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Pennsylvania State Corrections Officers Association v. National Labor Relations Board

United States Court of Appeals, District of Columbia Circuit

July 6, 2018

Pennsylvania State Corrections Officers Association, Petitioner
National Labor Relations Board, Respondent

          Argued November 21, 2017

          On Petition for Review and Cross-Application for Enforcement of an Order of the National Labor Relations Board

          Michael McAuliffe Miller argued the cause for petitioner. With him on the briefs was Edward R. Noonan.

          Micah P.S. Jost, Attorney, National Labor Relations Board, argued the cause for respondent. With him on the brief were Richard F. Griffin, Jr., General Counsel, John H. Ferguson, Associate General Counsel, Linda Dreeben, Deputy Associate General Counsel, and Robert J. Englehart, Supervisory Attorney. Ruth E. Burdick, Deputy Assistant General Counsel, entered an appearance.

          Before: Henderson, Circuit Judge, and Williams and Ginsburg, Senior Circuit Judges.


          Ginsburg, Senior Circuit Judge

         The Pennsylvania State Corrections Officers' Association (the Employer) petitions for review of an order of the National Labor Relations Board holding it had committed an unfair labor practice by failing to bargain with the Business Agents Representing State Union Employees Association (the Union) before terminating five employees. The Board therefore ordered the Employer to bargain with the Union over the effects of the discharge and to pay back wages to the employees. The parties bargained over the effects to an impasse, but the Board subsequently held it was not a lawful impasse because the Employer sought to bargain about, and reduce, the back pay amount set by the Board. The Board therefore held the Employer was liable for a substantially longer period of back pay. The Employer contends (1) the Board lacks substantial evidence that it failed to bargain over the effects to a lawful impasse, (2) the back pay requirement is arbitrary, capricious, and contrary to law, and (3) one of the five employees is not eligible to receive back pay. The Board cross-appeals for enforcement of the order. We hold the order is not supported by substantial evidence and therefore grant the petition for review, vacate the order, and remand the case to the Board to re-determine the back pay due to each employee.

         I. Background

         The Employer is a union representing approximately 11, 000 corrections officers. It deploys a number of corrections officers, on leave from their jobs with the Commonwealth of Pennsylvania, as "business agents" to represent it in disciplinary matters involving members. The business agents remain employees of the Commonwealth, which pays their salaries and receives reimbursement from the Employer. In June 2010, several of the business agents organized their own union (the Union), which then negotiated a collective bargaining agreement with the Employer.

         For reasons not relevant here, later in 2010 the Employer terminated five of the business agents. Four of them returned to the corrections officer positions from which they were on leave during their tenure at the Employer. The Employer gave each terminated employee one week of severance pay. The Union filed a complaint with the NLRB alleging the Employer's action violated the National Labor Relations Act because the Employer did not first bargain with the Union over the effects of the terminations.

         An Administrative Law Judge conducted a hearing and issued a recommended decision holding the failure to bargain was an unfair labor practice. Pa. State Corrections Officers Ass'n and Bus. Agents Representing State Union Emps. Ass'n (PSCOA I), 358 NLRB 108, 115 (2011). He ordered what the Board calls a Transmarine remedy, after Transmarine Navigation Corp., 170 NLRB 389 (1968), which required the Employer to do two things. First, upon request, it had to engage in effects bargaining with the Union. PSCOA I, 358 NLRB at 115. Second, it had to pay the employees an amount of back pay tied to the pace of the negotiations. Back pay would begin to accrue "5 days after the date of [the] order" and run until the Employer and the Union reached "a bona fide impasse in bargaining." Id. The ALJ also imposed minimum and maximum amounts; regardless of the amount due under the formula he prescribed, in no event could back pay be "less than the employees would have earned for a 2-week period at the rate of their normal wages when last in [the Employer's] employ" or more than "the amount they would have earned as wages from the date they were discharged to the time they secured equivalent employment elsewhere." Id. The remedy also provided that the back pay award was subject to reduction in the amount of "any net interim earnings" the employee received from other work during that period. Id. On March 23, 2012 the Board summarily affirmed and issued an order (the "Initial Order") adopting the remedies recommended by the ALJ. Pa. State Corrections Officers Ass'n and Bus. Agents Representing State Union Emps. Ass'n (PSCOA II), 358 NLRB 108, 108-09 (2012).

         Soon thereafter the Employer and the Union began bargaining over the effects of the terminations. On April 4, 2012, the Employer offered to pay each of the business agents two weeks of back pay (i) without any reduction for other wages they had earned but (ii) minus the one week of post-termination severance pay each agent had already received and (iii) subject to withholding the other week of back pay as a credit to offset disputed automobile mileage expense payments for which it had reimbursed several of the employees. The Union counter offered on April 11, demanding "2 weeks' severance pay and all unused leave paid back" for each of the five and reimbursement of additional expenses that one of them claimed. Later the same day the Employer rejected the Union's counteroffer, disputed the vacation time and expense requests, declared the parties at an impasse, and said it would implement its April 4 offer. Thereafter neither party contacted the other, the Employer made no payments to the employees, and the Union's bargaining authority lapsed when it became defunct on September 28, 2012.

         In late 2013 the General Counsel of the Board initiated compliance proceedings against the Employer before the ALJ. The General Counsel claimed the Employer's insistence on a credit against disputed expenses was contrary to the Initial Order, which allowed deductions from back pay only for net wages the employees had earned in other employment. The General Counsel therefore alleged that the Employer had insisted upon an "illegal" topic of bargaining, to wit, offering back pay below the minimum set by the Initial Order, that undercut the validity of the April 11 impasse. The Employer acknowledged that during the bargaining it had "identified the sum which it intended to pay as a Transmarine remedy and offset that against previously improperly paid benefits." Nonetheless it moved to dismiss the compliance proceeding on the ground that it had complied with the Initial Order by bargaining to a bona fide impasse with the Union. It also argued that one employee, Mr. Bill Parke, was not entitled to any back pay because he had decided not to return to his job as a corrections officer, and therefore had failed to mitigate his losses. While the compliance case was pending before the ALJ, the parties stipulated that the Employer and Union reached an impasse in bargaining on April 11, 2012.

         Following a hearing, the ALJ issued a recommended decision concluding the Employer had not complied with the Initial Order. Pa. State Corrections Officers Ass'n and Bus. Agents Representing State Union Emps. Ass'n (PSCOA III), 364 NLRB No. 108, 2014 WL 2194809 (May 23, 2014). He found "the Board's order required a minimum of two weeks of back pay," the Employer "offered two weeks of back pay, but required that there be a set off against that amount," thereby "[i]nsist[ing] to impasse on a position that derogates from a specific Board remedy" and was therefore "an illegal subject of bargaining." Id. at 12. "At the least, such a position does not constitute a mandatory subject, about which the other party must bargain." Id. He therefore concluded "that the impasse of April 11 was not a valid impasse and the back pay period continued to run thereafter" until September 28, 2012, when the Union lost its bargaining authority; hence the back pay period was 26 weeks. Id. With regard to Parke, the ALJ found he failed to mitigate his lost wages by not returning to his position as a corrections officer, which the ALJ regarded as equivalent to his position as a business agent because the two were "intrinsically intertwined." Id. He therefore ordered the Employer to pay Parke the minimum two weeks of back pay. Id. at 13.

         Both the Employer and the General Counsel of the Board filed exceptions to the recommended decision. The Employer challenged all the ALJ's findings and conclusions save those related to Parke, which the General Counsel challenged.

         In 2016 the Board issued, over Commissioner Miscimarra's partial dissent, a Supplemental Decision and Order adjudicating the compliance case. Pa. State Corrections Officers Ass'n and Bus. Agents Representing State Union Emps. Ass'n (PSCOA IV), 364 NLRB No. 108, 2016 WL 4582492 (Aug. 26, 2016). The Board and the dissenter agreed the Transmarine remedy was mandated by the Board, and therefore a topic over which the parties could not bargain. Id. at 3; id. at 6 (Miscimarra, Comm'r, dissenting). The Board found the Employer had attempted to "bargain about the Transmarine backpay remedy"; because "from the outset, the [Employer had] proposed reducing the Transmarine amount," it "in effect demanded a modification of the Transmarine remedy." Id. at 3-4. From these facts the Board concluded the Employer "never made a proposal that met its effects- bargaining obligation" and therefore did not reach a lawful impasse. Id. at 3-4. It also held that, "even if the [Employer] was permitted to bargain over the Board's Transmarine back pay remedy," its "insistence to impasse on treating 1 week of Transmarine back pay as a credit ... was impermissible" because "the Transmarine remedy ... requires the [Employer] to pay employees a minimum of 2 weeks' back pay minus only interim earnings." Id. at 4. "In sum, in the effects bargaining, the [Employer] was not entitled to demand that the Transmarine remedy be reduced from 2 weeks of backpay to 1 by claiming the second week as a credit." Id.

         Commissioner Miscimarra interpreted the Employer's offer as being more generous than required by Transmarine, wherefore he would have held the impasse was reached lawfully. Id. at 6-9. He did so in part because "the Transmarine backpay order provided that 'net interim earnings would be deducted from the gross amount of backpay'" whereas the Employer "offered the affected employees 'two weeks pay without deductions for interim earnings.'" Id. at 9 (quoting the record). He also would have credited the parties' stipulation that the Employer and the Union had bargained to impasse. Id. at 7-8.

         The Board unanimously reversed the ALJ's findings and conclusions regarding Parke. Applying Board precedents under which the equivalence of two jobs is determined by comparing pay, working conditions, and duties, the Board found Parke's blue collar corrections officer position was not equivalent to his white collar union job, citing in particular the differences in pay and in the duties of the jobs. Id. at 5. The Board therefore held Parke had not failed to mitigate and was entitled to the same back pay award - 26 weeks of pay minus net interim earnings - as the other employees. Id.

         II. Analysis

         This court "will uphold a decision of the Board unless it relied upon findings that are not supported by substantial evidence, failed to apply the proper legal standard, or departed from its precedent without providing a reasoned justification for doing so." E.I. DuPont de Nemours & Co. v. NLRB, 682 F.3d 65, 67 (D.C. Cir. 2012); see 29 U.S.C. § 160(f). When reviewing the Board's factual findings, we must determine whether "the evidence supporting that decision is substantial, when viewed in the light that the record in its entirety furnishes." Universal Camera Corp. v. NLRB, 340 U.S. 474, 488 (1951). We will affirm the legal conclusions of the Board so long as they are not arbitrary and capricious. See Mail Contractors of Am. v. NLRB, 514 F.3d 27, 31, 34-36 (D.C. Cir. 2008).

         The Employer challenges three aspects of the Supplemental Order. First, it argues there is not substantial evidence to support the Board finding that the parties did not reach a lawful impasse on April 11. Second, it argues the Supplemental Order is arbitrary and capricious because it impermissibly intrudes into the substantive aspects of the bargaining, confuses the procedural requirement to bargain with a substantive requirement to offer specific terms, and constitutes a fine that exceeds the Board's remedial authority under Section 10(c) of the Act, 29 U.S.C. § 160(c). Third, it argues the Board erred when it found Parke eligible to receive the full award of back pay, which we interpret as an argument that there is not substantial evidence to support that finding.

         A. Substantial Evidence

         The Employer argues there is not substantial evidence to support the Board's findings concerning the validity of the impasse and the associated Transmarine remedy. The Board argues preliminarily that we lack jurisdiction to hear the argument because it "did not appear in the [Employer's] filings with the Board." It argues in the alternative that it "reasonably found" the parties did not reach a lawful impasse.

         1. Jurisdiction

         The Board's jurisdictional objection is that the Employer never urged the substantial evidence argument before it. Section 10(e) of the Act bars us from considering any "objection that has not been urged before the Board ... unless the failure or neglect to urge such objection shall be excused because of extraordinary circumstances." 29 U.S.C. § 160(e); see Woelke & Romero Framing, Inc. v. NLRB, 456 U.S. 645, 665-66 (1982).

         The Board argues, following Alden Leeds, Inc. v. NLRB, 812 F.3d 159, 167-68 (D.C. Cir. 2016), that "section 10(e) bars review of any issue not presented to the Board, even where the Board has discussed and decided the issue." It claims the Employer did not raise any of its present arguments, including the substantial evidence challenge, at any point before the Board. The Employer argues it had properly raised the argument in its exceptions and that, as in Trump Plaza Associates v. NLRB, 679 F.3d 822, 830 (D.C. Cir. 2012), these exceptions "sufficiently apprised [the Board], for the purpose of section 10(e)," of its objection that there is not substantial evidence to support the Board's findings.

         In assessing a claim of forfeiture under § 10(e), "the critical question is whether the Board received adequate notice of the basis for the objection." Camelot Terrace, Inc. v. NLRB, 824 F.3d 1085, 1090 (D.C. Cir. 2016) (cleaned up). "Although briefing and argument before the Board are desirable ... section 10(e) does not require such procedures." Local 900, Int'l Union of Elec., Radio and Mach. Workers, AFL-CIO v. NLRB, 727 F.2d 1184, 1192 (D.C. Cir. 1984). An appellant may adequately notify the Board of the basis for its objection by "articulating [it] in its exceptions to the ALJ's decision." Davis Supermarkets, Inc. v. NLRB, 2 F.3d 1162, 1175 (D.C. Cir. 1993); see Consol. Freightways v. NLRB, 669 F.2d 790, 793 (D.C. Cir. 1981). That is precisely what happened here. For the obverse situation, see BPH & Co. v. NLRB, 333 F.3d 213, 219-220 (D.C. Cir. 2003) (holding a petitioner satisfied § 10(e) by briefing an argument before the Board despite it's not having been in the petitioner's exceptions).

         Two exceptions the Employer put before the Board are pertinent. First, the Employer excepted "[t]o the ALJ's finding that [its] position ... was contrary to the minimum back pay remedy in the Board's [Initial] Order." Second, the Employer excepted "[t]o the ALJ's failure to find that ... the Board's [Initial] Order in the underlying case tolled back pay at the point that the parties were at a lawful impasse, e.g. on or before April 11, 2012." It did not repeat either point in its brief before the Board.

         We need not debate whether, in the abstract, these exceptions provided adequate notice to the Board; we know they did because the Board addressed them in the Supplemental Order. First, the Board said it "affirm[ed] the [ALJ's] finding that the parties' April 11, 2012 impasse was not a lawful impasse and therefore did not toll the back pay period." PSCOA IV, 364 NLRB No. 108, at 3. It explained that the Initial Order required the Employer to "(1) bargain over the effects of the [termination], and (2) give affected employees 'limited backpay' for a period beginning 5 days after the date of the Board's Order and ending at the earliest" of several enumerated conditions. Id. It found the Employer had "propos[ed] during effects bargaining that the parties bargain about the Transmarine backpay remedy" and "insist[ed] to impasse on its offer to the Union of 'backpay … for a 2-week period' with 1 week's pay deducted … and the other 1 weeks' pay treated as a credit." Id. The Employer "in effect demanded a modification of the Transmarine remedy" because "from the outset, the [Employer] proposed reducing the Transmarine amount" and as such it "never made a proposal that met its effects-bargaining obligation." Id. at 3-4. Second, the Board said the Employer's back pay proposal was "impermissible" because "in the effects bargaining, the [Employer] was not entitled to demand that the Transmarine remedy be reduced from 2 weeks of backpay to 1 by claiming the second week as a credit." Id. at 4.

         The Board thus responded to - and thereby acknowledged its awareness of - both the relevant exceptions. Under our precedents, this is sufficient to satisfy Section 10(e). See BPH & Co., 333 F.3d at 220 (holding petitioner had "adequately apprised the Board" of an argument, and therefore "compl[ied] with section 10(e)," because it had briefed the argument before the Board and the Board had "acknowledged" as much in the order under review). Moreover, because the arguments were properly presented to the Board, Alden Leeds is inapposite and the Board's reliance upon it is misplaced.

         Our dissenting colleague would hold we do not have jurisdiction to consider the Employer's substantial evidence argument for two reasons. First, she would hold the Employer did not use the words "gross" and "net" in its exceptions before the Board, and therefore did not state its objection with the necessary precision. Dissenting Op. at 8 ("[T]he Employer nowise made the specific point that one week's gross unearned wages exceeded two weeks of net pay and ipso facto produced a lawful impasse."); see id. at 1, 6, 9. Second, she would hold the argument forfeit because it was not properly presented to us. See id. at 9-11.

         Regarding the former objection, we have never before required a litigant to frame a challenge to a finding of the Board with such precision. On the contrary, "we have not required that the ground for the exception be stated explicitly in the written exceptions filed with the Board" so long as "the ground for the exception [is] evident by the context in which the exception is raised." Trump Plaza Assocs., 679 F.3d at 829 (Henderson, J.) (cleaned up) (quoting Parsippany Hotel Mgmt. Co. v. NLRB, 99 F.3d 413, 417 (D.C. Cir. 1996)). Nor have we required a litigant to state a substantial evidence objection with great precision; for example, we have deemed sufficient an argument merely implied by the arguments actually presented to the Board. See id. at 830 (holding Section 10(e) satisfied because the argument made before the Board "necessarily includes" the argument made on appeal); BPH & Co., 333 F.3d at 220 (Henderson, J.) (holding a substantial evidence objection satisfied Section 10(e) "notwithstanding its not being addressed expressly to the conduct alleged" in a settlement agreement the Board cited as evidence of an unfair labor practice). Therefore under our precedents the Employer's exception to the specific Board finding that it was not "at a lawful impasse ... on or before April 11," for the specific reason that its bargaining position was not "contrary to the minimum back pay remedy in the Board's [Initial] Order," was more than sufficient.

         Regarding the latter objection, our dissenting colleague scrutinizes the Employer's brief and finds only two "bare assertions" and no legal reasoning. Dissenting Op. at 9. We find much more there: In a section that begins with the heading "The NLRB's findings of fact are not supported by substantial evidence on the record as a whole," the Employer argues it "made a lawful severance pay proposal during effects bargaining" and "never attempted to negotiate downward the Board-ordered backpay remedy." In the following three paragraphs, the Employer argues "the Board majority's conclusion that [the Employer] merely attempted to negotiate downward the Board-ordered backpay remedy is not supported by substantial evidence on the record as a whole," "the Union plainly did not view [the Employer's] proposal as an attempt to negotiate down the Board-ordered remedy," the Employer "complied [with] the effects ...

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