Opinion

Constellation Brands, U.S. Operations, Inc. v. National Labor Relations Board

842 F.3d 784

Court: Court of Appeals for the Second Circuit
Filed: Nov 21, 2016
Status: Published
Author: Cabranes
On the bench: Walker, Cabranes, Lohier
Cited by: 5 cases
Authority: More cited than 56.8%

discussing the Board’s procedures for union certification and the authorities of various units

How later courts described this case

discussing the Board’s procedures for union certification and the authorities of various units

Written by the judges who cited it.

The opinion

15‐2442‐ag, 15‐4106‐ag

Constellation Brands, U.S. Operations, Inc. v. NLRB

In the

United States Court of Appeals

for the Second Circuit

AUGUST TERM 2016

Nos. 15‐2442‐ag, 15‐4106‐ag

CONSTELLATION BRANDS, U.S. OPERATIONS, INC., DBA WOODBRIDGE

WINERY,

Petitioner–Cross‐Respondent,

NATIONAL LABOR RELATIONS BOARD,

Respondent–Cross‐Petitioner,

TEAMSTERS LOCAL UNION 601,

Intervenor.

Petitions for review and enforcement of orders of the National Labor

Relations Board

ARGUED: AUGUST 24, 2016

DECIDED: NOVEMBER 21, 2016

Before: WALKER, CABRANES, and LOHIER, Circuit Judges.

This case presents two questions. The first is whether the

framework for evaluating proposed bargaining units set forth in

Specialty Healthcare & Rehabilitation Center of Mobile, 357 N.L.R.B. 934

(2011), is unlawful. Under this framework, the National Labor

Relations Board (the “Board”) uses a two‐step analysis to determine

whether a union’s proposed bargaining unit consists of employees

who share a “community of interests” and does not arbitrarily

exclude other employees. Several sister circuits recently approved

this standard, but we have yet to opine on this question. The second

question is whether the Board properly applied the Specialty

Healthcare framework in its order at issue in this case.

We hold the Specialty Healthcare framework to be valid, as our

sister circuits have, and to be consistent with this Court’s precedent.

We conclude that the Board did not properly apply the Specialty

Healthcare framework, however, in its decision and order against

Constellation Brands, U.S. Operations, Inc., d/b/a Woodbridge

Winery. In approving the petitioned‐for collective bargaining unit,

the Board did not analyze at step one of the Specialty Healthcare

framework whether the excluded employees had meaningfully

distinct interests from members of the petitioned‐for unit in the

context of collective bargaining that outweigh similarities with unit

members.

Accordingly, we GRANT the petition for review, DENY the

Board’s cross‐petition for enforcement, and REMAND the cause to

the Board for further proceedings consistent with the record of this

matter and this opinion.

SHAY DVORETZKY (David Raimer, Willis J.

Goldsmith, on the brief) Jones Day,

Washington, DC, for Petitioner–Cross‐

Respondent.

GREG P. LAURO, Attorney (Jennifer Abruzzo,

Deputy General Counsel; John H. Ferguson,

Associate General Counsel; Linda Dreeben,

Deputy Associate General Counsel; Julie B.

Broido, Supervisory Attorney, on the brief),

for Richard F. Griffin, Jr., General Counsel,

National Labor Relations Board,

Washington, DC, for Respondent–Cross‐

Petitioner.

MATTHEW J. GINSBURG, AFL‐CIO,

Washington, DC (James B. Coppess, AFL‐

CIO, Washington, DC; Robert Bonsall,

Beeson, Tayer & Bodine, Sacramento, CA, on

the brief), for Intervenor.

JOSÉ A. CABRANES, Circuit Judge:

This case presents two questions. The first is whether the

framework for evaluating proposed bargaining units set forth in

Specialty Healthcare & Rehabilitation Center of Mobile, 357 N.L.R.B. 934

(2011), is unlawful. Under this framework, the National Labor

Relations Board (the “Board”) uses a two‐step analysis to determine

whether a union’s proposed bargaining unit consists of employees

who share a “community of interests” and does not arbitrarily

exclude other employees. Several sister circuits recently approved

this standard, but we have yet to opine on this question.1 The second

question is whether the Board properly applied the Specialty

Healthcare framework in its order at issue in this case.

We hold the Specialty Healthcare framework to be valid, as our

sister circuits have, and to be consistent with this Court’s precedent.

We conclude, however, that the Board did not properly apply the

Specialty Healthcare framework in its decision and order against

Constellation Brands, U.S. Operations, Inc., d/b/a Woodbridge

Winery (“Constellation”). In approving the petitioned‐for collective

bargaining unit, the Board did not analyze at step one of the Specialty

1 See Kindred Nursing Ctrs. E., LLC v. NLRB, 727 F.3d 552 (6th Cir. 2013) (enforcing

the original Specialty Healthcare case); accord FedEx Freight, Inc. v. NLRB, ‐‐‐F.3d‐‐‐,

2016 WL 5929822 (7th Cir. Oct. 12, 2016); NLRB v. FedEx Freight, Inc., 832 F.3d 432

(3d Cir. 2016); Nestle Dreyer’s Ice Cream Co. v. NLRB, 821 F.3d 489 (4th Cir. 2016)

(rejecting challenge under the National Labor Relations Act and the

Administrative Procedure Act); Macy’s, Inc. v. NLRB, 824 F.3d 557 (5th Cir. 2016);

FedEx Freight, Inc. v. NLRB, 816 F.3d 515 (8th Cir. 2016).

Healthcare framework whether the excluded employees had

meaningfully distinct interests from members of the petitioned‐for

unit in the context of collective bargaining that outweigh similarities

with unit members.

Accordingly, we GRANT the petition for review, DENY the

Board’s cross‐petition for enforcement, and REMAND the cause to

the Board for further proceedings consistent with the record of this

matter and this opinion.

BACKGROUND

Constellation owns and operates Woodbridge Winery in

California, which employs about 100 managers and 200 production

and maintenance employees. Its employees are divided into various

departments. This case concerns the cellar operations department,

which is organized into two subgroups: “outsider cellar” with 46

employees and “barrel” with 18 employees. The parties dispute

whether the “outside cellar” employees form a group that is

sufficiently distinct from the “barrel” employees (as well as from

Constellation’s other employees) that they may be treated separately

for collective bargaining purposes under Section 9 of the National

Labor Relations Act (“NLRA”).2

2 29 U.S.C. § 159 (laying out the procedures by which the Board resolves a

question of representation and directs an election).

The certification of a bargaining unit falls largely to the Board’s

Regional Directors (“RDs”), who are appointed by the General

Counsel and approved by the Board, and to hearing officers in the

regional offices, who report to the RDs.3 Parties seeking to determine

whether a particular labor organization has majority support in a

workplace submit a petition for an election to the Board’s regional

office.4 Where the parties do not agree on an appropriate bargaining

unit, a hearing officer will conduct a representation hearing to

“determine the unit appropriate for the purposes of collective

bargaining, to investigate and provide for hearings, and determine

whether a question of representation exists, and to direct an election

or take a secret ballot . . . and certify the results thereof.”5 Based on

the hearing officer’s report, the RD will decide on the petition and, if

warranted, direct an election and prescribe its procedures. Although

See id. § 153(b) (“The Board is . . . authorized to delegate to its regional

directors its powers . . . to determine the unit appropriate for the purpose of

collective bargaining . . . .”); 29 C.F.R. § 102.64 (2015) (describing the conduct of

hearings before hearing officers); id. § 102.67 (concerning proceedings before

RDs).

While substantial power has been delegated to the RDs, the Board’s

General Counsel, a Presidential appointee whose nomination is subject to the

advice and consent of the Senate, retains the ultimate authority with respect to

“the investigation of charges and issuance of complaints” under the NLRA. See 29

U.S.C. § 153(d).

See id. § 159(c) (requiring a petition be filed to seek Board approval of a

proposed bargaining unit).

Id. § 153(b).

parties have the right to appeal the RD’s decision to a three‐member

panel of the Board, the Board’s review is discretionary and granted

only in limited circumstance.6 Following the Board’s review, elections

are held and the RD may certify the results.

On September 2, 2014, the Teamsters Local Union 601 (the

“Union”) filed a petition seeking to represent Constellation’s outside

cellar employees as a bargaining unit. Constellation objected, arguing

that an appropriate unit should encompass all production and

maintenance employees or, at a minimum, all cellar operations

employees. Following a hearing, the RD decided in favor of the

Union and directed that an election be held. In determining that the

Union’s proposed bargaining unit of outside cellar employees was

appropriate, the RD applied the Specialty Healthcare standard. On

February 26, 2015, a three‐member panel of the Board (Chairman

Pearce, Member Hirozawa, and Member McFerran) denied

Constellation’s request to review the RD’s decision, stating that

6 See 29 C.F.R. § 102.67(d) (2015) (“The Board will grant a request for

review only where compelling reasons exist therefor. . . . [R]eview may be granted

only upon one or more of the following grounds: (1) That a substantial question of

law or policy is raised because of: (i) [t]he absence of; or (ii) [a] departure from,

officially reported Board precedent. (2) That the regional director’s decision on a

substantial factual issue is clearly erroneous on the record and such error

prejudicially affects the rights of a party. (3) That the conduct of any hearing or

any ruling made in connection with the proceeding has resulted in prejudicial

error. (4) That there are compelling reasons for reconsideration of an important

Board rule or policy.”).

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

Special App. 4.

In the Board‐ordered election, the outside cellar employees

voted 31–13 to unionize and the RD certified the Union as the

collective‐bargaining representative of those employees. Following

the usual procedure for contesting the validity of a union election,

Constellation refused to bargain with the Union, which then filed an

unfair‐labor‐practice charge.7 On July 29, 2015, a three‐member Board

panel granted the General Counsel’s motion for summary judgment

and concluded that Constellation had violated the NLRA by refusing

to bargain.8 Constellation subsequently petitioned for review of that

decision, and the Board filed a cross‐petition for enforcement.

JURISDICTION

While both parties agree that we have jurisdiction, we

nonetheless consider the issue independently.9 The Board had

7 The well‐settled practice for challenging the appropriateness of a

bargaining unit is refusing to bargain with the proposed unit and then defending

against an unfair labor practice charge on the ground that the unit is

inappropriate. See, e.g., NLRB v. Ky. River Cmty. Care, Inc., 532 U.S. 706, 709 (2001)

(“Because direct judicial review of representation determinations is unavailable,

. . . the respondent sought indirect review by refusing to bargain with the union,

thereby inducing the General Counsel of the Board to file an unfair labor practice

complaint under §§ 8(a)(1) and 8(a)(5) [of the NLRA].” (citation omitted)).

8 See Constellation Brands, 362 N.L.R.B. No. 151 (2015).

See, e.g., Taylor v. Rogich, 781 F.3d 647, 648 n.2 (2d Cir. 2015).

jurisdiction over the original petition under 29 U.S.C. § 160(a)–(c),

which empowers the Board to prevent unfair labor practices.10 Since

Constellation is a New York corporation and transacts business

within this Circuit, we have jurisdiction over the petition for review

and the cross‐petition for enforcement under 29 U.S.C. § 160(f).11

29 U.S.C. § 160(a)–(c) provides, in relevant part: “The Board is

empowered, as hereinafter provided, to prevent any person from engaging in any

unfair labor practice (listed in section 158 of this title) affecting commerce. . . . If

upon the preponderance of the testimony taken the Board shall be of the opinion

that any person named in the complaint has engaged in or is engaging in any such

unfair labor practice, then the Board shall state its findings of fact and shall issue

and cause to be served on such person an order requiring such person to cease

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

including reinstatement of employees with or without back pay, as will effectuate

the policies of this subchapter . . . .”

11 29 U.S.C. § 160(f) provides: “Any person aggrieved by a final order of

the Board granting or denying in whole or in part the relief sought may obtain a

review of such order in any United States court of appeals in the circuit wherein

the unfair labor practice in question was alleged to have been engaged in or

wherein such person resides or transacts business . . . by filing in such a court a

written petition praying that the order of the Board be modified or set aside.”); see

also Boire v. Greyhound Corp., 376 U.S. 473, 476–79 (1964).

In addition, 29 U.S.C. § 159(d) stipulates that the record and findings made

in the underlying representation proceeding is part of the record before this

Court. It provides: “Whenever an order of the Board…is based in whole or in part

upon facts certified following an investigation pursuant to subsection (c) of this

section and there is a petition for the enforcement or review of such order, such

certification and the record of such investigation shall be included in the

transcript of the entire record required to be filed under subsection (e) or (f) of

section 160 of this title, and thereupon the decree of the court enforcing,

modifying, or setting aside in whole or in part the order of the Board shall be

DISCUSSION

A. The Legality of the Specialty Healthcare Framework

The threshold question presented is whether we, along with

six of our sister circuits,12 should also adopt the Specialty Healthcare

framework. “[W]e review the Board’s legal conclusions to ensure that

they have a reasonable basis in law.”13

When considering a petition for a proposed bargaining unit, an

RD has discretion to approve any appropriate unit, not just “the

single most appropriate unit.”14 To guide its discretion, the RD has

traditionally asked whether the members of the proposed unit share

a “community of interests distinct from their interests as employees

of the whole institution.”15 In Specialty Healthcare, the Board clarified

this traditional approach by introducing a new, two‐step analysis.

made and entered upon the pleadings, testimony, and proceedings set forth in

such transcript.”

12 See ante note 1.

NLRB v. Special Touch Home Care Servs., Inc., 566 F.3d 292, 296–97 (2d Cir.

2009) (quotation marks omitted).

Am. Hosp. Ass’n v. NLRB, 499 U.S. 606, 610 (1991). This discretion is

derived from 29 U.S.C. § 159(b) that states, in relevant part: “The Board shall

decide in each case whether, in order to assure to employees the fullest freedom in

exercising the rights guaranteed by this subchapter, the unit appropriate for the

purposes of collective bargaining . . . .” Id.

15 Staten Island Univ. Hosp. v. NLRB, 24 F.3d 450, 454 (2d Cir. 1994).

“[I]n step one, the Board [i.e., the RD] performs a community‐of‐

interest analysis to determine whether the proposed unit is

appropriate; if the unit is found appropriate, in step two [the party

opposing certification] must demonstrate that the excluded

employees it wishes to include share an ‘overwhelming community

of interest’ with the included employees.”16

While the RD’s discretion in determining the appropriateness

of a bargaining unit is broad, it is not unlimited. Section 9(c) of the

NLRA explicitly states that “[i]n determining whether a unit is

appropriate . . . the extent to which the employees have organized

shall not be controlling.”17 The Board has long disfavored fractured

units that may arbitrarily exclude certain groups of employees or

could invite “gerrymandering” of interests among employees.18

Nestle Dreyer’s, 821 F.3d at 496 (emphasis omitted) (quoting Specialty

Healthcare, 357 N.L.R.B. at 944).

17 29 U.S.C. § 159(c)(5).

18 Francis Biddle, an architect of the NLRA, the second Chairman of the

National Labor Board (the predecessor of the Board), and later, Attorney General

of the United States, was a vocal opponent of fractured units during the Senate

committee hearings prior to the passage of the NLRA: “If the employees

themselves could make the decision without proper consideration of the elements

which should constitute the appropriate units they could in any given instance

defeat the practical significance of the majority rule; and, by breaking off into

small groups, could make it impossible for the employer to run his plant.” See

Hearings of S. 1958 Before the S. Comm. On Educ. & Lab., 74th Cong. 82 (1935),

(statement of Francis Biddle), reprinted in 1 NLRA LEGISLATIVE HISTORY 1458–59.

He further recognized then that there was always the risk “of your Board

gerrymandering and not carrying out the purposes of the Board,” but noted that

Today, it is well established under Board precedent that “the Board

does not approve fractured units, i.e., combinations of employees that

are too narrow in scope or that have no rational basis.”19

“any arbitrary act of the Board in selecting the unit is subject to check on review

by the court.” Id.

For many years, the Board presumed store‐wide or plant‐wide units to be

appropriate over multiple representation units within an employer. See, e.g.,

Laurel Assocs., Inc., d/b/a Jersey Shore Nursing & Rehab. Ctr., 325 N.L.R.B. 603

(1998) (service and maintenance unit in nursing home is presumptively

appropriate); Gourmet, Inc., d/b/a Jackson’s Liquors, 208 N.L.R.B. 807, 808

(1974) (“The employerwide unit . . . is presumptively appropriate.”); Kalamazoo

Paper Box Corp., 136 N.L.R.B. 134, 136 (1962) (“A plantwide unit is presumptively

appropriate under the Act, and a community of interest inherently exists among

such employees.”); May Dep’t Stores, Co., 97 N.L.R.B. 1007, 1008 (1952) (declaring a

“store‐wide unit” to be “the optimum unit for the purpose of collective

bargaining” in the retail industry).

This Circuit has long held a preference for consolidating bargaining units.

See, e.g., Staten Island Univ. Hosp, 24 F.3d at 456 (“We regard the single‐facility

presumption as the kind of rebuttable presumption that was beyond dispute in

American Hospital.”); accord NLRB v. Phoenix Programs of N.Y., Inc., 2 F. App’x 166,

168–69 (2d Cir. 2001) (summary order) (affirming the Board’s determination that

the employer failed to rebut the “single‐facility presumption”).

19 Seaboard Marine, Ltd., 327 N.L.R.B. 556 (1999).

The Board has maintained this governing approach following the Specialty

Healthcare decision in 2011. See, e.g., A.S.V., Inc., 360 N.L.R.B. No. 138 (2014)

(applying Specialty Healthcare and rejecting the proposed unit as “fractured” and

thus inappropriate); Odwalla, Inc., 357 N.L.R.B. 1608, 1612‐13 (2011) (applying

Specialty Healthcare to find that the recommended unit was an inappropriate

“fractured unit” and to further suggest that, even if a smaller constituent part of a

proposed unit would constitute an appropriate free‐standing unit, the unit may

Certain interested groups argue that the Specialty Healthcare

test essentially creates a presumption in favor of “micro” unions,

causing the undue proliferation of bargaining units that make it

difficult for employers to settle labor disputes and that arbitrarily

exclude certain employees.20 In addition to the increased costs to

employers of administering multiple contracts and benefit plans or

reconciling conflicting demands from separate units, “micro” unions

may also, the interested groups argue, diminish the rights of

employees.21 These groups argue that the proliferation of units can

allow one bargaining unit to disrupt the operations of an enterprise

with unique demands not shared by other employees. “Micro”

unions can also make it more difficult for employees to access new

opportunities across units and may diminish the overall power of

nevertheless become inappropriate if additional employees are proposed for

inclusion who have less community of interest with one another than do the

excluded employees).

20 See Brief for Amici Curiae Coalition for a Democratic Workplace,

Chamber of Commerce of the United States of America, National Association of

Manufacturers, National Retail Federation, and Retail Litigation Center, Inc., at

22‐24, Constellation Brands v. NLRB, No. 15‐2442‐ag (2d Cir. Dec. 16, 2015), ECF

No. 46.

21 See Cont’l Web Press, Inc. v. NLRB, 742 F.2d 1087, 1090 (7th Cir. 1984)

(“[B]reaking up a work force into many small units creates a danger that some of

them will be so small and powerless that it will be worth no one’s while to

organize them, in which event the members of these units will be left out of the

collective bargaining process.”).

labor by creating units so small that they lack influence.22 Outside

groups also echo Constellation’s objections that the Specialty

Healthcare framework is a departure from decades of Board cases23

and inconsistent with the NLRA.24

In the present case, Constellation asserts two objections to the

Specialty Healthcare test. First, it argues that this test impermissibly

gives controlling weight to the extent to which employees have

already been organized, thereby departing from past precedent of the

Board and contravening the statutory language of the NLRA. Under

the prior framework, Constellation argues, the RD had to determine

whether the petitioned‐for unit had interests “sufficiently distinct

from” those of excluded employees as part of the “community of

interest” analysis.25 Under Specialty Healthcare, in contrast, that

determination of “sufficiently distinct interests” is postponed until

22 See NLRB v. Purnell’s Pride, Inc., 609 F.2d 1153, 1156 (5th Cir. 1980)

(“[T]he designation of . . . small unit[s] that exclude[] employees with common

skills, attitudes, and economic interests may unnecessarily curtail the union’s

bargaining power and may generate destructive factionalization and in‐fighting

among employees.”).

See, e.g., ante notes 18 and 19 (discussing the Board’s historical preference

for employer‐wide units and opposition to fractured units); but see, e.g.,

Montgomery Ward & Co., 150 N.L.R.B. 598, 601 (1964) (“[T]he Board has held that

the appropriateness of an overall unit does not establish that a smaller unit is

inappropriate.”).

24 29 U.S.C. § 159(b), (c)(5).

25 See, e.g., Wheeling Island Gaming, Inc., 355 N.L.R.B. 637, 638 (2010).

step two, at which point the employer must show that excluded

employees shared an “overwhelming community of interest” with the

presumptively appropriate petitioned‐for group.26 This heightened

showing, Constellation argues, makes it nearly impossible for an

employer to resist unions’ efforts to gerrymander bargaining units.

This concern is misplaced. Step one of Specialty Healthcare

expressly requires the RD to evaluate several factors relevant to

“whether the interests of the group sought were sufficiently distinct

from those of other employees to warrant the establishment of a

separate unit.”27 For instance, the Board must consider “[w]hether the

employees 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.”28 Accordingly, it seems to us that

Specialty Healthcare does not significantly redefine the showing

required of a party seeking Board approval in establishing a

bargaining unit. Nor does it contravene Section 9(c) of the NLRA by

giving union organizers an inappropriate degree of control.

26 Nestle Dreyer’s, 821 F.3d at 496 (quoting Specialty Healthcare, 357 N.L.R.B.

at 944).

27 Id. at 500 (brackets and internal quotation marks omitted).

Specialty Healthcare, 357 N.L.R.B. at 942 (emphases added) (internal

quotation marks omitted).

Constellation’s second argument against adoption of the rule

of Specialty Healthcare is that the Board failed to provide a reasoned

explanation for the new standard.29 This argument is also

unpersuasive. Step one of Specialty Healthcare adopts verbatim the

“community of interest” test on which the Board has long relied.30

Step two is a novel formulation called the “overwhelming

community of interest” test, but its substance is consistent with

earlier Board precedents that imposed a heightened burden on a

party who urges the Board to add employees to a unit that has

otherwise been deemed appropriate. Moreover, the phrase

“overwhelming community of interest” was taken from a decision of

the United States Court of Appeals for the District of Columbia

Circuit, which itself purported to summarize relevant Board

precedents.31 One might question the desirability of the Board’s

approach. Yet it seems implausible to claim that a Board decision,

announced in a 14‐page opinion (exclusive of the dissent) that

borrows heavily from Board and appellate precedent, is invalid

because it failed to explain itself.

See Serv. Emps. Int’l Union, Local 32BJ v. NLRB, 647 F.3d 435, 442 (2d Cir.

2011) (“Where the Board departs from prior interpretations of the Act without

explaining why that departure is necessary or appropriate, the Board will have

exceeded the bounds of its discretion.” (internal quotation marks omitted)).

30 See Allied Chem. & Alkali Workers, Local Union No. 1 v. Pittsburgh Plate

Glass Co., Chem. Div., 404 U.S. 157, 172–73 (1971); Kalamazoo Paper Box Corp., 136

N.L.R.B. at 137.

31 See Blue Man Vegas, LLC v. NLRB, 529 F.3d 417, 421–23 (D.C. Cir. 2008).

In sum, Constellation has failed to meet its burden of showing

that the Specialty Healthcare framework is inconsistent with the NLRA

or meaningfully departs from the Board’s past precedents.

B. Did the Board Correctly Apply Specialty Healthcare?

We now turn to the application of the Specialty Healthcare

framework in this case. In reviewing the Board’s decision of unit

appropriateness, we are mindful that our task is not to substitute our

judgment for that of the Board.32 The Board is empowered to

determine whether a unit is appropriate for the purposes of collective

bargaining33 and “select from those possible arrangements in

reaching its unit determination.”34 Although the Board’s

determination that a bargaining unit is appropriate “will stand unless

arbitrary and unreasonable,”35 we conclude that the RD misapplied

the Specialty Healthcare framework at step one.

32 See Universal Camera Corp. v. NLRB, 340 U.S. 474, 488 (1951) (“Congress

has merely made it clear that a reviewing court is not barred from setting aside a

Board decision when it cannot conscientiously find that the evidence supporting

that decision is substantial . . . .”; see also Banknote Corp. of Am. v. NLRB, 84 F.3d

637, 651 (2d Cir. 1996).

33 29 U.S.C. § 159(b).

34 Staten Island Univ. Hosp., 24 F.3d at 455.; see also Universal Camera Corp.,

340 U.S. at 488.

35 Staten Island Univ. Hosp., 24 F.3d at 455.

1. Step One: “Community of Interest”

Constellation argues that the Specialty Healthcare standard

improperly rubber stamps a union’s organizing efforts by

presumptively approving the petitioned‐for unit and creating too

high a burden for the objecting party.36 We rejected that argument

above precisely because Specialty Healthcare indeed requires the

Board to consider, at step one, whether members of the proposed

unit have an interest that is “separate and distinct” from all other

employees.37 But merely reciting or repeating the standard cannot

substitute for the analysis that Specialty Healthcare demands.

The RD (whose decision the Board declined to review) did not

make the step‐one determination required by Specialty Healthcare.

Although he appropriately recited the community of interest

standard, and declared that “employees in the petitioned‐for unit

share distinct characteristics,” Special App. 34, the RD did not

explain why those employees had interests “sufficiently distinct from

Constellation argues that the Specialty Healthcare test created a new legal

standard. By deferring analysis of whether other employees were unjustifiably

excluded until step two, the opposing party must now show excluded employees

share an “overwhelming community of interests” (not merely a “community of

interests”). This higher showing, Constellation contends, violates Section 9(c) of

the NLRA by giving controlling weight to the extent to which employees have

already been organized. The Board counters that the Specialty Healthcare

framework “clarified—rather than overhauled—its unit‐determination analysis.”

See Nestle Dreyer’s, 821 F.3d at 500.

37 Specialty Healthcare, 357 N.L.R.B. at 942.

those of other employees to warrant the establishment of a separate

unit.”38 Rather, the RD based his step‐one determination on his

finding “that the employees in that unit are a readily identifiable

group, such that there is a rational basis for grouping them together

in a bargaining unit.”39 Special App. 32. Reciting the legal framework

does not substitute for analysis of differences between unit‐members

and other employees, as required by Specialty Healthcare. Indeed, as

one of our sister circuits has stated, the very purpose of step one is

“to guard against arbitrary exclusions” that have no purchase in the

context of collective bargaining.40

To be sure, the RD made a number of factual findings that tend

to show that outside cellar employees had interests distinct from

other employees. But he never explained the weight or relevance of

those findings. For instance, the RD did not explain why some factual

findings, which seemed to indicate the presence of distinct interests,

38 Nestle Dreyer’s, 821 F.3d at 500 (internal quotation marks omitted).

39 While the RD purported to identify differences between members of the

petitioned‐for unit and other employees at step one, the language was little more

than boilerplate. It seems highly unlikely, for example, that only employees of the

petitioned‐for cellar unit “unlike the unit of employees sought by the Employer

. . . must demonstrate skills of lower‐level job classifications before moving up to

higher‐level job classifications within the department,” as the RD claims. Special

App. 32‐33. It seems implausible that non‐cellar employees need not

“demonstrate skills” before being promoted. The RD’s remaining findings of

differences are similarly conclusory.

40 Nestle Dreyer’s, 821 F.3d at 499.

e.g., “physically separate locations” or “separate front‐line [and]

immediate supervisors,” should have outweighed other findings of

similarities, e.g., similar “job functions and duties,” evidence of

“interchange” and “work[ing] together,” and “identical skills and

training requirements.” Special App. 44 n.20. To the extent that the

RD did provide such explanations, it did so only at step two, i.e., only

to rebut a heightened showing that the excluded employees share an

“overwhelming community of interest” with the presumptively

appropriate petitioned‐for unit. This misapplication of Specialty

Healthcare requires us to deny the Board’s petition for enforcement.41

Our sister circuits have accepted the Specialty Healthcare

framework based on the understanding that it requires the Board to

ensure, at step one, that employees are not inappropriately “excluded

[from a bargaining unit] on the basis of meager differences.”42 To

properly apply this framework, the Board must analyze at step one

41 The Board cannot recite the legal standard and summarize the factual

record without any intervening explanation to demonstrate that it has performed

the analysis demanded by its own caselaw. See, e.g., Long Island Head Start Child

Dev. Servs. v. NLRB, 460 F.3d 254, 257–58 (2d Cir. 2006)(“[T]he agency must

examine the relevant data and articulate a satisfactory explanation for its action

including a rational connection between the facts found and the choice made.”

(quoting Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43

(1983)); see also New England Health Care Emps. Union v. N.L.R.B., 448 F.3d 189, 194

(2d Cir. 2006) (“[W]e may not supply a reasoned basis for the agency’s action that

the agency itself has not given . . . .” (internal quotation marks omitted)).

42 Nestle Dreyer’s, 821 F.3d at 500 (internal quotation marks omitted); accord

FedEx Freight, 832 F.3d at 442–43.

the facts presented to: (a) identify shared interests among members of

the petitioned‐for unit, and (b) explain why excluded employees have

meaningfully distinct interests in the context of collective bargaining

that outweigh similarities with unit members.43 Merely recording

similarities or differences between employees does not substitute for

an explanation of how and why these collective‐bargaining interests

are relevant and support the conclusion. Explaining why the

excluded employees have distinct interests in the context of collective

bargaining is necessary to avoid arbitrary lines of demarcation and to

avoid making step one of the Specialty Healthcare framework a mere

rubber stamp.

While the RD has discretion to approve of “an appropriate

unit, not the most appropriate unit,”44 he may exercise that discretion

only after finding, upon analysis, that a petitioner has met its “prima

facie” burden under the Specialty Healthcare framework. The RD

failed to do so here. Nor did the Board exercise its power of review to

ensure that the new framework was being appropriately applied.

Without this critical first step of the Specialty Healthcare framework,

Cf. FedEx Freight, 832 F.3d at 443 (requiring analysis of “similarities

between the employees in the petitioned‐for unit and whether their interests were

sufficiently distinct from other employees”); Staten Island Univ. Hosp., 24 F.3d at

454 (describing the unit‐determination as turning on a finding of “the degree to

which employees . . . share a community of interests distinct from their interests

as employees of the whole institution”).

44 Staten Island Univ. Hosp., 24 F.3d at 455 (citation omitted).

the burden would be exclusively on the employer to prove the

absence of distinctions. Such a burden is inconsistent with the NLRA

and the Board’s past precedent.

2. Step Two: “Overwhelming Community of Interests”

Constellation argues that it should also prevail at step two of

the Specialty Healthcare framework, known as the “overwhelming

community of interests” test, which requires that Constellation show

“that there is no legitimate basis upon which to exclude” barrel

employees from that unit.45 We need not reach this question. Since

the Board failed to perform the requisite analysis at step one, its

decision and order dated July 29, 2015 against Constellation cannot

stand.

CONCLUSION

To summarize, we hold as follows:

(1) The Board’s framework set forth in Specialty Healthcare for

determining a bargaining unit’s appropriateness is

consistent with the NLRA and the Board’s past precedent.

Constellation failed to show that the Specialty Healthcare

framework essentially creates a presumption in favor of

“micro” unions by inappropriately placing the burden on

See Specialty Healthcare, 357 N.L.R.B. at 944 (internal quotation marks

omitted).

the opposing party to prove the absence of distinction—

which, if true, would have been a departure from past

precedent and inconsistent with the NLRA.

(2) Adopting the Specialty Healthcare framework, we conclude

that the Board misapplied step one of that framework. It

failed to require that the proponent of a proposed

bargaining unit meet its “prima facie” burden of showing

why the excluded employees had distinct interests from

employees of the petitioned‐for unit in the context of

collective bargaining, that is, (a) identifying shared interests

among employees of the petitioned‐for unit and (b)

explaining why excluded employees have meaningfully

distinct interests in the context of collective bargaining that

outweigh similarities with unit members.

Accordingly, we GRANT the petition for review, DENY the

Board’s cross‐petition for enforcement, and REMAND the cause to

the Board for further proceedings consistent with the record of this

matter and this opinion.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.