Last Friday, Counsel for Jennifer Abruzzo (General Counsel of the NLRB) filed a motion for summary judgment in Thrive Pet Healthcare v. International Association of Machinists & Aerospace Workers. The motion requests that the Board issue a remedial order requiring the employer to “make the bargaining-unit employees whole for the lost opportunity to engage in collective bargaining.” The motion carries important implications for American labor law — indeed, GC Abruzzo’s office was sufficiently excited that it posted a thread to Twitter announcing the filing. Fashioning the remedy sought in the motion would necessitate, and the GC’s motion expressly requests, that the Board overturn its decision in the 1970 case Ex-Cell-O Corp., and would substantially expand the agency’s authority to redress and combat a fundamental, and routine, employer unfair labor practice: the refusal to bargain in good faith.
Section 8(a)(5) of the National Labor Relations Act imposes a statutory duty upon employers to “bargain collectively with the representative of his employees,” further defined by § 8(d) as the duty to “meet at reasonable times and confer in good faith with respect to wages, hours, and other terms and conditions of employment.” A subsequent clause of § 8(d) however, cautions that “such obligation does not compel either party to agree to a proposal or require the making of a concession.” Thus, the Act does not require that an employer reach a substantive agreement with a union representing its employees, but merely that the employer bargain with the union “in good faith.” Nonetheless, employers routinely defy § 8(a)(5)’s mandate in order to unlawfully delay the negotiation of a contract, sometimes for several years, and although § 10(c) grants the Board broad authority to fashion remedies designed to effectuate the policies of the Act, the Board’s conventional remedy for 8(a)(5) violations consists of meager cease and desist and bargaining orders, prospective-only remedies that achieve little beyond instructing the employer to do something that it was already statutorily required to do. Such orders, which exemplify the NLRB’s limited remedial arsenal that many labor law scholars have lamented, operate to reward and incentivize unlawful delay and frivolous litigation.
With such considerations in mind, the D.C. Circuit Court of Appeals, admonishing the Board’s traditional 8(a)(5) remedies as “counter-productive,” held in the 1970 case Tiidee Products that the Board possesses the statutory authority to impose a make-whole compensatory remedy for 8(a)(5) violations, pursuant to which an employer that refuses to bargain would be ordered to compensate its employees in the amount of additional wages and benefits that the employees would have earned had the employer engaged in the good faith bargaining contemplated by the Act. The D.C. Circuit encountered no difficulty in determining that § 8(d) did not preclude such make-whole 8(a)(5) relief, reasoning that “a determination of a means of calculating a remedy to compensate for injury sustained” does not constitute “imposing contract terms upon an unwilling employer,” but merely “provides money compensation as a remedy for past wrongs.”
A few months later, however, the Nixon Board considered but “reluctantly” declined to fashion this type of remedy in Ex-Cell-O, concluding that, in an outright rejection of the D.C. Circuit’s holding, the agency was not statutorily empowered to award such a remedy. The Ex-Cell-O Board conceded that “current remedies of the Board designed to cure violations of Section 8(a)(5) are inadequate” but claimed that adopting a compensatory remedy would improperly compel the recalcitrant employer “to accede to terms never mutually established by the parties,” which, in the view of the Ex-Cell-O Board, would run afoul of the Supreme Court’s then-recent holding in H.K. Porter Co. that § 8(d) foreclosed the Board from ordering a party to agree to a substantive contractual term. Moreover, the Ex-Cell-O Board found that fashioning a make-whole 8(a)(5) remedy would improperly require the Board to “engage in the most general, if not entirely speculative, inferences.” Accordingly, in the more than five decades since Ex-Cell-O, the Board’s approach to redressing unlawful employer refusals to bargain has been limited to the issuance of bargaining orders that not only fail to deter but often affirmatively reward violations of a statutory provision fundamental to facilitating collective bargaining.
In light of this history, GC Abruzzo included Ex-Cell-O in her “remarkable and inspiring” remedies memo issued last September as one area of Board caselaw that she was interested in reexamining during her tenure. In accordance with her memo, the GC’s motion in Thrive Healthcare contends that the Ex-Cell-O decision is “ripe for reconsideration” and offers a comprehensive exploration of the necessity and feasibility of fashioning a make-whole remedy in the failure-to-bargain context.
The motion first points out that in the years since Ex-Cell-O was decided, other jurisdictions — most notably the California Agricultural Labor Relations Board — have successfully issued compensatory remedies in refusal-to-bargain cases; in fact, the NLRB itself has adopted similar remedies in other contexts, such as when calculating backpay after a discriminatory discharge. Next, the General Counsel argues that H.K. Porter has no bearing on the legality of the retroactive make-whole relief contemplated here because that case addressed the narrow question of whether § 8(d) prohibits the Board from compelling agreement when the parties themselves are unable to agree, and ordering an employer to retroactively compensate its employees after having unlawfully failed to bargain would not bind the employer to a particular contractual term but would merely conjure a hypothetical contract as a means to measure the monetary relief to which the employees are entitled as compensation for the violation of their statutory rights. Furthermore, the motion contends that the Ex-Cell-O Board’s central premise that a conclusive factual finding that a contract would have resulted from the bargaining would be a necessary prelude to issuing a make-whole remedy effectively amounted to adopting an improper default presumption that absent the employer’s ULPs a contract would not have been reached, and such a presumption — that collective bargaining would have been fruitless—does not effectuate the policies of the Act. The motion then proceeds to outline a basic methodology that the Board could use to calculate the amount of make-whole relief owed in such situations, guided by the practice of the California ARB, which would require compiling and analyzing CBAs negotiated in comparable bargaining units, so-called “comparator contracts,” as a point of reference to then estimate the monetary value of the employees’ lost opportunity to bargain in the case at hand.
The General Counsel’s motion in Thrive Pet Healthcare portends a significant expansion of the Board’s remedial powers, an expansion that would permit the agency to more meaningfully redress and deter unlawful employer practices that fundamentally inhibit the collective bargaining process. Although an exciting development, it remains to be seen whether Abruzzo’s legal arguments will be accepted by a majority on the Board and, likely more challenging still, by the federal courts of appeals that will ultimately be tasked with deciding whether to enforce any eventual Board order awarding the make-whole § 8(a)(5) relief urged by the General Counsel.