FedEx Home Delivery v. National Labor Relations Board

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued September 21, 2016 Decided March 3, 2017

No. 14-1196

FEDEX HOME DELIVERY, AN OPERATING DIVISION OF FEDEX

GROUND PACKAGE SYSTEM, INC.,

PETITIONER

v.

NATIONAL LABOR RELATIONS BOARD,

RESPONDENT

Consolidated with 15-1066, 15-1116

On Petitions for Review and Cross-Application

for Enforcement of Orders of

the National Labor Relations Board

Maurice Baskin argued the cause for petitioner. With

him on the briefs was Joshua Waxman.

Michael J. Gray, E. Michael Rossman, Steven P.

Lehotsky, Warren Postman, Richard Pianka, and Linda E.

Kelly were on the brief for amici curiae Chamber of Commerce

1

of the United States of America, American Trucking

Associations & National Association of Manufacturers in

support of petitioner.

Kellie Isbell, Attorney, National Labor Relations

Board, argued the cause and filed the brief for respondent.

With her on the brief were Richard F. Griffin, Jr., General

Counsel, John H. Ferguson, Associate General Counsel, Linda

Dreeben, Deputy Associate General Counsel, and Robert

Englehart, Supervisory Attorney.

James B. Coppess argued the cause and filed the brief

for amicus curiae AFL-CIO in support of respondent. With

him on the brief were Lynn K. Rhinehart, Matthew J. Ginsburg,

and Laurence Gold.

Before: HENDERSON, KAVANAUGH, and MILLETT,

Circuit Judges.

Opinion for the Court filed by Circuit Judge MILLETT.

MILLETT, Circuit Judge: FedEx Home Delivery

(“FedEx”) offers package-delivery services to residential

customers throughout the United States. In FedEx Home

Delivery v. NLRB (FedEx I), 563 F.3d 492 (D.C. Cir. 2009),

this court held that single-route FedEx drivers working out of

Wilmington, Massachusetts are independent contractors, not

employees, as the latter term is defined in the National Labor

Relations Act, id. at 504. In this case, the National Labor

Relations Board held, on a materially indistinguishable factual

record, that single-route FedEx drivers are statutorily protected

employees, not independent contractors, when located in

Hartford, Connecticut. Both cannot be right. Having already

answered this same legal question involving the same parties

and functionally the same factual record in Fed Ex I, we give

the same answer here. The Hartford single-route FedEx drivers

are independent contractors to whom the National Labor

2

Relations Act’s protections for collective action do not apply.

We accordingly grant FedEx’s petitions, vacate the Board’s

orders, and deny the Board’s cross-application for

enforcement.

I.

A.

The National Labor Relations Act, 29 U.S.C. §§ 151–

169, offers a variety of protections to “employees” in

workplaces across the United States. The Act is explicit,

however, that the term “‘employee’ * * * shall not

include * * * any individual having the status of an

independent contractor[.]” Id. § 152(3). Accordingly, “[t]he

jurisdiction of the NLRB extends only to the relationship

between an employer and its ‘employees’; it does not

encompass the relationship between a company and its

‘independent contractors.’” C.C. Eastern, Inc. v. NLRB, 60

F.3d 855, 857 (D.C. Cir. 1995).

In NLRB v. United Insurance Company of America, 390

U.S. 254 (1968), the Supreme Court held that the determination

whether a worker is a statutorily protected “employee” or a

statutorily exempt “independent contractor” is governed by

“common-law agency” principles, id. at 256. In applying the

common law, the Supreme Court stressed that “there is no

shorthand formula or magic phrase that can be applied to find

the answer.” Id. at 258. Rather, “all of the incidents of the

relationship must be assessed and weighed with no one factor

being decisive.” Id. “What is important,” the Supreme Court

explained, “is that the total factual context is assessed in light

of the pertinent common-law agency principles.” Id.

Following United Insurance, the Board and this court

have generally consulted the Restatement (Second) of Agency

for guidance in conducting the common-law agency analysis.

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See Lancaster Symphony Orchestra v. NLRB, 822 F.3d 563,

565–566 (D.C. Cir. 2016); North Am. Van Lines, Inc. v. NLRB,

869 F.2d 596, 599–600 (D.C. Cir. 1989). 1 The Restatement

(Second) of Agency provides a non-exhaustive list of ten

factors to consider in deciding whether a worker is an

independent contractor: “(1) ‘the extent of control’ the

employer has over the work; (2) whether the worker ‘is

engaged in a distinct occupation or business’; (3) whether the

‘kind of occupation’ is ‘usually done under the direction of the

employer or by a specialist without supervision’; (4) the ‘skill

required in the particular occupation’; (5) whether the

employer or worker ‘supplies the instrumentalities, tools, and

the place of work for the person doing the work’; (6) the ‘length

of time for which the person is employed’; (7) whether the

employer pays ‘by the time or by the job’; (8) whether the

worker’s ‘work is a part of the regular business of the

employer’; (9) whether the employer and worker ‘believe they

are creating’ an employer-employee relationship; and

(10) whether the employer ‘is or is not in business.’”

Lancaster Symphony, 822 F.3d at 565–566 (quoting

RESTATEMENT (SECOND) OF AGENCY § 220(2) (1957)).

B.

FedEx operates a package-delivery terminal in

Hartford, Connecticut. Drivers for FedEx deliver packages

along certain “routes” that are designated by FedEx. A driver

may serve a single route or multiple routes. Both single-route

and multi-route drivers operate out of the Hartford location. In

2007, the Hartford single-route drivers elected Teamsters

1

See also, e.g., Local 777, Democratic Union Org. Comm.

Seafarers Int’l Union of N. Am., AFL-CIO v. NLRB, 603 F.2d 862,

870 n.22 (D.C. Cir. 1978); Arizona Republic, 349 N.L.R.B. 1040,

1042 (2007); St. Joseph News-Press, 345 N.L.R.B. 474, 477–478

(2005); Argix Direct, Inc., 343 N.L.R.B. 1017, 1020 & n.13 (2004).

4

Local 671 (“Union”) to represent them. FedEx subsequently

filed objections to the election with the Board.

While that administrative appeal was pending, this

court decided FedEx I, holding that FedEx drivers at the

company’s Wilmington, Massachusetts terminals were

“independent contractors” within the meaning of the National

Labor Relations Act. 563 F.3d at 504. In so holding, FedEx I

explained that application of the common-law agency test by

both the Board and this court had shifted over time. See id. at

496–497. For a period, the Board had focused on “an

employer’s right to exercise control” over the workers’

performance of their jobs. Id. at 496. Gradually, however, the

Board began to place “emphasis” on what this court described

as “a more accurate proxy: whether the ‘putative independent

contractors have significant entrepreneurial opportunity for

gain or loss.’” Id. at 497 (quoting Corporate Express Delivery

Sys. v. NLRB, 292 F.3d 777, 780 (D.C. Cir. 2002)).

Examining the factual record, FedEx I noted that some

of the common-law factors supported employee status, while

others were consistent with the drivers being independent

contractors. See 563 F.3d at 503–504. Looking at those factors

through the lens of entrepreneurial opportunity, however, this

court concluded that the indicia of independent contractor

status “clearly outweighed” the factors that would support

employee status. Id. at 504; see id. at 498–502.

FedEx subsequently filed a motion with the Board in

the Hartford case to dismiss the order against it, principally

arguing that FedEx I compelled a ruling in its favor. The

Board, however, issued a decision certifying the Union as the

exclusive representative of the Hartford single-route drivers,

without addressing FedEx I or FedEx’s motion to dismiss.

FedEx then filed a motion for reconsideration, which the Board

rejected in relevant part as “untimely” and “lack[ing] merit.”

D.A. 359–360 & n.2.

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FedEx then refused to bargain with the Union,

prompting the Union to file unfair labor practice charges

against the company. On October 29, 2010, the Board ruled

that FedEx violated Section 8(a)(5) of the Act, 29 U.S.C.

§ 158(a)(5), by refusing to bargain.

FedEx then filed in this court a petition for review of

the Board’s October 2010 unfair-labor-practice decision,

seeking summary disposition based on FedEx I. Before this

court ruled, the Board sua sponte vacated its decision and

order. We accordingly dismissed FedEx’s petition and motion

as moot.

Three years later, the Board issued a revised decision

and order. FedEx Home Delivery, 361 N.L.R.B. No. 55 (Sept.

30, 2014). Accepting that FedEx I and the case at hand dealt

with “virtually identical” facts, the Board admitted that FedEx

I “[could not] be squared with the Regional Director’s

determination” that the FedEx drivers at the Hartford terminal

were “employees” under the Act. Id. at 8. Nevertheless, the

Board “decline[d] to adopt [FedEx I’s] interpretation of the

Act.” Id. Specifically, the Board disagreed with FedEx I’s

treatment of “entrepreneurial opportunity * * * as an

‘animating principle’” for determining whether a worker is an

“employee” or an “independent contractor” under the Act.

FedEx Home Delivery, 361 N.L.R.B. No. 55, at 1 (quoting

FedEx I, 563 F.3d at 497). In the Board’s view, entrepreneurial

opportunity should merely be one “part of a broader factor

that * * * asks whether * * * [a] putative independent

contractor is, in fact, rendering services as part of an

independent business.” Id. at 10.

The Board added that the “independent-business

factor” should not receive any special weight in the overall

common-law agency analysis. Rather, in light of the Supreme

Court’s instruction in United Insurance that “all of the

incidents of the relationship must be assessed and weighed

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with no one factor being decisive,” FedEx Home Delivery, 361

N.L.R.B. No. 55, at 9 (quoting United Insurance, 390 U.S. at

258), the Board reasoned that “the weight given to the

independent-business factor will depend upon the factual

circumstances of the particular case,” id. at 12. To the extent

that past Board decisions were inconsistent with those

principles, the Board declared them to be overruled. Id.

Applying its newly announced approach, the Board

concluded that the single-route FedEx drivers based at the

Hartford terminal were “employees” under the Act. FedEx

Home Delivery, 361 N.L.R.B. No. 55, at 12–16. The Board

emphasized, in particular, the “pervasive control” FedEx exerts

“over the essential details of [its] drivers’ day-to-day work,”

and the “core” nature of the drivers’ work to FedEx’s business

operations. Id. at 12, 14.

FedEx again filed a petition for review in this court, as

well as a motion for reconsideration with the Board, which the

Board denied. FedEx Home Delivery, 362 N.L.R.B. No. 29

(Mar. 16, 2015). FedEx then filed a second petition for review

challenging the Board’s denial of reconsideration. The Board

filed a cross-application for enforcement of its order.

II.

As FedEx correctly argues, the question before this

court was already asked and answered in FedEx I. This case

involves the exact same parties—the Board and FedEx Home

Delivery—as FedEx I. The facts are acknowledged by the

Board to be “virtually identical,” see FedEx Home Delivery,

361 N.L.R.B. No. 55, at 8, and the Board makes no effort to

distinguish the two cases factually. The purely legal question

to be decided also is exactly the same: whether the same

materially indistinguishable facts that added up to

independent-contractor status in FedEx I add up to

independent-contractor status in FedEx round two.

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It is as clear as clear can be that “the same issue

presented in a later case in the same court should lead to the

same result.” In re Grant, 635 F.3d 1227, 1232 (D.C. Cir.

2011) (quoting LaShawn A. v. Barry, 87 F.3d 1389, 1393 (D.C.

Cir. 1996) (en banc)). Doubly so when the parties are the same.

This case is the poster child for our law-of-the-circuit doctrine,

which ensures stability, consistency, and evenhandedness in

circuit law. See LaShawn, 87 F.3d at 1393 & n.2. 2 Having

chosen not to seek Supreme Court review in FedEx I, the Board

cannot effectively nullify this court’s decision in FedEx I by

asking a second panel of this court to apply the same law to the

same material facts but give a different answer. 3

2

Cf. Brewster v. Commissioner of Internal Revenue, 607 F.2d

1369, 1373 (D.C. Cir. 1979) (per curiam) (“Stare decisis compels

adherence to a prior factually indistinguishable decision of a

controlling court.”) (emphasis added); United States v. Cardales-

Luna, 632 F.3d 731, 734 (1st Cir. 2011) (“[E]ven the narrowest

conception of stare decisis demands that two panels faced with the

same legal question and identical facts reach the same outcome.”).

3

An exception to law-of-the-circuit doctrine applies “when a

conflict exists within our own precedent,” in which case a

subsequent panel is “bound by the earlier” of the two conflicting

decisions. United States v. Old Dominion Boat Club, 630 F.3d 1039,

1045 (D.C. Cir. 2011); see also Sierra Club v. Jackson, 648 F.3d

848, 854 (D.C. Cir. 2011) (“[W]hen a decision of one panel is

inconsistent with the decision of a prior panel, the norm is that the

later decision, being in violation of that fixed law, cannot prevail.”);

Independent Cmty. Bankers of America v. Board of Governors of the

Fed. Reserve Sys., 195 F.3d 28, 34 (D.C. Cir. 1999) (“[W]hen faced

with an intra-circuit conflict, a panel should follow earlier, settled

precedent over a subsequent deviation therefrom.”) (alteration in

original) (quoting Haynes v. Williams, 88 F.3d 898, 900 n.4 (10th

Cir. 1996)). The Board, however, does not assert such an exception

in this case, nor does it claim that its revised view of the common-

law agency test is grounded in any prior decision of this court.

8

To be sure, on matters to which courts accord

administrative deference, agencies may change their

interpretation and implementation of the law if doing so is

reasonable, within the scope of the statutory delegation, and the

departure from past precedent is sensibly explained. See

National Cable & Telecomms. Ass’n v. Brand X Internet

Servs., 545 U.S. 967, 1001–1002 (2005). But the Supreme

Court held in United Insurance that the question whether a

worker is an “employee” or “independent contractor” under the

National Labor Relations Act is a question of “pure” common-

law agency principles “involv[ing] no special administrative

expertise that a court does not possess.” 390 U.S. at 260.

Accordingly, this particular question under the Act is not one

to which we grant the Board Chevron deference or to which the

Brand X framework applies. See Aurora Packing Co. v. NLRB,

904 F.2d 73, 75–76 (D.C. Cir. 1990) (“Deference under the

Chevron doctrine * * * does not apply here because of

the * * * direction that the Board and the courts apply the

common law of agency to the issue.”).

The Board contends that FedEx I transgressed the

Supreme Court’s command in United Insurance to consider

and weigh all of the common-law factors in evaluating

employee status. But, as we indicated in Lancaster Symphony,

FedEx I did consider all of the common-law factors as the law

requires. See Lancaster Symphony, 822 F.3d at 565 (citing

FedEx I, 563 F.3d at 492 & n.1, for the common-law factors

that “the Board, like this court, considers” “[i]n conducting th[e

employee-or-independent-contractor] inquiry”); see also

FedEx I, 563 F.3d at 504 (“We have considered all the common

law factors, and, on balance, are compelled to conclude they

favor independent contractor status.”).

Finally, the Board argues that our precedent requires us

to enforce a finding of employee status if the Board “made a

choice between two fairly conflicting views.” C.C. Eastern,

60 F.3d at 858 (quoting North Am. Van Lines, 869 F.2d at 599).

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But that standard applies only to the Board’s application of

established law to a particular factual record. See Aurora

Packing, 904 F.2d at 75 (“[D]eference would only be extended

to the Board’s determination of employee status—an

‘application of law to fact’—insofar as [the Board] made a

‘choice between two fairly conflicting views’ in a particular

case.”) (quoting United Insurance, 390 U.S. at 260); see also

C.C. Eastern, 60 F.3d at 858 (characterizing the Board’s

employee-or-independent-contractor determination as an

“application of the law of agency to established and undisputed

findings of fact”). We do not accord the Board such breathing

room when it comes to new formulations of the legal test to be

applied. In addition, given FedEx I, we cannot say that this

case involves “two fairly conflicting views” of how the law

should apply to these facts.

III.

In sum, we hold that FedEx I answers the case before

us, and we accordingly grant FedEx’s petitions for review,

vacate the Board’s orders, and deny the Board’s cross-

application for enforcement. 4

So ordered.

4

FedEx also argues that the Board erred in overruling two

objections to the conduct of the election. As FedEx acknowledges,

“it is unnecessary to reach this issue” if the Hartford single-route

drivers are “independent contractors” under the Act, Pet’r’s Br. 50,

as we hold they are.

10