Circus Circus Casinos, Inc. v. Nat'l Labor Relations Bd.

• Decision Date: 12 June 2020
• Docket Number: No. 18-1201,C/w 18-1211,18-1201
• Citation: 961 F.3d 469
• Parties: CIRCUS CIRCUS CASINOS, INC., d/b/a Circus Circus Las Vegas, Petitioner v. NATIONAL LABOR RELATIONS BOARD, Respondent
• Court: U.S. Court of Appeals — District of Columbia Circuit

961 F.3d 469

CIRCUS CIRCUS CASINOS, INC., d/b/a Circus Circus Las Vegas, Petitioner

v.NATIONAL LABOR RELATIONS BOARD, Respondent

No. 18-1201

C/w 18-1211

United States Court of Appeals, District of Columbia Circuit.

Argued October 28, 2019

Decided June 12, 2020

Paul T. Trimmer argued the cause for petitioner. With him on the briefs was Daniel I. Aquino, Las Vegas, NV.

Kellie Isbell, Senior Attorney, National Labor Relations Board, argued the cause for respondent. With her on the brief were Peter B. Robb, General Counsel, David S. Habenstreit, Assistant General Counsel, and Julie Brock Broido, Supervisory Attorney.

Before: Srinivasan, Chief Judge, Rao, Circuit Judge, and Randolph, Senior Circuit Judge.

Opinion concurring in part and dissenting in part filed by Chief Judge Srinivasan.

Rao, Circuit Judge:

This case arises out of an employment dispute between Circus Circus Casinos, Inc. ("Circus") and temporary employee Michael Schramm. The National Labor Relations Board ("NLRB") determined that Circus committed three unfair labor practices: threatening Schramm for exercising statutory rights under the National Labor Relations Act ("NLRA"), interfering with his right to union representation during an investigatory meeting, and suspending and terminating him because of protected union activity. Circus petitions for review, arguing the Board's decision misapplied governing law and lacked substantial evidence. For the reasons that follow, we grant Circus's petition for review in full and deny the Board's cross-application for enforcement.

I.

Circus Circus is a hotel and casino in Las Vegas, Nevada. In September 2013, the company hired journeyman carpenter Michael Schramm into its engineering department on a temporary basis to upgrade doorjamb security in the hotel's guest rooms. As a carpenter, Schramm was represented by the United Brotherhood of Carpenters and Joiners of America, Southwest Regional Council of Carpenters Local #1780 ("the Union").

In November or early December 2013, Schramm and about twelve other employees attended one of the engineering department's mandatory weekly safety meetings along with department head Rafe Cordell and several other managers. During the meeting, an engineer named Fred Tenney brought up the concern that secondhand exposure to marijuana smoke in guest rooms could cause employees to test positive for illegal drugs. Schramm echoed this concern, and a discussion ensued between Cordell, Schramm, and Tenney. According to Schramm and Tenney, they repeatedly pressed Cordell for additional commitments by the company and refused to accept his assurances that employees’ exposure was insufficient to produce a positive test result. On their account, Cordell eventually became angry, turned red, and told Schramm "you know what, maybe we just won't need you anymore" before abruptly leaving the meeting. Testimony from Cordell and other managers and employees also in attendance reported the weekly safety meeting proceeded just like any other and concluded without incident. Although some remember a discussion about marijuana policy, none remember Cordell making a threatening statement.

Several weeks later, Circus initiated an investigation into whether Schramm violated company policy with respect to a medical exam mandated by the Occupational Safety and Health Administration ("OSHA"). Pursuant to OSHA regulations, Circus provides custom-fit respirators to employees likely to encounter airborne hazards during their work, including virtually all members of the engineering department. See 29 C.F.R. § 1910.134(a) – (d). Because respirators can aggravate certain underlying health conditions, OSHA requires employers to contract with a medical service provider to review an employee's medical history and perform a medical examination prior to the custom-fitting process. See id. § 1910.134(e) – (f). To assure compliance with OSHA regulations, Circus maintains written policies that make submitting to the testing process a mandatory condition of employment. The company's General Rules of Conduct specify that "serious violations," including "insubordination" and "[f]ailure or refusal to submit to a physical examination ... ordered by Circus," "will result in disciplinary action up to and including immediate termination."

Schramm arrived at an onsite clinic for his scheduled testing appointment on December 10. He refused, however, to complete preliminary paperwork without first speaking with the contract doctor. Although clinic technicians explained he could not see the doctor without first completing a preliminary intake process, Schramm left the appointment and returned to work. Clinic staff relayed the incident to Cordell, who quickly suspended Schramm pending investigation into his refusal to take the medical exam. Over the next three days, Circus personnel interviewed Cordell and several other managers about the incident and scheduled Schramm for an investigatory interview. When a Circus human resources representative contacted Schramm to set up the interview, she provided a phone number for the Union in the event Schramm desired to have a Union representative present at the meeting. The record indicates Schramm attempted to contact the Union twice by phone, but to no avail.

Schramm returned to the Circus facility on December 13 for the interview. Cordell and two human resources representatives attended on behalf of Circus. According to Schramm, he looked around the hallway for a Union representative before entering the meeting and began by stating: "I called the Union three times [and] nobody showed up, I'm here without representation." Circus's witnesses deny Schramm made this statement at the beginning of the meeting but acknowledge continuing the interview without offering Schramm union representation.

In late December, Cordell and human resources met once again with Schramm to terminate his employment; this time he was accompanied by a Union steward. Circus represented during the administrative proceedings that it fired Schramm for violating the company's rules against insubordination and refusing to submit to mandatory testing.

Schramm subsequently filed unfair labor practice charges on his own behalf with the NLRB. After overriding the regional director's decision not to pursue the charges, the Board's general counsel issued a complaint alleging Circus violated three standards established under Section 8(a)(1) of the Act. See 29 U.S.C. § 158(a)(1). The complaint first alleged Cordell's comment to Schramm during the weekly safety meeting interfered with NLRA rights by discouraging employees from voicing shared concerns about the terms and conditions of employment. Second, the complaint alleged Schramm's statement at the beginning of the investigatory meeting was a request for union representation under NLRB v. J. Weingarten, Inc. , 420 U.S. 251, 95 S.Ct. 959, 43 L.Ed.2d 171 (1975), and that Circus violated the Act by ignoring the request. Finally, the complaint alleged that under the test for mixed-motive termination in Wright Line , 251 NLRB 1083 (1980), Circus unlawfully suspended and terminated Schramm because of activity protected under the Act and not because of his alleged workplace misconduct. After a hearing, an administrative law judge ("ALJ") issued a recommended decision finding that Circus committed the unfair labor practices brought by the general counsel.¹

The Board, sitting as a delegated three-member panel, see 29 U.S.C. § 153(b), adopted the ALJ's decision in all material respects and rejected a request by Circus to reopen the record for additional evidence tending to impeach Tenney, Schramm's key corroborating witness. See Circus Circus Casinos, Inc. , 366 NLRB No. 110 (June 15, 2018). The Board noted Chairman Ring dissented as to the Weingarten violation on the ground that the majority was wrong to find a request for representation "subsumed" in Schramm's statement, which described prior requests to the Union rather than a request to the company. Id. at *1 n.2. To remedy these unfair labor practices, the Board ordered Circus to reinstate Schramm with backpay, cease and desist from similar violations, and post a workplace notice describing the agency's findings. Id. at *2.

Circus petitioned for review of the Board's unfair labor practice findings and refusal to reopen the record, arguing the order is inconsistent with the NLRA and the Administrative Procedure Act ("APA"). The Board cross-petitioned for enforcement of the order.

II.

Judicial review of the Board's decisions and orders must evaluate both the Board's statements of law and application of law to the facts. Congress combined within the NLRB the authority to make rules, enforce rules, and adjudicate whether rules were violated in individual cases. See 29 U.S.C. § 160(a) – (c). The Supreme Court upheld the constitutionality of the NLRB against due process challenges notwithstanding this combination of functions in part because appellate review would afford "adequate opportunity to secure judicial protection against arbitrary action." NLRB v. Jones & Laughlin Steel Corp. , 301 U.S. 1, 47, 57 S.Ct. 615, 81 L.Ed. 893 (1937). Orders of the Board cannot be enforced without Article III approval, see 29 U.S.C. § 160(e) – (f), and reviewing courts "are not to abdicate the conventional judicial function" because "Congress has imposed on them responsibility for assuring that the Board keeps within reasonable grounds," Universal Camera Corp. v. NLRB , 340 U.S. 474, 490, 71 S.Ct. 456, 95 L.Ed. 456 (1951). Judicial review ensures that the Board stays within statutory and constitutional limits.

The Board rarely promulgates regulations through notice and comment but instead sets standards through adjudication. The Board, "uniquely among major federal administrative agencies, has chosen to promulgate virtually all the legal rules in its field through adjudication rather than rulemaking." Allentown Mack Sales & Serv., Inc. v. NLRB , 522 U.S. 359, 374,...