United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued May 5, 2006 Decided July 14, 2006
No. 05-1371
ENDICOTT INTERCONNECT TECHNOLOGIES, INC.,
PETITIONER
v.
NATIONAL LABOR RELATIONS BOARD,
RESPONDENT
No. 05-1381
NATIONAL LABOR RELATIONS BOARD,
CROSS-PETITIONER
v.
ENDICOTT INTERCONNECT TECHNOLOGIES, INC.,
RESPONDENT
On Petition for Review and
Cross-Application for Enforcement
of an Order of the National Labor Relations Board
Raymond J. Pascucci argued the cause for Endicott
Interconnect Technologies, Inc.
2
Christopher W. Young, Attorney, National Labor Relations
Board, argued the cause for the National Labor Relations Board.
Ronald E. Meisburg, General Counsel, John H. Ferguson,
Associate General Counsel, Aileen A. Armstrong, Deputy
Associate General Counsel, and Meredith L. Jason, Attorney,
National Labor Relations Board, were on brief. Daniel A. Blitz,
Attorney, National Labor Relations Board, entered an
appearance.
Before: HENDERSON, ROGERS and GRIFFITH, Circuit Judges.
Opinion for the court filed by Circuit Judge HENDERSON.
Concurring opinion filed by Circuit Judge HENDERSON.
KAREN LECRAFT HENDERSON, Circuit Judge: Endicott
Interconnect Technologies (EIT) petitions for review of an order
of the National Labor Relations Board (NLRB or Board)
concluding that EIT violated section 8(a)(1) of the National
Labor Relations Act (NLRA or Act). See Endicott Interconnect
Techs., Inc., 345 N.L.R.B. No. 28 (Aug. 27, 2005) (NLRB Op.).
Section 8(a)(1) makes it an unfair labor practice “to interfere
with, restrain, or coerce employees in the exercise of the rights
guaranteed in [section 7 of the NLRA].” 29 U.S.C. § 158(a)(1).
Included among the employee rights enumerated in section 7 is
the right “to engage in . . . concerted activities for the purpose of
collective bargaining or other mutual aid or protection.” 29
U.S.C. § 157. The Board found that EIT violated section
8(a)(1) on two occasions: (1) when one of its owners threatened
to discharge employee Richard White for making a disparaging
remark to a newspaper reporter about the company’s loss of
technical expertise after a large lay-off and (2) when the owner
discharged White after he posted a message on the newspaper’s
website criticizing the owner’s managerial abilities. We
conclude that White’s communications were so disloyal to EIT
as to remove them from section 7’s protection and that the
Board erred in holding otherwise.
3
I.
In 2002 EIT purchased a computer circuit board
manufacturing facility in Endicott, New York from International
Business Machines Corporation (IBM), which had been
contemplating “massive layoffs” at the plant.1 NLRB Op. at 1.
At the time of the purchase Alliance@IBM/Communications
Workers of America, Local 1701, AFL-CIO, (Local 1701) had
been trying unsuccessfully to organize the facility’s workers for
several years. Following the sale, IBM became the predominant
purchaser of EIT’s circuit boards, accounting for about sixty per
cent of its sales.
On November 15, 2002, two weeks after the sale was
completed, EIT permanently laid off 200 employees, about ten
per cent of its workforce. The same day, Local 1701 contacted
employee White, who was a union member, and requested that
he speak to a reporter for the Binghamton Press & Sun-Bulletin
in connection with an article about the lay-offs. On November
16, 2002, the newspaper published a story based in part on the
reporter’s interview with White. The article characterized White
as among those EIT employees who disagreed with
management’s lay-off decision because it would “hurt the
company over the long term.” NLRB Op. at 2. The article
reported White’s statements as follows:
“There’s gaping holes in this business,” said Rick White,
an employee with 28 years at the Endicott plant who,
with nearly 2,000 other people, recently transferred from
IBM to Endicott Interconnect. White, who kept his job,
1
According to the Board, EIT’s motivation in acquiring the company
“was, in part, to protect the local economy from massive layoffs being
contemplated by IBM, and in part to take advantage of a potentially
profitable business investment.” NLRB Op. at 1. The State of New
York provided financial assistance for the acquisition “[i]n exchange
for [EIT’s] commitment to maintain jobs at the facility.” Id.
4
said development and support people with specific
knowledge of unique processes were let go, leaving
voids in the critical knowledge base for the highly
technical business.
NLRB Op. at 2. The article also quoted James J. McNamara,
Jr., EIT’s president and chief executive officer, who defended
the reduction in force.
The day the article was published, William Maines, one of
EIT’s owners, received a telephone call from Thomas Calfield,
an IBM vice president responsible for procuring circuit boards.
Having read White’s statements in the newspaper article,
Calfield expressed concern over whether EIT had “gutted” its
engineering staff and as a consequence had “gaping holes.” Tr.
128; Joint App. (JA) 186. Maines assured Calfield that there
was no reason for concern.
On November 19, 2002 Maines met with White and
expressed displeasure over his comments in the newspaper
which, he said, “disparaged the Company in violation of the
company Handbook” and he “threatened to terminate White if
it happened again.” NLRB Op. at 2. White said he was “on
board” and it would not happen again. JA 79, 268.
On December 1, 2002 White posted a message on a website
that the Press & Sun-Bulletin maintained as a public forum for
comment on EIT’s acquisition of the plant. Responding to an
anti-union posting on the site, White wrote:
To Mr. House: Why do you continue to try to bundle
reasons why a union is suspect and not so desirable for
EIT employees? Why do you site [sic] all the bad things
about Unions, and ignore all the bad things that IBM and
EIT have done to the employees and their families and
the community at large? Isn’t it about time you
seriously thought about the fact that no one else will help
to stop the job losses, and root for the workers of the
5
community instead of defending the likes of Bill Maines,
George Pataki, and Tom Libous? Hasn’t there been
enough divisiveness among the people working in this
area? Isn’t it about time we stood up for our jobs, our
homes, our families and our way of life here? Do you
want to sit by and watch this area go to hell and dissolve
into a welfare town for people over 70? This business is
being tanked by a group of people that have no good
ability to manage it. They will put it into the dirt just
like the companies of the past that were “saved” by Tom
Libous and George Pataki, i.e., “Telespectrum”, “IFT
(Flex)”. When are you going to get it??? A union is not
just a protection for the employees. It’s an organization
that collectively fights for improvements and benefits for
working people in communities like ours. Forget Jimmy
Hoffa and the mob. Those people and situations are
stereotypes of fools who chose to undermine the very
system they vowed to protect. They are the minority and
always have been. Look around. Do you think the
government will help you when you lose your job and
your house? Think again. A union is the beginning of
a community standing up for itself. It’s [sic] time is
now.
NLRB Op. at 2.
On December 19, 2002 Maines again met with White and,
after pointing out that White had “disparaged EIT again,”
discharged him, “consistent with Maines’ warning of November
19.” NLRB Op. at 2.
The NLRB General Counsel filed a complaint in April 2003
alleging the November 19, 2002 threat and the December 19,
6
2002 discharge violated section 8(a)(1) and (3) of the NLRA.2
After a hearing on June 19, 2003 the administrative law judge
issued a decision in which he found EIT violated section 8(a)(1)
and ordered that EIT reinstate White.3 Endicott Interconnect
Techs., Inc., No. 3-CA-24105 (Aug. 7, 2003). EIT filed
exceptions to the decision with the NLRB.
In a two-to-one decision issued August 27, 2005 the Board
upheld the finding of violation under NLRB v. Electrical
Workers Local 1229 (Jefferson Standard), 346 U.S. 464 (1953),
in which the United States Supreme Court set out the standard
for determining whether an employee’s actions are protected
under section 7 of the Act. The Court there explained that when
an employee “attacks” his employer, whether or not he is
engaged in “a concerted activity wholly or partly within the
scope of those mentioned in § 7,” the attack will deprive the
employee of section 7’s protection if it constitutes
“insubordination, disobedience or disloyalty,” which, the Court
made clear, is “adequate cause for discharge.” 346 U.S. at 477-
78, 475. The Board found that White’s statements in both the
article and the web posting constituted “concerted activities”
protected under section 7 of the Act because they were related
to a “labor dispute”—in the former, to the 200-person lay-off
and in the latter, to both the lay-off and the ongoing union
organization drive. The Board further determined White’s
comments were “not so misleading, inaccurate, or reckless, or
otherwise outside the bounds of permissible speech, to cause
2
Section 8(a)(3) makes it an unfair labor practice “by discrimination
in regard to hire or tenure of employment or any term or condition of
employment to encourage or discourage membership in any labor
organization.” 29 U.S.C. § 158(a)(3).
3
The administrative law judge dismissed the 8(a)(3) allegation for
failure to establish anti-union animus.
7
[him] to lose the Act’s protection.’ ”4 NLRB Op. at 5 (quoting
Titanium Metals Corp., 340 N.L.R.B. 766, 766 n.3 (2003),
review granted and enforcement denied on other ground, 392
F.3d 439 (D.C. Cir. 2004)) (alteration in original). EIT filed a
timely petition for review and the Board filed a cross-application
for enforcement.
II.
“We will affirm the judgment of the Board unless, ‘upon
reviewing the record as a whole, [this Court] conclude[s] that
the Board’s findings are not supported by substantial evidence,
or that the Board acted arbitrarily or otherwise erred in applying
established law to the facts of the case.’ ” Beverly Health &
Rehab. Servs., Inc. v. NLRB, 317 F.3d 316, 320 (D.C. Cir. 2003)
(quoting Tradesman Int’l, Inc. v. NLRB, 275 F.3d 1137, 1141
(D.C. Cir. 2002)) (alterations in original). For the reasons set
out below, we conclude the Board misapplied Jefferson
Standard and its progeny to the facts of this case and we
therefore set aside its decision.
In Jefferson Standard, the Supreme Court upheld the
Board’s determination that a television broadcaster in Charlotte,
North Carolina did not violate the Act when it discharged a
group of nine technicians who had distributed a handbill
criticizing the quality of the station’s programming and
suggesting the station considered Charlotte a “second-class”
city. 346 U.S. at 468. The Court found the handbill constituted
“a demonstration of such detrimental disloyalty as to provide
4
Dissenting Board Chairman Battista concluded that White’s
comments in the article and on the internet “were unprotected by the
Act because they failed to reference an ongoing labor dispute and
because they were disloyal to [EIT]” and that EIT “was, therefore,
fully within its rights to discipline White because of the November 16
article, and to discharge him for cause because of the December 1
posting.” NLRB Op. at 6-7 (Battista, Chairman, dissenting).
8
‘cause’ for its refusal to continue in its employ the perpetrators
of the attack.” 346 U.S. at 472. The Court explained that,
although section 7 of the NLRA “safeguard[s] . . . the right of
employees to engage in ‘concerted activities for the purpose of
collective bargaining or other mutual aid or protection,’ ” id. at
473, it does not override the employer’s authority to discharge
“for cause” under section 10(c) of the Act, which expressly
provides: “No order of the Board shall require the reinstatement
of any individual as an employee who has been suspended or
discharged, or the payment to him of any back pay, if such
individual was suspended or discharged for cause.” 29 U.S.C.
§ 160(c); see also George A. Hormel & Co. v. NLRB, 962 F.2d
1061, 1064 (D.C. Cir. 1992) (“Nothing in the Act prevents an
employer from disciplining or discharging an employee for
disloyalty . . . .”). The Court found it immaterial that the
technicians’ union was contemporaneously picketing the
company and distributing handbills related to a bona fide labor
dispute (the station’s refusal to renew a provision in the expired
collective bargaining agreement) because “[t]he fortuity of the
coexistence of a labor dispute affords . . . no substantial
defense.” 346 U.S. at 476; see id at 477-78. Thus, the bona fide
labor dispute notwithstanding, the station was justified in
discharging the nine technicians “because, at a critical time in
the initiation of the company’s television service, they
sponsored or distributed 5,000 handbills making a sharp, public,
disparaging attack upon the quality of the company’s product
and its business policies, in a manner reasonably calculated to
harm the company’s reputation and reduce its income.” Id. at
471.
Following Jefferson Standard, the Board has formulated its
own two-part test under which an employee’s communication to
a third party is deemed protected under section 7 if, first, it is
related to an ongoing labor dispute and, second, it is “not so
disloyal, reckless or maliciously untrue as to lose the Act’s
protection.” Am. Golf Corp., 330 N.L.R.B. 1238, 1240 (2000)
9
(Mountain Shadows); see also Cincinnati Suburban Press, 289
N.L.R.B. 966, 967-968 (1988); Emarco, Inc., 284 N.L.R.B. 832,
833 (1987); Richboro Cmty. Mental Health Council, 242
N.L.R.B. 1267 (1979). Although the Board’s formulation
accurately reflects the holding in Jefferson Standard, we
conclude that in this case the Board misapplied the second part
of the test.5
The Board initially characterized the second prong of the
test correctly as requiring that the speech not be “so disloyal,
reckless or maliciously untrue as to lose the Act's protection,”
NLRB Op. at 3 (quoting Mountain Shadows, 330 N.L.R.B. at
1240). In examining White’s particular communications,
however, the Board seemingly ignored the very attribute that
justified discharging the technicians in Jefferson Standard for
cause: the “detrimental disloyalty” of their assault on their
employer. 346 U.S. at 472; see NLRB Op. at 5 (finding White’s
communications “not so misleading, inaccurate, or reckless, or
otherwise outside the bounds of permissible speech, to cause
[him] to lose the Act’s protection,’ ” with no mention of
disloyalty) (quoting Titanium Metals Corp., 340 N.L.R.B. at 766
n.3) (alteration in original). And White’s communications were
unquestionably detrimentally disloyal.
In the November 16, 2001 newspaper article, White,
identified as an employee of 28 years’ experience, stated there
were “gaping holes” in EIT’s business and that “development
and support people with specific knowledge of unique processes
were let go, leaving voids in the critical knowledge base for the
highly technical business.” NLRB Op. at 2. The damaging
5
It is therefore unnecessary to decide whether the Board properly
determined that White’s communications constituted protected activity
under the test’s first prong because his statements to the reporter were
related to the 200-employee lay-off and the internet posting was
related to both the lay-off and the ongoing union organization drive.
10
effect of the disloyal statements, made by an experienced insider
at a time when EIT was struggling to get up and running under
new management, is obvious from the immediate reaction of
IBM’s vice president, who telephoned Maines concerned about
EIT’s continuing ability to supply IBM’s circuit board needs.
The critical nature and injurious effect of White’s newspaper
comments alone gave EIT “cause” to immediately discharge
him. Nonetheless, Maines gave a second chance to White, who
agreed not to repeat such behavior. Yet, two weeks later he did
just that when he posted his message on the internet and
caustically attacked EIT management—and William Maines, in
particular, alleging that he lacked “good ability to manage” EIT,
was causing the business to be “tanked” and was going to “put
it into the dirt.” NLRB Op. at 2. As in Jefferson Standard, the
communications here constituted “a sharp, public, disparaging
attack upon the quality of the company’s product and its
business policies” at a “critical time” for the company.
Jefferson Standard, 346 U.S. at 471. Thus, as in Jefferson
Standard, the disloyal, disparaging and injurious nature of
White’s attacks on the company “ha[s] deprived [him] of the
protection of that section, when read in the light and context of
the purpose of the Act.” Id. at 477-78. We therefore conclude
that EIT did not violate the Act when it discharged White for
cause. Accordingly, we grant EIT’s petition for review, deny
the Board’s cross-application for enforcement and vacate the
Board’s order.
So ordered
KAREN LECRAFT HENDERSON, Circuit Judge, concurring:
I concur in the majority opinion because I agree that
White’s statements were not protected under the second prong
of the Jefferson Standard test as iterated in the Board’s
decisions. I write separately to express my opinion that the
statements did not satisfy the test’s first prong which requires
that they relate to an ongoing labor dispute—an issue the
majority does not reach, see maj. op. at 9 n.5. As the dissenting
Board chairman observed, although both the article and the
posting included references to labor disputes, the specific
statements that precipitated EIT’s ultimate discharge of White
related not to any labor issue but to the capabilities of EIT and
its management. See NLRB Op. at 5-7 (Battista, Chairman,
dissenting). Thus, I do not believe that White’s communications
qualify for protection under section 7 in the first place.