Guest Post: Can They Get Away With This? The Fifth Circuit Tries to Rewrite the NLRA

Andrew Strom

Andrew Strom is an Associate General Counsel of Service Employees International Union, Local 32BJ in New York, NY.

Andrew Strom is Associate General Counsel of SEIU Local 32BJ.

On April 13th, the Fifth Circuit issued a decision in McKinney v. Creative Vision Resources, LLC, reversing a District Court’s grant of injunctive relief under Section 10(j) of the National Labor Relations Act. So far, the decision has not garnered a lot of attention, but in Texas, Louisiana, and Mississippi, it will make it much harder for the NLRB to rein in employers who flout the law.

The case involved a group of workers, known as “hoppers,” who work the back end of garbage trucks In an illustration of the fissured economy at work, the waste disposal company, Richard’s Disposal, Inc., did not employ the hoppers directly, but instead hired a contractor to provide hoppers. Then, in 2010, Richard’s replaced its contractor with a new entity, Creative Vision, owned by the son of Richard’s owner. Creative Vision hired the hoppers who had worked for the contractor, and under well-established labor law doctrine, was required to recognize and bargain with the hoppers’ union. But, Creative Vision refused to recognize or bargain with the union.

The union filed its charge against Creative Vision on June 17, 2011. Unfortunately, the NLRB Regional Director didn’t issue a complaint against Creative Vision until March 30, 2012, and the Board didn’t file its petition for injunctive relief until July 25, 2012. Then, the District Court waited until July 8, 2014 to issue the preliminary injunction. When the case got to the Fifth Circuit, the employer essentially conceded that that the Board had established a likelihood of success on the merits. The statute provides that the district court has jurisdiction to grant the Board “such temporary relief or restraining order as it deems just and proper.” While the circuit courts have applied slightly different tests, the Fifth Circuit agreed that the “just and proper” test incorporates general principles of equity. In other words, the “just and proper” test is consistent with the Supreme Court’s directive that a party seeking a preliminary injunction must establish “that he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in his favor, and that an injunction is in the public interest.”

The standard of review when a district court grants a preliminary injunction is supposed to be a deferential “abuse of discretion” standard. Here, in finding that the District Court abused its discretion, the Fifth Circuit invented a new standard out of whole cloth. The Court held that a Section 10(j) injunction may only be employed in the event of “egregious” unfair labor practices, which it defined as those violations that “lead to exceptional injury as measured against other unfair labor practices.” The Court held that the district court erred because it did not explain “how Creative Vision’s work force or the union suffered egregious or otherwise exceptional harm….” The statute says nothing about Section 10(j) being limited to “egregious” cases. In other contexts, the Fifth Circuit has granted preliminary injunctions without finding that the conduct at issue was particularly “egregious.”  In fact, the Court has explained that “when the threatened harm is more than de minimis, it is not so much the magnitude but the irreparability that counts for purposes of a preliminary injunction.”

Typically, harm is considered irreparable where there is no adequate remedy at law such as monetary damages. This was precisely the case here. Where, as here, there is an initial refusal to bargain, the NLRB has never attempted to compensate workers for the years between the employer’s initial refusal to bargain and the entrance of an enforceable order. Instead, the standard Board remedy is simply a prospective bargaining order. More than forty years ago, the D.C. Circuit pointed out the obvious: “a prospective-only doctrine means that an employer reaps from his violation of the law an avoidance of bargaining which he considers an economic benefit.” But, recognizing that workers will never obtain a recovery for the loss of their statutory rights, the Board has tried to mitigate the harm by seeking preliminary injunctions under Section 10(j) of the NLRA when employers refuse to bargain for an initial collective bargaining agreement. In 2006, then-NLRB General Counsel Ronald Meisburg, a Bush-appointee, issued a memorandum encouraging NLRB Regional Directors to pursue preliminary injunctions in these cases.

The Second Circuit, the Seventh Circuit, and the Ninth Circuit have all recognized that an employer’s initial refusal to bargain causes irreparable harm. This is not surprising because, as the Seventh Circuit observed, the Board’s “forward-looking order cannot fully compensate the employees … for the variety of benefits that good-faith collective bargaining with the Union might otherwise have secured for them in the present.” Instead of trying to rewrite the NLRA, the Fifth Circuit should have applied traditional equitable principles and found that the preliminary injunction issued by the District Court was “just and proper.”

Enjoy OnLabor’s fresh takes on the day’s labor news, right in your inbox.