Medco Health Solutions of Las Vegas, Inc. v. National Labor Relations Board

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued September 20, 2012 Decided December 14, 2012

No. 11-1282

MEDCO HEALTH SOLUTIONS OF LAS VEGAS, INC.,

PETITIONER

v.

NATIONAL LABOR RELATIONS BOARD,

RESPONDENT

UNITED STEEL, PAPER AND FORESTRY, RUBBER,

MANUFACTURING, ENERGY, ALLIED INDUSTRIAL AND SERVICE

WORKERS INTERNATIONAL UNION, AFL-CIO, CLC, LOCAL

675,

INTERVENOR

Consolidated with 11-1321

On Petition for Review and Cross-Application for

Enforcement

of an Order of the National Labor Relations Board

Marc L. Zaken argued the cause and filed the briefs for

petitioner.

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Amy H. Ginn, Attorney, National Labor Relations

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

were John H. Ferguson, Associate General Counsel, David

Habenstreit, Assistant General Counsel, and Jill A. Griffin,

Supervisory Attorney. Daniel A. Blitz, Attorney, entered an

appearance.

Amanda M. Fisher argued the cause and filed the brief

for intervenor. Daniel M. Kovalik entered an appearance.

Before: ROGERS and KAVANAUGH, Circuit Judges, and

WILLIAMS, Senior Circuit Judge.

Opinion for the Court filed by Senior Circuit Judge

WILLIAMS.

WILLIAMS, Senior Circuit Judge: This case arises mainly

from an employer’s belief that exclaiming “WOW” to

celebrate workers’ special achievements would hearten the

workers and quicken their zeal. As so often in human

relationships, things proved more complicated.

Petitioner Medco Health Solutions of Las Vegas, Inc. is a

pharmacy benefits management company that sells

pharmaceuticals out of a mail-order facility in Las Vegas,

Nevada. It receives and fills prescriptions through an

automated process and mails completed orders to patients.

The company employs nearly 850 people at its Las Vegas

facility, including pharmacists, coverage review

representatives, and pharmacy technicians. These workers are

represented by the United Steel Workers Local No. 675. The

pharmacists belong to the “pharmacists unit,” the others to the

confusingly labeled “pharmacy unit.”

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In the summer of 2009, in an effort to encourage superior

performance, Medco introduced what it called the “WOW

program.” (WOW is apparently just an exclamation, not an

acronym.) The program centers on weekly events at which

designated employees receive “WOW awards” in recognition

of their achievements. The awards do not entitle the recipient

to monetary compensation, and they carry no weight in

determining promotions or wage increases (though

presumably the conduct underlying the awards may do so).

Employees may decline WOW awards and are not required to

attend the weekly recognition ceremonies.

Medco thought the program was a nice gesture, one that

employees would appreciate. It clearly believed that

customers and potential customers—e.g., firms that use

Medco to meet the pharmacy needs of insured workers—

would view the program as manifesting Medco’s commitment

to service. When Medco’s managers showed the

representatives of such firms around the facility, a regular stop

was an installation in the cafeteria called the “Wall of WOW,”

displaying recent WOW awardees, along with the reasons

they received their awards. Approximately one hundred such

customer tours take place each year, about two a week.

Medco also featured the WOW program in a slide

presentation that it routinely showed to tour groups.

Not all employees shared Medco’s sunny outlook on the

program. On February 12, 2010, employee Michael Shore

(vice-chairman of the “pharmacy unit”) wore a T-shirt to

work, its front bearing the union logo and its back the

message, “I don’t need a WOW to do my job.”

The same day, representatives of the Land O’Lakes

company, a Medco client, were scheduled to tour the facility.

Word that Shore had been wearing the T-shirt in the cafeteria

during his lunch break reached Vice President and General

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Manager Tom Shanahan, who summoned Shore to his office.

Shanahan expressed surprise and disappointment at Shore’s

decision to wear the shirt, which he felt was “insulting” to

Medco, and asked Shore to remove it. Shanahan added that if

Shore did not feel he could support the WOW program, “there

were plenty of jobs out there.” Shore complied with

Shanahan’s request and did not wear the T-shirt again. In the

ensuing proceedings before the National Labor Relations

Board, Medco invoked in support of its conduct a provision of

its dress code then in effect banning “Phrases, Words,

Statements, pictures, cartoons or drawings that are degrading,

confrontational, slanderous, insulting or provocative.” Medco

appears never to have objected to clothing bearing a union

logo or name.

Out of these events sprang charges of violations of

§ 8(a)(1) of the National Labor Relations Act, 29 U.S.C.

§ 158(a)(1), charges that the Board upheld in almost every

aspect. Medco Health Solutions of Las Vegas, Inc., 357

NLRB No. 25, at 1 (2011).

At the same time another dispute arose, unrelated except

that it involved a dress code provision, Medco, and the same

general time period. This clash started November 19, 2009,

when Medco notified the chairman of the pharmacists unit of

a change in dress code policy to be announced the following

day. The Board’s General Counsel charged Medco with

violating §§ 8(a)(1) & (5) of the Act, 29 U.S.C. §§ 158(a)(1)

& (5), by refusing to bargain over the change, and the Board

upheld the charge. Medco, 357 NLRB No. 25, at 2.

Medco now timely petitions for review of the Board’s

order as to both matters, and the Board cross-applies for

enforcement. As to the amendment of the dress code, we

uphold the Board. Various aspects of the T-shirt dispute,

however, require us to remand the matter to the Board for

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further proceedings. The dress code amendment issue being

fairly simple, we will clear it out of the way first, then tackle

the T-shirt question.

* * *

Pharmacists’ dress code changes. On November 19,

2009, Medco alerted William Webb, chairman of the

pharmacists unit, to a change in dress code policy to be

announced the following day. Effective January 1, 2010, the

company would require pharmacists to wear lab coats during

working hours and dress in business casual on scheduled tour

days. Management also told Webb that if the union had any

questions or concerns it should let Medco know by the

following day.

On December 9, Webb emailed Medco a request to

bargain over the issue. Medco responded that it “would be

happy to . . . discuss the upcoming change,” but said it did

“not believe this is a mandatory subject for bargaining.” Joint

Appendix (“J.A.”) 497. The next day, Medco and the union

met to discuss the changes to the dress code. Medco began

the meeting by reiterating its view that the dress code was not

subject to mandatory bargaining. Union representatives left

the meeting after concluding that Medco was immovable.

The new dress code went into effect as scheduled.

Medco does not now appear to contest that dress codes

qualify as a mandatory subject of bargaining contemplated by

the Act. See Yellow Enterprise Systems, 342 NLRB 804, 827

(2004). Rather, it argues that the United Steel Workers had

agreed that a management rights clause in an expired contract

between Medco and a predecessor union would remain in

effect while the United Steel Workers negotiated a new

collective bargaining agreement with Medco. This clause, it

contends, entitled Medco to promulgate the dress code

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changes when the union failed to raise questions or concerns

within 24 hours of Medco sharing the policy with the union

chair of the pharmacists unit. But the ALJ explicitly refused

to credit the testimony offered by Medco in support of the

alleged agreement to let the old contract continue in effect,

and the Board accepted that ruling. 357 NLRB No. 25, at 2-3.

Medco offers nothing to suggest that this case is among the

rare instances where we can properly overturn such a

credibility finding. See, e.g., Federated Logistics &

Operations v. NLRB, 400 F.3d 920, 923 (D.C. Cir. 2005).

Medco argues in the alternative that it did bargain with

the Union, and that the Board erred by focusing solely on

Medco’s statement that it would not bargain. Medco urges us

to look at the totality of its conduct, which it asserts

demonstrated a good-faith effort to bargain that ended in

impasse. But in fact that pattern consisted of repeatedly

denying any intent to bargain, and then declining to entertain

any concessions. Sustaining Medco’s objection would require

us and the Board to accept the idea that such a strategy

amounts to “bargaining” under the Act, a notion that would

vitiate § 8(a)(5)’s language making it an unfair labor practice

to “refuse to bargain.”

The anti-WOW T-shirt. After a hearing on the General

Counsel’s complaint, an ALJ found against Medco with

respect to the T-shirt charge. Specifically, he found: (1) that

Shore’s wearing of the T-shirt was a “union supported protest

of a working condition” protected by § 7 of the Act; (2) that

Medco, through Shanahan’s observation that if Shore did not

feel he could support the WOW program there were plenty of

jobs out there, had unlawfully invited Shore to quit his

employment in response to his protest of working conditions;

and (3) that Medco’s application to Shore of the dress code’s

ban on “insulting” language had restricted the employees’ § 7

rights in violation of § 8(a)(1). 357 NLRB No. 25, at 7-8 &

7

n.3. Finally, reading the dress code’s prohibitions on

“provocative” and “confrontational” statements as being

reasonably understandable as restraining protected activity,

the ALJ found that Medco had violated § 8(a)(1) by

“maintaining overly broad work rules,” seemingly a kind of

facial invalidation. Id. at 8.

In affirming, the Board departed from the ALJ’s analysis

only in declining to reach the merits of his finding that

employees would reasonably read the dress code to restrict § 7

activity, explaining that such a violation would not change the

remedy awarded the union. Id. at 2. Yet, among the other

remedies, the Board ordered Medco to cease enforcement of

and to rescind the ban on “provocative, insulting, or

confrontational” statements. Id. at 3-4.

Section 7 of the Act grants employees the right “to

engage in . . . concerted activities for the purpose of collective

bargaining or other mutual aid or protection.” 29 U.S.C.

§ 157. Section 8(a)(1) enforces § 7 by making it unlawful for

employers to “interfere with, restrain, or coerce” employees’

exercise of their rights under that provision. Id. § 158(a)(1).

Medco contends that Shore’s behavior was not protected

by § 7, and that therefore no § 8(a)(1) violation occurred. Its

challenge rests on three arguments. First, it claims that

Shore’s activity was not concerted because he was not acting

on behalf of his colleagues or in furtherance of a group

purpose. Second, Medco asserts that, even if Shore’s

behavior was concerted, it was not for the purpose of

“collective aid or protection” in that it did not seek to improve

a term or condition of employment. Finally, Medco maintains

that even if Shore’s behavior was concerted and relating to a

condition of employment, it was not protected by § 7 because

of “special circumstances”—principally that the message on

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Shore’s shirt disparaged Medco and threatened to harm

Medco’s relationship with its customers.

In fact the record adequately supports the Board’s

conclusion that Shore was engaging in concerted activity in

wearing the T-shirt. The shirt’s presence in Las Vegas

stemmed from a January 2010 trip by pharmacy unit

chairperson Marissa Osterman to Tampa for a meeting of

union leaders from across Medco offices. There she received

the T-shirt from the president of a Medco sister unit in

Pittsburgh. The shirt had been designed for a union unity

protest against the WOW program. She brought it back to Las

Vegas and gave it to Shore.

Shore testified that he had worn the T-shirt “because of

the [union] logo, first of all,” but when asked for his opinion

of the WOW program, he replied: “[M]y T-shirt said it all. I

don’t need a WOW to do my job.” J.A. at 240. Although he

testified that he did not discuss the T-shirt with anyone before

wearing it to work, he also said that in his capacity as union

vice-chairman he had received complaints about the WOW

program. He added that on the day he wore his shirt he

received words and gestures of approval from his colleagues.

We have upheld the Board’s definition of “concerted

activity” as encompassing “those circumstances where

individual employees seek to initiate or to induce or to prepare

for group action, as well as individual employees bringing

truly group complaints to the attention of management.” Prill

v. NLRB, 835 F.2d 1481, 1484 (D.C. Cir. 1987). In evaluating

whether an employee acted concertedly, “[t]he touchstone for

concerted activity . . . must be some relationship between the

individual employee’s actions and fellow employees.” Int’l

Transp. Service, Inc. v. NLRB, 449 F.3d 160, 166 (D.C. Cir

2006). The account above amply shows that Shore “brought a

group complaint to management’s attention.” His and

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Osterman’s testimony leaves little doubt that some Medco

employees in both Las Vegas and Pittsburgh disliked the

WOW program and that the T-shirt reflected that discontent.

Medco offers two specific points against this conclusion.

First it notes Shore’s failure to discuss his T-shirt plans with

his colleagues. But we have never said that the Board can

find concerted action only where an employee obtained the

consent or acknowledgment of his or her coworkers before

bringing a group complaint to the attention of management.

In fact, we have recognized the opposite contention. “[A]n

individual who brings a group complaint to the attention of

management is engaged in concerted activity even though he

was not designated or authorized to be a spokesman by the

group.” Citizens Inv. Services Corp. v. NLRB, 430 F.3d 1195,

1198-99 (D.C. Cir. 2005) (citations omitted).

Second, Medco asserts that Shore said he didn’t wear the

T-shirt as a protest of the WOW program. But the passage of

the transcript that Medco cites in support of its claim contains

no such remark. See Petitioner’s Brief at 7 (citing J.A. at 241,

254). We thus sustain the Board’s finding of concerted

activity.

Medco’s second argument is likewise unavailing. Section

7 protects workers’ concerted action “for the purpose of

collective bargaining or other mutual aid or protection.”

Under this language the purposes of protected concerted

activities extend beyond “the narrower purposes of ‘self-

organization’ and ‘collective bargaining.’” Eastex, Inc. v.

NLRB, 437 U.S. 556, 565 (1978). Before the Board, Medco

argued that the object of Shore’s protest, the WOW program,

is not a “term or condition of employment” (Eastex’s phrase

for the subjects for which workers may engage in concerted

activity, id.) because it is unrelated to “discipline,” “wage

increases,” or “promotions” and does not involve “monetary

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compensation.” Respondent’s Brief at 26, Medco Health

Solutions of Las Vegas, Inc., 357 NLRB No. 25 (2011) (Nos.

28-CA-22914, 22915). The Board rejected these arguments,

reasoning that “a program intended to create an incentive for

employees to work harder or be more productive” qualifies as

a condition of employment. Medco, 357 NLRB No. 25, at 2

n.6. The Board’s position is obviously sounder than Medco’s,

which would exclude from § 7’s protection not only Medco’s

WOW program but a host of other issues that are not merely

“terms and conditions of employment” within the meaning of

Eastex but are mandatory subjects of collective bargaining,

such as worker safety. See, e.g., United Steelworkers, AFL-

CIO-CLC v. Marshall, 647 F.2d 1189, 1236 (D.C. Cir 1980).

Before the Board and on appeal Medco has invoked New

River Industries, Inc. v. NLRB, 945 F.2d 1290 (4th Cir. 1991),

in which the court held that employees’ concerted satirical

attacks, leveled at an employer’s one-time provision of free

ice-cream cones in celebration of the firm’s execution of a

favorable contract, were unprotected. The only links between

the two cases are (1) ice cream (which was provided to Medco

employees at the weekly WOW events), and (2) the satirical

nature of the worker “protest.” But in New River the

company’s ice cream distribution was a one-time event, and

was related solely to management’s enthusiasm for a third-

party contract, not to its effort to create, in the words of the

Board, “an incentive for employees to work harder or be more

productive.” New River is thus no obstacle to our affirming

the Board’s finding on this point.

Medco’s final argument is that Shore’s wearing the T-

shirt potentially affected its relationship with its customers in

a way that created “special circumstances” justifying its

response. Here the ALJ and Board offered no clear answer.

The Board’s opinion adopted wholesale the ALJ’s cursory

reasoning that no “absolute ban” was justifiable because “the

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tours were not a daily occurrence.” 357 NLRB No. 25, at 2.

The Board further found that, even if the tours were conducted

daily, Medco’s argument would still fail because the company

had not offered any evidence that the T-Shirt posed a real risk

of harm to the customer relationship. Id.

We note first that the fact that the tours were not an

everyday occurrence does not mean that they were so

predictable that Medco could have devised a rule that would

have reliably screened customers from messages such as the

one on Shore’s T-shirt. Shanahan and another Medco

manager both testified that unscheduled tours occurred

periodically, and that visitors sometimes entered the Las

Vegas facility without advance notice. See J.A. at 148, 317.

The Board did not directly address this testimony, but rather

observed in a footnote that “[t]he record also shows that

employees generally received advanced notification of

upcoming tours.” 357 NLRB No. 25, at 2 n.7. Even under

our highly deferential standard of review, requiring us to

affirm the Board’s application of law to facts except where

“arbitrary or otherwise erroneous,” Guard Publishing Co. v.

NLRB, 571 F.3d 53, 58 (D.C. Cir. 2009), the Board cannot be

said to have offered a “reasoned explanation” for rejecting

Medco’s argument in favor of a rule applying throughout the

working day, see Int’l Transp. Service, 449 F.3d at 163.

Of course if Medco could not lawfully have banned the

anti-WOW T-shirt even at times coincident with customer

tours, the timing issue would not help it. But on the issue of a

partial ban, the Board’s reasoning was equally deficient.

Medco makes a straightforward argument that the message on

the T-shirt was insulting to the company and would have

undermined its efforts to attract and retain customers. To that

end, Medco has provided considerable evidence that the

WOW program is an important element of the pitch it gives

prospective and current clients; the company even assigns a

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fulltime employee to manage the program. This evidence, and

the tone of the T-shirt gibe at Medco’s management, seem to

preclude an offhand dismissal of the contention that the T-

shirt would threaten to damage Medco’s relationship with its

customers. Yet the Board concluded that Medco had “not

offered any evidence that the slogan reasonably raised the

genuine possibility of harm to the customer relationship.” 357

NLRB No. 25, at 2.

We find this conclusion puzzling, for the Board has had

no difficulty in identifying potential harm to customer

relations in prior rulings. In Pathmark Stores, Inc., 342

NLRB 378, 379 (2004), the Board held that a grocery store

could, because of its “legitimate interest in protecting its

customer relationship,” lawfully prohibit its employees from

displaying the message “Don’t Cheat About the Meat!” in

protest of the store’s use of prepackaged meat products. And

in Noah’s New York Bagels, Inc., 324 NLRB 266, 275 (1997),

the Board upheld a ban on T-shirts reading “If its [sic] not

Union, its [sic] not Kosher.” In neither of these cases did the

Board require the employer to offer additional evidence

beyond a relationship between its business and the banned

message. In Pathmark the Board explicitly acknowledged

that the company had “presented no evidence that customers

decided not to buy” its products in response to the banned

slogan, but upheld the ban because it found “the slogan

reasonably threatened to create concern among [the

company’s] customers.” 342 NLRB at 379.

We do not think the Board has adequately explained why

Medco’s claim of harm to customer relations requires

evidence beyond what it has already adduced, while those of

the employers in Pathmark and Noah’s New York Bagels

required none. At oral argument Board counsel proposed to

read these cases as limited to disparagements of an employer’s

merchandise. But obviously an employee can harm an

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employer’s customer relations by belittling or critiquing other

aspects of the employer’s operations. Especially for a firm

selling a service, concern for customers’ appraisal of its

employees’ attitudes seems natural. Obviously we don’t mean

to suggest that employers are free to suppress employee

speech in the interest of presenting a Potemkin village of

intra-firm harmony, but that is quite different from trying to

exclude the display of slogans that an outsider might read as

sullen resentment (especially when the object of discontent is

something so seemingly inoffensive as the WOW program).

We recognize that “the Board draws on a fund of

knowledge and expertise all its own,” NLRB v. Gissel Packing

Co., 395 U.S. 575, 612 n.32 (1969), but that expertise is

surely not at its peak in the realm of employer-customer

relations. And the Act of course protects a wide spectrum of

lawful means of protesting employer policies and actions,

some of which may occur in the presence of customers. But if

the Board wishes to locate an employee’s behavior within that

spectrum, it must supply a more meaningful analysis than it

has offered here.

In describing the ALJ’s and the Board’s analyses, we

noted that while the ALJ had not only condemned Medco’s

application of the dress code’s ban on “insulting” language to

Shore but also found its prohibition of “provocative” or

“confrontational” messages overly broad, the Board explicitly

refrained from endorsing the ALJ’s second finding. Yet the

Board’s order directs Medco to “[r]escind the overly broad

work rules that prohibit employees from wearing clothing

with messages that are provocative, insulting, or

confrontational.” 357 NLRB No. 25, at 3. In adopting this

provision, the Board neither followed the reasoning of the

ALJ nor substituted its own. It offered no explanation for its

implicit ruling that each of the three adjectives was overly

broad.

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In the past we have found the Board “remarkably

indifferent to the concerns and sensitivity” that lead

employers to adopt rules intended “to maintain a civil and

decent workplace.” Adtranz ABB Daimler-Benz Transp., N.A.

v. NLRB, 253 F.3d 19, 25, 27 (D.C. Cir. 2001). In Lutheran

Heritage Village-Livonia, 343 NLRB 646, 647 (2003), the

Board appeared to accept Adtranz’s holding on employers’

rights to maintain such a workplace. Moreover, when a rule

neither expressly nor inherently restricts protected activity, the

Board appeared in Lutheran Heritage to condition any

decision that the rule’s mere existence violated the Act on a

finding either that the rule was promulgated in response to

union activity or that a reasonable employee reading the rule

would construe it to prohibit protected conduct. Id. For no

apparent reason the Board seems to have abandoned that

analysis in proscribing Medco’s ban on provocative and

confrontational words. As a general matter, we suspect that

such expressions are seldom found in civil and decent places

of employment.

* * *

For the reasons above, we deny Medco’s petition to

review the Board’s determination that Medco committed an

unfair labor practice by refusing to bargain on its amendment

of the pharmacists’ dress code. We grant the Board’s cross-

application for enforcement on this issue. But we set aside the

Board’s determination that Medco violated the Act in ordering

Shore to remove his T-shirt, and in its ban on insulting,

provocative and confrontational expressions on clothing. We

remand for further proceedings consistent with this opinion.

So ordered.