Camelot Terrace, Inc. v. National Labor Relations Board

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued February 9, 2016 Decided June 10, 2016

No. 12-1071

CAMELOT TERRACE, INC. AND GALESBURG TERRACE, INC.,

PETITIONERS

v.

NATIONAL LABOR RELATIONS BOARD,

RESPONDENT

SERVICE EMPLOYEES INTERNATIONAL UNION,

HEALTHCARE ILLINOIS INDIANA (PREVIOUSLY SEIU LOCAL 4),

INTERVENOR

Consolidated with 12-1218

On Petition for Review and Cross-Application

for Enforcement of an Order

of the National Labor Relations Board

Christopher Landau argued the cause for the petitioners.

John S. Irving, Jr. was with him on brief.

Barbara A. Sheehy, Attorney, National Labor Relations

Board, argued the cause for the respondent. Richard F.

Griffin, Jr., General Counsel, John H. Ferguson, Associate

General Counsel, Linda Dreeben, Deputy Associate General

2

Counsel, and Usha Dheehan, Supervisory Attorney, were with

her on brief.

Margaret Angelucci was on brief for the intervenor,

Service Employees International Union, Healthcare Illinois

Indiana (previously SEIU Local 4) in support of the

respondent.

Before: HENDERSON and ROGERS, Circuit Judges, and

WILLIAMS, Senior Circuit Judge.

Opinion for the Court filed by Circuit Judge HENDERSON.

KAREN LECRAFT HENDERSON, Circuit Judge: Camelot

Terrace, Inc. (Camelot) and Galesburg Terrace, Inc.

(Galesburg) (collectively, Companies) petition for review of a

decision and order of the National Labor Relations Board

(Board) determining that the Companies violated the National

Labor Relations Act (Act), 29 U.S.C. §§ 151 et seq., by

engaging in bad-faith bargaining with the Service Employees

International Union (Union). The Companies do not contest

the Board’s conclusion that they violated the Act; rather, they

challenge two of the remedies the Board imposed: (1)

reimbursement of litigation costs incurred by both the Board

and the Union during Board proceedings and (2)

reimbursement of “all” of the negotiation expenses the Union

incurred during its bargaining sessions with the Companies.

See Camelot Terrace, 357 N.L.R.B. No. 161, 2011 WL

7121892, at *13, *15 (Dec. 30, 2011). The Companies assert

that the Board is without authority to impose either remedy.

Alternatively, they argue that the amount of the

bargaining-costs remedy—“all” of the Union’s bargaining

expenses—exceeds the amount necessary to remedy the harm

caused by the Companies’ conduct and is improperly punitive.

3

We agree that the Board lacks authority to require the

reimbursement of litigation costs incurred during Board

proceedings, see HTH Corp. v. NLRB, No. 14-1222, 2016 WL

2941936, at *9–11 (D.C. Cir. May 20, 2016), but hold that the

Board may require an employer to reimburse a union’s

bargaining expenses pursuant to its remedial authority under

section 10(c) of the Act. We also conclude that we lack

jurisdiction to entertain the Companies’ alternative challenge

to the amount of the bargaining-costs award because they

failed to raise it before the Board. Accordingly, we grant the

Companies’ joint petition in part and grant the Board’s

cross-application for enforcement in part.

I.

Camelot and Galesburg both operate nursing homes in

Illinois. In 2007, the Union was certified as the exclusive

representative of employees at both facilities. Over the course

of 2008 and 2009, the Companies—primarily through the

conduct of their common owner, Michael Lerner—repeatedly

bargained with the Union in bad faith. 1 The Board’s Office of

the General Counsel (OGC) got involved, leading to a

1

Because the Companies do not contest their underlying

violations of the Act, there is no need to describe their bad-faith

conduct in great detail. Their conduct included “restricting the

dates and length of bargaining sessions, repeatedly canceling and

shortening sessions, reneging on or withdrawing from tentative

agreements without good cause, refusing to bargain on economic

subjects, and refusing to make economic proposals.” Camelot

Terrace, 357 N.L.R.B. No. 161, 2011 WL 7121892, at *1. The

Companies violated the Act in other ways as well, including dealing

directly with Union-represented employees, unilaterally changing

the terms and conditions of employment without providing notice or

bargaining opportunity to the Union and firing an employee under a

unilaterally-implemented attendance policy.

4

settlement agreement detailing specific bargaining

requirements the Companies were to satisfy. When the

Companies failed to abide by the terms of the agreement and

continued to bargain in bad faith, the OGC issued a complaint

charging the Companies with numerous violations of the Act.

After holding a hearing and concluding that the Companies had

indeed violated the Act, an Administrative Law Judge (ALJ)

ordered, inter alia, that the Companies “[r]eimburse the

[Board] . . . and the Union for all costs and expenses incurred

in the investigation, preparation and conduct of [the case]

before the Board and the courts.” Camelot Terrace, 357

N.L.R.B. No. 161, 2011 WL 7121892, at *125. The ALJ also

ordered the Companies to “[r]eimburse the Union for all costs

and expenses incurred in collective-bargaining negotiations

from January 2008 to the [parties’] last bargaining session.”

Id.

The Companies filed exceptions with the Board,

challenging the imposition of these two remedies. In a

two-to-one decision, the Board held that it was authorized to

impose both remedies and did so with one modification. 2 The

bargaining-costs remedy, the Board concluded, was a

necessary exercise of its general remedial power: “[o]nly by

ordering the reimbursement of the Union’s negotiating

expenses [could] the Board reasonably restore the Union’s

previous financial strength and consequent ability to carry out

effectively its responsibilities as the employees’

representative.” Id. at *6. As for the litigation-costs remedy,

the Board concluded that it “has inherent authority to control

2

The Board modified the litigation-costs remedy by

eliminating the award for costs incurred in court proceedings,

“leav[ing] that determination to the discretion of the court [of

appeals].” Camelot Terrace, 357 N.L.R.B. No. 161, 2011 WL

7121892, at *6 n.8.

5

its own proceedings, including the authority to award litigation

expenses through the application of the ‘bad-faith’ exception to

the American Rule.” Id. The Board declared that its

“inherent authority” was sufficient to support the remedy and

therefore found it “unnecessary to pass on the [Companies’]

argument that the Board’s remedial authority under [section]

10(c) of the Act does not encompass the award of litigation

expenses.” Id. at *6 n.10. Member Hayes dissented from the

Board’s decision on the litigation-costs remedy, explaining

that the Board is “not free to invoke principles of ‘inherent

authority’ in order to unilaterally vest the Board with powers

beyond those contemplated by the legislature.” Id. at *17

(Member Hayes, dissenting). The Companies petitioned for

review, challenging the Board’s authority to impose the two

remedies. The Board cross-applied for enforcement.

II.

At the outset, because “the Board is entitled to

enforcement of all unchallenged portions of its order,” we

summarily enforce all such provisions of the Board’s decision.

United Food & Commercial Workers Union Local 204 v.

NLRB, 447 F.3d 821, 824 (D.C. Cir. 2006) (per curiam). As

for the two reimbursement orders the Companies do challenge,

although we generally afford the Board deference in reviewing

its chosen remedies, see Great Lakes Chem. Corp. v. NLRB,

967 F.2d 624, 629 (D.C. Cir. 1992) (“The Board has broad

authority in devising remedies to effectuate the policies of the

Act, subject only to limited judicial review.” (citation and

internal quotation marks omitted)), deference is limited if a

party challenges the Board’s authority to order a particular

remedy under any circumstance. In that case, to the extent the

Board claims its remedial authority arises from the Act, we

defer to the Board “only so far as ‘[its] interpretation is rational

and consistent with the statute.’ ” Unbelievable, Inc. v.

6

NLRB, 118 F.3d 795, 804 (D.C. Cir. 1997) (quoting NLRB v.

United Food & Commercial Workers, 484 U.S. 112, 123

(1987)). To the extent the Board relies on extra-statutory

authority, we afford no deference at all. See HTH Corp., 2016

WL 2941936, at *9–11 (evaluating Board’s “inherent

authority” to award litigation costs without deference); see also

Local 777, Democratic Union Org. Comm. v. NLRB, 603 F.2d

862, 869 n.17 (D.C. Cir. 1978) (“Ordinarily, we show

considerable deference to the judgment of the [Board] . . . [but]

where the issues involved are purely legal . . . , the Board’s

interpretation is entitled to no particular deference.”).

Here, the Companies have abandoned (or forfeited, see

infra at 10–11) any claim that reimbursement of litigation or

bargaining expenses was inappropriate in their particular case;

rather, they attack the Board’s authority to award bargaining

and litigation costs in all cases. Accordingly, we defer to the

Board’s view of the matter only insofar as its interpretation of

its statutory power is “rational” and “consistent” with the Act.

See Unbelievable, Inc., 118 F.3d at 804.

A. Litigation Costs

The Companies first claim that “the Board has neither

statutory nor inherent authority to award litigation expenses,

including attorney’s fees, as a remedy for an unfair labor

practice.” Pet’rs’ Br. 12. For the reasons discussed in HTH

Corp. v. NLRB, we agree. There, as here, the Board “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”

and ordered an employer to pay the litigation expenses of a

union and of the OGC. HTH Corp., 2016 WL 2941936, at *9

(internal quotation marks omitted). We declined to enforce

the order. See id. at *11. Recognizing that “[a]s a creature of

7

statute the Board has only those powers conferred upon it by

Congress,” we held that “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.” Id. at *9. Although the Board “relied solely on its

inherent authority to control and maintain the integrity of its

own proceedings,” and the court recognized “that it is wrong to

speak of agencies as having any inherent authority,” the

majority—perhaps in an effort to give the Board the benefit of

the doubt—went on to consider whether the Act’s general

endowment of remedial authority under section 10(c)

“implicitly authorizes fee shifting based on bad faith.” See id.

at *9–10 (emphasis in original) (internal quotation marks

omitted). The majority ultimately concluded that section

10(c) did not do so, primarily because “the Supreme Court has

consistently classified application of the bad-faith exception to

the American rule as punitive,” id. at *10 (citing Hall v. Cole,

412 U.S. 1, 5 (1973)), and a “[section] 10(c) remedy . . . ‘must

be truly remedial and not punitive,’ ” id. (quoting Capital

Cleaning Contractors, Inc. v. NLRB, 147 F.3d 999, 1009 (D.C.

Cir. 1998)).

Our decision in HTH controls. As in HTH, the Board in

this case claims the power to require the Companies to pay the

Board’s litigation costs and those of the Union solely on the

basis of its “inherent authority.” Camelot Terrace, 357

N.L.R.B. No. 161, 2011 WL 7121892, at *6 & n.10. But as

HTH makes plain, the Board possesses no extra-statutory

“inherent authority.” HTH Corp., 2016 WL 2941936, at *9.

Moreover, to the extent the Board meant “implicit in section

10(c)” when it said “inherent,” see id. at *10, it loses on that

score as well—section 10(c) neither explicitly nor by

implication authorizes the Board to award litigation costs, see

id. at *10–11. Accordingly, we deny enforcement of the

litigation-costs order. See id. at *11.

8

B. Bargaining Costs

The Companies also challenge the Board’s general

authority to require one party to reimburse another’s

bargaining costs; in the alternative, the Companies claim that

the Board may not award the Union “all” of its bargaining costs

because the Union would have incurred at least some of those

costs had the Companies bargained in good faith.

1.

As a threshold matter, the Board contends that we lack

jurisdiction to entertain these two claims because the

Companies failed to raise them with the Board. It is well

settled that, absent “extraordinary circumstances,” if a party

fails to “urge[]” an objection before the Board, we lack

jurisdiction to consider it for the first time on appeal. 29

U.S.C. § 160(e); see also Woelke & Romero Framing, Inc. v.

NLRB, 456 U.S. 645, 665–66 (1982); HTH Corp., 2016 WL

2941936, at *3. In assessing forfeiture under section 10(e) of

the Act, “the critical question” is “whether the Board received

adequate notice of the basis for the objection.” Alwin Mfg.

Co. v. NLRB, 192 F.3d 133, 143 (D.C. Cir. 1999); see also

DHL Express, Inc. v. NLRB, 813 F.3d 365, 372 (D.C. Cir.

2016) (considering whether “petitioner’s brief in support of its

exceptions adequately put the Board on notice of the grounds

on which the petitioner is objecting” (internal quotation marks

omitted)). “While we have not required that the ground for

the exception be stated explicitly in the written exceptions filed

with the Board, we have required, at a minimum, that the

ground for the exception be ‘evident by the context in which

[the exception] is raised.’ ” Parsippany Hotel Mgmt. Co. v.

NLRB, 99 F.3d 413, 417 (D.C. Cir. 1996) (alteration in

original) (quoting Consol. Freightways v. NLRB, 669 F.2d 790,

794 (D.C. Cir. 1981)).

9

Here, the Companies’ written exceptions and supporting

briefs together preserved their argument that the Board

generally lacks authority to require reimbursement of

bargaining costs—but just barely. The Companies’ exception

to the bargaining-costs remedy was indeed “vague,” see DHL

Express, 813 F.3d at 372, but nonetheless charged that the

bargaining-costs remedy violated “established Board law and

policy,” Resp’ts’ Exceptions to the A.L.J.’s Decision 2 (Mar.

10, 2010). Similarly, although their supporting brief was “no

paragon of precision or detail,” it included several statements

“adequate to apprise the Board that the Compan[ies] intended

to press the question now presented”—that the Board lacked

the power to require reimbursement of bargaining costs. See

NLRB v. Blake Constr. Co., 663 F.2d 272, 284 (D.C. Cir.

1981).

The best example is an express statement to that effect in

one of the brief’s headings, which read, “The Board Lacks

Authority to Award Litigation Expenses and Bargaining

Costs.” Resp’ts’ Br. in Supp. of Exceptions to the A.L.J.’s

Decision 4 (emphasis added). Other parts of the brief also

apprised the Board that its authority was being questioned.

The Companies averred that the ALJ “made erroneous legal

conclusions with regard to the [bargaining-costs] remedy,” id.

at 2, and in a different subheading stated, “The Board Lacks the

Inherent Authority to Award Costs,” id. at 6 (emphasis added).

And notwithstanding these sections of the brief primarily

addressed litigation costs, the brief transitioned into a new

section with the statement, “[e]ven if the Board has the

authority to order a respondent to pay litigation and bargaining

costs,” id. at 6 (emphasis added), indicating to the Board that

the brief’s discussion of the generic “costs,” see id., was meant

to cover bargaining costs as well as litigation costs. We

therefore conclude that “the Board received adequate notice of

10

the basis for the [Companies’] objection,” see Alwin, 192 F.3d

at 143, and we may consider the merits of the challenge.

The same is not true of the Companies’ alternative

argument that even if the Board has the authority to award

bargaining costs generally, it may not award “all” of the

Union’s costs. The thrust of the claim is that the Board may

award bargaining costs only to the extent the Companies’

bad-faith conduct caused the Union to incur such costs

unnecessarily. Because “the Union undoubtedly would have

incurred some bargaining costs” even if the Companies had

properly discharged their duty to negotiate in good faith, the

Companies argue that, in awarding the Union “all” of its

bargaining costs, the Board “crossed the line separating

permissible remedial action from impermissible punitive

action.” Pet’rs’ Br. 28–29. The Companies never presented

this argument to the Board but they argue that we should

nonetheless consider it because the award is “patently in excess

of [the Board’s] authority,” see Alwin, 192 F.3d at 143 n.13

(alteration in original) (quoting Detroit Edison Co. v. NLRB,

440 U.S. 301, 311 n.10 (1979)), and therefore their failure to

raise the issue should be “excused because of extraordinary

circumstances,” 29 U.S.C. § 160(e).

Although “a remedy that is patently ultra vires” generally

warrants review even if not challenged at the Board level, see

HTH Corp., 2016 WL 2941936, at *3 (citing Alwin, 192 F.3d

at 143 n.13), the bargaining-costs remedy at issue does not

patently run afoul of the limits on the Board’s power. If the

Board has the authority to award bargaining costs generally, it

is not inconceivable that requiring the reimbursement of all of

a party’s bargaining expenses might be necessary; for instance,

if an employer repeatedly schedules bargaining sessions with a

union but is a perpetual no-show, reimbursing all of the

expenses the union incurred in connection with those planned

11

sessions when no bargaining in fact took place would be

required to return the union to its financial position ex ante,

which is the Board’s justification for awarding bargaining

costs in the first place. See Fallbrook Hosp. Corp. v. NLRB,

785 F.3d 729, 732 (D.C. Cir. 2015) (bargaining-costs remedy

“warranted . . . to restore the economic strength that is

necessary to ensure a return to the status quo ante at the

bargaining table” (internal quotation marks omitted)). Thus,

such an award is not “obviously ultra vires” in all

circumstances. See Alwin, 192 F.3d at 143 n.13.

Nor is it obvious that an award of all of the Union’s

expenses was not necessary to remedy the wrong here; indeed,

the Board may well have concluded as much. This fact

underscores why we lack jurisdiction to consider this claim on

the merits—the Board has the first crack at answering whether

and why awarding “all” of a union’s bargaining expenses is

necessary in the particular circumstances of the case before it.

See Local 900, Int’l Union of Elec., Radio & Mach. Workers v.

NLRB, 727 F.2d 1184, 1192 (D.C. Cir. 1984) (“Simple fairness

to those who are engaged in the tasks of administration, and to

litigants, requires as a general rule that courts should not topple

over administrative decisions unless the administrative body

not only has erred but has erred against objection made at the

time appropriate under its practice.” (quoting United States v.

L.A. Tucker Truck Lines, Inc., 344 U.S. 33, 37 (1952))). The

Board had no reason to do so when the Companies never raised

this question in an exception or in a motion for reconsideration;

we lack jurisdiction, then, to address the claim for the first time

on appeal. 3

3

This does not mean, however, that the Companies are

prohibited from raising this argument before the Board at the

compliance stage. At oral argument, in comparing the Board order

in HTH that noted the union bore the burden of establishing a causal

12

2.

Because the Companies forfeited their extent-of-the-

bargaining-costs claim, only one question remains for

consideration on the merits—whether the Board ever has the

authority to require a party to reimburse another’s bargaining

costs. The Companies contend that the Board has no such

power. On their theory, the Board’s job is to enforce

substantive legal rights; it may not, however, require one party

to reimburse another for the costs incurred in vindicating those

rights. They view bargaining costs as “indistinguishable from

litigation costs” in that both “represent the price of attempting

to vindicate substantive legal rights.” Pet’rs’ Br. 24.

Therefore, just as awarding litigation costs is aliunde the

Board’s remedial authority, so is requiring one party to

reimburse another’s bargaining costs. The Board, in contrast,

contends that requiring a party that has engaged in particularly

egregious bad-faith bargaining to reimburse another party’s

bargaining costs is well within its remedial power under

section 10(c) of the Act.

We agree with the Board. When the Board determines

that a party has committed an unfair labor practice, section

10(c) of the Act gives it “discretion to fashion appropriate

remedies.” Fallbrook, 785 F.3d at 734. Specifically, the

Board “shall issue . . . an order requiring [a violator] to cease

relationship between the costs awarded and the unfair labor practice,

see HTH Corp., 361 N.L.R.B. No. 65, at 5 (Oct. 24, 2014), to the

Board award of “all” bargaining costs here, the Board counsel

explained, “[I]t was a different sort of remedy [in HTH] than you’ve

seen, so [the Board] w[as] reminding the Union we’ve not imposed

something like this before, so FYI, here’s what you need to do in

compliance, but I don’t think it’s any different than in other typical

compliance proceeding[s].” Oral Arg. Tr. 50:1–5.

13

and desist from such unfair labor practice, and to take such

affirmative action . . . as will effectuate the policies of [the

Act].” 29 U.S.C. § 160(c). “[T]he thrust of affirmative

action redressing the wrong incurred by an unfair labor

practice,” according to the United States Supreme Court, “is to

. . . restor[e] the economic status quo that would have obtained

but for the company’s wrongful [act]. The task of the [Board]

in applying § 10(c) is to take measures designed to recreate the

conditions and relationships that would have been had there

been no unfair labor practice.” Franks v. Bowman Transp.

Co., 424 U.S. 747, 769 (1976) (some alterations in original)

(citations and internal quotation marks omitted).

Although we have never directly held that reimbursement

of bargaining expenses is the type of “affirmative action” that

“effectuate[s] the policies” of the Act, 29 U.S.C. § 160(c), the

Board has repeatedly asserted as much, see, e.g., Unbelievable,

Inc., 318 N.L.R.B. 857, 859 (1995), enf’d in relevant part, 118

F.3d 795; Fallbrook Hosp. Corp., 360 N.L.R.B. No. 73, 2014

WL 1458265, at *2 (Apr. 14, 2014), enf’d, 785 F.3d 729, and

we have discussed the Board’s reasoning favorably. As we

explained in Fallbrook Hospital Corporation, “a

reimbursement remedy is appropriate ‘where it may fairly be

said that [an employer’s] substantial unfair labor practices have

infected the core of a bargaining process to such an extent that

their effects cannot be eliminated by the application of

traditional remedies.’ ” 785 F.3d at 732 (alteration in

original) (quoting Fallbrook Hosp. Corp., 360 N.L.R.B. No.

73, 2014 WL 1458265, at *2). “Such a remedy is warranted

both to make the charging party whole for the resources that

were wasted because of the unlawful conduct, and to restore

the economic strength that is necessary to ensure a return to the

status quo ante at the bargaining table.” Id. (internal quotation

marks omitted). Accordingly, we noted that “ ‘[i]n cases of

unusually aggravated misconduct,’ the Board may order an

14

offending party ‘to reimburse the charging party for

negotiation expenses.’ ” Id. at 734 (quoting Unbelievable,

Inc., 318 N.L.R.B. at 859). 4

Confronted directly with the question for the first time, we

too find the Board’s reasoning persuasive. An award of

bargaining expenses remedies an unfair labor practice by

ensuring that, upon resolution of the unfair labor practice

charge, the injured party can return to negotiations on the same

footing it occupied before the violation of the Act occurred.

See Fallbrook, 785 F.3d at 732. A more traditional remedy,

such as a bargaining order, is of little value if one party can

drain another of its resources by bargaining in bad faith and

then extracting concessions as the money wanes. See

Unbelievable, Inc., 318 N.L.R.B. at 858 (“[A] bargaining order

alone will not ensure meaningful bargaining, because it cannot

restore the Union[] to [its] position[] prior to the futile

negotiations. In fact, limiting the remedy to the conventional

bargaining order would effectively permit the [employer] to

benefit from its violations of the Act by ensuring bargaining

4

In Fallbrook and Unbelievable, we were not confronted with

the question of the Board’s general authority to order reimbursement

of bargaining costs; rather, we considered only whether the Board

had misapplied its own precedent in deciding that the

bargaining-costs remedy was warranted on the factual records those

cases presented. See Fallbrook, 785 F.3d at 736–37 (employer

argued Board improperly determined it had engaged in “unusually

aggravated conduct”); Unbelievable, Inc., 118 F.3d at 799 (“The

[employer] does not question the Board’s authority to order a

respondent to reimburse the charging party for negotiation expenses

if the respondent’s misconduct has been unusually aggravated . . . .

The Company does argue, however, that there is not substantial

evidence in the record considered as a whole to support the Board’s

findings of fact.”). Here, in contrast, the Companies challenge the

Board’s authority to award bargaining costs generally.

15

with [a] Union[] that [has] been economically weakened by the

[employer’s] misconduct.”). By instead allowing the harmed

party to be returned to its financial position ex ante, the Board

“effectuate[s] the policies of the Act.” See id.; see also

Bowman Transp. Co., 424 U.S. at 769.

The Companies do not dispute this rationale per se; in fact,

they acknowledge that “[a]n award of bargaining costs . . . can

be deemed ‘remedial’ in a broad sense.” Pet’rs’ Br. 27.

Rather, they hold fast to their contention that bargaining costs

and litigation costs are the same, and, if litigation costs cannot

be shifted under the American Rule, neither can bargaining

costs. The “harm” a bargaining-costs reimbursement order

“remedies,” they claim, is “not the sort of harm that is

generally cognizable in our legal system—the time and

expense necessary for a party to vindicate its substantive legal

rights.” Id.

We reject this approach for several reasons. First,

although the Companies make broad appeals to “tradition,”

“our legal culture” and “our legal system,” see id. at 24, 27,

noticeably absent from their brief is any case suggesting the

American Rule extends beyond the context of litigation or

other quasi-judicial adversarial proceedings. That is to say,

although it is well-established that litigation costs are subject to

the longstanding, pay-your-own-way tradition the Companies

describe, see, e.g., Alyeska Pipeline Serv. Co. v. Wilderness

Soc’y, 421 U.S. 240, 247–63 (1975), the Companies have

offered no authority for the proposition that the same tradition

applies to costs incurred during private contractual

negotiations outside the litigation context. See Pet’rs’ Br. 24–

27.

Second, even granting the Companies their premise, their

view of bargaining as a means of “vindicat[ing] substantive

16

legal rights,” id. at 24, misses the mark. The Act grants the

employer and the union alike the right to good-faith

bargaining, 29 U.S.C. § 158(d), and a violation of the

right—like any unfair labor practice—supports a remedy

making the wronged party whole, cf. Bill Johnson’s Rests., Inc.

v. NLRB, 461 U.S. 731, 747 (1983) (“[T]he Board may order

the employer to reimburse the employees whom he had

wrongfully sued for their attorneys’ fees and other expenses.”).

Thus, even assuming arguendo that “our legal culture”

prohibits a party from recovering the costs of “vindicat[ing]”

substantive rights as a general matter, see Pet’rs’ Br. at 24,

such a rule would not prohibit the Board from awarding

bargaining costs for bad-faith conduct during collective

bargaining.

Third, and finally, the justifications for awarding

bargaining costs and for awarding litigation costs pursuant to

the bad-faith exception to the American Rule are not, contrary

to the Companies’ claim, “essentially the same,” see id. at 26;

indeed, there are critical differences. The U.S. Supreme Court

has explained that a litigation-cost award is, in the context of

the bad-faith exception, a punitive measure—it “vindicate[s] [a

court’s] authority over a recalcitrant litigant.” Chambers v.

NASCO, 501 U.S. 32, 53 (1991) (some alterations in original)

(internal quotation marks omitted). Moreover, “[t]hat the

award ha[s] a compensatory effect does not” deprive it of its

punitive purpose. See id. (some alterations in original)

(internal quotation marks omitted). In contrast, the Board’s

rationale for awarding bargaining costs is consistent with the

“thrust of affirmative action” effectuating the Act’s

purposes—“restor[ing] the economic status quo that would

have obtained but for the [Companies’] wrongful [acts].”

Bowman Transp. Co., 424 U.S. at 769 (internal quotation

marks omitted). And just as the incidental “compensatory

effect” of a litigation-costs award does not render that award

17

“remedial,” see Chambers, 501 U.S. at 53 (internal quotation

marks omitted), neither does the incidental deterrent effect of a

bargaining-costs award render it “punitive.” Indeed, awards

that our “legal culture,” see Pet’rs’ Br. 24, plainly treats as

remedial—such as compensatory damages in a tort suit—often

have (and are intended to have) a deterrent effect. See, e.g., 1

Dan B. Dobbs, Paul T. Hayden & Ellen M. Bublick, The Law

of Torts § 14 (2d ed. updated 2015) (West) (“Courts and

writers almost always recognize that another aim of tort law is

to deter certain kinds of conduct by imposing liability when

that conduct causes harm.”). The same is true of bargaining

expenses in the labor law context. Although an award of such

costs might make the Companies think twice before again

wasting the Union’s time, the primary justification for the

award is to make the Union whole and “to recreate the

conditions . . . that would have been had there been no unfair

labor practice.” Bowman Transp. Co., 424 U.S. at 769

(internal quotation marks omitted).

Accordingly, we have little trouble concluding that

awarding bargaining costs in the appropriate case is within the

Board’s statutory remedial authority under section 10(c) of the

Act. Because the Companies do not challenge the Board’s

conclusion that they engaged in “unusually aggravated

misconduct” that “infected the core of a bargaining process,”

see Fallbrook, 785 F.3d at 732, 734 (internal quotation marks

omitted), we enforce the Board’s order requiring the

Companies to reimburse the Union for its bargaining costs.

For the foregoing reasons, we grant the Companies’

petition for review with respect to the litigation-costs remedy

and enforce the remainder of the Board’s order.

So ordered.