An employer that refuses to bargain with a union violates NLRA §8(a)(5) — the duty to bargain in good faith. The only remedy available to a union faced with an employer’s 8(a)(5) violation is a bargaining order. But §8(a)(5) already requires the parties to bargain — a bargaining order remedies nothing. Capitalizing on the impotence of the remedy, companies like Starbucks strategically refuse to bargain with newly certified unions. This causes employees to lose wages and benefits that would have derived from a collective bargaining agreement, reduces union support and momentum, and multiplies attorney’s fees from resulting litigation. 

In 2021, NLRB General Counsel Jennifer Abruzzo called on the Board to overturn the decision that established this ineffectual remedy, Ex-Cell-O v. NLRB. She argued the remedy for a §8(a)(5) violation should be a “make-whole” order, described in detail below. The Board did not act on the General Counsel’s recommendation. 

Today, Board remedies — like all administrative remedies — face a new potential hurdle thanks to the Supreme Court’s holding in SEC v. Jarkesy: the Seventh Amendment. But this post argues that reasoning from a recent Ninth Circuit case instructs that overturning Ex-Cell-O would not violate the Seventh Amendment. 

Doctrine of §8(a)(5) Remedies

The rule in Ex-Cell-O stems from the 1970 Supreme Court case H.K. Porter v. NLRB. In H.K. Porter, the Court held that it exceeded the Board’s authority and violated §8(d) to impose a substantive contractual term upon parties to a collective bargaining agreement. Later that year, the Board interpreted this rule in the context of a §8(a)(5) violation. 

In Ex-Cell-O, the Trial Examiner ordered an employer to make its employees whole for the compensation and benefits they would have had if a CBA had been agreed to. On appeal, the Board reversed. It reasoned that a make-whole order would require the Board to impose contractual terms like increased compensation or benefits, which H.K. Porter forbid.

Fifty years later, GC Abruzzo called on the Board to reverse Ex-Cell-O. Her proposal offered a solution to the H.K. Porter problem. In fashioning a make-whole order for an §8(a)(5) violation, the Board could use comparator contracts from unionized workplaces that have a CBA in place. For Abruzzo, this did not infringe on H.K. Porter: The employees would receive the compensation and benefits of the comparator contract until their union agreed to its own CBA with its employer. Although the Biden board did not accept Abruzzo’s proposal, a future Board is likely to return to the Ex-Cell-O question. When it does so, it may wonder whether or not recent Supreme Court precedent on administrative agency remedies will stand in its way.

The Jarkesy Problem

The Seventh Amendment guarantees defendants the right to a jury trial in federal civil cases. Historically, administrative actions fell outside the Amendment’s coverage. However, in Jarkesy, the Supreme Court issued an opinion that set administrative remedies and the jury right on a collision course.

The Jarkesy Court held that when the SEC seeks civil penalties for securities fraud, the Seventh Amendment entitles a defendant to a jury trial in an Article III court. The Court’s reasoning was based on its interpretation of the Seventh Amendment’s reach and its “public rights exception.” In short, when the government or a private party seeks to vindicate a “private” right, the Seventh Amendment unequivocally preserves the right to a jury trial. However, if the government seeks to vindicate a “public” right, the right to a jury trial is unavailable. 

The breadth of “public” right is critical. The Court recognized Congress is permitted to delegate enforcement power to administrative agencies to effectuate regulatory schemes. Administration of public lands, granting of public benefits, pensions, and patent rights all fall within the exception. Importantly, if the conduct governed by the administrative agency is also covered by a cause of action available at common law (like fraud in Jarkesy), that is more evidence that the government is seeking to vindicate a private right. 

As Justice Sotomayor’s dissent cautioned, Jarkesy could have “momentous consequences” for administrative remedies throughout the federal government. On the broadest reading of Jarkesy, it is possible the Seventh Amendment requires parties to bring certain NLRA actions in an Article III court. But the NLRA does not have a private right of action. As such, one could argue that Jarkesy threatens the NLRA’s entire remedial regime.

Lessons from Thryv & Operating Engineers

Recent circuit court precedent instructs how courts are thinking about NLRA remedies in light of Jarkesy. Fortunately, courts are not calling the constitutionality of traditional NLRA remedies into question.

In Thryv, the Biden Board expanded the remedy for an unlawful lockout, which previously provided for backpay of wages and benefits. It announced that the employer “shall also compensate the employees for any other direct or foreseeablepecuniary harms incurred as a result of the unlawful lockout.”

The majority opinions of three circuits that have considered the lawfulness of Thryv remedies did not directly reach the Seventh Amendment argument. However, in International Union of Operating Engineers v. NLRB, Judge Bumatay authored a fierce partial dissent arguing that Thryv remedies violate the Seventh Amendment.

Relying heavily on Jarkesy, Judge Bumatay read Thryv as allowing for consequential damages, “a tort remedy . . . [which] implicates the Seventh Amendment.” He argued the public rights exception did not apply because the remedy went “beyond defending the public interest in federal labor policy and instead target[ed] ‘the wrong done [to] the individual employee.’” However, he noted that backpay fell within the exception and did not violate the Seventh Amendment. 

Although the majority authored by Judge Wallach did not cite Jarkesy, it did respond to Judge Bumatay’s argument. The majority posited that Thryv’s make-whole framework vindicates the public right of labor policy, while only incidentally benefiting private parties. The primary purpose of Thryv remedies is “‘to aid in achieving the elimination of industrial conflict[,]’ vindicating ‘public, not private rights.’”

What This Means for Abbruzzo’s Proposal

Even under Judge Bumatay’s reading of Jarkesy, Abruzzo’s proposal does not violate the Seventh Amendment. By his own words the Board’s express authority to order backpay is “consistent[] with the Seventh Amendment.” In Jarksey terms, an Abruzzo-style make-whole order would vindicate the public right of eliminating labor disputes by encouraging employers to bargain in good faith with newly certified unions. There is also no common law analogue for an §8(a)(5) violation. The duty to bargain did not exist at common law. Therefore, Abruzzo’s proposed remedy would vindicate a public right, skirting the Seventh Amendment pitfall. In short, if the Board decides to overturn Ex-Cell-O, it should not fear Jarkesy.