National Labor Relations Board v. FedEx Freight, Inc.

PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

___________

No. 15-2585

___________

NATIONAL LABOR RELATIONS BOARD,

Petitioner

v.

FEDEX FREIGHT, INC.,

Respondent

____________

No. 15-2712

____________

FEDEX FREIGHT, INC.,

Petitioner

v.

NATIONAL LABOR RELATIONS BOARD,

Respondent

_______________________

On Application for Enforcement and Cross Petition for

Review of an Order of the National Labor Relations Board

(NLRB Docket No. 22-CA-146653)

______________

Argued: March 1, 2016

Before: AMBRO, JORDAN, and SCIRICA, Circuit Judges.

(Filed: August 9, 2016)

Linda Dreeben

Jill A. Griffin

Milakshmi V. Rajapakse [ARGUED]

National Labor Relations Board

1015 Half Street, SE

Washington, DC 20570

Counsel for National Labor Relations Board

Brett M. Anders

Jackson Lewis

220 Headquarters Plaza

East Tower, 7th Floor

Morristown, NJ 07960

David A. Prather

Ivan Rich, Jr. [ARGUED]

FedEx Freight Corp

1715 Aaron Brenner Drive

Suite 600

Memphis, TN 38120

Counsel for FedEx Freight, Inc.

2

____________________

OPINION

____________________

SCIRICA, Circuit Judge

The National Labor Relations Board certified a

collective-bargaining unit comprised of FedEx Freight, Inc.

drivers at FedEx’s South Brunswick Terminal in Monmouth

Junction, New Jersey. To test the appropriateness of the unit,

FedEx refused to bargain with the unit’s certified bargaining

representative, Local 701, contending the terminal’s

dockworkers must also be included in the unit.1 The Regional

Director issued an unfair labor practices order against FedEx,

and the Board granted summary judgment in favor of the

union. FedEx filed a petition for review, contending the

Board (having adopted the Regional Director’s reasoning)

abused its discretion in certifying the unit because it applied a

unit-determination standard from Specialty Healthcare &

1

“[T]o challenge the union’s certification the employer must

refuse to bargain, triggering unfair labor practice proceedings

under Section 8(a)(5).” Wellman Indus., Inc. v. NLRB, 490

F.2d 427, 430 (4th Cir. 1974); see also St. Margaret Mem’l

Hosp. v. NLRB, 991 F.2d 1146, 1151 n.5 (3d Cir. 1993)

(“Because certification orders are not final appealable orders,

St. Margaret had to expose itself to unfair labor practice

charges in order to challenge the validity of the certification

in the courts.” (internal citations omitted)).

3

Rehabilitation Center, 357 N.L.R.B. No. 83 (2011), enforced

sub nom. Kindred Nursing Centers East, LLC v. NLRB, 727

F.3d 552 (6th Cir. 2013). It contends this decision violated

Board precedent, the National Labor Relations Act, and the

Administrative Procedure Act. Alternatively, FedEx contends

that even if the Specialty Healthcare standard applies, the

Board abused its discretion by failing to properly apply it

here.2

Because the Board’s interpretation of the legal

standard to apply in unit-determination cases in Specialty

Healthcare was reasonable, and the Board properly applied

that standard here, we will deny the petition for review and

grant the Board’s cross-petition for enforcement of its order

to bargain.

I.

FedEx provides pick-up and delivery services to

customers throughout the United States and has a service

center, or “terminal”—the South Brunswick Terminal—in

Monmouth Junction, New Jersey. This terminal has an

administrative building and a dock where freight is loaded

and unloaded onto FedEx trucks by FedEx dockworkers.

There is also a yard surrounding the office building and dock

where these dockworkers move and store vehicles and

equipment.

2

The Board had jurisdiction under 29 U.S.C. § 160(a) of the

NLRA. We have jurisdiction over this appeal from the

Board’s decision under 29 U.S.C. § 160(e) because FedEx

conducts business in New Jersey.

4

The FedEx employees at issue here are city and road

drivers and dockworkers.3 City drivers transport freight

locally, and road drivers transport freight over longer

distances. The petitioned-for unit is comprised of all drivers,

both city and road, but excludes all dockworkers. FedEx’s

South Brunswick Terminal employs eighty-one city drivers,

thirty-three road drivers, and fifty-two dockworkers. All

drivers are full-time employees, and twenty of the fifty-two

dockworkers are full-time employees—the other thirty-two

dockworkers are part-time.

The basic requirements for city and road drivers are

the same—all drivers must have a commercial driver’s

license, at least one year of relevant driving experience (or

have gone through FedEx’s one-year dock-to-driver program,

see infra), and have acceptable motor-vehicle reports. They

must also submit to random drug testing and wear company-

issued uniforms. All drivers spend most of their working time

away from the dock and are supervised remotely by

dispatchers—operational supervisors who rotate between

dock and dispatch supervision. In addition, either type of

driver “[m]ay be required to perform job duties of [the other

type of driver] or [of] a dock employee where operationally

necessary.” J.A. 72, 74–75.

The differences between city and road drivers

primarily relate to compensation. Although all drivers’ wages

are based on their years of experience, city drivers are paid

between $20.63 and $24.93 per hour, whether or not they are

driving or working on the dock. Road drivers make the same

3

Neither party contends the South Brunswick Terminal’s

administrative employees should be part of the unit.

5

as city drivers when working on the dock or driving locally,

but make between $0.53 and $0.62 per mile when driving

longer distances.

Unlike drivers, dockworkers work only in the yard or

on the dock. Dockworkers load freight onto outbound trailers

and unload freight from inbound trailers. They may

occasionally drive forklifts and other vehicles within the yard

to move equipment from place to place (“hostling”),4 but this

driving does not require a commercial driver’s license nor

involve the types of vehicles city and road drivers use.

Moreover—unlike the requirements for drivers—no

relevant work experience is required to be a dockworker.

Dockworkers are also not required to wear uniforms nor are

they subject to random drug testing. Full-time dockworkers,

like drivers, select their schedules based on seniority. But

part-time dockworkers do not—FedEx assigns part-time

dockworkers to a shift when they are hired.

Dockworkers also earn considerably less than drivers.

Full-time dockworkers earn an average of $20.13 an hour—

fifty cents per hour less than the average city driver—and

part-time dockworkers make only between $16.31 and $18.31

per hour. Dockworkers have an opportunity to become drivers

through the “dock-to-driver” program,5 but only about 19

4

FedEx describes hostling as “staging trailers in the yard by

moving an empty trailer to a specific door on the dock for

loading, or moving a trailer that was just unloaded away from

the dock.” J.A. 188 n.6.

5

This program allows dockworkers to train to become drivers

with FedEx, and includes a five-week training course to help

6

percent of FedEx’s drivers at the South Brunswick Terminal

(24 percent of the road drivers and 16 percent of the city

drivers) graduated from the program. No employee has

moved in the opposite direction—from driver to dockworker.

Because drivers and dockworkers are employed by

FedEx, they unsurprisingly have some common conditions of

employment. All drivers and dockworkers are eligible for the

same retirement, healthcare benefits, and personal days off

(although part-time dockworkers do not receive paid holidays

and cannot accrue paid vacation time). In addition, all drivers

and dockworkers share the same break room and locker

rooms and must abide by the “General Responsibilities”

handbook for all FedEx employees. And, as noted, drivers

spend a small amount of their time doing dock work. In 2012,

about 3.5 percent of city drivers’ time and 10 percent of road

drivers’ time was spent performing dock work at the South

Brunswick Terminal.6

II.

We first address whether FedEx preserved its

challenges to Specialty Healthcare. In this case, FedEx

incorporated the arguments from its previous request for

review of the Regional Director’s unit determination in its

Response to Notice to Show Cause. Parties often incorporate,

rather than restate, prior arguments because of the Board’s

dockworkers get a commercial driver’s license. Dockworkers

work full-time as dockworkers while participating in the

program.

6

In 2012, this represented 14 percent of all dock work

performed at the South Brunswick Terminal.

7

“no-relitigation rule.” Nathan Katz Realty, LLC v. NLRB, 251

F.3d 981, 987 (D.C. Cir. 2001). Under this rule, “[d]enial of a

request for review [by the Board of the Regional Director’s

decision] shall . . . preclude relitigating any such issues in any

related subsequent unfair labor practice proceeding.” 29

C.F.R. § 102.67(g) (2015); see also Nathan Katz, 251 F.3d at

986 (explaining that under this rule an employer may

“incorporate[] by reference and reaffirm[] by reference its

post election objections”) (internal quotation marks and

citation omitted)). Here, FedEx incorporated in its Response

to Notice to Show Cause “the reasons and legal arguments set

forth in [its] Request for Review as the basis for its refusal to

recognize the Union.” J.A. 217. Therefore, we will consider

the arguments set forth in this prior proceeding.

The Board contends FedEx waived any challenges to

Specialty Healthcare because, in its request for review,

FedEx applied the overwhelming-community-of-interest

standard described in Specialty Healthcare rather than argue

Specialty Healthcare was wrongly decided. FedEx stated its

disapproval of the Specialty Healthcare decision in a

footnote.

Under 29 U.S.C. § 160(e), “[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 crucial

question in a section 160(e) analysis is whether the Board

“‘received adequate notice of the basis for the objection.’”

FedEx Freight, Inc. v. NLRB, 816 F.3d 515, 521 (8th Cir.

2016) (quoting Nathan Katz, 251 F.3d at 985); see also NLRB

v. FES, 301 F.3d 83, 89 (3d Cir. 2002) (holding that because

8

the “tenor of FES’s challenge before the Board raised a

purely factual question” and did not “provide[] the basis for

its challenge,” FES failed to raise the issue before the Board);

Nathan Katz, 251 F.3d at 986 (explaining a petitioner “has

forfeited its right to challenge the Board’s disposition” when

the petitioner “completely fails to raise an issue during an

unfair labor practice proceeding” (internal citation and

quotation marks omitted)).

Despite the Board’s arguments to the contrary,

FedEx’s footnote in its petition for review provided sufficient

notice. The footnote reads:

[FedEx] posits that Specialty Healthcare was decided

erroneously, largely for the reasons cited in Member

Hayes’ dissent therein. However, on the assumption

that [the] Board will not now revisit its decision there,

[FedEx] alternatively contends that the case at bar was

decided incorrectly even under the rule of Specialty

Healthcare and its progeny.

J.A. 183 n.4. As indicated, the footnote states clearly “that

Specialty Healthcare was decided erroneously,” and gives as

the basis for its challenge “the reasons cited in Member

[Brian] Hayes’[s] dissent therein.” Id. The footnote also states

that FedEx’s argument under Specialty Healthcare’s

overwhelming-community-of-interest test was an alternative

argument. Its primary argument was that “Specialty

Healthcare was decided erroneously.” But, “on the

assumption that [the] Board [would] not now revisit its

decision,” FedEx focused its briefing under the alternative

9

theory. Id.7

Board Member Harry Johnson’s concurrence in the

Board’s summary affirmance of the Regional Director’s unit

determination indicates this footnote provided sufficient

notice of FedEx’s Specialty Healthcare challenge. Johnson

declined to apply the Specialty Healthcare test, finding the

unit appropriate under the traditional community-of-interests

test. But he recognized the employer’s argument that the

Specialty Healthcare standard was misapplied and

“acknowledge[d] the well-argued points of the Employer in

this case and [in] recent cases” that the Board’s holding in

Specialty Healthcare was incorrect. J.A. 4 n.1.

Johnson’s concurrence reflects the Board’s acute

awareness of recent and active challenges to Specialty

Healthcare. See Macy’s, Inc. v. NLRB, No. 15-60022, ----

f.3d----, 2016 WL 3124847, at *6–*9 (5th Cir. Jun 2, 2016)

(addressing challenges to the unit-determination test

described in Specialty Healthcare); Nestle Dreyer’s Ice

Cream Co. v. NLRB, 821 F.3d 489, 498–502 (4th Cir. 2016)

7

In a parallel case, the Eighth Circuit also held FedEx did not

waive the Specialty Healthcare argument. See FedEx Freight,

816 F.3d at 521 (“FedEx stated in a footnote in each of its

requests for review of the determinations by the regional

director that ‘Specialty Healthcare was decided erroneously’

for the reasons stated in Board member Hayes’ dissent. . . .

The Board was aware of the FedEx challenge to Specialty

Healthcare . . . . This gave the Board adequate notice that

FedEx was objecting to the regional director’s use of the

Specialty Healthcare framework. We therefore have

jurisdiction to review the FedEx claims.”).

10

(same); FedEx Freight, 816 F.3d at 521–26 (same). The facts

at issue and legal standards used in these cases parallel those

here. It seems impossible, therefore, that the Board was not

on notice FedEx would challenge the Board’s Specialty

Healthcare decision.

Moreover, because the Board has refused to reconsider

its holding in Specialty Healthcare, employers have chosen to

challenge the validity and validation method of unit

certifications by refusing to bargain with the union, and

appealing these determinations to the relevant federal court of

appeals. Accordingly, it is not surprising that FedEx did not

pursue its challenge to Specialty Healthcare more vigorously

in its request for review before the Board, opting instead to

preserve its challenge for this appeal. See also FedEx Freight,

816 F.3d at 521.

Because the Board in this case had adequate notice of

FedEx’s challenges to Specialty Healthcare, there was no

waiver of these challenges, and we have jurisdiction to review

them.

III.

The primary issue before us is whether the Specialty

Healthcare Board’s clarification of its unit-determination

analysis is reconcilable with prior Board precedent, the

NLRA, and the APA. FedEx presses us to overrule Specialty

Healthcare, contending it misapplied the initial community-

of-interest test and improperly created a new heightened

standard—the overwhelming-community-of-interest test.

Section 9(a) of the NLRA provides for the designation

or selection of an exclusive representative for the purposes of

11

collective bargaining “by the majority of the employees in a

unit appropriate for such purposes.” 29 U.S.C. § 159(a). The

Supreme Court has held that section 9(a) “implies that the

initiative in selecting an appropriate unit resides with the

employees” and that “employees may seek to organize ‘a

unit’ that is ‘appropriate’—not necessarily the single most

appropriate unit.” Am. Hosp. Ass’n v. NLRB, 499 U.S. 606,

610 (1991) (emphasis in original). Accordingly, a union need

not be representative of all employees at a company, but

might only include employees “in a particular craft, or

perhaps just a portion thereof.” Id.8

To guide its resolution of unit determinations, the

Board may craft rules through rulemaking or adjudication. Id.

at 611–13. Because these rules interpret the NLRA, they are

subject to the principles of Chevron, U.S.A., Inc. v. Nat. Res.

Def. Council, Inc., 467 U.S. 837, 843 (1984). See NLRB v.

United Food & Commercial Workers Union, Local 23, 484

U.S. 112, 123–24 (1987) (hereinafter “UFCW”). Under

Chevron, if Congress has not “spoken to the precise question

at issue” and “the statute is silent or ambiguous with respect

to the specific issue, the question for the [reviewing] court is

whether the agency’s answer is based on a permissible

construction of the statute.” Chevron, 467 U.S. at 842–43.

Reviewing courts must “respect the judgment of the agency

empowered to apply the law to varying fact patterns, even if

the issue with nearly equal reason might be resolved one way

rather than another.” Holly Farms Corp. v. NLRB, 517 U.S.

392, 399 (1996) (internal citation and formatting omitted); see

also UFCW, 484 U.S. at 123 (explaining we “accord[] the

8

Section 9(b) of the NLRA grants the Board the authority to

determine whether a unit is appropriate. 29 U.S.C. § 159(b).

12

Board deference with regard to its interpretation of the NLRA

as long as its interpretation is rational and consistent with the

statute”); NLRB v. N.J. Bell Tel. Co., 936 F.2d 144, 147 (3d

Cir. 1991).

A Board decision may be unreasonable if it

incorporates new law but fails to “clearly announce[]” the

law, as this inhibits appellate courts’ “review [of the legal

changes] for their reasonableness and their compatibility with

the Act.” Allentown Mack Sales & Serv., Inc. v. NLRB, 522

U.S. 359, 378 (1988); see also Comite’ De Apoyo a Los

Trabajadores Agricolas v. Perez, 774 F.3d 173, 190 (3d Cir.

2014) (“Failure to consider relevant factors or provide an

adequate explanation for an agency action are indeed among

the wide range of reasons why agency action may be

judicially branded as arbitrary and capricious.” (internal

citation and quotation marks omitted)).

In Specialty Healthcare, the Board articulated a two-

step unit-determination test. First, under the initial

community-of-interest test, the Board determines whether the

unit is an appropriate unit, applying relevant traditional

factors. 357 N.L.R.B. No. 83, at *15. And second, if

notwithstanding this finding, a party contends additional

employees should be added, the Board looks at whether the

“employees in the more encompassing unit share ‘an

overwhelming community of interest’ such that there ‘is no

legitimate basis upon which to exclude certain employees

from it.’” Id. at *16 (quoting Blue Man Vegas, LLC v. NLRB,

529 F.3d 417, 421 (D.C. Cir. 2008)).

This heightened showing is required because “the

statute requires only an appropriate unit” and “it cannot be

13

that the mere fact that they also share a community of interest

with additional employees renders the smaller unit

inappropriate.” Id. at *15 (citing Blue Man Vegas, 529 F.3d at

421; Dunbar Armored, Inc. v. NLRB, 186 F.3d 844, 847 (7th

Cir. 1999); and Montgomery Ward & Co., 150 N.L.R.B. 598,

601 (1964)). The Board explained that although it “has

sometimes used different words to describe this

[overwhelming-community-of-interest] standard and has

sometimes decided cases such as this without articulating any

clear standard,” its evaluation of Board and appellate court

precedent showed it had consistently applied a heightened

standard in such situations. Id. at *17.

A.

We hold the initial community-of-interest test

described and applied by the Board in Specialty Healthcare

was in line with Board precedent. In Specialty Healthcare, the

Board explained that for a bargaining unit to be appropriate,

its members must share a community of interest. This

determination requires an analysis and weighing of

“traditional” relevant criteria or factors. Specialty Healthcare,

357 N.L.R.B. No. 83, at *15. These factors may include:

“[W]hether the employees are organized into a

separate department; have distinct skills and training;

have distinct job functions and perform distinct work .

. . [have] job overlap . . . ; are functionally integrated

with the Employer’s other employees; have frequent

contact with other employees; interchange with other

employees; have distinct terms and conditions of

employment; and are separately supervised.”

14

Id. (quoting United Operations, Inc., 338 N.L.R.B. No. 18,

2002 WL 3125799, at *1 (2002)); see also NLRB v. Saint

Francis Coll., 562 F.2d 246, 249 (3d Cir. 1977); Bartlett

Collins Co., 334 N.L.R.B. 484, 484 (2001) (“In determining

whether the employees possess a separate community of

interest, the Board examines such factors as mutuality of

interest in wages, hours, and other working conditions;

commonality of supervision; degree of skill and common

functions; frequency of contact and interchange with other

employees; and functional integration.”).

Applying this standard, the Specialty Healthcare

Board noted similarities among the employees within the

petitioned-for unit, and distinctions between them and

excluded employees. See Specialty Healthcare, 357 N.L.R.B.

No. 83, at *14. (“[Included employees] wear distinctive

[uniforms],” have “separate and distinct” supervision, have

“distinct wage scale,” and there was limited interaction

between the groups). The Board also found “no evidence of

significant functional interchange or overlapping job duties”

between included and excluded employees, id., and

emphasized the importance of departmental structure as an

organizing principle, see id. at *17.

This initial community-of-interest test—and its

application—reflects the standard used by the Board in prior

decisions. See Macy’s, 2016 WL 3124847, at *7 (“The

community of interest test articulated in Specialty Healthcare

and applied in this case was taken from the Board’s 2002

decision in United Operations . . . [and] does not look only at

the commonalities within the petitioned-for unit” but asks

“‘whether the employees are organized into a separate

department . . . [and] have distinct skills and training . . . .’”

15

(emphasis in original) (quoting Specialty Healthcare, 357

N.L.R.B. No. 83, at *14)). Accordingly, the Board’s initial

community-of-interest analysis in Specialty Healthcare was

not an abuse of discretion.9

B.

FedEx next contends the Specialty Healthcare Board

abused its discretion by standardizing the heightened

“overwhelming-community-of-interest” test it applies when

an interested party claims “the smallest appropriate unit

9

The Specialty Healthcare Board’s analysis under the initial

community-of-interest test is also in line with our precedent.

We have described twelve factors the Board often considers

in unit determinations:

(1) similarity in the scale and manner of determining

earnings; (2) similarity in employment benefits, hours

of work and other terms and conditions of

employment; (3) similarity in the kind of work

performed; (4) similarity in the qualifications, skills

and training of the employees; (5) frequency of contact

or interchange among the employees; (6) geographic

proximity; (7) continuity or integration of production

processes; (8) common supervision and determination

of labor-relations policy; (9) relationship to the

administrative organization of the employer; (10)

history of collective bargaining; (11) desires of the

affected employees; [and] (12) extent of union

organization.

Saint Francis Coll., 562 F.2d at 249 (quoting Robert A.

Gorman, Labor Law: Unionization and Collective Bargaining

69 (1976)).

16

contains additional employees.” Specialty Healthcare, 357

N.L.R.B. No. 83, at *15. FedEx offers three reasons for its

conclusion. First, it contends Board precedent does not

support the test; second, it claims the test violates section

9(c)(5) of the NLRA; and third, it argues the test is a rule of

general application and should have been created through

rulemaking, rather than through adjudication. We find none

of these reasons persuasive.

1. The Board’s Unit-Determination Precedent

FedEx contends the Specialty Healthcare Board failed

to provide a reasoned explanation for the “adoption” of the

overwhelming-community-of interest test. Like our sister

circuits, we believe FedEx “overstates the changes the Board

made in Specialty Healthcare. . . . [T]he Board clarified—

rather than overhauled—its unit-determination analysis.”

Nestle Dreyer’s, 821 F.3d at 500; see also Macy’s, Inc., 2016

WL 3124847, at *6 (quoting Nestle Dreyer’s, 821 F.3d at

500); FedEx Freight, 816 F.3d at 525 (“We conclude that the

overwhelming community of interest standard articulated in

Specialty Healthcare is not a material departure from past

precedent . . .”); Kindred Nursing Ctrs., LLC v. NLRB, 727

F.3d 552, 561 (6th Cir. 2013) (“The Board has used the

overwhelming-community-of-interest standard before, so its

adoption in Specialty Healthcare . . . is not new.”); Blue Man

Vegas, 529 F.3d at 421 (explaining the Board’s unit-

determination cases “generally conform to a consistent

analytic framework” in which, to challenge a unit that is

“prima facie appropriate”—i.e., a unit in which the

employees share a community of interest—the employer must

make a heightened showing that the unit is “truly

17

inappropriate”) (internal citation and quotation marks

omitted)).

As the Specialty Healthcare Board explained, although

it has used different words to describe the heightened

standard, it has long required “a showing that the included

and excluded employees share an overwhelming community

of interest.” 357 N.L.R.B. No. 83, at *16; see also FedEx

Freight, 816 F.3d at 523–24. For example, in United Rentals,

341 N.L.R.B. 540, 541 (2004), cited by the Board in Specialty

Healthcare, the Board reversed the Regional Director’s

approval of the unit because “the overwhelming and

undisputed evidence of overlapping duties and interchange

between the excluded employees and the petitioned-for

employees” demonstrated the excluded employees “share[d] .

. . a substantial community of interest with the petitioned-for

employees.” 341 N.L.R.B. at 541–42. And in Lanco

Construction Systems, Inc., 339 N.L.R.B. 1048 (2003), as

here, the Board considered and rejected the employer’s

argument that additional employees shared an “overwhelming

community of interests with its solely-employed carpenters

and helpers” requiring their inclusion in the unit. 339

N.L.R.B. at 1049; see also Overnite Transp. Co., 322

N.L.R.B. 723, 726 (1996) (explaining that the excluded

employees would “constitute a separate appropriate unit and

do not share such a close community of interest . . . as would

mandate their inclusion in the petitioned-for unit” (emphasis

omitted)).

The Specialty Healthcare Board also cited the D.C.

Circuit’s opinion in Blue Man Vegas, decided three years

earlier, as an accurate reflection of the Board’s historic use of

a heightened, overwhelming-community-of-interest standard

18

in such circumstances. 357 N.L.R.B. No. 83, at *16. Citing

various Board decisions, the D.C. Circuit explained that the

Board’s “unit determination cases generally conform to a

consistent analytic framework” in which, under the initial

community-of-interest test, the Board determines whether the

unit is “prima facie appropriate,” and then, because there can

be more than one appropriate bargaining unit, the person

challenging the unit must show the appropriate unit is “truly

inappropriate.” Blue Man Vegas, 529 F.3d at 421 (internal

quotation marks and citation omitted). The Board finds a unit

is truly inappropriate, the D.C. Circuit explained, if the

excluded employees “share an overwhelming community of

interest with the included employees” such that there is “no

legitimate basis upon which to exclude them.” Id. The

Board’s citation to and approval of the D.C. Circuit’s

understanding of Board precedent was not an adoption of new

law, but an attempt to standardize the phrasing of its

“consistent analytic framework.”

It is important to note, as the Fourth Circuit has, that

some statements in Specialty Healthcare might indicate

significant changes in Board policy. Of most importance, the

Board seems to suggest that “whether employees are

appropriately excluded from the petitioned-for unit is

addressed only in step two, the overwhelming-community-of-

interest analysis, not in step one, the traditional community-

of-interest analysis.” Nestle, 821 F.3d at 500 (emphasis in

original). This would constitute a significant change. But, as

noted supra, under the initial community-of-interest test, the

Specialty Healthcare Board did not look “solely and in

isolation, [at] the question [of] whether the employees in the

unit sought have interests in common with one another.”

Newton–Wellesley Hosp., 250 N.L.R.B. 409, 411 (1980).

19

Rather, it looked at similarities between the employees in the

petitioned-for unit and whether their interests were

sufficiently distinct from other employees. Because we find

the ultimate holdings of Specialty Healthcare, with respect to

the unit-determination standards, were not departures from

Board precedent, we conclude the Board’s interpretation and

clarification of the NLRA was reasonable and not an abuse of

discretion.

2. Violation of NLRA Section 9(c)(5)

FedEx also contends the Specialty Healthcare Board’s

overwhelming-community-of-interest test violates section

9(c)(5) of the NLRA because it ensures the union’s choice is

almost always the controlling factor.

Section 9(c)(5) states that “the extent to which the

employees have organized shall not be controlling.” 29

U.S.C. § 159(c)(5). But the extent to which employees have

organized can still be considered. Although Congress

“intended to overrule Board decisions where the unit

determined could only be supported on the basis of the extent

of organization,” it is clear from “both the language and

legislative history of § 9(c)(5) . . . that the provision was not

intended to prohibit the Board from considering the extent [to

which employees have organized] as one factor, though not

the controlling factor, in its unit determination.” NLRB v.

Metro. Life Ins. Co., 380 U.S. 438, 441–42 (1965) (emphasis

added) (internal footnote omitted).

FedEx contends that under Specialty Healthcare, the

union’s initial burden to show the proposed unit is appropriate

has been truncated—instead of showing the employees are

similar to one another and distinct from other employees, the

20

union now only has to show the employees in the proposed

unit are readily identifiable as a group. As discussed supra,

this is not the test. The union must first show the employees

comprise a readily identifiable group and share a community

of interest under the traditional test. Then, following a finding

of appropriateness, if a party wants to add additional

employees, it must show the additional employees share an

overwhelming community of interest with those in the

original unit. See Specialty Healthcare, 357 N.L.R.B. No. 83,

at *15. Therefore, we agree with the Fourth, Fifth, Sixth,

Eighth, and D.C. Circuits that “so long as the overwhelming

community of interest test is applied ‘only after the proposed

unit has been shown to be prima facie appropriate, the Board

does not run afoul of the statutory injunction that the extent of

the union’s organization not be given controlling weight.’”

FedEx Freight, 816 F.3d at 525 (emphasis in original) (quoting

Kindred Nursing, 727 F.3d at 565); see also Blue Man Vegas,

529 F.3d at 423.

In accordance with the Fourth Circuit’s recent

interpretation of its own precedent in Nestle Dreyer’s, the

Fourth Circuit’s reasoning in NLRB v. Lundy, 68 F.3d 1577

(4th Cir. 1995), does not persuade us otherwise. In Lundy, the

Board presumed the union-proposed unit was appropriate,

and then applied an overwhelming community-of-interest

standard. In other words, the Board never determined whether

the unit was appropriate under the traditional community-of-

interest test, but assumed it was and skipped to the question

of whether there was an overwhelming community of interest

between the employees. The Fourth Circuit found this method

effectively excluded employees suggested by the employer in

violation of section 9(c)(5). Lundy, 68 F.3d at 1581.

21

The facts of Lundy distinguish it from Specialty

Healthcare. As the Fourth Circuit recently explained in Nestle

Dreyer’s:

Lundy does not establish that the overwhelming-

community-of-interest test as later applied in Specialty

Healthcare fails to comport with the NLRA. Instead,

Lundy prohibits the overwhelming-community-of-

interest test where the Board first conducts a deficient

community-of-interest analysis . . . . But in Lundy we

had no occasion to determine whether the

overwhelming-community-of-interest test would

offend the NLRA in a case where the Board properly

conducts Specialty Healthcare’s step-one analysis by

determining that the members of the petitioned-for unit

share a distinct community of interest. With such a

case now before us, we find Lundy distinguishable.

Nestle Dreyer’s, 821 F.3d at 499. Each circuit court to hear

this issue has found likewise.10

10

See Macy’s, Inc., 2016 WL 3124847, at *7 (“Where the

Board ‘rigorously weigh[s] the traditional community-of-

interest factors to ensure that the proposed unit was proper

under the NLRA . . . the overwhelming community of

interest’ [test] does not conflict with the Act. . . . That is

precisely what the Board did in the instant case. As a result,

the test and its application do not violate Section 9(c).”

(quoting Nestle Dreyer’s, 821 F.3d at 499)); FedEx Freight,

816 F.3d at 525–26 (“The Lundy court did not hold that any

heightened standard violates section 9(c)(5) . . . . We agree

with the D.C. Circuit that the use of an overwhelming

community of interest test at the second step of the Board’s

22

Finally, FedEx contends that even if the

overwhelming-community-of-interest standard is not a de

jure violation of section 9(c)(5), recent Board decisions

suggest the test creates such an impossible standard for

employers to meet that as applied, it will always privilege the

employees’ proposed unit.11 This privileging occurs, FedEx

argues, because the Board promotes the departmental or

administrative form over all commonly shared factors,

making the appropriateness of the unit a foregone conclusion

in almost all circumstances.

analysis does not violate section 9(c)(5) because the Board

‘did not presume the union’s proposed unit was valid, as it

had done in Lundy.’” (quoting Blue Man Vegas, 529 F.3d at

423)); Kindred Nursing, 727 F.3d at 564–65 (“[T]he Board

did not [violate section 9(c)(5) by] assum[ing] that the CNA-

only unit was appropriate. Instead, it applied the community-

of-interest test . . . to find that there were substantial factors

establishing that the CNAs shared a community of interest

and therefore constituted an appropriate unit. . . . Nor does the

overwhelming-community-of-interest test violate section

9(c)(5) . . . ‘as long as the Board applies the overwhelming

community of interest standard only after the proposed unit

has been shown to be prima facie appropriate . . . .’” (internal

formatting omitted) (emphasis in original) (quoting Blue Man

Vegas, 529 F.3d at 423)).

11

Some of the cases cited by FedEx include: DPI Secuprint,

Inc., 362 N.L.R.B. No. 172, 2015 WL 5001021 (2015); Guide

Dogs for the Blind, Inc., 359 N.L.R.B. No. 151, 2013 WL

3365658 (2013); Fraser Eng’g, 359 N.L.R.B. No. 80, 2013

WL 1181583 (2013); and DTG Operations, Inc., 357

N.L.R.B. No. 175, 2011 WL 7052275 (2011).

23

This argument is unconvincing. Even if the Board has

approved more units organized along departmental lines—

lines often created by the employer—it does not follow that

the Board privileges the unit determinations of the employees,

and FedEx has not shown otherwise. Moreover, the Board has

been clear that it will not approve “fractured” units or

arbitrary segments of employees. See Odwalla, Inc., 357

N.L.R.B. No. 132, at *5 (2011) (using the overwhelming-

community-of-interest test to find additional employees

should be included in the otherwise appropriate unit because

the recommended unit was a fractured unit—an “arbitrary

segment” with no rational basis); see also Neiman Marcus

Grp., Inc., 361 N.L.R.B. No. 11, 2014 WL 3724884, at *4

(2014) (finding there was no community of interest because

“[t]he boundaries of the petitioned-for unit [did] not resemble

any administrative or operational lines drawn by the

Employer,” but not reaching the overwhelming-community-

of-interest test).

Accordingly, we conclude the overwhelming-

community-of-interest test clarified in Specialty Healthcare

does not conflict with section 9(c)(5).12

12

FedEx also argues the Specialty Healthcare Board

improperly imported the overwhelming-community-of-

interest test from accretion cases, in which “new employees

are added to an existing bargaining unit without a

representation election; therefore, the showing of shared

characteristics must be higher to protect employee interests.”

Lundy, 68 F.3d at 1581 (emphasis in original). This argument

is not persuasive. Although the “overwhelming-community-

of-interest” language from the Specialty Healthcare test is the

same language used in accretion cases, the frameworks of the

24

3. Rulemaking Versus Adjudication

Finally, FedEx contends Specialty Healthcare was

wrongly decided because the overwhelming-community-of-

interest test was a new policy and should have been

promulgated through rulemaking rather than adjudication.

We recognize that “the choice made between

proceeding by general rule or by individual, ad hoc litigation

is one that lies primarily in the informed discretion of the

administrative agency.” SEC v. Chenery Corp., 332 U.S. 194,

203 (1947).13 But as previously explained, the overwhelming-

community-of-interest test described in Specialty Healthcare

was not new policy, but a consolidation and clarification of

the heightened standard used by the Board in prior similar

situations. Therefore, we need not address whether the Board

abused its sound discretion in this regard.

tests are different. Unlike in accretion cases, in unit-

determination cases like Specialty Healthcare and this case,

the Board applies the “overwhelming-community-of-interest”

test only after conducting an initial community-of-interest

analysis and finding the employee-proposed unit appropriate.

13

Moreover, the Board, “uniquely among major federal

administrative agencies, has chosen to promulgate virtually

all the legal rules in its field through adjudication rather than

[through] rulemaking.” Allentown, 522 U.S. at 374; see also

Charlotte Garden, Toward Politically Stable NLRB

Lawmaking: Rulemaking vs. Adjudication, 64 Emory L.J.

1469, 1471 (2015) (explaining the Board generally creates

policies through adjudication rather than through

rulemaking).

25

IV.

Having found the Board’s clarification of the unit-

determination standard in Specialty Healthcare reasonable,

we consider whether the Board properly applied this two-step

framework here.

In this case, the Regional Director, as confirmed by the

Board, found (1) the petitioned-for unit of FedEx drivers was

an appropriate unit under the initial community-of-interest

test; and (2) the dockworkers did not share an overwhelming

community of interest with the drivers such that they must be

included in the unit.

To reiterate, under the initial community-of-interest

test, the Board weighs a variety of factors—selected based on

their relevance to the unit at hand—to determine whether the

employees in the petitioned-for unit share a community of

interest. These factors may include whether the employees in

the unit are “organized into a separate department; have

distinct skills and training; have distinct job functions and

perform distinct work[;] . . . are functionally integrated with

the Employer’s other employees; . . . have distinct terms and

conditions of employment; and are separately supervised.”

United Operations, 338 N.L.R.B., at *1. Applying this test,

the Regional Director first looked at whether the union had

shown the petitioned-for unit comprised a “clearly

identifiable group”—i.e., whether the employees in the unit

were internally similar or made up a fractured unit—and then

at whether this group shared a community of interest. He

found the group was “clearly identifiable because . . . ‘it

track[ed] a dividing line drawn by the Employer.’” J.A. 12

26

(citing Macy’s Inc., 361 N.L.R.B. No. 4, 2014 WL 3613065,

at *12 (2014)). Specifically, “[t]he petitioned-for unit [was]

structured along the lines of classification, job function, and

skills,” and although the dockworkers and drivers were not in

separate departments, “there [was] no question that the

Employer treat[ed] the driver classification differently in

almost every operational and administrative sense.” Id. The

Regional Director also found the drivers distinguishable from

the dockworkers because of their uniform requirements,

commercial driver’s license requirements, and driver-specific

job descriptions. Id.

For many of the same reasons, the Regional Director

found the drivers in the petitioned-for unit shared a

community of interest. They “engaged in virtually the same

task—moving freight from place to place,” were “distinctly

qualified and skilled because of their licensure requirements,

and use[d] the same type of equipment.” Id. at 13. Moreover,

all drivers were full-time employees with the same benefits

and similar compensation, experienced similar working

conditions, were subjected to random drug testing, and

applied for shifts based on seniority.

We find the Regional Director’s application of the

initial community-of-interest test (which was adopted by the

Board) was not an abuse of discretion. He weighed relevant

factors to determine whether the union had shown the

petitioned-for unit was an appropriate unit—looking not only

at whether the employees in the petitioned-for unit were

similar and comprised a readily identifiable group, but also at

whether these employees were sufficiently distinct from other

employees.

27

The Regional Director also properly applied the

overwhelming-community-of-interest analysis. Under this

test, the burden switched to FedEx to show that an otherwise

appropriate unit of drivers was inappropriate because

dockworkers shared an overwhelming community of interest

with them. The Regional Director agreed with the union,

finding sufficient distinctions between the employees. He

noted that dockworkers have no prerequisites for

employment, whereas drivers must have a Class A

commercial driver’s license with various certifications, and

that, unlike dockworkers, drivers are subject to random drug

testing because of the nature of their work. The Regional

Director also noted the disparity in wages between

dockworkers (including part-time dockworkers) and drivers,

and the distinct work locations of the employees—

dockworkers “work almost exclusively within the Terminal,”

while drivers work outside the terminal. J.A. 13. He also

observed that dockworkers and drivers do not frequently

interact with one another, and that there is only a one-way

interchange between positions—from dockworker to driver

through the dock-to-driver program.

The Regional Director did recognize “a few areas of

commonality between the three classifications, chiefly in

common supervision,” but he concluded that “these areas

[fell] far short of establishing the overwhelming community

of interest between the Dockworkers and the employees in the

petitioned-for unit that would be necessary to require the

Dockworkers’ inclusion.” Id.

Given the Board’s discretion to find an appropriate

unit—not necessarily the most appropriate unit—and our

deferential standard of review, we hold the Board’s

conclusion that there was no overwhelming community of

28

interest was not an abuse of discretion.

V.

For the foregoing reasons, we will deny FedEx’s

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

enforcement of its order.

29

JORDAN, Circuit Judge, concurring in part and concurring in

the judgment:

We have routinely held that a single passing reference

to an issue in a footnote, without squarely arguing it, is

insufficient to preserve that issue for our review on appeal.

See, e.g., Prometheus Radio Project v. FCC, 2016 WL

3003675, at *15 (3d Cir. May 25, 2016); John Wyeth & Bro.

Ltd. v. CIGNA Int’l Corp., 119 F.3d 1070, 1076 n.6 (3d Cir.

1997) (Alito, J.). Our sister circuits also decline to consider

issues raised in such perfunctory fashion.1 There is good

reason for this unanimous position. Brief, casual references

to arguments do not put the opposing party on adequate

1

“Federal courts of appeals refuse to take cognizance

of arguments that are made in passing without proper

development.” Johnson v. Williams, 133 S. Ct. 1088, 1095

(2013); see also Therrien v. Target Corp., 617 F.3d 1242,

1253 (10th Cir. 2010); Carmichael v. Kellogg, Brown & Root

Servs., Inc., 572 F.3d 1271, 1283 (11th Cir. 2009);

Minneapolis Taxi Owners Coal., Inc. v. City of Minneapolis,

572 F.3d 502, 506 n.2 (8th Cir. 2009); United States v.

Strong, 489 F.3d 1055, 1060 n.4 (9th Cir. 2007); City of

Syracuse v. Onondaga Cty., 464 F.3d 297, 308 (2d Cir.

2006); Smithkline Beecham Corp. v. Apotex Corp., 439 F.3d

1312, 1320 (Fed. Cir. 2006); United States v. Dairy Farmers

of Am., Inc., 426 F.3d 850, 856 (6th Cir. 2005); IGEN Int’l,

Inc. v. Roche Diagnostics GmbH, 335 F.3d 303, 309 n.3 (4th

Cir. 2003); Sugarcane Growers Coop. of Fla. v. Veneman,

289 F.3d 89, 93 n.3 (D.C. Cir. 2002); Beazley v. Johnson, 242

F.3d 248, 270 (5th Cir. 2001); Nat’l Foreign Trade Council v.

Natsios, 181 F.3d 38, 60 n.17 (1st Cir. 1999); Bakalis v.

Golembeski, 35 F.3d 318, 326 n.8 (7th Cir. 1994).

1

notice of the issue, nor do they develop it sufficiently to aid

our review. That is particularly true “where important and

complex issues of law are presented, [so] a far more detailed

exposition of [an] argument is required to preserve an issue”

in that context. Frank v. Colt Indus., Inc., 910 F.2d 90, 100

(3d Cir. 1990). Despite this well-recognized rule, my

colleagues in the Majority conclude that a one-sentence

statement incorporating a two-sentence footnote – which

itself only incorporates the views briefly expressed in a

dissenting opinion – is adequate to preserve FedEx’s

arguments before the NLRB. Were such a tenuous

“argument” made before this Court, we would never consider

it. See United States v. Joseph, 730 F.3d 336, 341 (3d Cir.

2013) (“[R]aising an issue in the District Court is insufficient

to preserve for appeal all arguments bearing on that issue”

(emphasis added).). No reason has been suggested why the

rule for raising arguments before the NLRB should be more

relaxed than the rule that applies in this and every other court

of appeals, and, as explained later, there is good reason to

believe that the rule for arguments to the NLRB should be

even more rigorous. I therefore respectfully disagree with

Part II of the Majority opinion, and would conclude that

FedEx’s arguments challenging the standard set forth in

Specialty Healthcare & Rehabilitation Center, 357 NLRB

934 (2011), see infra note 5, were inadequately raised to the

Board, leaving us without jurisdiction to consider them,

pursuant to 29 U.S.C. § 160(e).2

2

Because I regard FedEx’s challenge to the Specialty

Healthcare standard as waived, I would only review whether

the Board properly applied that standard. As to that question,

I join Part IV of the Majority’s opinion – I agree that the

Regional Director’s application of Specialty Healthcare in

2

As the Majority correctly recognizes, when we

consider petitions from NLRB decisions, our jurisdiction is

limited by statute only to a review of issues raised before the

Board. “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.”3

this case (which was adopted by the Board) was a proper

exercise of its discretion. I therefore also concur in the

judgment denying the petition for review and granting the

petition for enforcement.

3

FedEx has not alleged that any “extraordinary

circumstances” are present in this case to excuse its failure to

make its arguments before the Board. And even if it had,

[a] review of the cases shows that the

“extraordinary circumstances” provision of

Section 10(e) (29 U.S.C. § 160(e)) (excusing

the losing party’s failure to make objections to

the Board) has been applied only in rare cases,

as when a snow storm closes the Board’s

offices, or when a telephone and taxi strike

prevent delivery of the objections, or when an

unusually early mail pickup delays delivery.

NLRB v. STR, Inc., 549 F.2d 641, 642 (9th Cir. 1977) (per

curiam) (citations omitted); see also 1621 Route 22 West

Operating Co., LLC v. NLRB, Nos. 15-2466 & 15-2586, 2016

WL 3146014, at *7 (3d Cir. June 6, 2016) (noting that a

misapplication of the National Labor Relations Act by the

Board does not constitute an “extraordinary circumstance”);

3

29 U.S.C. § 160(e);4 see Woelke & Romero Framing, Inc. v.

NLRB, 456 U.S. 645, 666 (1982) (“[T]he Court of Appeals

lacks jurisdiction to review objections that were not urged

before the Board … .”). “The Supreme Court has construed

this rule strictly,” NLRB v. Konig, 79 F.3d 354, 359 (3d Cir.

1996), and we have likewise “shown unusual unanimity in

labor cases in strictly adhering to the requirement,” NLRB v.

Wolff & Munier, Inc., 747 F.2d 156, 166 (3d Cir. 1984)

(Sloviter, J., dissenting). “[T]o effectively preserve an issue,

the respondent’s exception must apprise the Board of the

issue that the responding party intends to press on review

sufficiently enough that the Board may consider the exception

on the merits.” Cast North America (Trucking) Ltd. v. NLRB,

207 F.3d 994, 1000 (7th Cir. 2000) (internal quotation marks

omitted). The Board’s rules similarly require parties to “set

forth specifically the questions of procedure, fact, law, or

policy to which exception is taken,” “concisely state the

grounds for the exception,” and “specifically urge[]” any

Advanced Disposal Servs. East, Inc. v. NLRB, 820 F.3d 592,

600 (3d Cir. 2016) (holding that “a challenge which goes to

the composition of the NLRB, and thus implicates its

authority to act, constitutes an ‘extraordinary circumstance’

under § 160(e)”).

4

Although our jurisdiction in this case arises under

both 29 U.S.C. §§ 160(e) and (f), as the parties petitioned for

both review and enforcement of the underlying order, the

requirement that an issue be presented to the Board for us to

have jurisdiction “applies to both enforcement and review

proceedings.” Oldwick Materials, Inc. v. NLRB, 732 F.2d

339, 341 (3d Cir. 1984).

4

exception, or risk having the argument “be deemed to have

been waived.” 29 C.F.R. § 102.46(b).

Because the preservation requirement of § 160(e) goes

to our jurisdiction, its application is “mandatory, not

discretionary.” Oldwick Materials, Inc. v. NLRB, 732 F.2d

339, 341 (3d Cir. 1984). “Th[at] rule serves a sound purpose

… [and] we are bound by it.” Detroit Edison Co. v. NLRB,

440 U.S. 301, 311 n.10 (1979). The jurisdictional bar is

“designed to allow the NLRB the first opportunity to consider

objections and to ensure that reviewing courts receive the full

benefit of the NLRB’s expertise.” Cast North America, 207

F.3d at 1000.

Here, FedEx provided two submissions to the Board.

First, the company sought review of the regional director’s

decision in the underlying representation proceeding. In that

submission, it generally argued that the regional director had

misapplied the Specialty Healthcare standard – laying out an

extensive factual argument about the integrated work of

dockworkers and drivers – with, in the following footnote,

only one brief reference to a possible legal challenge to the

overall standard:

The Employer posits that Specialty Healthcare

was decided erroneously, largely for the reasons

cited in Member Hayes’[s] dissent therein.

However, on the assumption that [the] Board

will not now revisit its decision there, the

Employer alternatively contends that the case at

bar was decided incorrectly even under the rule

of Specialty Healthcare and its progeny.

5

(JA at 183 n.4.) In the remaining twenty-three pages of its

brief, FedEx made no other objection to the Specialty

Healthcare standard, arguing only its proper application. It

also stated at the end of its brief that “[t]he Board has made

clear that the decision in Specialty Healthcare did not create a

new community of interest test.” (JA at 204.) And it said that

without comment or quarrel. FedEx’s first submission to the

Board is also notable for never actually applying any standard

but the one from Specialty Healthcare. The omission of any

effort to apply the more “traditional” analysis is telling5 – if

5

As explained in the Majority opinion, Specialty

Healthcare set out the “overwhelming community of

interests” test, in which an employer seeking to expand a

petitioned-for unit composed of a readily identifiable group

that shares a community of interest must demonstrate that the

employees it seeks to add “share an overwhelming

community of interest with those in the petitioned-for unit.”

Specialty Healthcare, 357 NLRB 934, 946 (2011) (emphasis

added). In dissent, Member Hayes noted that, “in a correct

application of the traditional community of interest test, the

Board never addresses, solely and in isolation, the question

whether the employees in the unit sought have interests in

common with one another.” Id. at 951 (internal quotation

marks omitted). In other words, the Specialty Healthcare test

starts by looking exclusively at the commonalities of the

petitioned-for unit, whereas the “traditional” analysis

contrasts the employees in that unit with other employees to

determine “whether the interests of the group sought are

sufficiently distinct from those of other employees to warrant

the establishment of a separate unit.” Id. (internal quotation

marks omitted). In Member Hayes’s view, “[t]he

‘overwhelming community of interest’ test [the Board

6

FedEx really was arguing that the Board should apply the

traditional analysis, it should have done so itself.

Thereafter, FedEx filed its second submission to the

Board in response to a notice to show cause in the subsequent

unfair labor practice proceeding. With no specificity, it

incorporated its previous submission by reference, saying

simply, “[t]he Employer continues to rely upon the reasons

and legal arguments set forth in the Employer’s Request For

Review as the basis for its refusal to recognize the Union.”

(JA at 217.) In the balance of its argument, FedEx again

challenged only the proper application of the Specialty

Healthcare standard.

Now, however, FedEx has made the strategic decision

to change its argument into a direct challenge of that standard.

If it had persevered in challenging only the proper application

of Specialty Healthcare, principles of deference that bind us

would have placed it in a difficult position. FedEx would

have had “to show that the Board abused its discretion in

determining the appropriateness of the bargaining unit in

question.” Presbyterian Univ. Hosp. v. NLRB, 88 F.3d 1300,

1303 (3d Cir. 1996) (internal quotation marks omitted). That

would have been an “uphill battle.” Id. Likely recognizing as

much, the company chose a different fight. So, in its opening

brief before us, FedEx made no argument whatsoever about

the proper application of the Specialty Healthcare standard.

None. Instead, it dedicated the entire twenty-five pages of

argument to a legal challenge to the existence of the Specialty

majority] endorse[d] cannot be reconciled with the traditional

appropriate unit test.” Id.

7

Healthcare standard, laying out the arguments that the

Majority addresses in Part III of its opinion.

Perhaps it is not coincidental that we “exercise plenary

review over questions of law and the Board’s application of

legal precepts.” NLRB v. Attleboro Assocs., Ltd., 176 F.3d

154, 160 (3d Cir. 1999). We have previously held that a party

cannot turn factual arguments raised before the Board into

legal arguments before our Court, which is exactly what

FedEx has done here. See NLRB v. FES, a Div. of Thermo

Power, 301 F.3d 83, 89 (3d Cir. 2002) (holding that because

“[t]he tenor of [the employer’s] challenge before the Board

raised a purely factual question,” a related legal challenge

was jurisdictionally barred). But, curiously, the Majority is

satisfied with that shape shifting. By my colleagues’

reckoning, FedEx legitimately changed its argument from one

that would have required strict deference to the Board into

one that permitted plenary review of the Board’s legal

conclusions. Although FedEx has lost its challenge to the

applicable standard – and, as I note at the end of this

discussion, see infra note 12, I too question the legitimacy of

the standard – we should not be entertaining the challenge at

all.

FedEx says that its footnote was sufficient to preserve

for our review its attack on Specialty Healthcare because

the General Counsel has suffered no prejudice

from FedEx Freight’s purported failure to raise

the Specialty Healthcare issue during the unfair

labor practice proceeding, unless of course the

General Counsel is contending that the Board

might have overturned Specialty Healthcare

8

had FedEx Freight decided to pursue its

argument more vigorously. That, however, was

simply not going to happen.

(Reply Br. at 5-6.) Its attorney echoed that point at oral

argument: “It would have been fruitless for us to argue this

below. The Board was going to do what it was going to do.”

Oral Argument at 05:30, available at http://www2.ca3.

uscourts.gov/oralargument/audio/15-2585NLRBv.FEDEX

FreightINC.mp3 (argued March 1, 2016). The Majority

agrees, saying that “it is not surprising that FedEx did not

pursue its challenge to Specialty Healthcare more vigorously

in its request for review before the Board” because the Board

had already “refused to reconsider its holding in Specialty

Healthcare.” (Majority Op. at 11.) But there is an obvious

difference between a strategic lack of vigor and the outright

omission of an argument. FedEx is, of course, free to make

strategic decisions about which arguments to emphasize and

which to discuss only briefly, but it must at least make an

argument to the Board for us to have jurisdiction to review it.

Cf. MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 125

(2007) (holding that a “futile” argument to overrule a circuit

precedent was preserved for further consideration when the

argument was limited only “to a few pages of [an] appellate

brief” (emphasis added)). That FedEx likely would not have

prevailed before the Board in challenging Specialty

Healthcare is irrelevant. The jurisdictional bar of § 160(e)

does not vary based upon the likelihood of success of the

waived argument. Indeed, the Supreme Court has already

rejected the idea that a party can avoid waiver if it had “no

practical reason” to raise a particular argument before the

Board. Detroit Edison, 440 U.S. at 311 n.10 (“If this ground

were accepted as an ‘extraordinary circumstance’ … little

9

would be left of the statutory exception.”). Section 160(e) is

straightforward: If an issue is not adequately raised before the

Board, we may not consider it.

The Majority says that “FedEx’s footnote in its

petition for review provided sufficient notice” because it gave

“as the basis for its challenge the reasons cited in Member

[Brian] Hayes’[s] dissent” in Specialty Healthcare. (Majority

Op. at 9 (alteration in original) (internal quotation marks

omitted).) I cannot agree. For starters, FedEx’s footnote is

not even phrased as an argument that the Board should

overrule Specialty Healthcare; it simply “posits” the

company’s disagreement with Specialty Healthcare for

“largely” the reasons in Hayes’s dissent. (JA at 183 n.4.)

Which reasons? The footnote does not specify, opting instead

to merely reference Member Hayes’s dissent and leaving it to

the reader to guess which reasons FedEx likes.6 But my

larger concern is that such wholesale incorporation of

6

Notably, the Majority does not examine the

dissenting opinion from Specialty Healthcare that FedEx

purported to incorporate by reference in its first submission to

the NLRB, which is odd since that is the only place any legal

arguments against the Specialty Healthcare standard were

raised at all. And, when parsed in detail, Member Hayes’s

dissent actually makes few references to the three legal

arguments that FedEx now advances before us. Hayes,

however, certainly did criticize the Board majority’s adoption

of the “overwhelming community of interest test,” saying that

it had “fundamentally change[d] the standard for determining

whether a petitioned-for unit is appropriate in any industry

subject to the Board’s jurisdiction.” Specialty Healthcare,

357 NLRB at 948.

10

arguments embodied elsewhere – without any elaboration of

those issues directly to the Board – simply cannot be adequate

to satisfy § 160(e). Were it otherwise, parties before the

Board would be free to repeatedly drop such footnotes and

incorporate by reference any argument that could conceivably

(if tangentially) be related to the proceeding in question. That

would effectively nullify any word or page limits that apply

to Board proceedings and needlessly complicate the task of

the NLRB and its members. Indeed, there would be no

practical limit to the ability of parties to incorporate a variety

of arguments, from a variety of sources, entirely by reference

in their submissions to the Board. For similar reasons, courts

of appeals do not permit parties to incorporate their district

court submissions by reference. See, e.g., Gaines-Tabb v. ICI

Explosives, USA, Inc., 160 F.3d 613, 624 (10th Cir. 1998)

(emphasizing that “[a]llowing litigants to adopt district court

filings would provide an effective means of circumventing

the page limitations on briefs,” and collecting cases to that

effect).

In my estimation, this case is akin to Marshall Field &

Co. v. NLRB, in which the Supreme Court held that an

objection to the Board that the agency had erred “in making

each and every recommendation” was insufficient to grant

jurisdiction for judicial review of a more particularized

challenge. 318 U.S. 253, 255 (1943) (per curiam). A

“general objection” presented to the Board is insufficient to

preserve more specific, subsidiary issues later brought to

court, as it “d[oes] not apprise the Board that [the party]

intend[s] to press the question now presented, and may well

account for the Board’s failure to consider th[e] question in

its decision and to make findings with respect to it.” Id. Like

the objection in Marshall Field, FedEx’s footnoted aside was

11

far too general to pass this test. FedEx offered no specific

basis for its disagreement with Specialty Healthcare. See

Pub. Serv. Co. of N.M. v. NLRB, 692 F.3d 1068, 1073 (10th

Cir. 2012) (“To determine whether § 160(e)’s ‘objection’

requirement is satisfied, we ask this question: was the matter

the petitioner seeks to raise here pressed before the Board

with ‘sufficient specificity and clarity’ so the tribunal was

aware it needed to be addressed and could become the subject

of litigation in this court?” (citation omitted)). In fact, it

qualified what little it did say, with the hedge that it “largely”

agreed with the Specialty Healthcare dissent. The

jurisdictional bar of § 160(e) forecloses our review of any

such vague argument-by-reference.7

The Majority hangs much of its contrary conclusion on

the existence of Member Johnson’s concurrence in FedEx’s

7

I do agree with the Majority’s conclusion that

FedEx’s second submission was sufficient to incorporate the

arguments of its first. Because the NLRB has a fairly strict

“no relitigation” rule (see Majority Op. at 7-8), parties to a

follow-on unfair labor practice proceeding in these

circumstances may incorporate by reference their earlier

submission to the Board in the representation proceeding.

The issue in this case, however, is not the adequacy of

FedEx’s incorporation by reference in its second submission.

The problem, rather, is that the first submission’s footnote

was inadequate to bring FedEx’s arguments against the

Specialty Healthcare standard before the Board. I would not

view the issue as waived if FedEx had made a fully-

developed argument in the representation proceeding and then

incorporated that argument by reference in the unfair labor

practice proceeding. But that is not what happened here.

12

representation proceeding. He declined to apply the Specialty

Healthcare test for approving a bargaining unit and instead

found the unit appropriate under the “traditional” approach.

As a consequence, Johnson found “no need to express a view

whether the Board correctly decided Specialty Healthcare …

and whether the Regional Director correctly applied it here.”

(JA at 4 n.1.) To my colleagues in the Majority, “Johnson’s

concurrence … indicates [that FedEx’s] footnote provided

sufficient notice of [its] Specialty Healthcare challenge.”

(Majority Op. at 10.)

I disagree. For one, the concurrence in question

reflected the position of only a single member and not the

entire Board. The Board opinion stated that FedEx’s

challenge “raise[d] no substantial issues warranting review.”

(JA at 4.) Had the Board perceived that FedEx was mounting

a challenge to the applicable standard, that certainly would

count as a “substantial issue.” Also, and more importantly,

the Supreme Court has held that the jurisdictional bar of

§ 160(e) “applies even though the Board” has addressed and

decided an issue. Woelke & Romero Framing, Inc., 456 U.S.

at 666 (holding that even where the Board raises an issue sua

sponte, the aggrieved party must seek reconsideration to the

Board before seeking judicial review); see also Int’l Ladies’

Garment Workers’ Union v. Quality Mfg. Co., 420 U.S. 276,

281 n. 3 (1975) (imposing the same requirement); Alwin Mfg.

Co. v. NLRB, 192 F.3d 133, 143 (D.C. Cir. 1999) (“The

Supreme Court has indicated that section [160(e)]8 bars

8

In many cases, courts have referred to § 160(e) as

“§ 10(e),” which is its section number in the National Labor

Relations Act. I have changed any such section numbers in

quotations throughout this concurrence to “§ 160(e)” for the

13

review of any issue not presented to the Board, even where

the Board has discussed and decided the issue.”). “[T]he

statute requires objection to the Board, and not discussion by

the Board, before an issue may be presented in court.” Local

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

727 F.2d 1184, 1191 (D.C. Cir. 1984).9 In the past, “[c]ases

interpreting section [160(e)] look[ed] to whether a party’s

exceptions are sufficiently specific to apprise the Board that

an issue might be pursued on appeal.” Consol. Freightways

v. NLRB, 669 F.2d 790, 793 (D.C. Cir. 1981). Accordingly,

we should look only to the adequacy of the objection brought

to the Board, not the content of the Board’s opinion (or, as

here, a one-member concurrence), to decide whether we have

jurisdiction under § 160(e). “[T]he fact that the Board has or

sake of consistency, but the two sections are one and the

same.

9

In an analogous context, the D.C. Circuit recently

declined to address an argument that a party had not made

before the NLRB. See HealthBridge Mgmt., LLC v. NLRB,

798 F.3d 1059, 1069 (D.C. Cir. 2015). The court

acknowledged that a “dissenting member [had] explicitly”

addressed the argument that the party was advancing, but

concluded that “even if this gave the [Board] majority notice

the [rule] itself was at issue, it [was] insufficient to invoke our

jurisdiction.” Id. The D.C. Circuit rightly recognized that the

jurisdictional bar turns on whether an issue is adequately

presented to the Board by the parties, not on whether the

Board (or any of its members) has discussed the issue in an

opinion. The aggrieved party had simply “failed to put this

issue before the Board,” so the court “lack[ed] jurisdiction

over th[at] aspect of its petition.” Id.

14

has not discussed an issue raises no necessary inferences with

respect to section [160(e)].” Local 900, 727 F.2d at 1192.10

The Majority also points out “the Board’s acute

awareness of recent and active challenges to Specialty

10

Were that not enough, the circumstances of this case

make Johnson’s concurrence particularly insignificant to any

assessment of the adequacy of FedEx’s submissions to the

Board. It appears that, around the time of the Board’s

decision in this case, certain members of the Board

(particularly then-Members Hayes and Johnson) applied the

more traditional analysis in every case involving the Specialty

Healthcare standard. See, e.g., Odwalla, Inc., 357 NLRB

1608, 1611 (2011) (Hayes concurring under traditional

analysis). In other words, Johnson wrote this same

concurrence regularly. So the Majority cannot say that

FedEx’s two-sentence footnote was what put this issue on

Johnson’s radar, as his concurrence was a pro forma opinion

that he used in each case that applied Specialty Healthcare,

even, as here, when he agreed with the ultimate outcome. In

all, it appears he wrote at least twenty-five such footnoted

concurrences in the period from when Specialty Healthcare

was decided until August 20, 2015, when he ultimately

dissented and expressed his disagreement with that standard.

See DPI Secuprint, Inc., 362 NLRB No. 172, at *9 (2015).

The mere fact that he included a footnoted concurrence in this

case – a concurrence that had been replicated (often almost

verbatim) in every other case that called for application of

Specialty Healthcare – does not suggest that it was FedEx’s

buried footnote that brought the issue to anyone’s attention on

the Board. Quite the contrary: Member Johnson would have

included that concurrence regardless.

15

Healthcare” in other cases, making it “impossible” that it was

not on notice of FedEx’s challenge to the standard. (Majority

Op. at 10-11.) Perhaps the Majority is suggesting that FedEx

did not even need to include its footnote to preserve the issue

for our review – that it was enough that there was an ongoing

debate in the ether. But that very loose approach is not what

§ 160(e) allows. The statute requires that an argument be

adequately presented to the Board, and that principle does not

vary depending upon what issue is involved, even if the issue

is otherwise well known. “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.” United States v. L.A.

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

Section 160(e) places an obligation solely on the parties, and

they must meet that obligation before we can exercise

jurisdiction over their claims, regardless of any ongoing

debates within the Board. The statute means what it says, and

we are not free to relax its jurisdictional requirement just

because the particular unpreserved issue happens to be

especially timely or of interest to particular Board members.

Section 160(e) applies uniformly to all issues and to all

parties.

Real damage is done by permitting the kind of

sandbagging that FedEx has gotten away with here. Despite

the strictures of § 160(e), the Board will now have to be

concerned about addressing barely mentioned legal issues.

And, by our blessing as legitimate argument FedEx’s “I

incorporate what I incorporated when I said I largely agreed

with a dissent” statement, we only encourage such improper

16

practice in future cases. This is particularly troubling because

it may be said to broaden the scope of our own appellate

review. After all, why should the requirements for issue

preservation be any different for practice before the Board

than before us?11 I cannot think of a good reason. But, if

there were, an argument could be made that the rules should

be stricter before the Board. Section 160(e) imposes a non-

waivable statutory bar on further review, grounded in

jurisdiction rather than discretion, whereas waiver in our

Court is a prudential doctrine to which we may choose to

make exceptions. Compare Advanced Disposal Servs. East,

Inc. v. NLRB, 820 F.3d 592, 598 (3d Cir. 2016), with Wright

v. Corning, 679 F.3d 101, 105 (3d Cir. 2012). Rigid

adherence to § 160(e) is also important because “[t]his

statutory provision affords the Board the opportunity to bring

11

The Fourth Circuit, for example, applies a similar

rule for preservation of arguments before the Board as it

applies for preservation of arguments before it – “the

objection process would have no worth” if “a passing

reference [were] sufficient to preserve an objection.”

Elizabethtown Gas Co. v. NLRB, 212 F.3d 257, 265 (4th Cir.

2000). A claim of error to that court must be “grounded in an

appropriately specific objection” that was also raised before

the Board. Id. In our Circuit, however, it will apparently be

the NLRB’s job to ferret out, and fully consider, any possible

argument that might be buried in a corner of a brief. And if

that rule applies to the Board, one might assume that it would

also apply to us. If so, parties are now free to drop footnotes

that incorporate by reference arguments found somewhere

else entirely – perhaps in court opinions, law review articles,

or law blogs – and we should be willing to consider them.

That has never been our job before, but it may be now.

17

its labor relations expertise to bear on the problem so that we

may have the benefit of its opinion when we review its

determinations.” NLRB v. Allied Prods. Corp., 548 F.2d 644,

653 (6th Cir. 1977). Our application of § 160(e) should

therefore strongly encourage parties to make full arguments

to the Board in the first instance. That, unfortunately, is not

the incentive provided by today’s Majority opinion.12

For the foregoing reasons, I regard FedEx’s challenge

to the Specialty Healthcare standard as waived. I would thus

proceed directly to the application of that standard, as does

the Majority in Part IV of its opinion. I concur in that part of

the Majority’s opinion, and therefore concur in the judgment.

12

Were FedEx’s challenge to Specialty Healthcare

properly before us, I would agree with the Majority’s

understated observation “that some statements in Specialty

Healthcare might indicate significant changes in Board

policy.” (Majority Op. at 19.) In light of those changes, I

have serious misgivings about the Board’s choice to adopt

that standard in an adjudicative proceeding rather than by

rulemaking. I am also concerned that the changed standard

seems to put a thumb on the scale in favor of the union’s

choice of unit, thus perhaps running afoul of NLRA § 9(c)(5),

codified at 29 U.S.C. § 159(c)(5), and encouraging the

fragmentation of bargaining units. But, interesting as those

issues are, they do not give us license to issue an advisory

opinion about arguments outside of our jurisdiction. As

FedEx did before the Board, I will content myself by noting

that my concerns are largely those expressed in Member

Hayes’s dissent.

18