Labor Board’s Expanded Remedies Under Review at Fifth Circuit

A federal appeals court is set to consider the legality of a National Labor Relations Board ruling expanding the agency’s ability to order employers to pay for economic harm stemming from a labor law violation.

Software company Thryv Inc.—the employer involved in the underlying case—is urging the US Court of Appeals for the Fifth Circuit to overturn the decision, arguing that the expanded remedies violate the National Labor Relations Act. The board, which filed its own petition for court enforcement of its order, will face off against Thryv in oral arguments Tuesday.

The case will be heard by Judges Carolyn King, a Carter appointee; Edith Jones, a Reagan appointee; and Andrew Oldham, a Trump appointee.

The oral argument comes amid increased scrutiny of the NLRB, including recent claims by both Trader Joe’s and SpaceX that the agency’s structure is unconstitutional. The Fifth Circuit also has a history of skepticism toward federal agency decisions and has overturned NLRB orders in the past.

The full slate of judges on the court also appears to be leaning toward ruling in favor of Tesla on appeal from a board decision finding that CEO Elon Musk illegally threatened workers when he tweeted about them losing stock options if they unionized.

The 2022 NLRB ruling on review at the Fifth Circuit allows the board to charge companies for “all direct or foreseeable pecuniary harms” stemming from the illegal conduct, including workers’ late credit card bills, medical expenses, and even fees for late rent and car payments.

The addition of these damages gives the NLRB a weapon in its limited arsenal for enforcing the National Labor Relations Act and discouraging unfair labor practices. The agency otherwise lacks the power to levy monetary fines or impose punitive damages, and must go to court to enforce its own orders.

But the ruling scaled back what NLRB General Counsel Jennifer Abruzzo had been seeking, which was the ability for the board also to award damages for noneconomic harm like emotional distress and reputational damage.

The court must overturn the NLRB’s ruling because the expanded remedies violate the NLRA by imposing punitive damages that aren’t allowed under the law, Thryv said in its brief.

“There can be no serious question that the cures for ‘the harms’ the NLRB now wants to label as make-whole relief are really impermissible consequential damages,” it said. “While the NLRB is permitted under Section 10(c) to develop remedies that further the purposes of the Act, Congress did not intend or permit the wholesale rewriting of that scheme, as contemplated here.”

Bargaining Dispute

The case stemmed from conflict over Thryv’s 2019 layoff of six sales representatives whom the company said weren’t performing well.

Thryv argued in its brief that the company followed the procedure in its bargaining contract with the International Brotherhood of Electrical Workers, who represent the sales staff. But the IBEW, which intervened in the case, said no deal had been reached at the time the layoffs took place.

According to the union’s brief, IBEW filed unfair labor practice charges after Thryv declared negotiations over a new collective bargaining agreement at an impasse. The NLRB general counsel’s office dismissed the charges, but the company and union still hadn’t reached a deal by the time the layoffs were proposed.

An NLRB administrative law judge ruled in the company’s favor, but the board unanimously overturned the decision—including both Republican board members who were serving at the time.

“By implementing the layoffs at that time, rather than waiting to revisit the layoff issue after the parties executed a successor contract less than two months later, Thryv ran afoul of a straightforward board rule prohibiting unilateral changes during pending contract negotiations,” the NLRB said in its Fifth Circuit brief. “Thryv does not challenge the underlying legal rule, and the court may enforce the board’s order on that basis alone.”

Predetermined Outcome?

Before issuing its decision, the NLRB asked for public input on whether it should consider expanded remedies to cover the fallout when workers are illegally fired.

Issuing this notice before deciding the outcome of the case is evidence that the board was set on ruling against Thryv as an excuse to get to the remedies issue, the company argued in its brief.

“The NLRB did exactly what Thryv feared and predicted would happen: Rather than examine the record, the NLRB inevitably would find a violation of the Act once it decided that it wanted to use this case to expound on consequential damages,” the company said.

The agency’s brief called Thryv’s assertions “conspiratorial.”

“The present case did not afford the board a unique opportunity to clarify its standard make-whole remedy. The board routinely orders make-whole relief in cases, such as this one, where parties have been harmed by a violation of federal law,” the board said.

Thryv is represented by Seyfarth Shaw LLP. Agency attorneys are representing the NLRB. IBEW is represented by Sherman, Dunn, Cohen, Leifer & Yellig PC.

The case is Thryv v. NLRB, 5th Cir., No. 23-60132, oral arguments scheduled 2/6/24.