Recently, in a case called HTH Corporation (Pacific Beach Hotel), 361 NLRB No. 65 (Oct. 24, 2014), the NLRB ordered a repeat-offender employer to comply with unusually strict remedies for unfair labor practices. The decision has made a splash: commentators have taken notice, and questioned whether the decision indicates a shift towards enforcement with more bite.

The Facts

HTH Corporation operates the Pacific Beach Hotel, a resort in Honolulu, Hawaii. In 2002, hotel employees began an effort to unionize and the International Longshore & Warehouse Union Local 142 first petitioned for recognition that year. This launched a bitter union-management dispute that has lasted more than 10 years. For example, the hotel has banned union representatives from entering the premises, made unilateral changes to terms and conditions of employment, fired specific workers who are union organizers, and fired groups of workers in mass for supporting the union.

The hotel’s unfair labor have resulted in multiple rulings from the NLRB, federal district court, and Ninth Circuit, all against the hotel. In 2005, the hotel initially recognized the union and bargained with them through 2006. Then, it engaged in a series of unfair labor practices, including firing union supporters, and ceased bargaining in 2008.

The Case History

This failure to continue bargaining with the union led to two separate NLRB cases. The first NLRB decision was enforced via an injunction and contempt order issued district court and upheld by the Ninth Circuit. The hotel briefly complied with these decisions, but then re-fired a reinstated employee and continued to engage in bad-faith bargaining. That, in turn, led to this case, beginning in 2011. After an evidentiary hearing, Administrative Law Judge John McCarrick, found that the hotel committed unfair labor practices. The district court again granted an injunction, which the Ninth Circuit affirmed in 2012.

This Case

This Board decision is the NLRB’s appellate review of ALJ McCarrick’s decision. The Board affirmed his findings of fact and conclusions of law. But what’s particularly noteworthy is the remedies the Board ordered: clearly frustrated with HTH’s complete disregard for the many NLRB and federal court orders against it, the Board adopted much stronger remedies than it usually orders.

Section 10(c) of the NLRA grants the Board broad remedial powers to take “affirmative action . . . as will effectuate the policies” of the Act. The Supreme Court has held since 1940, however, that these powers are only remedial, not punitive. More recently, both the Supreme Court and the NLRB have tried to sketch out more precisely the Board’s remedial powers. For example, in the context of remedying bad-faith bargaining, the Supreme Court has held that the Board may not compel the parties to agree to specific contract terms; it may only order continued bargaining. This creates a weakness with the NLRB’s power to enforce good-faith bargaining requirement: if the only remedy is continued bargaining, a party determined bargain in bad faith can do so indefinitely without real consequences.

In HTH, the Board stressed that HTH had disregarded multiple NLRB and court orders:

Despite having been found in violation of multiple provisions of the Act, having been found to have engaged in objectionable conduct that interfered with elections on two occasions, having been subject to two Section 10(j) injunctions, and having been found in contempt of court for violating a Federal district court’s injunction, the case before us demonstrates that the Respondents still have not complied with the remedial obligations imposed on them during our earlier encounters.

It continued by quoting the Ninth’s Circuit: “A skeptical adjudicator might question whether HTH has ever taken seriously its obligations under the law.”

The Board therefore concluded it needed to impose extraordinary remedies, although it explained that each of these remedies had used or discussed before. First, the Board ordered the hotel pay the litigation costs of the NLRB General Counsel and the Union. Second, the Board ordered the hotel to pay the union’s costs resulting from the prolonged bargaining. These costs include “reasonable salaries, travel expenses, and per diems” for the union representatives, and the additional expenses the union incurred because the hotel forbade union representatives from entering the facility. The Board has ordered this remedy before, but only rarely. In Frontier Hotel & Casino, 318 NLRB No. 857 (Aug. 30, 1995), the NLRB ordered a losing party to pay litigation costs because its extreme bad-faith bargaining “infected the core of the bargaining process” such that its “effects cannot be eliminated by the application of traditional remedies.” The D.C. Circuit struck down that remedy as beyond the Board’s section 10(c) authority. But since then, in Teamsters Local 122, 334 NLRB No. 1190 (Aug. 20, 2001), the NLRB has held that it can order litigation costs under the common law “bad faith” exception to general “American Rule” that each party pays their own litigation costs. The D.C. Circuit enforced this order in 2003. (Teamsters Local 122 v. NLRB, No. 01-1513, 2003 WL 880990 (D.C. Cir. Feb. 14, 2003)).

Third, the Board required the hotel to inform the employees’ of their rights via specific steps: it must hold a meeting explaining employee rights to supervisors and employers; post this Explanation of Rights for three years; mail this information to employees; and to publish it in a local paper. Fourth, the Board ordered reinstatement and backpay for employees who were unlawfully fired (which are standard remedies). And finally, the Board suggested, but did not order, a more novel remedy: front pay, rather than reinstatement, for one employee who had been repeatedly targeted for unlawful retaliation. The two Board members who concurred in part and dissented in part disagreed with this aspect of the decision.

Whether these remedies will be effective remains to be seen. As does whether these remedies will be challenged as beyond as the scope of the NLRB’s authority. Regardless, workers are hopefully that conditions at the hotel will improve: last January, employees approved the first ever labor contract with management.