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More NLRB Cases Are Open for Reversal: Ethics Fallout Explained

Aug. 23, 2022, 9:30 AM

The federal labor board’s move to scrap a two-year-old decision in which it said former Republican member William Emanuel tainted the outcome by not disclosing a financial conflict means four other decisions in which Emanuel participated could be tossed as well.

In each of those cases, Emanuel owned stock in companies that had business before the National Labor Relations Board, and he didn’t alert ethics officials. His failure to monitor his investments put Emanuel in violation of federal ethics laws, the agency inspector general said in March. The US Department of Justice subsequently declined to press charges. But even a year after Emanuel’s term ended, the NLRB is trying to clean up one of the darkest black eyes in its 87-year history.

A Bloomberg Law investigation earlier this year showed that Emanuel held close to $300,000 in two exchange-traded sector funds that invested substantially in ExxonMobil, Marathon Oil Corp., CVS Health Corp., and Universal Health Services, Inc.; a fifth company remains unknown.

That would have been fine if he hadn’t participated in cases involving those companies.

When he joined the board in 2017, Emanuel signed an ethics agreement saying he would personally sign off on every stock trade that fell under federal reporting requirements—a category that included sector-based investment funds worth more than $50,000—and separately promised not to participate “personally and substantially” in any matter where he had a financial interest that could be “directly and predictably” affected.

Those are the requirements for the NLRB and other regulatory agencies that have the power to move markets. It’s unclear whether Emanuel actually made money from his decisions, but ethics experts say he at least had a duty to notify federal watchdogs.

Emanuel, who didn’t immediately respond to a request for comment, has denied wrongdoing. In a 2021 statement, he said he was never influenced by money and never had “any knowing conflict of interest.”

The NLRB’s Democratic majority said in January 2022 that it would review three more cases where Emanuel likely had conflicts. Here are the known cases, including three that the NLRB could reverse.

1. ExxonMobil Research & Engineering Co.

The NLRB Democratic majority on Aug. 19 vacated its 2020 ExxonMobil decision, which found that Exxon didn’t break the law by unilaterally changing a collective bargaining agreement with a union of lab researchers and subcontracting out union work.

The three-member NLRB panel of all Republicans, including Emanuel, cleared the company of seven violations and overturned an administrative law judge’s ruling against ExxonMobil.

While the administrative law judge concluded that Exxon had unlawfully promised to give paid parental leave to employees if they voted to decertify the union, and made disparaging claims about the labor group, the NLRB panel brushed them off as an “understandable exercise in sarcasm” and “not objectively false or misleading.”

Emanuel held Exxon stock through an energy-based investment fund.

2. Marathon Petroleum Co.

In this case, Emanuel participated in a procedural motion that would be unremarkable under normal circumstances.

Emanuel and two other Republican members in June 2020 granted a motion to remand the Marathon case after the US Court of Appeals for the Sixth Circuit punted it back to the NLRB.

Emanuel didn’t participate in the underlying decision, meaning the Democratic majority would have a hard time vacating the entire ruling. It would likely be limited to the motion that Emanuel voted on.

3. CVS Health Corp.

On Feb. 5, 2021, Emanuel voted on a motion from CVS Health Corp. to review the scope of a union petition at one of its stores. CVS wanted to exclude “team leaders” from the proposed bargaining unit, arguing they were managers, not rank-and-file workers.

A three-member panel of Emanuel, Republican member Marvin Kaplan, and Democratic Chair Lauren McFerran granted the agency’s request, overturning a regional director’s initial decision and remanding the case.

While the board didn’t make any sweeping policy pronouncements, the Democratic majority could still erase a piece of pro-management case law on who belongs in a union and who doesn’t.

Emanuel held CVS stock through a health care-based investment fund.

4. George Washington University Hospital

In April 2021, Emanuel took part in a case that approved of George Washington University Hospital‘s conduct in a round of bruising labor negotiations. The dustup ended in GW Hospital expelling a union that had represented support staff for more than two decades. Emanuel and fellow Republican John Ring comprised the majority; McFerran dissented.

Emanuel and Ring said there was nothing wrong with the hospital’s conduct—overturning a lower NLRB judge’s ruling—and said the union acted in bad faith.

The hospital is owned by Universal Health Services Inc., in which Emanuel held stock through a health care-based investment fund. Universal Health bought out George Washington University’s 20% stake in May 2022, becoming the sole owner.

Vacating this case could give the Democratic majority an opportunity to limit the types of tactics employers can use labor disputes.

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To contact the reporter on this story: Ian Kullgren in Washington at ikullgren@bloombergindustry.com

To contact the editors responsible for this story: Martha Mueller Neff at mmuellerneff@bloombergindustry.com; Keith Perine at kperine@bloombergindustry.com