D.C. Circuit Rejects NLRB's Award of Attorneys' Fees and Expenses in Unfair Labor Practice Cases

The U.S. Court of Appeals for the D.C. Circuit recently rejected the National Labor Relations Board’s attempt to expand the remedies available under the National Labor Relations Act for unfair labor practices.  Building on established precedent, the court in HTH Corporation v. National Labor Relations Board held that the Board lacked statutory authority to order an employer found to have committed unfair labor practices to pay the litigation expenses that either the General Counsel or the union incurred in the case.

The court’s decision stemmed from a decade-long dispute between the International Longshore & Warehouse Union Local 142 and HTH Corporation, when in 2002 the union first petitioned for recognition as the exclusive bargaining agent of employees at a resort hotel operated by the corporation.  Although the company won the initial representation election, the Board found that it engaged in objectionable conduct, and overturned that result and ordered a new election.  The union won the second election and the Board certified the union as the collective bargaining representative of the company’s employees.

The company refused to bargain to test the certification, resulting in two sets of unfair labor practice charges.  The first set resulted in a Board Order requiring the company to bargain with the union.  The company refused to comply with the Board’s order, resulting in an injunction and contempt order issued by the U.S. District Court for the District of Hawaii and upheld by the Ninth Circuit.

The company briefly bargained with the union, but was found to have engaged in additional unfair labor practices.  An administrative law judge (ALJ) found the company’s additional unfair labor practices violated the injunction, and levied contempt sanctions.

On review, the Board affirmed the ALJ’s findings, but concluded that the company's alleged disregard for the Board’s and courts’ prior rulings proved the Board’s traditional remedies were insufficient.  Consequently, the Board adopted a host of “extraordinary” remedies besides the standard 60-day notice posting and reinstatement and back pay for unlawfully discharged employees.  The Board’s extraordinary remedies included: (1) awarding litigation expenses to the NLRB’s General Counsel and the union; (2) awarding bargaining and other expenses to the union; and (3) permitting the Board, for a three-year period, to "visit" company premises and access company files to assess compliance with the Board’s more conventional orders.

The Board also expanded its traditional notice-posting requirement.  Although the ALJ required the company to read the notice posting to employees, the Board modified that order, requiring a specific manager involved in many of the unfair labor practices to read the notice posting to employees, or, in the alternative, to have a Board agent read the notice.  The Board also: (1) required that an Explanation of Rights be read at the notice-reading event; (2) mandated that all company supervisors and managers attend the reading; (3) specified that the company must permit a union representative to attend the reading; and (4) further required the company to publish the Explanation of Rights in two local publications. 

On appeal, the D.C. Circuit dispensed with several of the company's challenges to the Board’s remedies as barred for lack of jurisdiction, explaining that Section 10(e) of the Act precluded objections that a party had not previously raised before the Board.  The company's failure to move the Board for reconsideration of most of the extraordinary remedies prevented the court from asserting jurisdiction over challenges to those remedies.  The court rejected the company's argument that a motion for reconsideration would have been futile, as well as the company’s contention that it had properly preserved in its exceptions to the underlying ALJ decision, a challenge to the remedies imposed by the Board.

According to the court, the company properly preserved only two challenges to the Board’s Order.  The first was the Board’s requirement that a specific management representative read the notice.  The second was requiring the company to reimburse the litigation expenses of the NLRB’s General Counsel and the union.

On the company's first challenge, the court explained that its precedent disfavored a remedy requiring a specific management representative to read the notice posting.  However, the court acknowledged that the Board’s Order provided that a Board Agent could read the notice instead of the designated employer official.  The court upheld the Board’s alternative, and reasoned that because the Board properly provided the company with the option of having a Board agent read the notice, it need not decide the validity of a mandate that a specific management representative read the notice to employees.

Turning to the Board’s award of litigation expenses, the court pointed to prior precedent holding that the Board lacks statutory authority to shift litigation expenses.  Siding with that prior precedent, the court rejected the Board’s argument that, like a federal court, it retains inherent authority to control and maintain the integrity of its proceedings by shifting litigation expenses upon a finding of bad faith.  Noting that the Board is a creature of statute, the court explained that the Board could shift litigation expenses only if a provision of the Act authorized it to do so.  Concluding that shifting litigation expenses for bad faith is a punitive measure, and that nothing in the Act grants the Board punitive powers, the court denied enforcement of that portion of the Board’s Order.

Employers can take a measure of solace from the court’s rejection of the Board’s continuing effort to assess attorneys' fees in unfair labor practice cases.  However, they should not lose sight of the other extraordinary remedies the Board imposed against the company.  The Board demonstrates a continuing willingness to order remedies beyond traditional notice posting, reinstatement, and back pay as it presses the limits of its remedial authority.  Similarly, practitioners should note the court’s holding that failing to move for reconsideration following the Board’s Decision and Order will precluded an employer from challenging the Board’s novel remedies on appeal.

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.