break rooms, and lockers. They must also follow

the same workplace policies, including wearing similar uniforms.

But the two groups are distinguished in several significant

respects. Maintenance workers are generally better paid,

receiving $20–$30 an hour, compared with $15–$22 for production

6
workers. This reflects the fact that maintenance employees have

significantly more training, particularly in mechanics and

electronics. Maintenance employees rarely do the work of

production employees, and they work on a different schedule.

Whereas maintenance employees work four ten-hour shifts each

week, production employees work five eight-hour shifts, which

results in different overtime, holiday, and sick pay.

Furthermore, the two groups are organized into separate

departments with different immediate supervisors. Maintenance

employees are part of the Technical Operations Team; production

employees are on either the Manufacturing Team or the Pre-

Manufacturing Team. Finally, the BOC shuts down annually for

two to four weeks for a complete rebuild of the production

lines. All maintenance employees are required to work during

this period, whereas only a few production employees work if

they volunteer or are selected to participate.

Near the end of 2009, Dreyer’s put in place a pilot

program, limited to one production line, intended to partially

integrate the roles of production and maintenance employees.

The purpose of the program was to increase production employees’

ability to perform routine maintenance (cleaning, inspecting,

lubricating), thereby allowing maintenance employees to focus

less on breakdowns and more on preventive maintenance. The

7
program was put on hold sometime in 2011 and was restarted in

early 2012.

B.

Late in 2011, the International Union of Operating

Engineers Local 501, AFL–CIO filed a petition with the Board,

seeking to represent the BOC’s maintenance employees. Dreyer’s

objected to the proposed unit, arguing that it should also

include production employees. The Board’s Regional Director

(the “RD”) approved the maintenance-only unit over Dreyer’s

objections, and the Board denied Dreyer’s request for review.

After maintenance employees voted 56–53 in favor of joining the

Union, Dreyer’s refused to bargain and the Union filed an

unfair-labor-practice charge with the Board. 2

The Board granted summary judgment to the Union, and

Dreyer’s sought review in this court. We placed the case in

abeyance pending the Supreme Court’s decision in NLRB v. Noel

Canning, 134 S. Ct. 2550 (2014), which ultimately held that the

appointments of some members of the Board were unconstitutional.

On the Board’s motion, we vacated its order and remanded.

On remand, the Board again found that Dreyer’s had

committed an unfair labor practice, and Dreyer’s again

2
To challenge the Board’s unit determination, “the employer
must refuse to bargain, triggering unfair labor practice
proceedings under Section 8(a)(5).” Wellman Indus., Inc. v.
NLRB, 490 F.2d 427, 430 (4th Cir. 1974).

8
petitioned this court for review. The Board cross-petitioned

for enforcement.

II.

A.

The NLRA requires the Board to determine “the unit

appropriate for the purposes of collective bargaining.” 29

U.S.C. § 159(b). In making this determination, the Board

exercises “the widest possible discretion.” Sandvik Rock Tools,

Inc. v. NLRB, 194 F.3d 531, 534 (4th Cir. 1999). The Board may

approve any appropriate unit; it need not identify and select

“the single most appropriate unit.” NLRB v. Enter. Leasing Co.

Se., 722 F.3d 609, 625 (4th Cir. 2013) (quoting Am. Hosp. Ass’n

v. NLRB, 499 U.S. 606, 610 (1991)). Therefore, to resist the

Board’s determination that a petitioned-for unit is appropriate,

an employer cannot merely demonstrate that a different unit is

also appropriate, or even more appropriate. Sandvik, 194 F.3d

at 537. Rather, “[a]n employer challenging the Board’s unit

determination . . . has the burden to prove that the bargaining

unit selected is ‘utterly inappropriate.’” Enter. Leasing, 722

F.3d at 626-27 (quoting Sandvik, 194 F.3d at 534); see also

Arcadian Shores, Inc. v. NLRB, 580 F.2d 118, 120 (4th Cir.

1978).

9
 But despite granting broad discretion, the NLRA prohibits

the Board from blindly deferring to a union’s proposed unit.

NLRB v. Lundy Packing Co., 68 F.3d 1577, 1580 (4th Cir. 1995).

Rather, the NLRA states that “[i]n determining whether a unit is

appropriate . . . the extent to which the employees have

organized shall not be controlling.” 29 U.S.C. § 159(c)(5).

This means that the happenstance of a union’s organizing efforts

may not be the dominant factor in the Board’s decision to

approve the unit. See Lundy, 68 F.3d at 1580. Because a union

will ordinarily propose a unit controlled by organized

employees, the Board violates the statute if it presumes the

appropriateness of a proposed unit. See id. at 1581.

Nevertheless, the Board may consider the extent of organization

as one relevant factor, which may even be the “determinative”

factor in a “close case.” Overnite Transp. Co. v. NLRB, 294

F.3d 615, 620 (4th Cir. 2002).

To guide its discretion, and to avoid giving controlling

weight to the extent of organization, the Board has

traditionally asked whether “employees in the requested unit

shar[e] a sufficient community of interest to be included in the

same unit.” Overnite Transp. Co., 322 N.L.R.B. 723, 725 (1996).

The community-of-interest test incorporates several factors:

(1) similarity in the scale and manner of determining
the earnings; (2) similarity in employment benefits,
hours of work, and other terms and conditions of

10
 employment; (3) similarity in the kind of work
performed; (4) similarity in the qualifications,
skills and training of the employees; (5) frequency of
contact or interchange among the employees;
(6) geographic proximity; (7) continuity or
integration of production processes; (8) common
supervision and determination of labor-relations
policy; (9) relationship to the administrative
organization of the employer; (10) history of
collective bargaining; (11) desires of the affected
employees; [and] (12) extent of union organization.

Enter. Leasing, 722 F.3d at 626 n.8 (quoting Lundy, 68 F.3d at

1580). The test ensures not only that the employees in the unit

share common interests, but also that these interests are

distinct from those of excluded employees. See Newton-Wellesley

Hosp., 250 N.L.R.B. 409, 411 (1980).

In Specialty Healthcare & Rehabilitation Center of Mobile,

357 N.L.R.B. No. 83 (2011), the Board set out to clarify this

longstanding unit-determination analysis. The Board explained

that the analysis proceeds in two steps. In step one, “the

Board examines the petitioned-for unit . . . . If that unit is

an appropriate unit, the Board proceeds no further.” Id. at

*12. In essence, this is the traditional community-of-interest

test outlined above. See id. at *14 (examining the community-

of-interest factors to determine that the included employees

“share a community of interest” and “are unlike all the other

employees the Employer would include in the unit”). Once the

Board determines in step one that the members of the proposed

unit share a community of interest—and the unit is thus

11
appropriate—the burden then shifts to the employer to show that

the approved unit is inappropriate. Id. at *15.

In step two, the employer “is required to demonstrate that

a proposed unit consisting of employees readily identifiable as

a group who share a community of interest is nevertheless not an

appropriate unit because the smallest appropriate unit contains

additional employees.” Id. The employer’s required showing is

necessarily “heightened”: because the Board need not select the

most appropriate unit, the employer must do more than show that

its preferred unit is also appropriate. Id. at *16.

The Board acknowledged in Specialty Healthcare that it and

the courts of appeals had over time used “different words . . .

to describe this heightened showing,” and it concluded that the

use of “slightly varying verbal formulations . . . [did] not

serve the statutory purpose” of the NLRA. Id. at *16-17.

Accordingly, to describe the employer’s required showing when

asking the Board to include additional employees in the unit,

the Board settled on a phrase accepted by the D.C. Circuit: “an

overwhelming community of interest.” Id. at *16 (quoting Blue

Man Vegas, LLC v. NLRB, 529 F.3d 417, 421 (D.C. Cir. 2008)).

To summarize the Specialty Healthcare framework: in step

one, the Board performs a community-of-interest analysis to

determine whether the proposed unit is appropriate; if the unit

is found appropriate, in step two the employer must demonstrate

12
that the excluded employees it wishes to include share an

“overwhelming community of interest” with the included

employees. Id. (emphasis added).

B.

We hold that the Board acted within its broad discretion in

certifying the Union’s petitioned-for unit. After a thorough

analysis of the facts, the RD applied the traditional community-

of-interest factors to determine not only that the maintenance

employees share a community of interest amongst themselves, but

also that maintenance employees form a group distinct from

production employees. By doing so, the RD did not allow the

extent of organization to control his decision.

In applying the Specialty Healthcare framework, the RD

began by determining that the maintenance employees are “readily

identifiable as a separate group” from production employees.

J.A. 416. Maintenance employees “are in their own department,

and are in different job classifications, have different skills,

and perform different functions from production employees.” Id.

The RD focused in particular on the “very different skills” of

the two employee groups and on the fact that maintenance

employees have “much more technical knowledge” than production

employees. Id. Specifically, maintenance employees “are

required to have one year[’s] experience in computerized

maintenance management, two years[’] experience in

13
troubleshooting pneumatics, hydraulics, and electrical and

manufacturing, and five to seven years[’] experience in

industrial high speed maintenance.” Id. None of these

requirements apply to production employees. Id. And whereas

“[m]aintenance mechanics spend about 90% of their time

performing skilled maintenance work,” “production employees lack

the appropriate skill” for such work and make only “minor

adjustment[s] or repair[s].” J.A. 416-17.

Having distinguished maintenance and production employees,

the RD next determined that “[t]he maintenance employees share a

sufficient community of interest amongst themselves for purposes

of collective bargaining.” J.A. 417. Applying the traditional

community-of-interest factors, he determined that the

maintenance employees share similar wages, similar hours, common

supervision, and common functions. J.A. 418-19.

Throughout this analysis, the RD continued to note how

maintenance employees are distinct from production employees.

He found that “[t]he greater skill of the maintenance employees

is . . . reflected by the fact that the maintenance employees

are significantly higher paid than the production employees” and

that “there is virtually no temporary interchange between

maintenance and production employees.” J.A. 419–20. Moreover,

any overlap in wages of the two groups is limited to one of five

classes of maintenance employees and is ultimately

14
“insignificant.” J.A. 418. The two groups work different

shifts, the RD found, and as a result, “[o]vertime is calculated

differently for maintenance employees than production

employees,” “maintenance employees tend to work more overtime

than production [employees],” and maintenance employees receive

more hours of sick pay than production employees. Id. The two

groups’ essential functions also differ: “The maintenance

employees are primarily in charge of maintaining the Employer’s

machinery, and the production employees are primarily in charge

of producing the ice cream.” J.A. 419. And while many

maintenance employees “come into contact with production

employees on the production lines,” some maintenance employees

who do not work on the lines have “more limited” or “very little

contact” with production employees. J.A. 420.

Moving on to step two of the Specialty Healthcare analysis,

the RD found that Dreyer’s could not meet its burden to show

that the production and maintenance employees share an

overwhelming community of interest. J.A. 420–21. He rejected

several of Dreyer’s arguments. First, he found distinguishable

prior Board cases approving joint units of production and

maintenance employees. J.A. 421 (citing Buckhorn, Inc., 343

N.L.R.B. 201 (2004); TDK Ferrites Corp., 342 N.L.R.B. 1006

(2004)). Second, he found that the petitioned-for unit is not

arbitrary or fractured because the Union sought “to represent

15
all classifications of the Employer’s maintenance employees.”

Id. Third, he found the bargaining history at the facility

inconclusive. Id. And finally, the RD gave “little weight” to

Dreyer’s argument that its pilot program for increasing the

integration of the production and maintenance employees’ work

renders the unit inappropriate. J.A. 422. The success of the

program remained speculative, he found, and even assuming its

success, the program would not close the significant gap in

skill between the two groups. Id.

By properly applying the community-of-interest factors

before shifting the burden to Dreyer’s, the RD appropriately

exercised his discretion and did not permit the extent of

organization to control. Cf. FedEx Freight, Inc. v. NLRB, No.

15-1848, 2016 WL 859971, at *7 (8th Cir. Mar. 7, 2016)

(published) (holding that “the use of an overwhelming community

of interest test at the second step of the Board’s analysis does

not violate section 9(c)(5)”); Kindred Nursing Ctrs. E., LLC v.

NLRB, 727 F.3d 552, 565 (6th Cir. 2013) (enforcing the Board’s

order in Specialty Healthcare); Blue Man, 529 F.3d at 423 (“As

long as the Board applies the overwhelming community-of-interest

standard only after the proposed unit has been shown to be prima

facie appropriate, the Board does not run afoul of the statutory

injunction that the extent of the union’s organization not be

given controlling weight.”).

16
 This conclusion is supported by the fact that the approved

unit tracks Dreyer’s own departmental lines and is consistent

with prior Board unit determinations. See, e.g., Ore-Ida Foods,

Inc., 313 N.L.R.B. 1016, 1020 (1994) (finding that maintenance

employees shared a community of interest distinct from

production workers because of differences in skill and

compensation, despite “extensive contact with, and, at times the

assistance of, the production employees”). And it is of no

consequence that a unit including production employees may also

be appropriate. See J.A. 421 (RD noting that “factors

[Dreyer’s] points to might show that a combined unit is an

appropriate unit”). Dreyer’s burden is to show that the

approved unit is “utterly inappropriate.” Enter. Leasing, 722

F.3d at 626-27. That it cannot do, as we explain in the next

section.

C.

Dreyer’s offers several objections, focusing its attack on

Specialty Healthcare rather than on the Board’s decision in this

case. 3 We consider each objection in turn.

3Dreyer’s focus on Specialty Healthcare rather than on the
RD’s analysis in this case is telling. Indeed, the dissenting
member of the Specialty Healthcare panel also participated in
this case, and, while he refused to rely on Specialty
Healthcare, he nevertheless found here “that, under the
traditional community-of-interest test, the interests of the
petitioned-for unit are sufficiently distinct from the
(Continued)
17
 First, Dreyer’s contends that the overwhelming-community-

of-interest test in Specialty Healthcare violates the NLRA by

giving controlling weight to the extent of union organization.

For this contention, Dreyer’s relies primarily on our decision

in Lundy Packing. In Lundy, the Board approved a unit of

production and maintenance employees at a pork-products plant,

rejecting the employer’s argument that industrial engineers and

some quality-control employees should also be included. 68 F.3d

at 1579. While the Board conceded that the larger unit might

also be an appropriate unit, it determined that the excluded

employees did not share an “overwhelming community of interest”

with those in the proposed unit. Id. at 1581. The Board

therefore denied the employer’s request to include additional

employees. Id. at 1579.

We denied enforcement of the Board’s order, finding several

problems with the decision. First, the Board permitted the

exclusion of some employees on the basis of “meager

differences,” which was “problematic under the ‘community of

interest’ standard.” Id. at 1581. Second, the Board “adopted a

production employees.” J.A. 426. And at oral argument, counsel
for Dreyer’s conceded that the RD’s community-of-interest
analysis “looks a lot like the . . . historical analysis that
used to be done.” Oral Argument at 14:15, Nestle Dreyer’s Ice
Cream Co. v. NLRB, 14-2222 (Oct. 28, 2015),
http://coop.ca4.uscourts.gov/OAarchive/mp3/14-2222-20151028.mp3.

18
novel legal standard which effectively accomplished the

exclusion. Under this new standard, any union-proposed unit is

presumed appropriate unless an ‘overwhelming community of

interest’ exists between the excluded employees and the union-

proposed unit.” Id. We held that this use of the overwhelming-

community-of-interest standard, which presumed the

appropriateness of a proposed bargaining unit, “effectively

accorded controlling weight to the extent of union organization”

in violation of the NLRA. Id.

According to Dreyer’s, Lundy held that the overwhelming-

community-of-interest test necessarily violates the NLRA when

used in the context of unit determinations: “Instead of using a

range of factors to determine whether a proposed unit is

appropriate, as the Board did with its traditional [community-

of-interest] test, the overwhelming test skews the analysis

‘overwhelmingly’ in favor of the union-proposed unit.” Pet’r’s

Br. at 41.

Dreyer’s reads Lundy too broadly. Lundy does not establish

that the overwhelming-community-of-interest test as later

applied in Specialty Healthcare fails to comport with the NLRA.

Instead, Lundy prohibits the overwhelming-community-of-interest

test where the Board first conducts a deficient community-of-

interest analysis—that is, where the first step of the Specialty

Healthcare test fails to guard against arbitrary exclusions.

19
The “meager differences” we identified in Lundy between the

excluded quality-control employees and the included production

and maintenance employees were the following: “(1) the method

for calculating their earnings; (2) supervision; and (3) a lack

of interchangeability with other [production and maintenance]

positions.” Id. at 1580. And even these distinctions were

questionable: at least one included employee’s pay was

calculated in the same manner as the excluded employees, and

many of the included employees had different supervisors from

one another. Id. at 1580–81. In other words, the petitioned-

for unit was an apparent union gerrymander. By rubber-stamping

it and then applying the overwhelming-community-of-interest

test, “the Board effectively accorded controlling weight to the

extent of union organization.” Id. at 1581.

But in Lundy we had no occasion to determine whether the

overwhelming-community-of-interest test would offend the NLRA in

a case where the Board properly conducts Specialty Healthcare’s

step-one analysis by determining that the members of the

petitioned-for unit share a distinct community of interest.

With such a case now before us, we find Lundy distinguishable.

Here, in addition to the differences cited in Lundy, the RD

identified several community-of-interest factors that

distinguished maintenance employees from production employees:

higher wages, greater training and education requirements,

20
higher skill levels, and different hours. In Lundy, the Board

effectively assumed the proposed-unit employees shared a

community of interest; here, in contrast, the Board rigorously

weighed the traditional community-of-interest factors to ensure

that the proposed unit was proper under the NLRA.

We need not and do not hold that an application of the

Specialty Healthcare standard will never run afoul of Lundy.

Our assessment of a prior Board policy regarding unit

determinations remains applicable here:

The Board’s announced standard may lead to some
decisions where the extent of organization will be the
dominant factor in unit selection (such as in cases
where the community of interest considerations in
support of the union’s proposed unit are weak), but
not all cases will be like that. And that did not
happen here, where the Board supported its decision to
exclude the [production employees] from the . . . unit
with numerous community of interest factors.

Overnite Transp., 294 F.3d at 621 (addressing the Board’s policy

of considering “only whether the unit requested [by the union]

is an appropriate one, even though it may not be the most

optimum or most appropriate unit”). At least on the facts

before us, the imposition of the overwhelming-community-of-

interest test did not give controlling weight to the extent of

union organization, unlike in Lundy.

Next, Dreyer’s contends that the Board in Specialty

Healthcare failed to provide a reasoned explanation for its

adoption of the overwhelming-community-of-interest test, which

21
resulted in a “repudiation of more than forty years of

precedent.” Pet’r’s Br. at 44. Dreyer’s overstates the changes

the Board made in Specialty Healthcare. Indeed, we agree with

our sister circuits that the Board clarified—rather than

overhauled—its unit-determination analysis. See FedEx, 2016 WL

859971, at *7 (“We conclude that the overwhelming community of

interest standard articulated in Specialty Healthcare is not a

material departure from past precedent . . . .”); Kindred, 727

F.3d at 561 (“The Board has used the overwhelming-community-of-

interest standard before, so its adoption in Specialty

Healthcare . . . is not new.”); Blue Man, 529 F.3d at 421

(describing the Board’s “consistent analytic framework” as

including the question whether “the excluded employees share an

overwhelming community of interest with the included

employees”).

We acknowledge that some statements in Specialty Healthcare

may be read to indicate significant changes in Board policy.

For example, some passages suggest that whether employees are

appropriately excluded from the petitioned-for unit is addressed

only in step two, the overwhelming-community-of-interest

analysis, not in step one, the traditional community-of-interest

analysis. Specialty Healthcare, 357 N.L.R.B. No. 83, at *26

(Hayes, dissenting); see also id. at *17 (majority opinion).

This would indeed constitute a significant change, as it would

22
mean that the Board no longer determines for itself whether

employees are arbitrarily excluded from the petitioned-for unit.

Applying Specialty Healthcare in such a manner might well

conflict with Lundy, which requires that before the

overwhelming-community-of-interest test is applied, the Board at

the very least must ensure that employees are not excluded on

the basis of “meager differences.” Lundy, 68 F.3d at 1581.

The RD’s application of Specialty Healthcare here, however,

is entirely consistent with our precedent. The analysis of the

proposed unit did not “address[], solely and in isolation, the

question whether the employees in the unit sought have interests

in common with one another.” Newton-Wellesley Hosp., 250

N.L.R.B. at 411. Instead, the analysis “proceed[ed] to a

further determination whether the interests of the group sought

[were] sufficiently distinct from those of other employees to

warrant the establishment of a separate unit.” Id. This was a

proper application of the well-worn community-of-interest test,

and it represented a finding that the petitioned-for unit was

appropriate. At that point, a challenge to the unit faced a

high burden. In our words, the unit had to be proven “utterly

inappropriate”; in the Board’s newly chosen words, the excluded

employees had to share an overwhelming community of interest

with those in the unit. These standards are entirely

consistent.

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 Nor is it unreasonable, as Dreyer’s urges, for the Board to

use the same overwhelming-community-of-interest test in this

context that it has historically used in the context of

accretions. In an accretion, new employees become part of an

existing bargaining unit without taking part in a representative

election. Lundy, 68 F.3d at 1581. Because these employees lack

the opportunity to vote, the Board will not permit their

addition to a unit unless they share an overwhelming community

of interest with the unit. Id. As we explained in Lundy, the

Board may not import this test to determine whether a

petitioned-for unit is appropriate. Id. at 1582. The proper

analysis for that determination is the community-of-interest

test. But in determining whether the Board’s approved unit is

“utterly inappropriate,” the overwhelming-community-of-interest

test is reasonable. As in the accretion context, the question

is whether some employees share more than a community of

interest with the members of the unit.

Moreover, to the extent the Board in Specialty Healthcare

departed from its prior precedent, it provided enough

explanation so that a reviewing court could understand what

changes the Board intended to make and why. See J.P. Stevens &

Co. v. NLRB, 623 F.2d 322, 329 (4th Cir. 1980) (determining that

the Board had not sufficiently explained itself where it was

“difficult to ascertain . . . why the Board apparently departed

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from its precedents”). Specifically, the Board explained that

the overwhelming-community-of-interest test, though somewhat new

in name, was consistent with the Board’s prior precedent and

with the precedent of the courts of appeals, and that using

varying terminology did not serve the purposes of the NLRA.

Specialty Healthcare, 357 N.L.R.B. No. 83, at *16-17. This was

a sufficient explanation for our review. Because the Board did

not significantly alter its prior rulings in Specialty

Healthcare, and because it reasonably explained the changes it

was making, the Board did not abuse its discretion.

Finally, Dreyer’s argues that in Specialty Healthcare, “the

Board exceeded the reasonable boundaries of the adjudicative

process and abused its discretion,” in violation of the

Administrative Procedure Act. Pet’r’s Br. at 59. This appears

to encompass two sub-arguments: first, Specialty Healthcare

changed the law so significantly that rulemaking rather than

adjudication was required; second, whether to adopt the

overwhelming-community-of-interest test was not before the Board

in Specialty Healthcare, so the Board was announcing a rule

without either proper adjudication or rulemaking. Both

arguments lack merit.

Ordinarily, the Board may adopt new regulatory principles

through adjudication rather than rulemaking. NLRB v. Bell

Aerospace Co. Div. of Textron, 416 U.S. 267, 294 (1974).

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However, courts have sometimes found the choice of adjudication

inappropriate where an agency purports to establish a new rule

of widespread application. See Ford Motor Co. v. FTC, 673 F.2d

1008, 1009 (9th Cir. 1981). In Ford, for example, the FTC was

required to proceed by rulemaking rather than adjudication when

it created a rule that “would require a secured creditor to

credit the debtor with the ‘best possible’ value of [a]

repossessed vehicle, and forbid the creditor from charging the

debtor with overhead and lost profits.” Id.

In Specialty Healthcare, by contrast, the Board did not

create a new obligation for employers in operating their

businesses. Rather, the Board merely clarified the employer’s

evidentiary burden when it challenges a union’s proposed

bargaining unit in the course of an adjudication. Such a

clarification of agency law through adjudication is hardly the

kind of abuse of discretion the Ninth Circuit identified in

Ford. See FedEx, 2016 WL 859971, at *8 (holding that “the

Board’s decision to proceed by adjudication was not an abuse of

discretion”); cf. Bell Aerospace, 416 U.S. at 295 (finding that

rulemaking was not required for the Board to change course from

prior decisions, when industry reliance on past decisions would

not result in “substantial” adverse consequences).

We also reject Dreyer’s contention that the issue of

whether to adopt the overwhelming-community-of-interest test was

26
not before the Board in Specialty Healthcare. Although the

parties did not raise the question of what standard should

apply, the employer was asking the Board to include additional

employees in a proposed bargaining unit. Specialty Healthcare,

357 N.L.R.B. No. 83, at *2. The Board was free to clarify the

applicable standard. See Bell Aerospace, 416 U.S. at 294

(“[T]he Board is not precluded from announcing new principles in

an adjudicative proceeding . . . .”).

We therefore conclude that the Board did not violate the

Administrative Procedure Act.

III.

For the reasons stated, we deny Dreyer’s petition for

review and grant the Board’s cross-petition for enforcement.

PETITION FOR REVIEW DENIED AND CROSS-PETITION FOR
ENFORCEMENT GRANTED

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