Opinion

HTH Corp. v. National Labor Relations Board

823 F.3d 668
422 U.S. App. D.C. 352
206 L.R.R.M. (BNA) 3302
2016 U.S. App. LEXIS 9226

Court: Court of Appeals for the D.C. Circuit
Filed: May 20, 2016
Status: Published
On the bench: Henderson, Rogers, Williams
Cited by: 27 cases
Authority: More cited than 43.5%

“[A] motion for reconsideration is patently futile where the agency had previously rejected the very argument made by petitioner.”

How later courts described this case

“[A] motion for reconsideration is patently futile where the agency had previously rejected the very argument made by petitioner.”
noting that Curaleaf did not challenge the other three violations
panel however, Scomas had not sufficiently raised the notice issue in its exceptions to the ALJ’s decision. Id. 12 cannot “overrule or supersede a prior panel’s decision” (internal quotation omitted)
“[A] party may not rely on arguments raised in a dissent [from the Board’s decision] or on a discussion of the relevant issues by the majority to overcome the § 10(e) bar; the Act requires the party to raise its challenges itself.”

Written by the judges who cited it.

The opinion

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued February 9, 2016 Decided May 20, 2016

No. 14-1222

HTH CORPORATION, ET AL.,

PETITIONERS

NATIONAL LABOR RELATIONS BOARD,

RESPONDENT

Consolidated with 14-1283

On Petition for Review and Cross-Application

for Enforcement of an Order of

the National Labor Relations Board

Richard M. Rand argued the cause and filed the briefs for

petitioners. Peter J. Petesch and Megumi Sakae entered

appearances.

Barbara A. Sheehy, Attorney, National Labor Relations

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

were Richard F. Griffin, Jr., General Counsel, John H.

Ferguson, Associate General Counsel, Linda Dreeben, Deputy

Associate General Counsel, and Usha Dheenan, Supervisory

Attorney.

Before: HENDERSON and ROGERS, Circuit Judges, and

WILLIAMS, Senior Circuit Judge.

Opinion for the Court filed by Senior Circuit Judge

WILLIAMS.

Opinion concurring in part and concurring in the

judgment filed by Circuit Judge HENDERSON.

Opinion concurring in part and concurring in the

judgment filed by Circuit Judge ROGERS.

WILLIAMS, Senior Circuit Judge: The National Labor

Relations Board determined that petitioners HTH Corporation

and various affiliates (collectively “HTH” or the “company”)

committed a host of severe and pervasive unfair labor

practices, a finding that HTH does not here dispute. HTH

does, however, petition for review of five extraordinary

remedies imposed by the Board, three of them adopted by the

Board sua sponte and two of them recommended by the

administrative law judge but then modified by the Board. The

company petitions for review of these new and modified

remedies and the Board cross-applies for enforcement of its

Order. Because the company failed to file a motion for

reconsideration with the Board, we lack jurisdiction to

consider the company’s objections to all but two of the

challenged remedies. As to those two, we uphold one (notice-

reading) and vacate the other (attorney’s fees).

* * *

The company, which operates the Pacific Beach Hotel in

Honolulu, is no stranger to the Board or to the judicial system.

Time and time again, the Board and the courts have concluded

that the company violated the law in its dealings with the

International Longshore and Warehouse Union, Local 142. A

brief overview of the prior violations will provide context for

the imposition of extraordinary remedies in this case.

Starting as early as 2002, the company unlawfully

interfered with a representation election, HTH Corp., 342

N.L.R.B. 372, 374 (2004), and then with an election held to

replace that election, Pacific Beach Corp., 344 N.L.R.B. 1160,

1163 (2005). The union prevailed in the latter and was duly

certified. There followed various efforts to derail the union

and two sets of unfair labor practice charges. The first set led

to a Board order, HTH Corp., 356 N.L.R.B. 1397 (2011),

enforced, 693 F.3d 1051 (9th Cir. 2012), and to a court

injunction under § 10(j) of the National Labor Relations Act,

Norelli v. HTH Corp., 699 F. Supp. 2d 1176 (D. Haw. 2010),

aff’d sub nom. Frankl v. HTH Corp., 650 F.3d 1334 (9th Cir.

2011). The company violated that injunction, leading to

compensatory contempt citations against it and its Regional

Vice President, Robert Minicola. Frankl v. HTH Corp., 832 F.

Supp. 2d 1179 (D. Haw. 2011).

The second set of charges ultimately resulted in the

extraordinary remedies contested here. In September 2011 an

administrative law judge determined that the company had

violated the Act by disciplining and firing a union activist

named Rhandy Villanueva (who had been unlawfully fired

once before), unilaterally increasing housekeepers’ workloads,

unreasonably withholding information from the union,

surveilling union activities, banning two union representatives

from the hotel and then announcing the ban to employees,

threatening to remove a union agent who was distributing

union literature from a public sidewalk, and halting its

matching contributions to employees’ 401(k) plans. HTH

Corp., 2011 WL 4073681 (Sept. 13, 2011). Several of these

actions, including Villanueva’s second termination, were in

violation of the § 10(j) injunction and formed the basis of the

district court’s later imposition of contempt sanctions. See

Frankl, 832 F. Supp. 2d at 1187-1203, 1206-13, 1216-17. The

ALJ recommended a set of remedies, only two of which are

relevant for our purposes: requirements of (1) notice-posting

and (2) notice-reading.

The ALJ’s proposed notice-reading remedy required

either the company’s CEO and its President, or Minicola (the

Regional Vice President), to read to employees a “notice”

drafted by the Board. In the “notice” the officials are to say

that “we” have violated the National Labor Relations Act and

the employees’ rights and to state 15 specific assurances in the

form, “We will” adhere to specified NLRA obligations and

remedy various breaches, or “We will not” violate the Act in a

wide range of specified ways.

The company filed various exceptions to the ALJ’s

decision. Only one is relevant here—an objection to the

notice-reading remedy on the ground that extraordinary

remedies were unwarranted because there had been no

showing that traditional remedies were insufficient to cure the

company’s unfair labor practices. The company didn’t object

to the ALJ’s notice-posting remedy.

In October 2014 the Board issued the Order on appeal

here. HTH Corp., 361 N.L.R.B. No. 65, 2014 WL 5426174

(Oct. 24, 2014). The Board agreed with the ALJ that the

company had committed each of the alleged violations but

found the ALJ’s recommended remedies insufficient.

Accordingly, it sua sponte ramped up the notice-posting and

notice-reading requirements and imposed three additional

extraordinary remedies.

We need not detail the Board’s expansions of the notice-

posting requirement as (for reasons soon to be developed) the

company’s objections to them are barred by § 10(e) of the Act.

As to the notice-reading remedy, the Board decreased the

burden in one respect and increased it in others. It mitigated

the order by allowing the company to have a Board agent read

the notice rather than requiring that Minicola or the CEO and

President do so. It toughened the remedy by (1) removing the

option of having the CEO and President read the notice (i.e., if

a company manager is going to fulfill this obligation, it must

be Minicola); (2) requiring that an Explanation of Rights be

read at the notice-reading event; (3) requiring that all company

supervisors and managers attend the reading; and (4)

specifying that a union representative be allowed to be present.

The new Board remedies, not rooted in the ALJ’s report,

consisted of (1) awarding litigation expenses to the General

Counsel and the union; (2) awarding bargaining and other

expenses to the union; and (3) subjecting the company for

three years to Board “visitation” throughout company

premises and files to assess compliance with the Board’s more

conventional orders. The Board tripled the length of the

“notice” to be read aloud by including, among other things,

assurances that “We will” implement each of the Board’s

remedial requirements. (The company points to a fourth new

remedy—requiring publication of the notice and the

Explanation of Rights in two local publications—but we think

the publication requirement is classified more appropriately as

an expansion of the notice-posting remedy. The classification

has no effect on the preclusion of the company’s challenge, as

it failed to object on this score to the ALJ’s order or to seek

reconsideration of the Board’s.)

Two members of the Board, Members Miscimarra and

Johnson, dissented.

The company didn’t file a motion for reconsideration with

the Board, opting instead to go directly to this court. On

appeal the company challenges only the three new remedies

added by the Board and the expansions of the ALJ’s notice-

posting and notice-reading remedies.

* * *

We lack jurisdiction to consider most of the company’s

objections because they were never raised before the Board.

Section 10(e) of the Act provides that “[n]o 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 Woelke & Romero Framing, Inc. v.

NLRB, 456 U.S. 645, 665-66 (1982) (the § 10(e) bar is

jurisdictional). The company’s failure to file a motion for

reconsideration bars all its challenges except, for reasons we’ll

explain, its objections to the Board’s award of litigation

expenses and aspects of its challenge to the notice-reading

remedy.

The company raises several arguments in an attempt to

salvage its barred claims. First, the company argues that the

dissents by Members Miscimarra and Johnson offered the

Board an opportunity to confront objections to its Order, and

that the majority’s rejection of the dissenters’ points suggests

that moving for reconsideration would have been futile. But a

party may not rely on arguments raised in a dissent or on a

discussion of the relevant issues by the majority to overcome

the § 10(e) bar; the Act requires the party to raise its

challenges itself. See Contractors’ Labor Pool, Inc. v. NLRB,

323 F.3d 1051, 1061 (D.C. Cir. 2003); Local 900, Int’l Union

of Elec., Radio and Mach. Workers v. NLRB, 727 F.2d 1184,

1191-92 (D.C. Cir. 1984).

Next, the company argues that the challenged remedies

are patently ultra vires and meet § 10(e)’s “extraordinary

circumstances” exception. The company is right that we could

review a remedy that is patently ultra vires. Alwin Mfg. Co. v.

NLRB, 192 F.3d 133, 143 n.13 (D.C. Cir. 1999). But the

Board’s remedial authority is broad, see, e.g., United Food &

Commercial Workers Union Local 204 v. NLRB, 447 F.3d

821, 827 (D.C. Cir. 2006), and that authority was not patently

exceeded under our precedents, particularly considering the

company’s history of severe and pervasive unfair labor

practices. Nor does the mere fact that the Board acted sua

sponte constitute an “extraordinary circumstance”; the

company was required to file a motion for reconsideration to

preserve its challenges. See NLRB v. FLRA, 2 F.3d 1190,

1195 (D.C. Cir. 1993).

Finally, the company argues that its exceptions to the

ALJ’s decision sufficed to preserve its challenges even to

remedies or requirements that the Board imposed sua sponte.

But an exception, no matter how broadly formulated, cannot

preserve an objection to something that the ALJ never

imposed. See NLRB v. Sambo’s Rest., Inc., 641 F.2d 794, 796

(9th Cir. 1981); NLRB v. St. Regis Paper Co., 674 F.2d 104,

108 n.4 (1st Cir. 1982). Cf. Quazite Div. of Morrison Molded

Fiberglass Co. v. NLRB, 87 F.3d 493, 497 (D.C. Cir. 1996)

(“A categorical denial does not place the Board on notice that

its particular choice of remedy is under attack[.]”).

The company did, however, argue before the Board that

the notice-reading remedy was extraordinary and that

extraordinary remedies were unwarranted because there had

been no showing that traditional remedies were insufficient to

address the unfair labor practices. Although the objection did

not specify the attributes of the notice-reading remedy that

called for special judicial concern (see below), we have held

that “when the issues implicated by an imprecisely drafted

objection are made evident by the context in which it is

raised,” § 10(e) is not a bar. Consol. Freightways v. NLRB,

669 F.2d 790, 794 (D.C. Cir. 1981). Indeed, the Board does

not dispute that the notice-reading remedy is properly before

us.

Here, of course, the Board changed the remedy in various

ways, most importantly by giving the company the option of

having a Board agent read the notice. But the Board does not

deny that even after its changes, the remedy remained

“extraordinary” and thus subject to the objection that it’s

unwarranted so long as traditional remedies suffice. See In Re

Federated Logistics & Operations, 340 N.L.R.B. 255, 256

(2003) (acknowledging that notice-reading with the Board-

agent option is an extraordinary remedy); First Legal Support

Servs., LLC, 342 N.L.R.B. 350, 350 n.6 (2004) (explaining

that extraordinary remedies cannot be granted unless

traditional remedies are insufficient). Although the option to

have a Board employee read the notice alters matters, as we

shall see when we address the merits, the order as modified

poses objections similar in character to those posed by the ALJ

recommendation. The Board’s additions, however, seem

distinctive, and insofar as they may call for anything more

than generalized analysis of the adequacy of traditional

remedies, HTH should have sought reconsideration if it

wished to challenge them in court.

In Judge Henderson’s view, “we are without jurisdiction

to consider the validity vel non of the Board-agent option.”

Henderson Op. 3. Assuming that to be true, the company’s

general challenge to the notice-reading remedy as an

extraordinary remedy is not barred, and it would make little

sense to consider that challenge without regard to the Board’s

amelioration of the remedy (from HTH’s viewpoint) by giving

HTH another option. Taken to its extreme, such hyper-

refinement of party obligations under § 10(e) would mean that

any change made by the Board sua sponte, however trivial,

would require a motion for reconsideration (or else require the

reviewing court to ignore the change). We decline to adopt

this approach.

One other issue is also open to review—the Board’s

award of litigation expenses. We have explained that filing a

motion for reconsideration is patently futile where the agency

had previously rejected the very argument made by petitioner.

FLRA, 2 F.3d at 1196; cf. W & M Properties, Inc. v. NLRB,

514 F.3d 1341, 1346 (D.C. Cir. 2008). The patent futility of a

reconsideration motion excuses the failure to object, at least

where the Board acts sua sponte. See FLRA, 2 F.3d at 1196.

Here, the Board rejected the company’s argument with respect

to litigation expenses—that the Board has no inherent

authority to award such expenses—three years before its

decision in this case. See Camelot Terrace, 357 N.L.R.B.

1934, 1937-39 (2011). The Board had also awarded litigation

expenses based in part on its asserted inherent authority in

earlier cases. See, e.g., Teamsters Local Union No. 122, 334

N.L.R.B. 1190, 1193 (2001); Alwin Mfg. Co., 326 N.L.R.B.

646, 647 & n.6 (1998), enforced, 192 F.3d 133 (D.C. Cir.

1999); Lake Holiday Manor, 325 N.L.R.B. 469, 469 & n.5

(1998). In light of this precedent, asking the Board to

reconsider its sua sponte decision to award litigation expenses

in this case would have been patently futile—and the failure to

do so is excused under § 10(e)’s “extraordinary

circumstances” exception. See FLRA, 2 F.3d at 1196.

The cases generally do not distinguish between attorney’s

fees and other litigation costs for purposes of applying the

American rule. See, e.g., Nepera Chem., Inc. v. Sea-Land

Serv., Inc., 794 F.2d 688, 696 n.56 (D.C. Cir. 1986) (“The

reasons underlying the American Rule lead to the conclusion

normally that litigation expenses other than attorneys’ fees are

similarly nonrecoverable.”). See also Fox v. Vice, 131 S. Ct.

2205, 2213 (2011) (“Our legal system generally requires each

party to bear his own litigation expenses, including attorney’s

fees, regardless whether he wins or loses.” (emphasis added));

Int’l Union of Elec., Radio & Mach. Workers v. NLRB, 502

F.2d 349, 356 n.22 (D.C. Cir. 1974) (“The American rule

generally disfavors the award of attorney fees and other

litigation expenses except where specifically provided for by

statute or contract.” (emphasis added)). Thus, as the parties

have generally done in this case, we treat them as a package.

* * *

We turn now to the merits of the company’s two

preserved challenges—the mandated notice-reading first.

Recall that the ALJ recommended an order requiring specified

high-level company officials to read out the notice

acknowledging the company’s violations and committing not

to indulge in such behavior in the future. The Board, apart

from adding elements that § 10(e) bars us from considering,

narrowed the choice of persons to one, Minicola, but then

broadened the company’s choices by giving it the option of

having a Board employee read the notice in the presence of

company management.

The history of our court’s consideration of this issue is

long and complex, but displays two patterns: first, succeeding

panels manifest no detectable obligation to heed prior panels;

second, the degree of deference to the Board steadily

increases. We will recite the three key cases in chronological

order.

The line starts with International Union of Electrical,

Radio & Machine Workers v. NLRB, 383 F.2d 230 (D.C. Cir.

1967) (“IUE”), in which the Board ordered “the employer” (it

singled out no individual) to read a notice to “groups of

employees, convened during working hours.” Id. at 232. This

was on top of requirements that the employer mail the notice

to each employee, post copies of the notice, and give a union

access to the facilities to present the union position (on

company time and at company expense). Id. & n.4. After the

usual genuflection to Board discretion, we dispatched the idea

in two sentences:

The public reading by the employer of the order would,

further, be humiliating and degrading to the employer and

undoubtedly would have a lingering effect on future

relations between the company and the Union. It could as

well have an impact on the atmosphere, not only at the

time of the reading, but in the future, for peaceful, fruitful,

and effective labor bargaining.

Id. at 233 (footnote omitted). We then opened the door the

tiniest sliver to a possible exception, and even in doing that we

returned immediately to the basic proposition that such an

order had no place in our democratic system:

It is conceivable that some conduct on the part of an

employer or a union might reach such extreme dimensions

as to justify the novel and drastic step of requiring the

offending party to stand up before the employees and read

the Board’s notice publicly, but we cannot close our eyes

to the reality that such a course would inevitably poison

the future relations between company and union and be a

source of continuing resentment. The ignominy of a

forced public reading and a “confession of sins” by any

employer, any employee, or any union representative

makes such a remedy incompatible with the democratic

principles of the dignity of man.

Id. at 233-34. Although the opinion suggests that it is

“conceivable” that some conduct would call for a mandatory

reading remedy, the passage reverts to the court’s basic take

on the issue—that such a mandate is “incompatible with the

democratic principles of the dignity of man.”

The next time we considered the matter, in Teamsters

Local 115 v. NLRB, 640 F.2d 392 (D.C. Cir. 1981), the court

gave IUE a nodding glance, and then went on to give great

weight to a “new” purpose advanced by the Board—the

desirability of a management reading to provide employees

“reassurances that this [unlawful] campaign will end.” Id. at

402 (citation and internal quotation marks omitted). What

made this purpose so “new” the court did not reveal. The

court then paraphrased IUE’s allusion to the conceivability of

circumstances where, as the court put it, “the need for the

remedy would outweigh its oppressiveness,” and without more

ado approved mandatory employer reading. Id. at 403. Thus,

what IUE had unequivocally condemned, subject to a

“conceivable” exception, became something that with a little

“balancing” would be quite all right.

The court did, however, gag on one aspect of the order—

the specification of a named individual, the president and

owner of the offending firm. As he had directly performed

only one of the unfair labor practices, singling him out went

too far. Id. at 403-04.

In the next case, Conair Corp. v. NLRB, 721 F.2d 1355

(D.C. Cir. 1983), the court did not even pause to consider the

propriety of a notice-reading mandate, and jumped directly to

the specification of a named perpetrator. See id. at 1385-86.

Thus what IUE had said was “incompatible with the

democratic principles of the dignity of man” was now

acceptable automatically. The court did make a footnote

allusion to IUE, scoffing at the dissent’s reliance on it:

The dissent reaches back to our decision in [IUE] for

language characterizing the requirement of a public

reading as “incompatible with the democratic principles

of the dignity of man.”

Id. at 1386 n.99. (The “reach back” was a full 16 years, less

than half the time that elapsed from Conair to the present.) It

then went on to say that IUE had been “superseded, if not

actually overruled, by our more recent decision” in Teamsters

Local 115, id., without explaining what entitled one panel to

overrule or “supersede” a prior panel’s decision. Normally

such switches can be done only by the court en banc or by an

Irons footnote (reflecting unanimous court approval). See

LaShawn v. Barry, 87 F.3d 1389, 1395 (D.C. Cir. 1996) (en

banc).

The Conair court went on to approve what IUE had not

even dreamed of and what Teamsters Local 115 had been

unable to stomach: a mandate that a particular perpetrator read

out the language specified by the Board. The court recognized

that such public reading implicated dignity interests but held

that the order was justified by the president’s “pervasive

personal involvement” in his company’s unfair labor practices.

Conair, 721 F.2d at 1386.

The dissent that the Conair majority dismissed in a

footnote was by then-Judge Ruth B. Ginsburg. Then-Judge

Ginsburg objected to requiring Conair’s president to

personally read out the notice, even though the president’s

personal involvement in the company’s unfair labor practices

was “far more conspicuous” than in Teamsters Local 115.

Conair, 721 F.2d at 1401 (Ginsburg, J., dissenting). The

dissent merits quoting at length:

I would modify the extraordinary notice remedies in

one respect. The Board’s order requires that Conair’s

president, Leandro Rizzuto, personally read the Board’s

cease and desist notice to an assembly of employees; I

would allow Rizzuto to choose between reading the notice

himself or designating a responsible officer to read it on

his behalf.

...

[A] reading order “directed at a specified individual”

is a “startling innovation.” [Teamsters Local 115, 640

F.2d at 403.] Such an order would occasion no surprise in

a system in which those who offend against state

regulation must confess and repent as a means of self-

correction, or to educate others. But it is foreign to our

system to force named individuals to speak prescribed

words to attain rehabilitation or to enlighten an assembled

audience. The Board, I believe, has not thoughtfully

considered this point.

A forced, public “confession of sins,” even by an

owner-president who has acted outrageously, is a

humiliation this court once termed “incompatible with the

democratic principles of the dignity of man.” [IUE], 383

F.2d at 234. It has a punitive, vindictive quality, see

Teamsters Local 115, 640 F.2d at 401, and is the kind of

personal performance command equity decrees have

avoided. Moreover, as Board Chairman Van de Water

noted, Conair, 261 NLRB at 1195 n. 28, a reading of the

notice by the president may be less effective than a

reading by another responsible officer. The former,

humiliated and degraded by the personal specific

performance order, may demonstrate “by inflections and

facial expressions, his disagreement with the terms of the

notice.” Id. The latter, assigned the task but lacking the

same personal involvement, may perform it with less

distaste, more detachment, and thus with greater

credibility. I would not single out the president here, or

any other named individual, hand him lines, and make

him sing.

Conair, 721 F.2d at 1401-02 (Ginsburg, J., dissenting) (some

citations omitted).

It’s worth pausing to think briefly why so many of our

distinguished predecessors have used the terms “humiliating

and degrading,” “ignominy,” and “confession of sins” for a

mandatory reading—especially by a named perpetrator—not

to mention why then-Judge Ginsburg acknowledged that an

order of this sort “would occasion no surprise in a system in

which those who offend against state regulation must confess

and repent as a means of self-correction, or to educate others.”

Id. at 1401. For those familiar with 20th century history, such

an order conjures up the system of “criticism-self-criticism”

devised by Stalin and adopted by Mao. “Criticism” generally

took the form of an attack on the target by his or her peers at a

meeting with fellow workers, spouting claims fed them by

powerful members of the Communist party (on pain of

themselves being tagged enemies of the people), and then

regurgitated by the target (“self-criticism”) in the hopes that

full confession might avert dispatch to the gulag, torture or

execution.

What is the subtext communicated by the sort of scene the

Board would mandate? What is communicated to the

assembled workers and the perpetrator himself? “You see

before you one of your managers, who normally has a

responsibility to make important choices as to your work. But

who is he? Not merely is he a lawbreaker, but he is a pathetic

creature who can, at the behest of federal officials (and not

especially lofty ones at that), be forced to spout lines they have

put in his mouth. He is not even a parrot, who can choose

when to speak; he is a puppet who speaks on command words

that he may well abominate. We have successfully turned him

into a pathetic semblance of a human being.” Of course, one

may say, here it is just that the mighty have fallen; he was a

lawbreaker. But fallen so low? Fallen to a condition that

denies his autonomy? Cf. United States v. Gementera, 379

F.3d 596, 611 (9th Cir. 2004) (Hawkins, J., dissenting) (saying

that the sole purpose of a sentence requiring a convicted mail

thief to stand outside a post office for eight hours wearing a

sandwich board stating, “I stole mail. This is my punishment”

was “to turn him into a modern day Hester Prynne”).

As the quoted passage shows, then-Judge Ginsburg

approved the idea of an order allowing the company to avoid

the confessional feature by designating an officer to read out a

notice acknowledging the company’s violations. The

difference seems as obvious to us as it was to the court in

Teamsters Local 115.

Here of course the Board gave the company another

option—that of a having a Board agent read the notice to the

employees in the presence of management. This measure, too,

has a history in our court. In IUE we condemned it harshly in

dictum: “This procedure . . . creates a problem more severe

than the one it supposedly solves” because its “practical

effect” “is to put the imprimatur of the Board on both a

particular union’s activities, as well as on union activities in

general.” 383 F.2d at 233 n.5. See also Teamsters Local 115,

640 F.2d at 402 n.11 (“We . . . continue to doubt the propriety

of having a Board representative perform the reading.” (citing

IUE)). Recently, however, we enforced a notice-reading order

with the Board-agent option, without even a nod to IUE

(which neither party had cited). Federated Logistics &

Operations v. NLRB, 400 F.3d 920, 929-30 (D.C. Cir. 2005).

Although the court gave no explanation for the switch, we

believe that the “imprimatur” concern appears weak. After all,

the substance of the notice will make employees fully aware

of how the Board has ruled, of which “side” the Board has

taken.

Indeed, in NLRB v. S.E. Nichols, Inc., 862 F.2d 952 (2d

Cir. 1988), when the Second Circuit found itself confronted

with an order that the president of an offending retail chain

read a notice, the court (sua sponte so far as appears) limited

the order to the store where the violations had taken place and

required the Board to give the company the alternative, at its

option, of having the notice read by a Board representative.

Id. at 962. “This alternative eliminates the necessity of

participation by the company, if it so desires, and still

guarantees effective communication of the Board’s order to

the company’s employees.” Id. See also Textile Workers

Union v. NLRB, 388 F.2d 896, 904 (2d Cir. 1967) (rejecting

the imprimatur idea). Accordingly, we feel no obligation to

follow the court’s previous dicta.

Given the company’s long history of unlawful practices

and the severe violations the Board found in this case, we

uphold the Board’s exercise of discretion in ordering notice-

reading in the modified form, i.e., with the company having

the option of punting the task to a Board employee. (As

explained above, we lack jurisdiction to consider the

company’s challenges to the additional requirements the Board

appended to the notice-reading remedy. We therefore enforce

those requirements.) Further, given the option of having the

notice read by a Board employee, we have no need to address

the validity of an employee-specific notice-reading mandate

unaccompanied by such an option.

* * *

We turn next to the Board’s award of litigation expenses

to the General Counsel and the union. In Unbelievable, Inc. v.

NLRB, 118 F.3d 795, 800-06 (D.C. Cir. 1997), we held that

the Board lacks authority to shift litigation expenses under

§ 10(c) of the Act, which empowers the Board “to take such

affirmative action including reinstatement of employees with

or without back pay, as will effectuate the policies of [the

Act],” 29 U.S.C. § 160(c). In ordering fees in this case, the

Board recognized the holding in Unbelievable but claimed

that, like a federal court, it has “inherent authority to control

and maintain the integrity of its own proceedings through an

application of the bad-faith exception to the American Rule.”

HTH Corp., 361 N.L.R.B. No. 65, Amended Deferred

Appendix (“App.”) 3-4. See Chambers v. NASCO, Inc., 501

U.S. 32, 45-46 (1991) (recognizing that although the American

rule prohibits fee shifting in most cases, federal courts have

inherent power to assess attorney’s fees “when a party has

‘acted in bad faith, vexatiously, wantonly, or for oppressive

reasons’” (citation and internal quotation marks omitted)).

As a creature of statute the Board has only those powers

conferred upon it by Congress. See Louisiana Pub. Serv.

Comm’n v. FCC, 476 U.S. 355, 374 (1986); Michigan v. EPA,

268 F.3d 1075, 1081 (D.C. Cir. 2001). To be sure, we have

recognized that agencies enjoy some powers that were not

expressly enumerated by Congress. See, e.g., Ivy Sports Med.,

LLC v. Burwell, 767 F.3d 81, 86 (D.C. Cir. 2014) (power to

reconsider prior decisions); Polydoroff v. ICC, 773 F.2d 372,

374 (D.C. Cir. 1985) (power to police the behavior of

practitioners); Howard Sober, Inc. v. ICC, 628 F.2d 36, 41

(D.C. Cir. 1980) (power to correct clerical mistakes).

Although we have often described these powers as “inherent,”

the more accurate label is “statutorily implicit.” See Ivy

Sports, 767 F.3d at 93 (Pillard, J., dissenting). Therefore,

unlike a federal court, the Board may apply the bad-faith

exception to the American rule only if some provision or

provisions of the Act explicitly or implicitly grant it power to

do so.

In deciding to award litigation expenses on a bad-faith

theory, the Board relied solely on its “inherent authority to

control and maintain the integrity of its own proceedings.”

HTH Corp., 361 N.L.R.B. No. 65, App. 3-4. Neither in its

Order nor on appeal has the Board argued that the power to

shift fees in cases of bad faith is implicit in the Act. Given

that it is wrong to speak of agencies as having any inherent

authority, it would under many circumstances be quite

appropriate for us to say that the Board has cited no pertinent

authority at all, to vacate this part of the Order under review,

and to have done with it.

There are several reasons to reject that approach and

consider whether § 10(c) implicitly authorizes fee shifting

based on bad faith. First, the distinction between inherent

authority and implicitly granted authority is a subtle one—so

subtle that this court generally overlooked it until Judge Pillard

pointed it out in Ivy Sports. Second, considering § 10(c) does

not take us into refined linguistic nuances; § 10(c) simply

authorizes the Board to take “such affirmative action . . . as

will effectuate the policies” of the Act. Third, and closely

related to the purely linguistic point, the decisive

considerations resolving the issue stem not from the exact

language of § 10(c) but from contextual concerns that were at

the heart of Unbelievable and the subject of intense discussion

at oral argument.

The controlling contextual concern arises from two

propositions: first, that nothing in § 10(c) grants the Board

punitive powers, and, second, that application of the American

rule’s bad-faith exception is punitive. On the first, as we said

in Unbelievable, “The Supreme Court has consistently

invalidated Board orders that are not directly related to the

effectuation of the purposes of the Act or are punitive.” 118

F.3d at 805 (emphasis added). We cited several decisions in

support of that proposition, starting with Consolidated Edison

Co. v. NLRB, 305 U.S. 197, 235-36 (1938), which held that the

Board’s purported cancellation of bargaining agreements that

were not causally derived from the alleged unfair labor

practices was punitive and therefore not within the Board’s

§ 10(c) powers, even if the Board should “be of the opinion

that the policies of the Act might be effectuated by such an

order.” Id. at 236. Similarly, once we found in Capital

Cleaning Contractors, Inc. v. NLRB, 147 F.3d 999, 1009-12

(D.C. Cir. 1998), that the Board’s imposition of contract terms

on a successor employer based on terms negotiated by its

predecessor was punitive in the circumstances, we held it

beyond the Board’s powers. A § 10(c) remedy, we said, “must

be truly remedial and not punitive.” Id. at 1009.

This authoritative ban on punitive remedies by the Board

is triggered here: the Supreme Court has consistently classified

application of the bad-faith exception to the American rule as

punitive. Hall v. Cole, 412 U.S. 1, 5 (1973). Such fee shifting

is akin to a fine for civil contempt: both serve the purpose of

vindicating the tribunal’s authority over a recalcitrant litigant.

Chambers, 501 U.S. at 53.

The Board doesn’t dispute that it may not adopt punitive

remedies but argues instead that its award of litigation

expenses is “clearly compensatory in nature.” HTH Corp.,

361 N.L.R.B. No. 65, App. 4. According to the Board, the

General Counsel and the union were forced to squander

resources on this case, and the fee award merely “helps restore

the parties to where they would have been but for the

[company’s] unlawful conduct.” Id. Of course we recognize

that compensation and punishment are not inherently mutually

exclusive goals. But in the context of the American rule, any

attempt to rest on the compensatory character of a fee award

runs into the basic underpinning of the American rule, namely,

the idea that the compensatory functions of fee shifting

collide, in the litigation context, with other values, particularly

broad freedom to assert rights and defenses. See Summit

Valley Indus. Inc. v. Local 112, 456 U.S. 717, 724-25 (1982).

Thus we said in Unbelievable, “To the extent that the Board is

relying upon the idea that a party is not made whole unless it

recovers its attorney’s fees, . . . that is but a criticism of the

American Rule—indeed, a criticism that the Supreme Court

has heard and rejected.” 118 F.3d at 805. As the Supreme

Court declared in Chambers, “That the award ha[s] a

compensatory effect does not in any event distinguish it from a

fine for civil contempt, which also compensates a private party

for the consequences of a contemnor’s disobedience.” 501

U.S. at 53-54 (citation and internal quotation marks omitted).