15‐2442‐ag, 15‐4106‐ag
Constellation Brands, U.S. Operations, Inc. v. NLRB
In the
United States Court of Appeals
for the Second Circuit
AUGUST TERM 2016
Nos. 15‐2442‐ag, 15‐4106‐ag
CONSTELLATION BRANDS, U.S. OPERATIONS, INC., DBA WOODBRIDGE
WINERY,
Petitioner–Cross‐Respondent,
v.
NATIONAL LABOR RELATIONS BOARD,
Respondent–Cross‐Petitioner,
TEAMSTERS LOCAL UNION 601,
Intervenor.
Petitions for review and enforcement of orders of the National Labor
Relations Board
ARGUED: AUGUST 24, 2016
DECIDED: NOVEMBER 21, 2016
Before: WALKER, CABRANES, and LOHIER, Circuit Judges.
This case presents two questions. The first is whether the
framework for evaluating proposed bargaining units set forth in
Specialty Healthcare & Rehabilitation Center of Mobile, 357 N.L.R.B. 934
(2011), is unlawful. Under this framework, the National Labor
Relations Board (the “Board”) uses a two‐step analysis to determine
whether a union’s proposed bargaining unit consists of employees
who share a “community of interests” and does not arbitrarily
exclude other employees. Several sister circuits recently approved
this standard, but we have yet to opine on this question. The second
question is whether the Board properly applied the Specialty
Healthcare framework in its order at issue in this case.
We hold the Specialty Healthcare framework to be valid, as our
sister circuits have, and to be consistent with this Court’s precedent.
We conclude that the Board did not properly apply the Specialty
Healthcare framework, however, in its decision and order against
Constellation Brands, U.S. Operations, Inc., d/b/a Woodbridge
Winery. In approving the petitioned‐for collective bargaining unit,
the Board did not analyze at step one of the Specialty Healthcare
framework whether the excluded employees had meaningfully
distinct interests from members of the petitioned‐for unit in the
context of collective bargaining that outweigh similarities with unit
members.
2
Accordingly, we GRANT the petition for review, DENY the
Board’s cross‐petition for enforcement, and REMAND the cause to
the Board for further proceedings consistent with the record of this
matter and this opinion.
SHAY DVORETZKY (David Raimer, Willis J.
Goldsmith, on the brief) Jones Day,
Washington, DC, for Petitioner–Cross‐
Respondent.
GREG P. LAURO, Attorney (Jennifer Abruzzo,
Deputy General Counsel; John H. Ferguson,
Associate General Counsel; Linda Dreeben,
Deputy Associate General Counsel; Julie B.
Broido, Supervisory Attorney, on the brief),
for Richard F. Griffin, Jr., General Counsel,
National Labor Relations Board,
Washington, DC, for Respondent–Cross‐
Petitioner.
MATTHEW J. GINSBURG, AFL‐CIO,
Washington, DC (James B. Coppess, AFL‐
CIO, Washington, DC; Robert Bonsall,
Beeson, Tayer & Bodine, Sacramento, CA, on
the brief), for Intervenor.
3
JOSÉ A. CABRANES, Circuit Judge:
This case presents two questions. The first is whether the
framework for evaluating proposed bargaining units set forth in
Specialty Healthcare & Rehabilitation Center of Mobile, 357 N.L.R.B. 934
(2011), is unlawful. Under this framework, the National Labor
Relations Board (the “Board”) uses a two‐step analysis to determine
whether a union’s proposed bargaining unit consists of employees
who share a “community of interests” and does not arbitrarily
exclude other employees. Several sister circuits recently approved
this standard, but we have yet to opine on this question.1 The second
question is whether the Board properly applied the Specialty
Healthcare framework in its order at issue in this case.
We hold the Specialty Healthcare framework to be valid, as our
sister circuits have, and to be consistent with this Court’s precedent.
We conclude, however, that the Board did not properly apply the
Specialty Healthcare framework in its decision and order against
Constellation Brands, U.S. Operations, Inc., d/b/a Woodbridge
Winery (“Constellation”). In approving the petitioned‐for collective
bargaining unit, the Board did not analyze at step one of the Specialty
1 See Kindred Nursing Ctrs. E., LLC v. NLRB, 727 F.3d 552 (6th Cir. 2013) (enforcing
the original Specialty Healthcare case); accord FedEx Freight, Inc. v. NLRB, ‐‐‐F.3d‐‐‐,
2016 WL 5929822 (7th Cir. Oct. 12, 2016); NLRB v. FedEx Freight, Inc., 832 F.3d 432
(3d Cir. 2016); Nestle Dreyer’s Ice Cream Co. v. NLRB, 821 F.3d 489 (4th Cir. 2016)
(rejecting challenge under the National Labor Relations Act and the
Administrative Procedure Act); Macy’s, Inc. v. NLRB, 824 F.3d 557 (5th Cir. 2016);
FedEx Freight, Inc. v. NLRB, 816 F.3d 515 (8th Cir. 2016).
4
Healthcare framework whether the excluded employees had
meaningfully distinct interests from members of the petitioned‐for
unit in the context of collective bargaining that outweigh similarities
with unit members.
Accordingly, we GRANT the petition for review, DENY the
Board’s cross‐petition for enforcement, and REMAND the cause to
the Board for further proceedings consistent with the record of this
matter and this opinion.
BACKGROUND
Constellation owns and operates Woodbridge Winery in
California, which employs about 100 managers and 200 production
and maintenance employees. Its employees are divided into various
departments. This case concerns the cellar operations department,
which is organized into two subgroups: “outsider cellar” with 46
employees and “barrel” with 18 employees. The parties dispute
whether the “outside cellar” employees form a group that is
sufficiently distinct from the “barrel” employees (as well as from
Constellation’s other employees) that they may be treated separately
for collective bargaining purposes under Section 9 of the National
Labor Relations Act (“NLRA”).2
2 29 U.S.C. § 159 (laying out the procedures by which the Board resolves a
question of representation and directs an election).
5
The certification of a bargaining unit falls largely to the Board’s
Regional Directors (“RDs”), who are appointed by the General
Counsel and approved by the Board, and to hearing officers in the
regional offices, who report to the RDs.3 Parties seeking to determine
whether a particular labor organization has majority support in a
workplace submit a petition for an election to the Board’s regional
office.4 Where the parties do not agree on an appropriate bargaining
unit, a hearing officer will conduct a representation hearing to
“determine the unit appropriate for the purposes of collective
bargaining, to investigate and provide for hearings, and determine
whether a question of representation exists, and to direct an election
or take a secret ballot . . . and certify the results thereof.”5 Based on
the hearing officer’s report, the RD will decide on the petition and, if
warranted, direct an election and prescribe its procedures. Although
See id. § 153(b) (“The Board is . . . authorized to delegate to its regional
3
directors its powers . . . to determine the unit appropriate for the purpose of
collective bargaining . . . .”); 29 C.F.R. § 102.64 (2015) (describing the conduct of
hearings before hearing officers); id. § 102.67 (concerning proceedings before
RDs).
While substantial power has been delegated to the RDs, the Board’s
General Counsel, a Presidential appointee whose nomination is subject to the
advice and consent of the Senate, retains the ultimate authority with respect to
“the investigation of charges and issuance of complaints” under the NLRA. See 29
U.S.C. § 153(d).
See id. § 159(c) (requiring a petition be filed to seek Board approval of a
4
proposed bargaining unit).
Id. § 153(b).
5
6
parties have the right to appeal the RD’s decision to a three‐member
panel of the Board, the Board’s review is discretionary and granted
only in limited circumstance.6 Following the Board’s review, elections
are held and the RD may certify the results.
On September 2, 2014, the Teamsters Local Union 601 (the
“Union”) filed a petition seeking to represent Constellation’s outside
cellar employees as a bargaining unit. Constellation objected, arguing
that an appropriate unit should encompass all production and
maintenance employees or, at a minimum, all cellar operations
employees. Following a hearing, the RD decided in favor of the
Union and directed that an election be held. In determining that the
Union’s proposed bargaining unit of outside cellar employees was
appropriate, the RD applied the Specialty Healthcare standard. On
February 26, 2015, a three‐member panel of the Board (Chairman
Pearce, Member Hirozawa, and Member McFerran) denied
Constellation’s request to review the RD’s decision, stating that
6 See 29 C.F.R. § 102.67(d) (2015) (“The Board will grant a request for
review only where compelling reasons exist therefor. . . . [R]eview may be granted
only upon one or more of the following grounds: (1) That a substantial question of
law or policy is raised because of: (i) [t]he absence of; or (ii) [a] departure from,
officially reported Board precedent. (2) That the regional director’s decision on a
substantial factual issue is clearly erroneous on the record and such error
prejudicially affects the rights of a party. (3) That the conduct of any hearing or
any ruling made in connection with the proceeding has resulted in prejudicial
error. (4) That there are compelling reasons for reconsideration of an important
Board rule or policy.”).
7
Constellation had “raise[d] no substantial issues warranting review.”
Special App. 4.
In the Board‐ordered election, the outside cellar employees
voted 31–13 to unionize and the RD certified the Union as the
collective‐bargaining representative of those employees. Following
the usual procedure for contesting the validity of a union election,
Constellation refused to bargain with the Union, which then filed an
unfair‐labor‐practice charge.7 On July 29, 2015, a three‐member Board
panel granted the General Counsel’s motion for summary judgment
and concluded that Constellation had violated the NLRA by refusing
to bargain.8 Constellation subsequently petitioned for review of that
decision, and the Board filed a cross‐petition for enforcement.
JURISDICTION
While both parties agree that we have jurisdiction, we
nonetheless consider the issue independently.9 The Board had
7 The well‐settled practice for challenging the appropriateness of a
bargaining unit is refusing to bargain with the proposed unit and then defending
against an unfair labor practice charge on the ground that the unit is
inappropriate. See, e.g., NLRB v. Ky. River Cmty. Care, Inc., 532 U.S. 706, 709 (2001)
(“Because direct judicial review of representation determinations is unavailable,
. . . the respondent sought indirect review by refusing to bargain with the union,
thereby inducing the General Counsel of the Board to file an unfair labor practice
complaint under §§ 8(a)(1) and 8(a)(5) [of the NLRA].” (citation omitted)).
8 See Constellation Brands, 362 N.L.R.B. No. 151 (2015).
See, e.g., Taylor v. Rogich, 781 F.3d 647, 648 n.2 (2d Cir. 2015).
9
8
jurisdiction over the original petition under 29 U.S.C. § 160(a)–(c),
which empowers the Board to prevent unfair labor practices.10 Since
Constellation is a New York corporation and transacts business
within this Circuit, we have jurisdiction over the petition for review
and the cross‐petition for enforcement under 29 U.S.C. § 160(f).11
29 U.S.C. § 160(a)–(c) provides, in relevant part: “The Board is
10
empowered, as hereinafter provided, to prevent any person from engaging in any
unfair labor practice (listed in section 158 of this title) affecting commerce. . . . If
upon the preponderance of the testimony taken the Board shall be of the opinion
that any person named in the complaint has engaged in or is engaging in any such
unfair labor practice, then the Board shall state its findings of fact and shall issue
and cause to be served on such person an order requiring such person to cease
and desist from such unfair labor practice, and to take such affirmative action
including reinstatement of employees with or without back pay, as will effectuate
the policies of this subchapter . . . .”
11 29 U.S.C. § 160(f) provides: “Any person aggrieved by a final order of
the Board granting or denying in whole or in part the relief sought may obtain a
review of such order in any United States court of appeals in the circuit wherein
the unfair labor practice in question was alleged to have been engaged in or
wherein such person resides or transacts business . . . by filing in such a court a
written petition praying that the order of the Board be modified or set aside.”); see
also Boire v. Greyhound Corp., 376 U.S. 473, 476–79 (1964).
In addition, 29 U.S.C. § 159(d) stipulates that the record and findings made
in the underlying representation proceeding is part of the record before this
Court. It provides: “Whenever an order of the Board…is based in whole or in part
upon facts certified following an investigation pursuant to subsection (c) of this
section and there is a petition for the enforcement or review of such order, such
certification and the record of such investigation shall be included in the
transcript of the entire record required to be filed under subsection (e) or (f) of
section 160 of this title, and thereupon the decree of the court enforcing,
modifying, or setting aside in whole or in part the order of the Board shall be
9
DISCUSSION
A. The Legality of the Specialty Healthcare Framework
The threshold question presented is whether we, along with
six of our sister circuits,12 should also adopt the Specialty Healthcare
framework. “[W]e review the Board’s legal conclusions to ensure that
they have a reasonable basis in law.”13
When considering a petition for a proposed bargaining unit, an
RD has discretion to approve any appropriate unit, not just “the
single most appropriate unit.”14 To guide its discretion, the RD has
traditionally asked whether the members of the proposed unit share
a “community of interests distinct from their interests as employees
of the whole institution.”15 In Specialty Healthcare, the Board clarified
this traditional approach by introducing a new, two‐step analysis.
made and entered upon the pleadings, testimony, and proceedings set forth in
such transcript.”
12 See ante note 1.
NLRB v. Special Touch Home Care Servs., Inc., 566 F.3d 292, 296–97 (2d Cir.
13
2009) (quotation marks omitted).
Am. Hosp. Ass’n v. NLRB, 499 U.S. 606, 610 (1991). This discretion is
14
derived from 29 U.S.C. § 159(b) that states, in relevant part: “The Board shall
decide in each case whether, in order to assure to employees the fullest freedom in
exercising the rights guaranteed by this subchapter, the unit appropriate for the
purposes of collective bargaining . . . .” Id.
15 Staten Island Univ. Hosp. v. NLRB, 24 F.3d 450, 454 (2d Cir. 1994).
10
“[I]n step one, the Board [i.e., the RD] performs a community‐of‐
interest analysis to determine whether the proposed unit is
appropriate; if the unit is found appropriate, in step two [the party
opposing certification] must demonstrate that the excluded
employees it wishes to include share an ‘overwhelming community
of interest’ with the included employees.”16
While the RD’s discretion in determining the appropriateness
of a bargaining unit is broad, it is not unlimited. Section 9(c) of the
NLRA explicitly states that “[i]n determining whether a unit is
appropriate . . . the extent to which the employees have organized
shall not be controlling.”17 The Board has long disfavored fractured
units that may arbitrarily exclude certain groups of employees or
could invite “gerrymandering” of interests among employees.18
Nestle Dreyer’s, 821 F.3d at 496 (emphasis omitted) (quoting Specialty
16
Healthcare, 357 N.L.R.B. at 944).
17 29 U.S.C. § 159(c)(5).
18 Francis Biddle, an architect of the NLRA, the second Chairman of the
National Labor Board (the predecessor of the Board), and later, Attorney General
of the United States, was a vocal opponent of fractured units during the Senate
committee hearings prior to the passage of the NLRA: “If the employees
themselves could make the decision without proper consideration of the elements
which should constitute the appropriate units they could in any given instance
defeat the practical significance of the majority rule; and, by breaking off into
small groups, could make it impossible for the employer to run his plant.” See
Hearings of S. 1958 Before the S. Comm. On Educ. & Lab., 74th Cong. 82 (1935),
(statement of Francis Biddle), reprinted in 1 NLRA LEGISLATIVE HISTORY 1458–59.
He further recognized then that there was always the risk “of your Board
gerrymandering and not carrying out the purposes of the Board,” but noted that
11
Today, it is well established under Board precedent that “the Board
does not approve fractured units, i.e., combinations of employees that
are too narrow in scope or that have no rational basis.”19
“any arbitrary act of the Board in selecting the unit is subject to check on review
by the court.” Id.
For many years, the Board presumed store‐wide or plant‐wide units to be
appropriate over multiple representation units within an employer. See, e.g.,
Laurel Assocs., Inc., d/b/a Jersey Shore Nursing & Rehab. Ctr., 325 N.L.R.B. 603
(1998) (service and maintenance unit in nursing home is presumptively
appropriate); Gourmet, Inc., d/b/a Jackson’s Liquors, 208 N.L.R.B. 807, 808
(1974) (“The employerwide unit . . . is presumptively appropriate.”); Kalamazoo
Paper Box Corp., 136 N.L.R.B. 134, 136 (1962) (“A plantwide unit is presumptively
appropriate under the Act, and a community of interest inherently exists among
such employees.”); May Dep’t Stores, Co., 97 N.L.R.B. 1007, 1008 (1952) (declaring a
“store‐wide unit” to be “the optimum unit for the purpose of collective
bargaining” in the retail industry).
This Circuit has long held a preference for consolidating bargaining units.
See, e.g., Staten Island Univ. Hosp, 24 F.3d at 456 (“We regard the single‐facility
presumption as the kind of rebuttable presumption that was beyond dispute in
American Hospital.”); accord NLRB v. Phoenix Programs of N.Y., Inc., 2 F. App’x 166,
168–69 (2d Cir. 2001) (summary order) (affirming the Board’s determination that
the employer failed to rebut the “single‐facility presumption”).
19 Seaboard Marine, Ltd., 327 N.L.R.B. 556 (1999).
The Board has maintained this governing approach following the Specialty
Healthcare decision in 2011. See, e.g., A.S.V., Inc., 360 N.L.R.B. No. 138 (2014)
(applying Specialty Healthcare and rejecting the proposed unit as “fractured” and
thus inappropriate); Odwalla, Inc., 357 N.L.R.B. 1608, 1612‐13 (2011) (applying
Specialty Healthcare to find that the recommended unit was an inappropriate
“fractured unit” and to further suggest that, even if a smaller constituent part of a
proposed unit would constitute an appropriate free‐standing unit, the unit may
12
Certain interested groups argue that the Specialty Healthcare
test essentially creates a presumption in favor of “micro” unions,
causing the undue proliferation of bargaining units that make it
difficult for employers to settle labor disputes and that arbitrarily
exclude certain employees.20 In addition to the increased costs to
employers of administering multiple contracts and benefit plans or
reconciling conflicting demands from separate units, “micro” unions
may also, the interested groups argue, diminish the rights of
employees.21 These groups argue that the proliferation of units can
allow one bargaining unit to disrupt the operations of an enterprise
with unique demands not shared by other employees. “Micro”
unions can also make it more difficult for employees to access new
opportunities across units and may diminish the overall power of
nevertheless become inappropriate if additional employees are proposed for
inclusion who have less community of interest with one another than do the
excluded employees).
20 See Brief for Amici Curiae Coalition for a Democratic Workplace,
Chamber of Commerce of the United States of America, National Association of
Manufacturers, National Retail Federation, and Retail Litigation Center, Inc., at
22‐24, Constellation Brands v. NLRB, No. 15‐2442‐ag (2d Cir. Dec. 16, 2015), ECF
No. 46.
21 See Cont’l Web Press, Inc. v. NLRB, 742 F.2d 1087, 1090 (7th Cir. 1984)
(“[B]reaking up a work force into many small units creates a danger that some of
them will be so small and powerless that it will be worth no one’s while to
organize them, in which event the members of these units will be left out of the
collective bargaining process.”).
13
labor by creating units so small that they lack influence.22 Outside
groups also echo Constellation’s objections that the Specialty
Healthcare framework is a departure from decades of Board cases23
and inconsistent with the NLRA.24
In the present case, Constellation asserts two objections to the
Specialty Healthcare test. First, it argues that this test impermissibly
gives controlling weight to the extent to which employees have
already been organized, thereby departing from past precedent of the
Board and contravening the statutory language of the NLRA. Under
the prior framework, Constellation argues, the RD had to determine
whether the petitioned‐for unit had interests “sufficiently distinct
from” those of excluded employees as part of the “community of
interest” analysis.25 Under Specialty Healthcare, in contrast, that
determination of “sufficiently distinct interests” is postponed until
22 See NLRB v. Purnell’s Pride, Inc., 609 F.2d 1153, 1156 (5th Cir. 1980)
(“[T]he designation of . . . small unit[s] that exclude[] employees with common
skills, attitudes, and economic interests may unnecessarily curtail the union’s
bargaining power and may generate destructive factionalization and in‐fighting
among employees.”).
See, e.g., ante notes 18 and 19 (discussing the Board’s historical preference
23
for employer‐wide units and opposition to fractured units); but see, e.g.,
Montgomery Ward & Co., 150 N.L.R.B. 598, 601 (1964) (“[T]he Board has held that
the appropriateness of an overall unit does not establish that a smaller unit is
inappropriate.”).
24 29 U.S.C. § 159(b), (c)(5).
25 See, e.g., Wheeling Island Gaming, Inc., 355 N.L.R.B. 637, 638 (2010).
14
step two, at which point the employer must show that excluded
employees shared an “overwhelming community of interest” with the
presumptively appropriate petitioned‐for group.26 This heightened
showing, Constellation argues, makes it nearly impossible for an
employer to resist unions’ efforts to gerrymander bargaining units.
This concern is misplaced. Step one of Specialty Healthcare
expressly requires the RD to evaluate several factors relevant to
“whether the interests of the group sought were sufficiently distinct
from those of other employees to warrant the establishment of a
separate unit.”27 For instance, the Board must consider “[w]hether the
employees are organized into a separate department; have distinct
skills and training; have distinct job functions and perform distinct
work . . . ; are functionally integrated with the Employer’s other
employees; . . . have distinct terms and conditions of employment;
and are separately supervised.”28 Accordingly, it seems to us that
Specialty Healthcare does not significantly redefine the showing
required of a party seeking Board approval in establishing a
bargaining unit. Nor does it contravene Section 9(c) of the NLRA by
giving union organizers an inappropriate degree of control.
26 Nestle Dreyer’s, 821 F.3d at 496 (quoting Specialty Healthcare, 357 N.L.R.B.
at 944).
27 Id. at 500 (brackets and internal quotation marks omitted).
Specialty Healthcare, 357 N.L.R.B. at 942 (emphases added) (internal
28
quotation marks omitted).
15
Constellation’s second argument against adoption of the rule
of Specialty Healthcare is that the Board failed to provide a reasoned
explanation for the new standard.29 This argument is also
unpersuasive. Step one of Specialty Healthcare adopts verbatim the
“community of interest” test on which the Board has long relied.30
Step two is a novel formulation called the “overwhelming
community of interest” test, but its substance is consistent with
earlier Board precedents that imposed a heightened burden on a
party who urges the Board to add employees to a unit that has
otherwise been deemed appropriate. Moreover, the phrase
“overwhelming community of interest” was taken from a decision of
the United States Court of Appeals for the District of Columbia
Circuit, which itself purported to summarize relevant Board
precedents.31 One might question the desirability of the Board’s
approach. Yet it seems implausible to claim that a Board decision,
announced in a 14‐page opinion (exclusive of the dissent) that
borrows heavily from Board and appellate precedent, is invalid
because it failed to explain itself.
See Serv. Emps. Int’l Union, Local 32BJ v. NLRB, 647 F.3d 435, 442 (2d Cir.
29
2011) (“Where the Board departs from prior interpretations of the Act without
explaining why that departure is necessary or appropriate, the Board will have
exceeded the bounds of its discretion.” (internal quotation marks omitted)).
30 See Allied Chem. & Alkali Workers, Local Union No. 1 v. Pittsburgh Plate
Glass Co., Chem. Div., 404 U.S. 157, 172–73 (1971); Kalamazoo Paper Box Corp., 136
N.L.R.B. at 137.
31 See Blue Man Vegas, LLC v. NLRB, 529 F.3d 417, 421–23 (D.C. Cir. 2008).
16
In sum, Constellation has failed to meet its burden of showing
that the Specialty Healthcare framework is inconsistent with the NLRA
or meaningfully departs from the Board’s past precedents.
B. Did the Board Correctly Apply Specialty Healthcare?
We now turn to the application of the Specialty Healthcare
framework in this case. In reviewing the Board’s decision of unit
appropriateness, we are mindful that our task is not to substitute our
judgment for that of the Board.32 The Board is empowered to
determine whether a unit is appropriate for the purposes of collective
bargaining33 and “select from those possible arrangements in
reaching its unit determination.”34 Although the Board’s
determination that a bargaining unit is appropriate “will stand unless
arbitrary and unreasonable,”35 we conclude that the RD misapplied
the Specialty Healthcare framework at step one.
32 See Universal Camera Corp. v. NLRB, 340 U.S. 474, 488 (1951) (“Congress
has merely made it clear that a reviewing court is not barred from setting aside a
Board decision when it cannot conscientiously find that the evidence supporting
that decision is substantial . . . .”; see also Banknote Corp. of Am. v. NLRB, 84 F.3d
637, 651 (2d Cir. 1996).
33 29 U.S.C. § 159(b).
34 Staten Island Univ. Hosp., 24 F.3d at 455.; see also Universal Camera Corp.,
340 U.S. at 488.
35 Staten Island Univ. Hosp., 24 F.3d at 455.
17
1. Step One: “Community of Interest”
Constellation argues that the Specialty Healthcare standard
improperly rubber stamps a union’s organizing efforts by
presumptively approving the petitioned‐for unit and creating too
high a burden for the objecting party.36 We rejected that argument
above precisely because Specialty Healthcare indeed requires the
Board to consider, at step one, whether members of the proposed
unit have an interest that is “separate and distinct” from all other
employees.37 But merely reciting or repeating the standard cannot
substitute for the analysis that Specialty Healthcare demands.
The RD (whose decision the Board declined to review) did not
make the step‐one determination required by Specialty Healthcare.
Although he appropriately recited the community of interest
standard, and declared that “employees in the petitioned‐for unit
share distinct characteristics,” Special App. 34, the RD did not
explain why those employees had interests “sufficiently distinct from
Constellation argues that the Specialty Healthcare test created a new legal
36
standard. By deferring analysis of whether other employees were unjustifiably
excluded until step two, the opposing party must now show excluded employees
share an “overwhelming community of interests” (not merely a “community of
interests”). This higher showing, Constellation contends, violates Section 9(c) of
the NLRA by giving controlling weight to the extent to which employees have
already been organized. The Board counters that the Specialty Healthcare
framework “clarified—rather than overhauled—its unit‐determination analysis.”
See Nestle Dreyer’s, 821 F.3d at 500.
37 Specialty Healthcare, 357 N.L.R.B. at 942.
18
those of other employees to warrant the establishment of a separate
unit.”38 Rather, the RD based his step‐one determination on his
finding “that the employees in that unit are a readily identifiable
group, such that there is a rational basis for grouping them together
in a bargaining unit.”39 Special App. 32. Reciting the legal framework
does not substitute for analysis of differences between unit‐members
and other employees, as required by Specialty Healthcare. Indeed, as
one of our sister circuits has stated, the very purpose of step one is
“to guard against arbitrary exclusions” that have no purchase in the
context of collective bargaining.40
To be sure, the RD made a number of factual findings that tend
to show that outside cellar employees had interests distinct from
other employees. But he never explained the weight or relevance of
those findings. For instance, the RD did not explain why some factual
findings, which seemed to indicate the presence of distinct interests,
38 Nestle Dreyer’s, 821 F.3d at 500 (internal quotation marks omitted).
39 While the RD purported to identify differences between members of the
petitioned‐for unit and other employees at step one, the language was little more
than boilerplate. It seems highly unlikely, for example, that only employees of the
petitioned‐for cellar unit “unlike the unit of employees sought by the Employer
. . . must demonstrate skills of lower‐level job classifications before moving up to
higher‐level job classifications within the department,” as the RD claims. Special
App. 32‐33. It seems implausible that non‐cellar employees need not
“demonstrate skills” before being promoted. The RD’s remaining findings of
differences are similarly conclusory.
40 Nestle Dreyer’s, 821 F.3d at 499.
19
e.g., “physically separate locations” or “separate front‐line [and]
immediate supervisors,” should have outweighed other findings of
similarities, e.g., similar “job functions and duties,” evidence of
“interchange” and “work[ing] together,” and “identical skills and
training requirements.” Special App. 44 n.20. To the extent that the
RD did provide such explanations, it did so only at step two, i.e., only
to rebut a heightened showing that the excluded employees share an
“overwhelming community of interest” with the presumptively
appropriate petitioned‐for unit. This misapplication of Specialty
Healthcare requires us to deny the Board’s petition for enforcement.41
Our sister circuits have accepted the Specialty Healthcare
framework based on the understanding that it requires the Board to
ensure, at step one, that employees are not inappropriately “excluded
[from a bargaining unit] on the basis of meager differences.”42 To
properly apply this framework, the Board must analyze at step one
41 The Board cannot recite the legal standard and summarize the factual
record without any intervening explanation to demonstrate that it has performed
the analysis demanded by its own caselaw. See, e.g., Long Island Head Start Child
Dev. Servs. v. NLRB, 460 F.3d 254, 257–58 (2d Cir. 2006)(“[T]he agency must
examine the relevant data and articulate a satisfactory explanation for its action
including a rational connection between the facts found and the choice made.”
(quoting Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43
(1983)); see also New England Health Care Emps. Union v. N.L.R.B., 448 F.3d 189, 194
(2d Cir. 2006) (“[W]e may not supply a reasoned basis for the agency’s action that
the agency itself has not given . . . .” (internal quotation marks omitted)).
42 Nestle Dreyer’s, 821 F.3d at 500 (internal quotation marks omitted); accord
FedEx Freight, 832 F.3d at 442–43.
20
the facts presented to: (a) identify shared interests among members of
the petitioned‐for unit, and (b) explain why excluded employees have
meaningfully distinct interests in the context of collective bargaining
that outweigh similarities with unit members.43 Merely recording
similarities or differences between employees does not substitute for
an explanation of how and why these collective‐bargaining interests
are relevant and support the conclusion. Explaining why the
excluded employees have distinct interests in the context of collective
bargaining is necessary to avoid arbitrary lines of demarcation and to
avoid making step one of the Specialty Healthcare framework a mere
rubber stamp.
While the RD has discretion to approve of “an appropriate
unit, not the most appropriate unit,”44 he may exercise that discretion
only after finding, upon analysis, that a petitioner has met its “prima
facie” burden under the Specialty Healthcare framework. The RD
failed to do so here. Nor did the Board exercise its power of review to
ensure that the new framework was being appropriately applied.
Without this critical first step of the Specialty Healthcare framework,
Cf. FedEx Freight, 832 F.3d at 443 (requiring analysis of “similarities
43
between the employees in the petitioned‐for unit and whether their interests were
sufficiently distinct from other employees”); Staten Island Univ. Hosp., 24 F.3d at
454 (describing the unit‐determination as turning on a finding of “the degree to
which employees . . . share a community of interests distinct from their interests
as employees of the whole institution”).
44 Staten Island Univ. Hosp., 24 F.3d at 455 (citation omitted).
21
the burden would be exclusively on the employer to prove the
absence of distinctions. Such a burden is inconsistent with the NLRA
and the Board’s past precedent.
2. Step Two: “Overwhelming Community of Interests”
Constellation argues that it should also prevail at step two of
the Specialty Healthcare framework, known as the “overwhelming
community of interests” test, which requires that Constellation show
“that there is no legitimate basis upon which to exclude” barrel
employees from that unit.45 We need not reach this question. Since
the Board failed to perform the requisite analysis at step one, its
decision and order dated July 29, 2015 against Constellation cannot
stand.
CONCLUSION
To summarize, we hold as follows:
(1) The Board’s framework set forth in Specialty Healthcare for
determining a bargaining unit’s appropriateness is
consistent with the NLRA and the Board’s past precedent.
Constellation failed to show that the Specialty Healthcare
framework essentially creates a presumption in favor of
“micro” unions by inappropriately placing the burden on
See Specialty Healthcare, 357 N.L.R.B. at 944 (internal quotation marks
45
omitted).
22
the opposing party to prove the absence of distinction—
which, if true, would have been a departure from past
precedent and inconsistent with the NLRA.
(2) Adopting the Specialty Healthcare framework, we conclude
that the Board misapplied step one of that framework. It
failed to require that the proponent of a proposed
bargaining unit meet its “prima facie” burden of showing
why the excluded employees had distinct interests from
employees of the petitioned‐for unit in the context of
collective bargaining, that is, (a) identifying shared interests
among employees of the petitioned‐for unit and (b)
explaining why excluded employees have meaningfully
distinct interests in the context of collective bargaining that
outweigh similarities with unit members.
Accordingly, we GRANT the petition for review, DENY the
Board’s cross‐petition for enforcement, and REMAND the cause to
the Board for further proceedings consistent with the record of this
matter and this opinion.
23
Constellation Brands, U.S. Operations, Inc. v. National Labor Relations Board
Court: Court of Appeals for the Second Circuit
Date filed: 2016-11-21
Citations: 842 F.3d 784
Copy CitationsCombined Opinion