W & M Properties of Connecticut, Inc. v. National Labor Relations Board

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued November 16, 2007 Decided February 8, 2008

No. 06-1365

W&M PROPERTIES OF CONNECTICUT, INC.,

PETITIONER

v.

NATIONAL LABOR RELATIONS BOARD,

RESPONDENT

Consolidated with

06-1395

On Petition for Review and Cross-Application for

Enforcement

of an Order of the National Labor Relations Board

Peter D. Stergios argued the cause for petitioner. With

him on the briefs was Patrick M. Collins.

Jeffrey J. Barham, Attorney, National Labor Relations

Board, argued the cause for respondent. With him on the brief

were Ronald E. Meisburg, General Counsel, John H.

Ferguson, Associate General Counsel, Linda Dreeben,

Assistant General Counsel, and Julie B. Broido, Senior

Attorney.

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Before: BROWN and GRIFFITH, Circuit Judges, and

EDWARDS, Senior Circuit Judge.

Opinion for the Court filed by Circuit Judge GRIFFITH.

GRIFFITH, Circuit Judge: In this case, the National Labor

Relations Board determined that an employer’s decision not

to retain employees of a newly acquired business was

unlawfully animated by a desire to avoid dealing with a labor

union, in violation of the National Labor Relations Act.

Because the Board’s order is a product of reasoned

decisionmaking and is supported by substantial evidence in

the record, we deny the employer’s petition for review and

grant the Board’s cross-application for enforcement.

I.

W&M Properties of Connecticut, Inc. (“W&M”) is a real

estate management and marketing firm. In 2001, W&M

expanded its portfolio of managed commercial properties by

purchasing from TrizecHahn Corporation an 800,000-square-

foot office complex called First Stamford Place. Prior to

W&M’s purchase, maintenance at First Stamford Place had

been provided by a seven-person engineering staff employed

by TrizecHahn. These TrizecHahn engineers were union

members, having elected as their representative the

International Union of Operating Engineers, Local 30, AFL-

CIO (“Local 30”).

Beginning in September 2000, W&M conducted due

diligence to determine what improvements would be

necessary to bring the property up to its standards. After

touring First Stamford Place and settling upon a staffing

model, W&M Senior Vice President Richard Heller

conducted a series of job interviews to hire the necessary

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engineers. TrizecHahn employees participated in this process,

as did outside applicants. The union membership of the

TrizecHahn engineers did not go unnoticed. One W&M

interviewer made clear to a job applicant that First Stamford

Place would not have a unionized workforce, and several

TrizecHahn employees were questioned about their union

membership.

W&M offered jobs to two of the TrizecHahn engineers,

Hector Benitez and Omar Perez, but not to the others, Liam

McGoohan, Stephen Bonos, Richard Stofko, Henry Cassidy,

and Paul Schmitt. Benitez accepted the offer and Perez

declined. W&M filled the remaining positions with four

outside applicants and one employee transferred from another

W&M property, for a total of six engineers. The reconstituted

engineering staff of First Stamford Place lacked a majority of

union workers, with Benitez as the lone union member. As a

result, W&M refused to bargain with Local 30 and made

certain unilateral changes to the working environment at First

Stamford Place.

Local 30 filed a charge with the National Labor Relations

Board (“Board”), alleging violations of the National Labor

Relations Act (“NLRA”).1 An administrative law judge was

assigned to determine whether W&M had violated § 8(a)(1),

§ 8(a)(3), or § 8(a)(5) of the NLRA by interfering with the

employees’ right to unionize, failing to hire the union

employees, and refusing to bargain with the union. W&M

argued that its refusal to hire McGoohan, Bonos, Stofko, and

Cassidy was motivated by its determination, on the basis of

subjective and objective evaluations, that those engineers

1

The General Counsel’s complaint did not name Schmitt as a

victim of anti-union discrimination, so W&M’s refusal to hire him

is not at issue in this case.

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were unsuitable for the task of maintaining First Stamford

Place according to W&M’s standards.

The administrative law judge ruled against W&M,

finding that anti-union animus motivated its hiring decisions.

W&M filed exceptions. The Board adopted most of the

administrative law judge’s findings in an order dated

September 20, 2006. As a remedy, the Board ordered W&M

to bargain with Local 30, hire and make whole McGoohan,

Bonos, Stofko, and Cassidy, and make whole other employees

aggrieved by the unilateral changes to working conditions at

First Stamford Place. W&M did not file a motion for

reconsideration with the Board, opting instead to go straight

to court. W&M petitions for review of the Board’s order and

the Board cross-applies for enforcement of its order.

II.

Before discussing the merits of W&M’s petition, we must

first address a jurisdictional bar to our consideration of one of

its arguments. Section 10 of the NLRA, which creates and

limits our jurisdiction to review the Board’s orders, provides:

“No objection that has not been urged before the Board . . .

shall be considered by the court, unless the failure or neglect

to urge such objection shall be excused because of

extraordinary circumstances.” 29 U.S.C. § 160(e); see also id.

§ 160(f) (incorporating subsection (e)’s jurisdictional

constraint). We are therefore powerless, in the absence of

“extraordinary circumstances,” to consider arguments not

made to the Board.

W&M claims for the first time in its opening brief that

the Board’s chosen remedy was unlawfully punitive. This

argument was not made to the Board and so comes too late.

See Quazite Div. of Morrison Molded Fiberglass Co. v.

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NLRB, 87 F.3d 493, 497 (D.C. Cir. 1996). If aggrieved by the

Board’s remedy, W&M should have filed a motion for

reconsideration pursuant to the Board’s rules and regulations.

See, e.g., Int’l Ladies’ Garment Workers’ Union v. Quality

Mfg. Co., 420 U.S. 276, 281 n.3 (1975); United Food &

Commercial Workers Union Local 204 v. NLRB, 506 F.3d

1078, 1087 (D.C. Cir. 2007); Cobb Mech. Contractors v.

NLRB, 295 F.3d 1370, 1377–78 (D.C. Cir. 2002); Epilepsy

Found. of Ne. Ohio v. NLRB, 268 F.3d 1095, 1101–02 (D.C.

Cir. 2001); Glaziers’ Local No. 558 v. NLRB, 408 F.2d 197,

202–03 (D.C. Cir. 1969); see also 29 C.F.R. § 102.48(d)(1)

(establishing procedures for motions for reconsideration).

Such a motion would have given the Board notice of W&M’s

objection, Local 900, Int’l Union of Elec., Radio & Mach.

Workers v. NLRB, 727 F.2d 1184, 1192 & n.8 (D.C. Cir.

1984), and an opportunity to fix its supposed mistake, see

Elastic Stop Nut Div. of Harvard Indus. v. NLRB, 921 F.2d

1275, 1284 (D.C. Cir. 1990). “[O]rderly procedure and good

administration require that objections to the proceedings of an

administrative agency be made while it has opportunity for

correction in order to raise issues reviewable by the courts.”

United States v. L.A. Tucker Truck Lines, Inc., 344 U.S. 33,

37 (1952).

By failing to file a motion for reconsideration, W&M

waived its challenge to the Board’s remedy and deprived us of

jurisdiction to consider it. Woelke & Romero Framing, Inc. v.

NLRB, 456 U.S. 645, 665–66 (1982). Contrary to W&M’s

suggestion, there are no “extraordinary circumstances”

excusing this error under § 10 of the NLRA. W&M argues

that its failure to file should be forgiven because a motion for

reconsideration would have been futile in light of the new

remedial framework announced in Planned Building Services,

Inc., 347 N.L.R.B. No. 64, 2006 WL 2206975 (2006). W&M

relies on NLRB v. FLRA, a case in which we entertained an

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argument that had not been urged before the Federal Labor

Relations Authority (“Authority”) by taking a rather broad

view of “extraordinary circumstances” in the waiver provision

of the Federal Labor Relations Act. See 2 F.3d 1190, 1195–96

(D.C. Cir. 1993) (per curiam) (construing 5 U.S.C. § 7123(c)).

W&M’s argument under NLRB v. FLRA fails.

The “extraordinary circumstances” we found in NLRB v.

FLRA consisted of the “patent futility” of filing a motion for

reconsideration in that case. Id. at 1196. The petitioner in

NLRB v. FLRA established patent futility by pointing to

instances in which the agency had already rejected its

contested argument in other proceedings. See id. By contrast,

W&M offers nothing but its own forecast regarding how the

Board might view its argument in light of the recently decided

adverse precedent in Planned Building. W&M claims that,

“[g]iven the Board’s fanfare in unveiling [a new remedial

standard] just seven weeks before the decision under review

here, it is manifestly clear it would have been a useless

exercise for W&M to seek reconsideration by the Board in

this case.” Reply Br. at 11. Such an assessment of the Board’s

likely disposition, relying on highly subjective indicia such as

“the Board’s fanfare,” is insufficient to prove patent futility

because it does not show that a motion for reconsideration

was “clearly doomed” by the agency’s rejection of identical

arguments. See Ga. State Chapter Ass’n of Civilian

Technicians v. FLRA, 184 F.3d 889, 892 (D.C. Cir. 1999). As

we have noted, “the requirement that a litigant present such a

petition is ordinarily not excused simply because the [agency]

was unlikely to have granted it.” Id. (citation and internal

quotation marks omitted). Given W&M’s failure to urge its

remedial challenge before the Board and its inability to

establish “extraordinary circumstances” justifying this

mistake, we conclude that the argument is waived and that we

therefore lack jurisdiction to consider it.

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III.

Turning to the merits that we may properly consider,

W&M levels two charges against the Board’s order: first, that

the Board impermissibly departed from precedent in

analyzing the decision not to hire TrizecHahn’s union

member employees; and second, that the findings of labor

violations lack the support of substantial evidence in the

record. “We will set aside the Board’s decision only if the

Board ‘acted arbitrarily or otherwise erred in applying

established law to the facts at issue, or if its findings are not

supported by substantial evidence.’ ” Waterbury Hotel Mgmt.,

LLC v. NLRB, 314 F.3d 645, 650 (D.C. Cir. 2003) (quoting

Plumbers & Pipe Fitters Local Union No. 32 v. NLRB, 50

F.3d 29, 32 (D.C. Cir. 1995)). Applying this deferential

standard of review, we find no fault with the Board’s

decision.

Departure From Precedent

The Board is not at liberty to ignore its prior decisions,

LeMoyne-Owen College v. NLRB, 357 F.3d 55, 60–61 (D.C.

Cir. 2004), but must instead provide a reasoned justification

for departing from precedent, Titanium Metals Corp. v.

NLRB, 392 F.3d 439, 446 (D.C. Cir. 2004). As we explained

in Greater Boston Television Corp. v. FCC, “an agency

changing its course must supply a reasoned analysis

indicating that prior policies and standards are being

deliberately changed, not casually ignored, and if an agency

glosses over or swerves from prior precedents without

discussion it may cross the line from tolerably terse to

intolerably mute.” 444 F.2d 841, 852 (D.C. Cir. 1970)

(footnotes omitted). In Planned Building Services, Inc., 347

N.L.R.B. No. 64, slip op. at 4–5 (2006), the Board departed

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from precedent regarding the standard used to evaluate

failure-to-hire claims in the successorship context. W&M

challenges the Board’s application of the new Planned

Building standard to the facts of this case, arguing that the

Board should have retained the old standard from FES (Div.

of Thermo Power), 331 N.L.R.B. 9 (2000), enforced, 301 F.3d

83 (3d Cir. 2002). Because the Board provided a reasoned

justification for its partial abandonment of FES in Planned

Building, we will not upset its new standard.

To trace the development of the failure-to-hire standard

as it applies to this successorship case, we begin with the

Board’s analysis of discriminatory-firing claims in Wright

Line, 251 N.L.R.B. 1083 (1980), enforced, 662 F.2d 899 (1st

Cir. 1981). Under Wright Line, if the General Counsel proves

that protected union conduct was a motivating factor in the

employer’s decision to terminate an employee, the burden

shifts to the employer, who must prove that it would have

made the same decision regardless of the union conduct. See

Office of Workers’ Comp. Programs v. Greenwich Collieries,

512 U.S. 267, 277–78 (1994); NLRB v. Transp. Mgmt. Corp.,

462 U.S. 393, 399–403 (1983) (citing Wright Line). In FES,

the Board adapted the Wright Line standard to the failure-to-

hire context by adding two items to the General Counsel’s

initial burden of proof: that the employer was hiring, and that

the unhired applicant had relevant experience or training for

the job. See FES, 331 N.L.R.B. at 12–13. This change ensured

that employers would only have to guard against the

discrimination claims of qualified job applicants.

The FES addendum to the Wright Line formula made

sense for most failure-to-hire claims, but not for the subset of

cases involving successor employers. In applying FES to

successorship cases, the Board came to see the pointlessness

of establishing that an employee was qualified to hold the

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same job he had performed for the predecessor employer.

Planned Building acted on this realization by removing the

FES burden from successor’s-failure-to-hire cases, in essence

treating the decision not to hire a predecessor’s employee as it

would a firing. See Planned Building, slip op. at 4–5.

The Board provided a sound rationale for this change,

explaining that elimination of the FES burden in the

successorship context promotes efficiency by removing an

extraneous analytical step. See id. at 4 (“[I]t serves no purpose

to require the General Counsel to demonstrate, in each

successorship case, that the employees have relevant

experience or training for essentially the same jobs in the

successor’s work force that they performed in the

predecessor’s work force.”). The FES elements of job

availability and applicant qualification are presumptively

satisfied in a successorship case, so the inquiry reverts to the

Wright Line analysis. See id.

W&M challenges the Board’s rationale by attacking a

Planned Building straw man. W&M argues that the

presumption that a predecessor’s employees are qualified to

work for a successor prevents a successor from choosing its

own personnel policies. This contention mistakenly assumes

that the presumption of qualification is irrebuttable. A

successor employer is well-positioned to explain to the Board

how its employment expectations differ from those of its

predecessor. Nothing in Planned Building prevents a

successor employer from making this point.

By providing a reasoned justification for its departure

from precedent, the Board avoided a finding of arbitrary and

capricious action under the Administrative Procedure Act, 5

U.S.C. § 706(2)(A). See Titanium Metals Corp. v. NLRB, 392

F.3d 439, 446 (D.C. Cir. 2004).

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Labor Violations

The Board found that W&M violated the NLRA by

interfering with the employees’ right to unionize, declining to

hire its predecessor’s employees because of their union

membership, and refusing to bargain with the union. See 29

U.S.C. § 158(a)(1), (3), (5) (proscribing such conduct). We

review the Board’s order to determine whether it enjoys the

support of substantial evidence in the record. Waterbury Hotel

Mgmt., LLC v. NLRB, 314 F.3d 645, 650 (D.C. Cir. 2003).

Our review of the Board’s factual conclusions is “highly

deferential,” Capital Cleaning Contractors, Inc. v. NLRB, 147

F.3d 999, 1004 (D.C. Cir. 1998), for we must treat the

Board’s findings of fact as “conclusive” if supported by

substantial evidence, 29 U.S.C § 160(e). We will not disturb

the Board’s “reasonably defensible” interpretation of the

facts, Traction Wholesale Ctr. Co. v. NLRB, 216 F.3d 92, 99

(D.C. Cir. 2000), regardless whether we might rule differently

de novo, Evergreen Am. Corp. v. NLRB, 362 F.3d 827, 837

(D.C. Cir. 2004). Greater still is the deference due a

credibility determination or a finding regarding motive. See

Capital Cleaning, 147 F.3d at 1004.

W&M challenges the finding that it unlawfully

interrogated Perez about his union membership. Coercive

interrogation of this sort violates § 8(a)(1) of the NLRA,

which makes it an unfair labor practice “to interfere with,

restrain, or coerce employees in the exercise of” their right to

unionize. 29 U.S.C. § 158(a)(1). The standard for unlawful

interrogation is whether an employer’s questions about union

membership “reasonably tended to interfere with, restrain, or

coerce.” Facchina Constr. Co., 343 N.L.R.B. 886, 886

(2004), enforced mem., 180 Fed. Appx. 178 (D.C. Cir. 2006).

The Board, after properly examining the “totality of the

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circumstances,” Vincent Indus. Plastics, Inc. v. NLRB, 209

F.3d 727, 737 (D.C. Cir. 2000), found that Heller’s coercive

questioning of Perez violated § 8(a)(1) of the NLRA.

Substantial evidence supports this conclusion. Testifying

before the administrative law judge, Perez described the

following interaction:

[Q:] Okay. Anything else you recall being discussed

in that meeting with Mr. Heller?

[A:] Yes. He asked me, you know, like — he also

asked me how long I was a member of Local 30.

[Q:] And what did you tell him?

[A:] I told him for almost eight years. You know, he

also asked me, you know, like, if I was to get laid

off, like, if the Union would get me another job.

Questions about union membership have a tendency to

coerce. See Allegheny Ludlum Corp. v. NLRB, 104 F.3d 1354,

1359 (D.C. Cir. 1997). This is especially so where the

questioning occurs behind closed doors and is initiated by a

company official, as it was in this case. See Timsco Inc. v.

NLRB, 819 F.2d 1173, 1178 (D.C. Cir. 1987); Perdue Farms,

Inc., Cookin’ Good Div. v. NLRB, 144 F.3d 830, 835–36

(D.C. Cir. 1998). A reasonable jury viewing this record could

have found W&M’s questioning to violate § 8(a)(1) of the

NLRA, so we conclude that substantial evidence supports the

Board’s finding to that effect. See Allentown Mack Sales &

Serv., Inc. v. NLRB, 522 U.S. 359, 366–67 (1998).

W&M also challenges the finding that it discriminatorily

refused to hire TrizecHahn’s unionized employees, in

violation of § 8(a)(3) of the NLRA, 29 U.S.C. § 158(a)(3).

The Board’s finding to this effect is built upon two

propositions, each of which finds support in the record. First

is the proposition that W&M harbored anti-union animus

12

against the TrizecHahn engineers. Gerrit Blauvelt, W&M’s

Director of Property Management, told one job applicant that

W&M would never recognize Local 30 because the owners

did not want a unionized workforce at First Stamford Place,

and told another that “if anyone was going to work for W&M

that it would have to be non-Union.” The second proposition

is that W&M’s excuse for not hiring the TrizecHahn

engineers was a pretext for anti-union animus. W&M claimed

that its decision not to hire McGoohan, Bonos, Stofko, and

Cassidy was based on its walking tours, which showed First

Stamford Place to be in disrepair; on its neutral and objective

hiring criteria; and on its interviews, which revealed certain

employees to be unsatisfactory. The Board reasonably

discredited the disrepair argument because W&M made no

effort to attribute the problems found to the employees not

hired, and in fact showed an interest in hiring Joe Morra

despite his responsibility, as Property Manager, for the poor

condition of First Stamford Place. The Board inferred from

the hiring of Benitez and outside applicant Adalberto Sotillo,

both of whom lacked relevant experience, and from the failure

to hire more qualified and better trained employees, that

W&M’s alleged criteria were illusory. Finally, the Board

discredited W&M officials’ claims that subjective but neutral

observations from the interviews supported the decision not to

hire. Substantial evidence supports the finding of a violation

of § 8(a)(3) of the NLRA because, taken together, these items

from the record are enough to persuade a reasonable jury that

protected union conduct was a motivating factor in W&M’s

decisionmaking process, and that it failed to establish an

affirmative defense under Wright Line and Planned Building.

See Allentown Mack, 522 U.S. at 366–67.

Finally, the Board found that W&M’s objection to the

administrative law judge’s conclusion on the § 8(a)(5) refusal-

to-bargain charge depended on its contention that the

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§ 8(a)(3) finding was erroneous. Having properly rejected

W&M’s challenges to the § 8(a)(3) finding, the Board

reasonably found no merit in W&M’s exceptions to the

administrative law judge’s findings on the § 8(a)(5) charge.

IV.

For the reasons set forth in this opinion, we deny W&M’s

petition for review and grant the Board’s cross-application to

enforce its order.

So ordered.