Circuit Court Rift Forming on Respect for Labor Board Rulings

Federal appeals courts are beginning to diverge on how the end of the Chevron doctrine impacts judicial review of National Labor Relations Board decisions, dividing on whether they should defer to the agency’s legal conclusions.

Most courts that have evaluated NLRB rulings since the US Supreme Court’s landmark June 28 decision in Loper Bright Enterprises v. Raimondo have continued their longstanding deferential approach to assessing the board’s findings.

The high court’s line of precedent calling for limited judicial oversight of the NLRB’s view on labor law goes back to the New Deal era, long before its now defunct 1984 ruling in Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., which required courts to accept reasonable agency interpretations of ambiguous laws.

But last week, the US Court of Appeals for the Sixth Circuit broke with five other circuits, citing Loper Bright to say that it doesn’t yield to the NLRB’s readings of the National Labor Relations Act.

Beyond giving litigants that lose at the NLRB their day in court, judicial review of NLRB decisions is also essential because the board cannot enforce its orders on its own. Failure to comply with a court’s ruling enforcing a board order is punishable by civil penalties and even jail time.

The Sixth Circuit’s reference to Loper Bright was limited to its articulation of the standard of review, a common section in appeals court opinions setting forth what degree of deference is afforded to the decision under review.

The court didn’t cite it again in the opinion, which still upheld the NLRB’s ruling that a construction company should have produced information that a union requested. It also backed President Joe Biden’s authority to fire the Trump-era NLRB general counsel.

Nevertheless, the Sixth Circuit opinion portends more substantive clashes between appeals courts over the impact of Loper Bright on court challenges to NLRB decisions.

“It’s not a question of if, but when there’s a split among the circuits,” said Steven Bernstein, co-chair of management-side firm Fisher & Phillips LLP’s labor relations group.

Respect for Role

The NLRA itself instructs courts to treat the NLRB’s holdings on questions of fact as “conclusive” when they’re “supported by substantial evidence on the record.” Judicial deference to the board’s legal conclusions flows in large part from case law underscoring the role Congress gave the agency.

The Seventh Circuit’s first post-Loper Bright decision evaluating an NLRB ruling, for example, explained that it accepts the NLRB’s readings of the law unless they’re irrational or inconsistent with the NLRA. That court affirmed the board’s ruling against a mining company.

“For legal conclusions, our scrutiny of the Board’s decision is deferential out of respect for Congress’s broad delegation of responsibility for developing national labor policy to the Board,” the appeals court said in its July 23 ruling.

The Supreme Court told judges in Loper Bright to use their “independent judgment” and to find the “best reading” of a law. But judges must “respect” when a particular statute delegates authority to an agency, the high court said.

Labor Commandments

Since the NLRB’s founding nearly 90 years ago, the board has been interpreting—and fleshing out—a relatively bare-bones law in the course of policing workers’ organizing rights, said Michael Fischl, a former NLRB lawyer who teaches at the University of Connecticut.

“The NLRA is written more like the Ten Commandments than the Federal Register,” he said.

For example, the board has read the section of the NLRA that makes it illegal for employers to “interfere with, restrain, or coerce” workers in the exercise of their rights to cover a laundry list of union-busting tactics that have evolved over time, Fischl said.

Conduct outlawed under that section includes spying on workers, polling them about union support, banning the wearing of buttons and other union insignia, promising benefits for rejecting a union, soliciting support for a petition to eject a union, and a host of other employer actions aimed at stymieing labor organizing.

Although the NLRB has received deference for decades from courts that gave weight to the purposes of the NLRA, the board could encounter resistance from a Supreme Court most concerned with finding specific delegations of authority in the text of the law, Fischl said.

Loper Bright Vulnerabilities

All NLRB precedent is based on the board interpreting the NLRA. But that doesn’t mean everything the NLRB does would be newly vulnerable if circuit courts shed their longstanding deference to the board’s views of the law and take on a Loper Bright approach, legal observers said.

Agency lawyers have a wealth of circuit case law to cite from that have endorsed prior NLRB interpretations of federal labor law, they said.

Still, there are areas of board actions that could be at risk if a court is reviewing its legal conclusions without any deference, said David Kelly, a former NLRB attorney who represents employers at Jackson Lewis PC. That includes areas where the board has flipped back and forth on views of the NLRA depending on which party is in the majority, such as with its tests for independent contractor status and the legality of workplace rules.

“Loper Bright will have an effect when the NLRB is challenged on its rulemaking, challenged on its flip-flopping, and challenged on its newer expansions of its interpretations of the statute,” Kelly said.

Fifth Circuit Special

In addition to the Sixth and Seventh circuits, four other appeals courts have ruled on NLRB decisions since the Supreme Court issued Loper Bright: the Fifth, Eighth, Ninth, and District of Columbia circuits.

The Fifth Circuit’s judicial review was an outlier. Unlike the five other circuit courts that analyzed NLRB interpretations of the law, the Fifth Circuit examined the board’s reading of the court’s earlier order remanding the case.

The New Orleans-based appeals court held that the NLRB was wrong to use the remanded case as a vehicle for reworking its framework for assessing offensive employee conduct without first hearing from the company involved in the case.

Yet the Supreme Court gave the Fifth Circuit the opportunity to weigh in on how Loper Bright affects review of NLRB rulings when it sent a case back to the circuit court with instructions to reconsider it in light of that Chevron-killing precedent.

That case involves United Natural Foods Inc.’s petition to appeal an NLRB decision denying the company’s bid to challenge the withdrawal of a complaint against two International Brotherhood of Teamsters affiliates. The Fifth Circuit rejected the company’s petition, citing Chevron to accept the board’s holding that the withdrawal was an unreviewable exercise of prosecutorial discretion.

Briefing in that case is due in early September.