Alden Leeds, Inc. v. National Labor Relations Board

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued September 18, 2015 Decided February 5, 2016

No. 11-1267

ALDEN LEEDS, INC.,

PETITIONER

v.

NATIONAL LABOR RELATIONS BOARD,

RESPONDENT

UNITED FOOD AND COMMERCIAL WORKERS LOCAL 1245,

INTERVENOR

Consolidated with 11-1296

On Petition for Review and Cross-Application

for Enforcement of an Order of

the National Labor Relations Board

Joseph B. Fiorenzo argued the cause and filed the briefs

for petitioner.

Jeffrey W. Burritt, Attorney, National Labor Relations

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

brief were John H. Ferguson, Associate General Counsel,

Linda Dreeben, Deputy Associate General Counsel, and

Robert J. Englehart, Supervisory Attorney.

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Patricia McConnell and Jessica D. Ochs were on the

brief for intervenor United Food and Commercial Workers

Local 1245 in support of respondent.

Before: TATEL, Circuit Judge, and EDWARDS and

GINSBURG, Senior Circuit Judges.

Opinion for the Court filed by Senior Circuit Judge

EDWARDS.

EDWARDS, Senior Circuit Judge: Petitioner Alden Leeds,

Inc. (“Alden Leeds” or “the Company”), seeks review of a

Decision and Order issued by the National Labor Relations

Board (“NLRB” or “the Board”) on July 19, 2011. The Board

has filed a cross-application for enforcement. The United

Food and Commercial Workers Union Local 1245 (“the

Union”), the charging party before the Board, has intervened

in support of the Board.

The Board found that Alden Leeds had violated Sections

8(a)(1) and (3) of the National Labor Relations Act (“NLRA”

or “the Act”), 29 U.S.C. § 158(a)(1), (3), by locking out its

employees on November 3, 2009, without providing the

employees with a timely, clear, and complete offer setting

forth the conditions necessary to avoid the lockout. Alden

Leeds, Inc., 357 N.L.R.B. No. 20 (July 19, 2011). Alden

Leeds claims that substantial evidence in the record does not

support the Board’s finding that the Company committed the

cited unfair labor practices. Alden Leeds also argues that,

even if the lockout was unlawful, the Board erred in declining

to allow the Company to attempt to establish in a separate

compliance proceeding that its backpay liability ended on

November 9, 2009.

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We hold that, on the record before us, there is substantial

evidence to support the Board’s finding that Alden Leeds

violated the Act by locking out its employees on November 3,

2009. Therefore, we deny the Company’s petition for review

on this issue and grant the Board’s cross-application for

enforcement.

We have no jurisdiction to consider the Company’s claim

that the Board erred in precluding it from litigating its

backpay liability in a compliance proceeding. Alden Leeds

failed to raise this issue before the Board in the first instance,

as required by Section 10(e) of the Act. See 29 U.S.C. §

160(e) (“No objection that has not been urged before the

Board, its member, agent, or agency, shall be considered by

the court, unless the failure or neglect to urge such objection

shall be excused because of extraordinary circumstances.”).

There are no “extraordinary circumstances” here which give

the court jurisdiction to address this matter.

I. BACKGROUND

Petitioner Alden Leeds manufactures and packages

swimming pool cleaning supplies and chemicals at two

locations in New Jersey. The Company employs

approximately fifty production and delivery employees, who

have been represented by the Union since 2001. In September

2009, Alden Leeds and the Union commenced negotiations on

a new contract to succeed their 2005 collective bargaining

agreement, which was set to expire on October 3, 2009. The

Union sought increases in wages, sick days, and vacation

days; changes in seniority; and a three-year agreement. The

main sticking point between the parties was health care.

Premiums were set to increase under the existing health care

plan, and the Company and Union disagreed over how to

apportion the increases.

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The parties’ first bargaining session was on September

30, 2009. At that meeting, Tom Cunningham, the Union’s

business agent, went through the Union’s proposals and

explained that the Union was seeking to keep its existing

health care plan, which would necessitate increased

contributions from the Company. Mark Epstein, the

Company’s president and chief executive officer, informed

Cunningham that the Company was not going to agree to the

health care contribution increases the Union was seeking.

Nonetheless, Epstein told Cunningham that he was going to

explore alternative health care plans with the Company’s

insurance broker.

The next meeting between the parties took place on

October 5. Epstein provided Cunningham with descriptions of

several alternative health care plans that had been prepared by

the Company’s broker. Cunningham stated that the plans

would not work for the Union employees, as the deductibles

and out-of-pocket costs were very high. Epstein responded

that the Company’s broker would look into other health care

plans that might be more affordable for the employees.

Cunningham then attempted to discuss the Union’s other

contract proposals, but Epstein interjected that he “couldn’t

do anything” with the other proposals, and that all the

Company wanted was “a freeze for one year.” Alden Leeds,

Inc., 357 N.L.R.B. No. 20, at 3. Cunningham responded that

the Union would not agree to such a deal because the

Company’s current health care contributions would not

sustain medical coverage for the year. Epstein repeated that he

would furnish Union officials with additional health care

plans for their consideration.

On October 8, the Company and the Union met again. At

this meeting, Epstein stated that he was still trying to obtain

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some additional health care plan proposals to provide the

Union. Epstein also repeated that the Company wanted to

extend the current contract for one year with a one-year

“freeze.” Id. at 4. However, Epstein informed the Union that

he expected to have information on some additional health

care plans by the next week. The parties signed an agreement

at their October 8 meeting extending the 2005 collective

bargaining agreement until November 2.

On October 21, Epstein emailed Cunningham an

additional health care plan for the Union to review. Epstein

also indicated that he “hoped to have something even better”

and that he would advise the Union if anything came through.

Id. at 5. The next day, on October 22, Epstein emailed

Cunningham an analysis of the health care plan that the

Company had provided to the Union the day before. Epstein

explained that the cost of the plan would be more expensive

than the existing plan, but less expensive than the Union’s

proposed renewal. Alternatively, Epstein suggested that if the

Company provided employee-only coverage and eliminated

family coverage, the cost would drop below the existing plan

and the company could pay $400 towards each employee’s

deductible. Epstein ended his email by reiterating that he

hoped to have something better later that day and, if so, he

would forward it to the Union.

Later on October 22, Epstein emailed Cunningham yet

another health care plan. He explained that, although the cost

was similar to the plan that he had provided the day before

and the deductible was higher, employees would not be

required to provide their medical histories in order to secure

coverage. Cunningham showed these plans to the Union’s

secretary treasurer, John Troccoli. Cunningham told Troccoli

that he was not really sure what the Company was proposing

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on health care and that the Company had made no proposal

dealing with the Union’s other issues.

On October 30, Troccoli telephoned Epstein and

informed him that the Union did not think any of the

Company’s proposed health care plans would work because

the deductibles were too high, medical reviews were required,

and the cost to employees would be too high. As a

concession, the Union offered the Company a continuation of

the existing health care plan for one year at the same

contribution levels. Troccoli requested that the parties go

forward and discuss the other outstanding issues. Epstein

replied, “You don’t understand. I just want to keep everything

the same. I don’t want to pay anything more. . . . I want to

keep everything the same for one year.” Id. at 6 (ellipsis in

original). Troccoli responded that the Union was willing to do

that with health care, but wanted to discuss the other

outstanding issues. Epstein repeated that he wanted to keep

everything the same for one year, and that the Union

employees were supposed to vote on the Company’s offer.

Troccoli responded, “Vote on what? I have no idea what

we’re voting on.” Id. Epstein stated that if the employees did

not vote and agree to the Company’s offer, the employees

would be locked out. Troccoli repeated that he did not know

what the Union employees were supposed to be voting on.

Epstein replied that the Union would have something by the

end of the day.

Later that day, Epstein sent an email to the Union, which

stated:

During the 30 days since the Agreement between the

parties expired we at the Company have tried our best to

come up with an alternative medical plan that would cost

the same or less than the proposed increase for the Union

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plan. Our best efforts resulted in a plan that 1) requires

medical interview for coverage 2) does not include dental

3) does not include optical 4) did not cost less than the

expiring plan. However if we were to eliminate the

family coverage and go to single coverage for all Union

members then this plan would cost less than the expiring

Union plan. There would be enough of a savings that the

Company would provide $400 to each member to go

toward their deductibles. . . . If we have no Agreement

between the parties by the close of business on Monday

then the Company will lock out the Union members on

Tuesday morning Nov 3, 2009.

Id. Union officials made no effort to contact Epstein regarding

his email. At 4 p.m. on November 2, Epstein informed the

Union that, effective immediately, the employees were locked

out. On November 3, the Union employees attempted to

punch in at work but were prevented from doing so by the

Company.

The parties met on November 3, 4, and 9. At the meeting

on November 9, the Company presented the Union with a

document entitled “Final Offer.” Id. at 8. In its “Final Offer,”

the Company specified the health care plan that would be

provided to employees and the contribution rates for both

employees and the Company. The “Final Offer” further stated

that all other terms of the 2005 collective bargaining

agreement would remain in full force and effect. On

November 12, the Union rejected the Company’s “Final

Offer.”

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II. THE PROCEEDINGS BEFORE THE BOARD

The Union filed unfair labor practice charges against the

Company. Thereafter, the Board’s Regional Director issued a

complaint and notice of hearing, alleging, inter alia, that

Alden Leeds violated Sections 8(a)(1), (3), and (5) of the Act

by unlawfully locking out its employees. On August 30, 2010,

following a hearing, an Administrative Law Judge (“ALJ”)

concluded that Alden Leeds had violated Sections 8(a)(1) and

(3) of the Act by locking out its employees on November 3,

2009, without providing its employees with a timely, clear,

and complete offer setting forth the conditions necessary to

avoid the lockout. Alden Leeds, Inc., 357 N.L.R.B. No. 20, at

10-13. The ALJ noted that the Company’s October 30 email

purporting to detail the terms of its offer was confusing,

incomplete, and internally inconsistent, and that both

Cunningham and Troccoli were confused about which health

care plan, if any, the Company was proposing. Id. at 11. The

ALJ found that the Company first submitted a complete

proposal to the Union on November 9, 2009. Id. at 12. The

ALJ found, however, that this proposal did not cure the

Company’s failure to provide a complete proposal prior to the

lockout, and that the lockout, unlawful at its inception,

retained its initial taint of illegality until it was terminated and

the affected employees were made whole. Id. The ALJ

recommended that the Company should cease and desist from

illegally locking out its employees, reinstate the unlawfully

locked out employees, and provide the unlawfully locked out

employees full backpay. Id. at 13.

On July 19, 2011, the Board substantially adopted the

ALJ’s findings and his recommended order. Id. at 1. The

Board added the following explanation to its judgment:

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We agree with the [ALJ], for the reasons he states,

that the lockout’s initial illegality was not cured when the

Respondent provided the Union with a complete contract

proposal on November 9, 2009, almost 1 week after the

lockout began. The [ALJ] specifically so found and the

[Company] has not argued in its exceptions or brief in

support that the judge erred in so finding. Moreover, it is

well established that “a lockout unlawful at its inception

retains its initial taint of illegality until it is terminated

and the affected employees are made whole.” Movers and

Warehousemen’s Assn. of Washington DC, 224 NLRB

356, 357 (1976), enfd. 550 F.2d 962 (4th Cir. 1977), cert.

denied 434 U.S. 826 (1977). The Board further held in its

decision on the merits in Movers, “the burden must be on

Respondent to show that its failure to restore the status

quo ante had no adverse impact on the subsequent

collective bargaining,” and that “no such showing has

been made.” Id. at 358. Here, the [ALJ] did not find that

the [Company] has carried its burden in this regard and

the [Company] did not except to the absence of such a

finding. In these circumstances, further litigation of this

matter at compliance is unwarranted.

Id. at 1 n.3. One member of the Board indicated that he would

have allowed the Company to litigate its backpay liability at a

compliance proceeding even though Alden Leeds had failed

to raise a specific exception to the ALJ’s decision on this

point. Id.

Alden Leeds now petitions for review of the Board’s

Decision and Order. Specifically, Alden Leeds raises two

challenges. First, Alden Leeds argues that the Board erred in

adopting the ALJ’s finding that the Company violated the Act

by failing to provide the Union with a timely, clear, and

complete offer setting forth the conditions necessary to avoid

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the lockout. Second, Alden Leeds contends that the Board

erred in concluding that further litigation of the Company’s

backpay liability in a compliance proceeding was

unwarranted.

III. DEFERENCE DUE TO THE BOARD’S FINDINGS

It is well established that this court “accords a very high

degree of deference to administrative adjudications by the

NLRB.” Bally’s Park Place, Inc. v. NLRB, 646 F.3d 929, 935

(D.C. Cir. 2011) (citation omitted). We review the Board’s

findings of fact for substantial evidence, which “gives the

agency the benefit of the doubt, since it requires not the

degree of evidence which satisfies the court that the requisite

fact exists, but merely the degree which could satisfy a

reasonable factfinder.” Allentown Mack Sales & Serv., Inc. v.

NLRB, 522 U.S. 359, 377 (1998). Credibility determinations

made by the ALJ, as adopted by the Board, are accepted

unless they are patently insupportable. NLRB v. Creative

Food Design Ltd., 852 F.2d 1295, 1297 (D.C. Cir. 1988).

Furthermore, “[w]hen the Board concludes that a violation of

the NLRA has occurred, we must uphold that finding unless it

has no rational basis or is unsupported by substantial

evidence.” Bally’s, 646 F.3d at 935 (citation omitted).

“Indeed, the Board is to be reversed only when the record is

so compelling that no reasonable factfinder could fail to find

to the contrary.” Id. (citation omitted).

Section 8(a)(3) of the NLRA makes it an unfair labor

practice for an employer “by discrimination in regard to hire

or tenure of employment or any term or condition of

employment to encourage or discourage membership in any

labor organization.” 29 U.S.C. § 158(a)(3). Such conduct also

violates Section 8(a)(1) of the Act, id. § 158(a)(1), which

makes it an unfair labor practice “to interfere with, restrain, or

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coerce employees in the exercise of rights guaranteed” in the

Act. Laro Maint. Corp. v. NLRB, 56 F.3d 224, 227 n.3 (D.C.

Cir. 1995). An employer may, however, lawfully lock out its

employees for “the sole purpose of bringing economic

pressure to bear in support of [its] legitimate bargaining

position.” Am. Ship Bldg. Co. v. NLRB, 380 U.S. 300, 318

(1965). In order for such a lockout to be lawful, the employer

must inform the union in a clear and timely manner of its

demands so that the union has a fair opportunity to evaluate

whether to accept the employer’s proposal and avoid a

lockout. Dayton Newspapers, Inc., 339 N.L.R.B. 650, 656

(2003), enforced in relevant part 402 F.3d 651 (6th Cir.

2005); see also Dietrich Indus., Inc., 353 N.L.R.B. 57, 60

(2008).

Alden Leeds argues that its October 30, 2009, email was

clear, and that the record is replete with evidence that the

Company’s negotiating position remained unchanged

throughout the entire period leading up to, and including, the

lockout. According to Alden Leeds, the record demonstrates

that the Union knew and understood that the Company was

offering a one-year freeze on all terms of the existing

agreement, including the cost of employee health care. On

this view of the record, the Company argues that the Board

had no grounds to support its determination that Alden Leeds

violated the Act. We disagree.

Reviewing the record as a whole, it is clear that the

Board’s judgment in this case is supported by substantial

evidence. In considering the Company’s October 30, 2009,

email to the Union – the last communication sent from the

Company to the Union before the lockout – a reasonable

factfinder could conclude that the Company’s proposal to the

Union regarding health care was unclear. See Allentown Mack

Sales, 522 U.S. at 377. The email fails to illuminate whether

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the Company was proposing any or all of its various

alternative health care plans, which differed from the existing

health care plan under the 2005 collective bargaining

agreement. Furthermore, the ALJ credited the testimony of

both Cunningham and Troccoli that the Union was confused

about which health care plan, if any, the Company was

proposing in its October 30 email. We must accept these

credibility determinations, as nothing in the record suggests

that they are “patently insupportable.” See Creative Food

Design, 852 F.2d at 1297.

Although Alden Leeds argues that the record contains

evidence that is contrary to the Board’s findings and supports

its position, “[t]he question before us is not whether

substantial evidence supports the [Company’s] view, but

whether it supports the Board’s.” Wayneview Care Ctr. v.

NLRB, 664 F.3d 341, 352 (D.C. Cir. 2011). The Board’s

judgment in this case easily commands the deference of this

court under the controlling standards of review.

IV. THE SECTION 10(E) ISSUE

“[A] lockout unlawful at its inception retains its initial

taint of illegality until it is terminated and the affected

employees are made whole.” Movers & Warehousemen’s

Ass’n of Metro. Wash., D.C., Inc., 224 N.L.R.B. 356, 357

(1976), enforced 550 F.2d 962 (4th Cir. 1977). In other

words, to cure a lockout, the employer must restore the status

quo ante as well as end the lockout. See Greensburg Coca-

Cola Bottling Co., 311 N.L.R.B. 1022, 1029 (1993),

enforcement denied on other grounds, 40 F.3d 669 (3d Cir.

1994). Nevertheless, “an employer can avoid further liability

if it is able to show affirmatively that a failure to restore the

status quo ante did not adversely affect subsequent

bargaining.” Id.

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Alden Leeds contends that the Board erred in refusing to

permit the Company to litigate the scope of its backpay

liability in a compliance proceeding. In particular, the

Company argues that it should be afforded an opportunity to

establish in a compliance proceeding that its backpay liability

ended on November 9. We lack jurisdiction to consider this

challenge, however, because Alden Leeds failed to raise this

claim with the Board, as required by the Act.

Section 10(e) of the NLRA provides that “[n]o objection

that has not been urged before the Board, its member, agent,

or agency, 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). The

Board’s regulation interpreting this provision requires parties

to “set forth specifically the questions of procedure, fact, law,

or policy to which exception is taken” and “concisely state the

grounds for the exception.” 29 C.F.R. § 102.46(b)(1); see also

id. § 102.46(b)(2) (“Any exception to a ruling, finding,

conclusion, or recommendation which is not specifically

urged shall be deemed to have been waived.”). “And it is long

established that where a petitioner objects to a finding on an

issue first raised in the Board’s decision, a petitioner must file

for reconsideration to afford the Board an opportunity to

correct the error, if any.” Nova Se. Univ. v. NLRB, 807 F.3d

308, 313 (D.C. Cir. 2015) (citing Woelke & Romero Framing,

Inc. v. NLRB, 456 U.S. 645, 666 (1982)).

It is undisputed that Alden Leeds failed to raise its claim

with the Board as required by Section 10(e) of the Act. Once

the ALJ found that the Company’s November 9, 2009, offer

did not cure the lockout, and instead found that the lockout

retained its initial taint of illegality until the Company

terminated the lockout and made its employees whole, Alden

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Leeds was obligated to challenge that finding in its exceptions

to the Board in order to preserve the issue for judicial review.

See Nova Se. Univ., 807 F.3d at 313 (dismissing challenge

under Section 10(e) where petitioner failed to file proper

exception); Spectrum Health-Kent Cmty. Campus v. NLRB,

647 F.3d 341, 348-50 (D.C. Cir. 2011) (same). But as the

Board found and the Company concedes, Alden Leeds failed

to raise and preserve its objection. See Alden Leeds, Inc., 357

N.L.R.B. No. 20, at 1 n.3; Br. of Petitioner at 50 (“The

question of the scope of the Company’s backpay liability . . .

was not the subject of a specific exception made to the NLRB

below.”). Accordingly, we lack jurisdiction under Section

10(e) to consider the Company’s challenge.

In an attempt to escape this conclusion, Alden Leeds

presses several arguments, none of which is persuasive. First,

the Company contends that under Greensburg Coca-Cola

Bottling Co., 311 N.L.R.B. 1022 (1993), cited by the

dissenting Board member, the scope of the Company’s

backpay liability should be reserved for the compliance stage

of the Board’s proceedings, despite the fact that Alden Leeds

did not raise this issue before the Board during the unfair

labor practice proceedings. See Br. of Petitioner at 47-52. But

as the majority of the Board correctly pointed out,

Greensburg Coca-Cola does not support the Company’s

position. In Greensburg Coca-Cola, the ALJ explicitly

deferred the backpay issue of whether the lockout was cured

or retained its initial taint of illegality to a future compliance

proceeding, 311 N.L.R.B. at 1028-29, and neither party filed

an exception to that portion of the ALJ’s decision. Thus, the

jurisdictional bar of Section 10(e) was not at issue. In the

present case, in contrast, the ALJ explicitly ruled that the

lockout was not cured and retained its initial taint of illegality

until the Union’s employees were made whole, but Alden

Leeds never objected to this finding. Greensburg Coca-Cola

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thus presents no justification to disturb the application of

Section 10(e)’s jurisdictional bar in the present case.

Second, relying on Trump Plaza Associates v. NLRB, 679

F.3d 822 (D.C. Cir. 2012), Alden Leeds argues that the

jurisdictional bar of Section 10(e) does not apply in this case

because the Board was “sufficiently appraised” of the issue

that Alden Leeds now seeks to raise. Therefore, according to

the Company, it would have been an “empty formality” to

raise the matter with the Board in the first instance. Reply Br.

of Petitioner at 22-24. We reject this argument.

In Trump Plaza, the court found that the substance of the

petitioner’s challenge was encompassed in its other

exceptions filed with the Board. Therefore, the court

determined that Section 10(e) was not a bar to the petitioner’s

challenge, despite the petitioner’s failure to specifically object

before the Board. Trump Plaza, 679 F.3d at 830. Unlike in

Trump Plaza, Alden Leeds never put before the Board, in any

manner, the argument that it now advances – that Alden

Leeds should be able to contest the scope of its backpay

liability at a compliance proceeding. Not only did Alden

Leeds fail to make this argument in a specific exception filed

before the Board, but none of the other exceptions filed by

Alden Leeds encompassed the substance of this challenge.

Indeed, Alden Leeds has never even argued that its other

exceptions encompassed its backpay challenge. Trump Plaza

therefore provides the Company with no relief. See id.; see

also Parsippany Hotel Mgmt. Co. v. NLRB, 99 F.3d 413, 417-

18 (D.C. Cir. 1996) (finding vague exception insufficient to

provide Board with required notice of ground for petitioner’s

challenge).

Finally, Alden Leeds argues that Section 10(e) should not

apply in this case because the Board discussed the backpay

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issue on its own initiative, the issue has been briefed by the

parties, and the issue involves an undecided question of law.

See Br. of Petitioner at 51-52. These points cannot carry the

day. The Company attempts to frame these circumstances as

“extraordinary,” sufficient to confer jurisdiction on the court

to address the issue. See Reply Br. at 24-28. The Company’s

position, however, finds no support in the law. “[S]ection

10(e) bars review of any issue not presented to the Board,

even where the Board has discussed and decided the issue.”

HealthBridge Mgmt., LLC v. NLRB, 798 F.3d 1059, 1069

(D.C. Cir. 2015) (quoting Alwin Mfg. Co. v. NLRB, 192 F.3d

133, 143 (D.C. Cir. 1999)). Furthermore, Section 10(e)

applies “regardless of whether the questions raised be

considered questions of law, questions of fact, or mixed

questions of fact and law.” P.R. Drydock & Marine

Terminals, Inc. v. NLRB, 284 F.2d 212, 215-16 (D.C. Cir.

1960).

V. CONCLUSION

For the reasons set forth above, we hereby deny the

petition for review and grant the cross-petition for

enforcement.

So ordered.