United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued March 12, 2018 Decided August 3, 2018
No. 16-1405
ADVANCED LIFE SYSTEMS INC.,
PETITIONER
v.
NATIONAL LABOR RELATIONS BOARD,
RESPONDENT
Consolidated with 16-1450
On Petitions for Review and Cross-Application
for Enforcement of an Order of
the National Labor Relations Board
Gary E. Lofland argued the cause and filed the briefs for
petitioner.
David A. Seid, Attorney, National Labor Relations Board,
argued the cause for respondent. With him on the brief were
Richard F. Griffin, General Counsel at the time the brief was
filed, Jennifer Abruzzo, Deputy General Counsel at the time the
brief was filed, John H. Ferguson, Associate General Counsel,
Linda Dreeben, Deputy Associate General Counsel, and Jill A.
Griffin, Supervisory Attorney.
2
Before: KAVANAUGH ∗ and MILLETT, Circuit Judges, and
SENTELLE, Senior Circuit Judge.
Opinion for the Court filed by Circuit Judge MILLETT.
MILLETT, Circuit Judge: Unfair if you do; unfair if you
don’t. As a practical matter, that is the position in which the
National Labor Relations Board’s decision in this case left the
employer. Advanced Life Systems, a family owned-and-
operated small business, found itself whipsawed between
Board precedent that, on the one hand, forbids employers to
make pay increases and holiday gifts without first negotiating
with the union, and, on the other, generally forbids employers
to stop making increases and holiday gifts after a union’s
election. We hold that two statements by the company’s owner
constitute unfair labor practices, but the Board’s ruling that the
employer’s suspension of personal gifts and discretionary pay
raises was unlawful is not supported by substantial evidence.
I
A
The National Labor Relations Act, 29 U.S.C. § 151 et seq.,
protects the right of employees to “bargain collectively through
representatives of their own choosing.” Id. § 157. The Act
enforces that right by proscribing certain “unfair labor
practice[s],” id. § 158(a), including any employer action that
“interfere[s] with, restrain[s], or coerce[s] employees in the
exercise” of that right to collective bargaining, id. § 158(a)(1).
The Act also shields employees from discriminatory employer
∗ Judge Kavanaugh was a member of this panel at the time the
case was argued, but did not participate in this opinion.
3
actions designed to punish or deter union participation and
membership. See id. § 158(a)(3).
Once employees exercise their Section 7 rights and elect a
union to represent them, the Act makes it an unfair labor
practice for employers “to refuse to bargain collectively with
th[ose] representatives” on issues regarding “wages, hours, and
other terms and conditions of employment.” 29 U.S.C.
§ 158(a)(5), (d). In other words, the Act imposes on covered
employers an affirmative duty to bargain over the terms and
conditions of employment. See Local Union No. 189,
Amalgamated Meat Cutters, and Butcher Workmen of N.
America, AFL-CIO v. Jewel Tea Co., 381 U.S. 676, 685–686
(1965). Correspondingly, the Act forbids employers to make
unilateral changes to those employment matters for which
bargaining is mandatory. See NLRB v. United States Postal
Serv., 8 F.3d 832, 836 (D.C. Cir. 1993).
B
Advanced Life Systems, Inc. provides ambulance services
in Yakima, Washington. See Advanced Life Sys., Inc., 364
NLRB No. 117 at 13 (2016). William Woodcock is Advanced
Life’s majority owner and operator. Woodcock’s immediate
family members co-own the business, but only Woodcock
controlled the company and its operations. Advanced Life
began operations in 1996 and has grown over the intervening
years to operate six ambulance stations and employ around
fifty-five personnel, comprising a mix of Emergency Medical
Technicians (“EMTs”), paramedics, dispatchers, and
administrative and management staff.
Given its size, Advanced Life never adopted a formalized
wage schedule or written policy. Advanced Life Sys., 364
NLRB at 13. New hires were reportedly told that they could
4
expect periodic pay raises on, for example, the anniversary of
their hire date. But those informal predictions rarely, if ever,
materialized. Id.; see id. at 3 n.8. In practice, pay increases
occurred at highly irregular intervals, varying between 2 weeks
and 22.5 months. Id. at 7–9 (Member Miscimarra, dissenting).
The amount of any pay raise, even for the same employee, was
equally unpredictable, with per hour increases ranging between
25 cents and $2.50. Id. at 14. The record reveals no discernible
nexus between, on one hand, the timing or amount of any pay
raises and, on the other hand, any consistent or predictable
metric like seniority or advanced training. Rather, Woodcock
exercised unbridled discretion over the timing and amount of
each individual’s pay increase (if any). Id. at 13 n.8.
Similarly, Advanced Life lacked any formal bonus policy
or standardized gift practice. Advanced Life Sys., 364 NLRB
at 14. In 1996, the company’s first year of operations, the
Woodcock family hosted a Christmas potluck for all Advanced
Life employees at one of the ambulance stations and distributed
personal gifts to each employee. Id. at 14; ALJ Hr’g Tr. 83:7,
In re: Advanced Life Systems, Inc., and International Ass’n of
EMTs and Paramedics, No. 19-CA-096464 (NRLB ALJ Feb.
25, 2014).
As the company grew, the potluck grew into an annual
Christmas party at which Woodcock and his wife distributed
assorted gifts and prizes to their employees, including
everything from raffle tickets and gift cards to cash, appliances,
and trips. Advanced Life Sys., 364 NLRB at 14. Those gifts
were all paid for by the Woodcocks out of their personal funds.
Id. at 14 n.21, 15; see also id. at 16. Advanced Life continued
this holiday practice until 2011, with one exception. In 2010,
in lieu of gifts, the Woodcocks donated approximately $10,000
to an employee whose home was destroyed in a mudslide.
5
Neither the Woodcocks nor Advanced Life kept any
records of the gifts given to employees. Advanced Life Sys.,
364 NLRB at 14 n.21, 15. Since the Woodcocks paid for the
gifts entirely from their personal funds, they never claimed a
tax deduction nor sought other favorable treatment for those
expenditures. The employees, for their part, never claimed the
gifts as wages nor reported them on their income taxes.
In July 2012, the now-defunct National Emergency
Medical Services Association (“Union”) began an organizing
campaign among Advanced Life’s paramedics, EMTs, and
dispatchers. During the organization campaign, one of the unit
employees, Matthew Schauer, talked with Woodcock about the
“pros and cons” of unionization. ALJ Hr’g Tr. 74:20. In
testimony that the Board credited, Schauer reported Woodcock
as saying that Advanced Life “would not be able to give us
raises if we brought a union in.” Id. at 27:1.
Shortly after that, the Union won the representation
election, and the Board certified it as the unit’s exclusive
collective-bargaining representative. Following the Union’s
election, Advanced Life discontinued pay raises and the
Christmas party and gifts pending negotiation of those matters
with the Union.
Four months later, in December 2012, Lenny Ugaitafa, a
bargaining unit employee, inquired about a pay raise.
Woodcock explained that his attorney had advised him to
temporarily freeze all changes in the employees’ terms and
conditions of employment, including pay raises, “because of
the whole Union deal.” ALJ Hr’g Tr. 65:15.
The next month, another unit employee, Cole Gravel,
asked Woodcock why Advanced Life had not made any pay
raises in the five months since the employees had unionized.
6
Woodcock replied that, because pay raises had been
discretionary prior to the election, Advanced Life was now
legally obligated to negotiate any change in pay with the
Union. Advanced Life Sys., 364 NLRB at 2.
C
The International Association of EMTs and Paramedics, a
labor organization affiliated with the Union, filed two unfair
labor practice charges against Advanced Life in January 2013.
Then-Acting General Counsel Lafe Solomon issued an order
consolidating the cases and complaints. General Counsel
Richard Griffin subsequently ratified the consolidated
complaint and, after independently reviewing the merits,
authorized continued prosecution of the matter.
The General Counsel’s complaint alleged that Advanced
Life violated Section 8 of the Act, 29 U.S.C. § 158, by (i)
“withholding regularly scheduled biannual wage increases;”
(ii) “failing to provide employees with Christmas bonuses;”
(iii) “telling employees that wage increases were withheld
because of their union activity[;]” and (iv) “discriminating in
regard to the hiring, tenure or terms and conditions of
employment of its employees” to discourage union and
concerted activities. Advanced Life Sys., 364 NLRB at 13.
After a hearing, a Board administrative law judge
concluded that Woodcock’s three statements made to
employees about halting wage increases after unionization
violated Section 8(a)(1) of the Act, 29 U.S.C. § 158(a)(1),
because they were designed to discourage the exercise of the
employees’ Section 7 collective action rights, 29 U.S.C. § 157.
The administrative law judge also found that Advanced Life
“had a longstanding practice of granting hourly wage increases
mainly between 25 to 50 cents once every 6 months or sooner,
7
depending on tenure and performance[,]” and that its unilateral
cessation of pay raises and Christmas bonuses violated Section
8(a)(5) of the Act, which prohibits changing the terms and
conditions of employment without bargaining, 29 U.S.C.
§ 158(a)(5). Advanced Life Sys., 364 NLRB at 15. Lastly, the
administrative law judge ruled that Advanced Life’s decision
to halt wage increases and Christmas gifts pending negotiations
with the Union constituted anti-union retaliation in violation of
Section 8(a)(3), 29 U.S.C. § 158(a)(3), as evidenced by
Woodcock’s contemporaneous statements. Advanced Life
Sys., 364 NLRB at 18.
The Board affirmed most of the administrative law judge’s
findings and rulings, concluding that Advanced Life was liable
for two violations of Section 8(a)(1) based on Woodcock’s
statements immediately before and four months after the
election that tied the temporary halt in wage increases to the
need to negotiate with the Union. Advanced Life Sys., 364
NLRB at 2. The Board also found two violations of Section
8(a)(3) for discriminatorily ceasing pay raises and Christmas
bonuses following the election, and one violation of Section
8(a)(5) for unilaterally changing the employees’ wages by
halting the Christmas gifts. Id. at 3–4.
The Board also supplemented the remedial order to
include back pay plus interest for the Section 8(a)(3) violations
and required Advanced Life to offset any adverse tax
consequences arising from a lump-sum of back pay. Advanced
Life Sys., 364 NLRB at 4. The Board specifically declined to
pass upon whether the pay raise freeze violated Section 8(a)(5),
and whether Woodcock’s January 2013 statement interfered
with, restrained, or coerced employees in the exercise of their
rights, in violation of Section 8(a)(1). Id. at 2 n.5, 3–4 & n.8.
8
Advanced Life petitioned for review of the Board’s order,
and the Board filed a cross-application for enforcement.
II
We have jurisdiction to review the Board’s decision under
29 U.S.C. § 160(e) and (f). In so doing, we will uphold the
Board’s decision if its ruling is not arbitrary, capricious, or
founded on an erroneous application of the law, and if its
factual findings are supported by substantial evidence. 29
U.S.C. § 160(e); Stephens Media, LLC v. NLRB, 677 F.3d
1241, 1250 (D.C. Cir. 2012).
But we will not “merely rubber-stamp NLRB decisions.”
Tradesmen Int’l, Inc. v. NLRB, 275 F.3d 1137, 1141 (D.C. Cir.
2002) (quoting Douglas Foods Corp. v. NLRB, 251 F.3d 1056,
1062 (D.C. Cir. 2001)). “[O]ur review ‘must take into account
whatever in the record fairly detracts from the weight’ of the
evidence cited by the Board to support its conclusions.” Dover
Energy, Inc. v. NLRB, 818 F.3d 725, 729 (D.C. Cir. 2016)
(quoting Universal Camera Corp. v. NLRB, 340 U.S. 474, 488
(1951)).
III
A
At the outset, Advanced Life argues that the initial
complaint issued by then-Acting General Counsel Lafe
Solomon was void because Solomon was not lawfully serving
in that position. In NLRB v. SW General, Inc., 137 S. Ct. 929
(2017), the Supreme Court held that Solomon’s continued
service in an acting capacity after the President nominated him
to the full-time General Counsel position violated the Federal
Vacancies Reform Act of 1998 (“Vacancies Act”), 5 U.S.C.
9
§ 3345 et seq., see SW General, 137 S. Ct. at 944. Solomon’s
invalid tenure included the time during which the complaint
was first issued against Advanced Life.
Advanced Life failed to raise that Vacancies Act argument
before the Board. That failure to exhaust the claim strips this
court of jurisdiction to decide it, absent “extraordinary
circumstances.” 29 U.S.C. § 160(e); see Woelke & Romero
Framing, Inc. v. NLRB, 456 U.S. 645, 666 (1982). No
extraordinary circumstances exist here that would excuse
Advanced Life’s procedural neglect of its Vacancies Act claim.
B
The Board found that Advanced Life twice violated
Section 8(a)(1) based on statements Woodcock made
connecting the freeze on pay raises with the Union’s arrival—
one shortly before the representation election and another four
months after. Advanced Life has not challenged the violation
based on the post-election statement in either its opening or
reply briefs. So the Board is entitled to summary enforcement
of that uncontested portion of its order. See Allied Mech. Servs.
v. NLRB, 668 F.3d 758, 765 (D.C. Cir. 2012). 1
1
The Board declined to pass upon the administrative law
judge’s finding of a Section 8(a)(1) violation arising out of
Woodcock’s January 2013 statement explaining to employee Gravel
that pay raises, which had previously been within his discretion to
grant, now had to be negotiated with the Union as a mandatory
subject of bargaining. Advanced Life Sys., 364 NLRB at 2 n.5.
Accordingly, that charge is not before us. But because the Board
explicitly predicated its declination on the immateriality of an
additional Section 8(a)(1) violation to the ultimate remedy, id. at 2
n.5, remand of that issue would be futile.
10
The only question before us, then, is whether the Board
reasonably grounded a Section 8(a)(1) violation in
Woodcock’s statement to employee Schauer, in the weeks
leading up to the election, that he “would not be able to give
[the employees] raises if [they] brought a union in.” Advanced
Life Sys., 364 NLRB at 2; ALJ Hr’g Tr. 26:25–27:1. A Section
8(a)(1) violation occurs when, considering all of the
surrounding circumstances, the employer’s conduct reasonably
tended to interfere with an employee’s exercise of her Section
7 collective action rights. Tasty Baking Co. v. NLRB, 254 F.3d
114, 124 (D.C. Cir. 2001). The inquiry is objective. Dover
Energy, 818 F.3d at 729. Neither the employer’s intent to
interfere nor actual coercion of the employee needs to be
proven. United Servs. Auto. Ass’n v. NLRB, 387 F.3d 908, 913
(D.C. Cir. 2004); see Raymond Interior Sys., Inc. v. NLRB, 812
F.3d 168, 179 (D.C. Cir. 2016). Instead, whether an
employer’s conduct trenches upon Section 7 rights turns on
how a reasonable employee would have understood the action.
See Dover Energy, 818 F.3d at 729–730. In applying that test,
we “recognize the Board’s competence in the first instance to
judge the impact of utterances made in the context of the
employer-employee relationship.” Progressive Elec., Inc. v.
NLRB, 453 F.3d 538, 544 (D.C. Cir. 2006).
Advanced Life does not claim that the Board committed
legal error in the test that it applied. And Advanced Life admits
that Woodcock and Schauer had a conversation about the effect
of unionization on the company’s relations with its employees.
Advanced Life just factually disputes the precise content of
Woodcock’s statement. According to Advanced Life,
Woodcock only said that without the Union, employment
issues could be expeditiously resolved between management
and employees, but unionization would require negotiating
11
with the Union “a lot of the things that [Advanced Life]
normally did day to day[.]” ALJ Hr’g Tr. 74:23, 74:25–75:1.
So this issue boils down to a credibility determination
between Schauer’s and Woodcock’s versions of his statement.
The problem for Advanced Life is that we will not reverse the
Board’s credibility determination unless it was “hopelessly
incredible, self-contradictory, or patently unsupportable.”
Shamrock Foods Co. v. NLRB, 346 F.3d 1130, 1134 (D.C. Cir.
2003). Advanced Life points to nothing in the record that
meets that high mark. The Board faced a binary choice and had
to credit one set of testimony over the other. To be sure, the
Board had reason to be suspicious of Schauer’s testimony,
given that Schauer disclaimed remembering “all the specifics”
of his conversation with Woodcock yet “specifically
remember[ed]” the precise wording of Woodcock’s comment.
ALJ Hr’g. Tr. 26:24–25. But that is not enough for us to say
that the Board’s decision to credit Schauer was patently
unsupportable.
Once credited, the statement expressly linking a cessation
in pay increases to the advent of the Union could reasonably be
understood by the employee to restrain or sanction his exercise
of his Section 7 right to organize. See Acme Die Casting v.
NLRB, 26 F.3d 162, 164 (D.C. Cir. 1994) (Section 8(a)(1)
violation obtained where supervisor stated “I told you guys not
to bother with the Union because that was going to happen, no
raise.”); Southwire Co. v. NLRB, 820 F.2d 453, 457 (D.C. Cir.
1987) (employer statements that “unionization would result in
lower wages and loss of benefits” violated Section 8(a)(1)).
For those reasons, we grant the Board’s cross-application
for enforcement as to the portion of its order ruling that
Advanced Life violated Section 8(a)(1) of the Act based on
12
Woodcock’s statements shortly before and four months after
the representation election.
C
The Board also found that Advanced Life twice
discriminated against its employees for choosing the Union, in
violation of Section 8(a)(3), 29 U.S.C. § 158(a)(3): First, by
temporarily discontinuing its irregular pay increases pending
negotiations with the Union, and second, for stopping the
Christmas gifts in December 2012 in advance of Union
bargaining. Advanced Life Sys., 364 NLRB at 2–3. The
administrative law judge found that the same two practices also
violated Section 8(a)(5), 29 U.S.C. § 158(a)(5), because
Advanced Life failed to negotiate those changes in
employment terms with the Union. Id. at 15–17. The Board,
however, did not address the finding of a Section 8(a)(5)
violation concerning the pay increases. Id. at 3 n.8. Instead,
the Board explicitly limited the Section 8(a)(5) determination
to the Christmas gifts.
The Board’s selective affirmance highlights the tightrope
the Board had to walk to establish an unfair labor practice in
this case. As a general rule, employers may not make pay
increases or award bonuses to represented employees without
first negotiating their terms with the union. Indeed, unilaterally
instituting such payments would be an unfair labor practice, in
violation of an employer’s Section 8(a)(5) duty to bargain with
the employees’ chosen union over the terms and conditions of
employment, 29 U.S.C. § 158(a)(5). See NLRB v. Katz, 369
U.S. 736, 743 (1962); Consolidated Commc’n, Inc. v. NLRB,
837 F.3d 1, 19–20 (D.C. Cir. 2016). The starting assumption,
then, was that Section 8(a)(5) required Advanced Life to freeze
pay increases and holiday gifts until it could negotiate them
with the Union.
13
But an exception exists. If the employer has a “long-
standing practice” of awarding the same “automatic increases”
or bonuses, Katz, 369 U.S. at 746, at “fixed” and “regular
intervals,” Acme Die Casting v. NLRB, 93 F.3d 854, 856–857
(D.C. Cir. 1996), the continuation of those payments is
permitted. More than that, the failure to continue making the
payments could be construed as evidence of discrimination
against the employees’ exercise of their unionization right,
which is itself an unfair labor practice under Section 8(a)(3),
29 U.S.C. § 158(a)(3). See Katz, 369 U.S. at 746.
To pay, or not to pay: that is the question that Advanced
Life faced once the employees unionized. 2 And the answer
turned entirely on whether its past pay increases and Christmas
gifts documented a longstanding practice of automatically
paying predictable amounts at known intervals. If they did, not
paying could be an unfair practice; if they did not fit that
pattern, paying would be an unfair practice.
Applying that rubric, the Board found that Advanced Life
had a fixed and determinate practice of pay increases and
holiday gifts, and that it committed an unfair labor practice by
halting the payments after unionization. We vacate that
decision because the Board’s finding that Advanced Life had
such an established payment practice is not grounded in
substantial evidence, and no other record evidence
substantially supported its finding of discrimination.
1
At the outset, the Board argues that Advanced Life waived
its challenge to the Section 8(a)(3) violations. That is incorrect.
2
See WILLIAM SHAKESPEARE, HAMLET, act 3, sc 1.
14
Advanced Life (i) listed the Board’s Section 8(a)(3) rulings in
its statement of the issues before this court, and (ii) directly
attacked the factual and legal underpinnings necessary to
sustain the Section 8(a)(3) violation based on the withheld pay
raises. What the Board’s argument overlooks is that the same
facts and arguments about the character of Advanced Life’s
past pay increases and Christmas gifts are dispositive of both
the Section 8(a)(3) and (a)(5) inquiries. That is because they
are mirror inquiries: If the timing or amount of Advanced
Life’s past pay raises and gifts were anything less than
automatic, Section 8(a)(5) precluded Advanced Life from
making any further payments pending negotiations with the
Union. If they were automatic, then Section 8(a)(3) required
Advanced Life to make those payments and its failure to do so
evidenced anti-union animus. Because the Board found no
Section 8(a)(5) violation involving the withheld pay raises, the
only purpose of Advanced Life’s arguments about the
irregularity of its pay increases was to attack the Board’s
finding of Section 8(a)(3) violations.
In sum, Advanced Life adequately addressed the operative
facts and legal theories governing the findings of Section
8(a)(3) violations. That suffices to bring the issue before us.
See Stephens Media, 677 F.3d at 1250–1251 (explaining that
we will consider any contested findings of the Board); cf. Allied
Mech., 668 F.3d at 765 (summarily enforcing only those
portions of Board’s order that the petitioner abandoned or
failed to contest).
2
Unlike Section 8(a)(1), violations of Section 8(a)(3)
require proof of the employer’s motive or animus.
Specifically, to establish that an employer has discriminated
against its employees’ exercise of their Section 7 right to
15
collective activity, the General Counsel must show that an
employer took adverse action against an employee, “at least in
part,” because of that employee’s union involvement. Matson
Terminals, Inc. v. NLRB, 114 F.3d 300, 303 (D.C. Cir. 1997);
see Arc Bridges, Inc. v. NLRB, 861 F.3d 193, 198–199 (D.C.
Cir. 2017). To establish a prima facie case of discriminatory
motivation, the General Counsel must show that the employer
knew of the employee’s union activity and acted in response to
it. See Wright Line, 251 NLRB 1083, 1089 (1980), enforced,
662 F.2d 899 (1st Cir. 1981); see also NLRB v. Transportation
Mgmt. Corp., 462 U.S. 393, 401–403 (1983) (approving Wright
Line test), overruled in part on other grounds by Department
of Labor v. Greenwich Collieries, 512 U.S. 267, 276–278
(1994); LCF, Inc. v. NLRB, 129 F.3d 1276, 1281 (D.C. Cir.
1997) (employing Wright Line burden shifting).
Substantial evidence of the required discriminatory motive
is missing here. That is because the essential predicate of the
General Counsel’s claim—that Advanced Life had the type of
well-established and automatic practice of paying fixed
amounts at predetermined intervals that would allow continued
payment without violating Section 8(a)(5)’s duty to bargain—
is missing. Katz requires that past wage increases present a
recognizable pattern establishing who will receive a raise,
when it will occur, and how much that raise will be. See 369
U.S. at 746–747.
Yet the record in this case shows that the pay increases
were irregular in their timing and unsystematic in their
amounts. When raises occurred, they could come at intervals
as short as two weeks or as long as 22.5 months. Even
discarding the most extreme data points, the record showed that
three employees received raises two weeks apart, six received
raises one month apart, four were at 1.5 months, six at two
months, five at 2.5 months, fourteen at three months, ten at 3.5
16
months, eight at four months, eighteen at 4.5 months, ten at five
months, and twenty-nine at 5.5 months.
The amount of each increase was just as uneven and
unpredictable, ranging from 25 cents, to 50 cents, to $1.00, to
$2.50 per hour. And nothing in the record tied those disparities
to identifiable or predictable metrics, like evaluations, time in
service, or advanced training. Cf. Advanced Life Sys., 364
NLRB at 14 n.13 (noting that a multiplicity of unpredictable
factors could influence Woodcock’s discretion to award raises,
including “the availability of employees, the economy,
company expenses, call volumes, and reimbursement rates”).
The General Counsel’s own evidence, which was drawn
from three employees, proves the point. Cole Gravel received
incremental hourly increases of $1.00, $0.50, $0.50, $0.50,
$1.50, $0.50, $0.50, and $0.25. Lenny Ugaitafa’s raises came
in amounts of $0.50, $0.50, and $1.00 per hour. And Matthew
Schauer received $0.50, $1.00, $0.50, $0.25, $0.25, $0.25, and
$0.25 increases to his hourly rate. Nothing in the record reveals
any rhyme or reason for the differing amounts other than
Woodcock’s exercise of his sole discretion.
In short, on this record, the only discernible constant is the
inconstancy of both the timing and amount of pay increases.
Apparently lumping the numbers together, the
administrative law judge divined that, on average, 25 to 50 cent
raises occurred “once every 6 months or sooner[.]” Advanced
Life Sys., 364 NLRB at 15. That paints the bullseye around the
arrow. The question under Katz is not whether numbers could
be averaged in hindsight, but whether a “long-standing”
practice of predetermined payments to individual employees
was so ingrained in the workplace as to lead to “automatic wage
increases” for individual employees. Katz, 369 U.S. at 746; see
17
Daily News of Los Angeles v. NLRB, 73 F.3d 406, 412 n.3 (D.C.
Cir. 1996) (expressing doubt that simply awarding pay raises
at fixed intervals would alone be sufficient to bring them within
the Katz exception); Acme Die Casting, 93 F.3d at 857 (finding
that discretion over timing or amount will exclude past raises
from the existing terms and conditions of employment).
As for the administrative law judge’s numbers, no
individual employee could have felt assured of any such
increase anywhere within that timeframe. Nor were those
increases locked-in going forward. Even the administrative
law judge acknowledged that the timing and amount of each
raise, including those falling within the purported pattern,
depended on discretionary variables like performance.
Advanced Life Sys., 364 NLRB at 15. Perhaps that is why the
Board abandoned the administrative law judge’s perceived
pattern. See id. at 3 n.8.
Because pay increases were “in no sense automatic, but []
informed by a large measure of discretion,” Advanced Life
could not implement them unilaterally and, instead, Section
8(a)(5) required it to negotiate “the procedures and criteria for
determining such increases.” Katz, 369 U.S. at 746; see also
Daily News, 73 F.3d at 412 n.3 (“[If] the Company retained
total discretion to grant the increases based on any factors it
chose, [a unilateral change] would [not] have resulted in a
violation of section 8(a)(5) even though the raises had been
awarded annually[.]”). For that reason, Advanced Life’s
declination to make the pay increases—a decision required by
Section 8(a)(5)—cannot be treated as a violation of Section
8(a)(3).
For evidence of anti-union animus, the Board also points
to Woodcock’s statements (i) to Schauer before the election
that Advanced Life would be unable able to give raises if the
18
employees unionized without negotiating, and (ii) to Ugaitafa
that he could no longer give individual raises following the
Union’s election.
That is too thin a reed on which to hang a finding of anti-
union animus. While the timing and context allowed the Board
to find that the two statements violated Section 8(a)(1) based
on how a reasonable employee would interpret them, without
more they cannot be bootstrapped into evidence of actual
discriminatory intent on Woodcock’s part given the confusing
questions of legality surrounding Advanced Life’s ability (or
not) to continue such payments. Under the circumstances,
suspending pay increases could have equally evidenced the
legally required respect for the employees’ and the Union’s
bargaining rights. 3
D
The Board likewise left Advanced Life in a Catch-22 over
the Woodcocks’ Christmas gifts: forbidden to pay them
unilaterally by Section 8(a)(5), and compelled to keep paying
them unilaterally by Section 8(a)(3). The Board found that
Advanced Life had such an established practice of granting
Christmas “payments” that they constituted a term and
condition of employment, and so unilaterally discontinuing
them after the Union was elected violated Section 8(a)(5).
Advanced Life Sys., 364 NLRB at 2–3. The Board further
concluded that their temporary cessation pending negotiations
3
Our holding that the pay raises were discretionary forecloses
as a matter of law any finding that the decision to freeze them
pending negotiations with the Union violated Section 8(a)(5), an
issue the Board did not reach. Remand, therefore, would be futile.
See Katz, 369 U.S. at 746–747.
19
reflected anti-union discrimination in violation of Section
8(a)(3).
Holiday bonuses may “become[] an element of wages and,
therefore, a term and condition of employment that cannot be
altered unilaterally if it is tied to other remuneration and paid
regularly over an extended period.” Exxel/Atmos, Inc. v.
NLRB, 147 F.3d 972, 976–977 (D.C. Cir. 1998) (quotations
omitted). The Board occasionally frames the inquiry in terms
of employees’ expectations. See Philadelphia Coca-Cola
Bottling Co., 340 NLRB 349, 353 (2003) (compiling cases),
enforced, 112 F. App’x 65 (D.C. Cir. 2004) (per curiam).
While employees’ subjective expectations can be one relevant
consideration, they cannot by themselves establish the type of
long-term pattern of regularized payments needed to except
awards from the employer’s central duty to bargain with a
union over terms of employment.
As with the pay increases, the record in this case lacks
substantial evidence of a long pattern of regularized Christmas
payments by Advanced Life that was tied to the employees’
remuneration.
First, the testimony concerning Christmas gifts was far too
sparse, inconsistent, and conflicting to establish any reliable
pattern of payments, let alone one tied to the employees’
remuneration. The General Counsel relied on evidence from
just three employees, only two of whom received cash gifts
rather than just a raffle ticket. Not only did the testimony of
those two employees prove inconsistent with each other, but
also one of the two witnesses who received a cash gift had his
testimony on the Christmas gifts impeached by his own earlier
sworn affidavit. Advanced Life Sys., 364 NLRB at 14 n.22.
20
The remnants of unimpeached testimony concerning cash
payments boiled down to one employee, Schauer, receiving a
gift of $100 in 2011, and another employee, Gravel, receiving
$100 in 2008 and $300 in 2011. That does not a mechanical
and predictable pattern of payments make. It makes no pattern
at all.
Schauer went on to testify that he was told by Advanced
Life management that “EMTs [get] $50 for every year that
we’re there up to $500 and paramedics get $100 for every year
that we’re there up to $500 as well.” ALJ Hr’g Tr. 32:7–9.
That testimony contradicts Gravel’s testimony—the only
testimony concerning Christmas payments with an
unimpeached sample size of more than one year. Under
Schauer’s proffered pattern, Gravel should have received $400
dollars in 2011. 4 But Gravel received only $300. The Board
made no effort to reconcile that conflicting evidence and the
unpredictability of gift amounts that it revealed. Nor did the
Board point to any discernible linkage between gift amounts
and remuneration as the law requires. Exxel/Atmos, 147 F.3d
at 977.
Read as a whole, the record gets still worse for the Board.
Rather than disclose a consistent, long-term pattern of
foreordained bonuses, the record reveals that Gravel, alone,
received a $100 payment in 2008. In 2009, Gravel received a
Christmas check but could not recall the amount. In 2010, the
employees received only a smattering of token raffle gifts
because the Woodcocks chose instead to donate $10,000 to an
employee whose home was destroyed in a mudslide. And in
2011, the only year where all three testifying employees
4
If the pattern held true, Gravel would have received $100 in
2008, $200 in 2009, $300 in 2010 (donated to a fellow employee),
and $400 in 2011.
21
received something of value, one of them received a $50 gift
card to a coffee shop. That is the antithesis of a regularized and
longstanding pattern of established holiday bonuses.
The Board contends that the Woodcocks had an
enforceable practice of collectively disbursing cash and other
items totaling between $10,000 and $15,000 each holiday
season. But the Board had to find that Advanced Life had a
longstanding pattern of making bonus payments calculable by
reference to each recipient employee’s remuneration.
Exxel/Atmos, 147 F.3d at 976–977. The Board made no
relevant finding that stripped the payments of their purely
personal origin and motivation. In any event, the Board’s
reliance on a broad swath of dollar amounts—a range with an
internal deviation of 50%—confesses its own inability to
calculate with any confidence whether and how much any
individual employee might expect.
Second, there were no payments made by Advanced Life.
The Board glossed over the critical and undisputed fact that the
Woodcocks paid for the Christmas gifts entirely out of their
own pockets, not out of company funds. Neither the
Woodcocks nor Advanced Life claimed those expenditures as
tax deductions or any type of business expense. Nor did the
Woodcocks and Advanced Life even maintain a record of the
payments.
The Board simply imputed the payments to Advanced Life
on the ground that Woodcock was the company’s majority
owner and the payments aimed to boost employee morale. Yet
neither of those considerations turns personal gifts into
business expenditures, let alone a formal component of
employees’ salaries or benefits. In ordering the retroactive
payment of Christmas gifts, the Board also failed to grapple
with the problem that (1) the Woodcocks are not parties to
22
either the administrative or judicial proceedings, and (2) no
basis was found for piercing the corporate veil or imposing
alter ego status, which is what would be needed to transmogrify
the Woodcocks’ personal gifts into salary payments by
Advanced Life.
Third, the Board ignored that the employees themselves
had never treated the gifts as salary or official bonuses. On this
record, not one of them reported any of the Christmas payments
as income on their federal or state taxes. The Board contends
a company’s tax treatment of monetary disbursals to employees
is not dispositive of whether those payments are wages. Cf.
North Am. Pipe Corp., 347 NLRB 836, 840 (2006). That is
true, but beside the point. The Board rested its finding of a
violation of Section 8(a)(5) in no small part on how the
employees subjectively understood the payments at issue. But
the Board cannot rely selectively on those subjective views that
support its position, while ignoring evidence about uniform
employee understandings that point in the opposite direction.
See Carpenters and Millwrights, Local Union 2471 v. NLRB,
481 F.3d 804, 809 (D.C. Cir. 2007) (Board must account for
and reasonably explain evidence contrary to its findings).
Fourth, the Section 8(a)(1) statements about having to halt
pay raises pending negotiations with the Union constitute the
sole evidence upon which the Board based its animus finding.
Yet neither of those statements makes any mention of the
Christmas party or the Christmas gifts.
To sum up, the record overwhelmingly documents the
personal, discretionary, and irregular nature of the Woodcocks’
Christmas gifts, and the absence of any discernible link
between their amount and the individual employee’s
remuneration (or any other relevant employment factor). No
substantial evidence supports treating them as company wages
23
or bonuses. All the Board demonstrated here was that no good
deed goes unpunished. That we will not uphold.
*****
The Board’s finding that Woodcock’s two statements,
both of which were made proximate to the Union election and
in his capacity as Advanced Life’s owner and operator, violated
Section 8(a)(1), 29 U.S.C. § 158(a)(1), is supported by
substantial evidence. So for that claim, we deny Advanced
Life’s petition and we grant the Board’s cross-application for
enforcement. As to the Section 8(a)(3) and 8(a)(5) violations,
29 U.S.C. § 158(a)(3) and (5), we grant Advanced Life’s
petition, deny the cross-application for enforcement, and
vacate those portions of the Board’s decision.
So ordered.