Hendrickson United States, LLC. v. Nat'l Labor Relations Bd.

• Decision Date: 01 August 2019
• Docket Number: Nos. 18-1144/1315,s. 18-1144/1315
• Parties: HENDRICKSON USA, LLC., Petitioner/Cross-Respondent, v. NATIONAL LABOR RELATIONS BOARD, Respondent/Cross-Petitioner.
• Court: U.S. Court of Appeals — Sixth Circuit

932 F.3d 465

HENDRICKSON USA, LLC., Petitioner/Cross-Respondent,

v.NATIONAL LABOR RELATIONS BOARD, Respondent/Cross-Petitioner.

Nos. 18-1144/1315

United States Court of Appeals, Sixth Circuit.

Argued: May 2, 2019

Decided and Filed: August 1, 2019

McKEAGUE, Circuit Judge.

When Hendrickson USA, LLC learned that employees were attempting to unionize one of its manufacturing plants, it began advocating against unionization. A plant-wide letter cautioned employees that contract negotiations would begin "from scratch," and a PowerPoint shown to employees stated that "relationships suffer" in a union shop. The National Labor Relations Board found that the company’s statements constituted unfair labor practices because they coerced employees in the exercise of their rights under the National Labor Relations Act (NLRA) and ordered Hendrickson to post remedial notices around its plant. Hendrickson petitioned this court for review, and the Board cross-appealed for enforcement of its order. Because the Board’s opinion is not supported by substantial evidence, we GRANT Hendrickson’s petition and DENY the Board’s cross-appeal.

I

Hendrickson owns an industrial plant in Lebanon, Kentucky, that produces truck suspension and axle systems. On August 21, 2015, Hendrickson received a letter from a group of employees informing the company about the formation of a union organizing committee on behalf of United Steel Workers of America. The company quickly responded with a campaign against unionization. The same day the company received the letter, H.R. director Marlin Smith called a meeting to emphasize the company’s "direct employee relationship strategy" and advised employees to read carefully any union-related documents before signing them. A few days later, on August 24, plant manager Randy Lawless circulated a letter touting the company’s current compensation package and taking issue with the idea that involving a third party would improve the relationship between the company and employees. The letter cautioned employees that union representation would not guarantee an increase in compensation, stating that "[t]he Company and any recognized Union would begin the negotiation process from scratch." Then, on August 25 and again on August 26, the company played a PowerPoint slideshow for all employees. Over the course of forty slides, the presentation explained Hendrickson’s negative view of unionization and strongly urged employees not to vote for unionization. One of the concluding slides opined that, when a plant unionizes, "the culture will definitely change," "relationships suffer," and "flexibility is replaced by inefficiency."

In September, a Hendrickson employee filed a charge with the Board, and the Board’s General Counsel issued a complaint against Hendrickson, alleging that the company violated Section 8(a)(1) of the NLRA by threatening employees that authorization of a union would lead to loss of access to management and a more onerous work environment. The case went to a Board administrative law judge (ALJ), where the General Counsel added another claim, arguing that Hendrickson threatened employees with the loss of wages and benefits if they unionized. The ALJ rejected the General Counsel’s allegation regarding statements about the loss of access to management but accepted the allegations regarding threats of an onerous work environment and threats of lower wages and benefits. The ALJ then ordered Hendrickson to cease communication in violation of the NLRA and post public notices about employees’ rights under the NLRA.

Both Hendrickson and the General Counsel filed exceptions to the ALJ’s opinion with the Board. The Board adopted the ALJ’s opinion in full and added a footnote expressing the majority and dissenting statements of the three participating Members. Hendrickson has filed an appeal with this court, challenging the holdings that it unlawfully threatened employees with a more onerous work environment and lower wages and benefits. The Board has filed a cross-appeal asking for enforcement of its order.

II

Our role in reviewing the Board’s findings is limited. See Vencare Ancillary Servs., Inc. v. NLRB , 352 F.3d 318, 321 (6th Cir. 2003) (citation omitted). We must defer to the Board’s findings of fact, reasonable inferences from the facts, and applications of law to the facts if they are supported by substantial evidence on the record considered as a whole. Beverly Health and Rehab. Servs., Inc. v. NLRB , 297 F.3d 468, 476, 478 (6th Cir. 2002) (citing 29 U.S.C. § 160(e) ). Despite its name, "substantial evidence" is not an exacting standard—it means "more than a mere scintilla" and "only such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Biestek v. Berryhill , ––– U.S. ––––, 139 S. Ct. 1148, 1154, 203 L.Ed.2d 504 (2019) (quotations omitted). The deference of the substantial evidence standard is rooted in "the Board’s competence in the first instance to judge the impact of utterances made in the context of the employer-employee relationship." NLRB v. Gissel Packing Co. , 395 U.S. 575, 620, 89 S.Ct. 1918, 23 L.Ed.2d 547 (1969) (citation omitted). On the other hand, "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, when viewed in the light that the record in its entirety furnishes, including the body of evidence opposed to the Board’s view." Universal Camera Corp. v. NLRB , 340 U.S. 474, 488, 71 S.Ct. 456, 95 L.Ed. 456 (1951).

III

Section 7 of the NLRA guarantees employees the right "to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing," and the right to refrain from those activities. 29 U.S.C. § 157. Under Section 8(a), it is an unfair labor practice for an employer "to interfere with, restrain, or coerce employees in the exercise of rights guaranteed in [Section 7]." 29 U.S.C. § 158(a)(1). On the other hand, under Section 8(c), "[t]he expressing of any views, argument, or opinion" by an employer is not an unfair labor practice as long as the expression "contains no threat of reprisal or force or promise of benefit." 29 U.S.C. § 158(c). This last section recognizes both the existence of and limits to an employer’s right of free speech under the First Amendment. See Gissel , 395 U.S. at 617, 89 S.Ct. 1918.

The enactment of Section 8(c) in 1947 "manifested a congressional intent to encourage free debate on issues dividing labor and management," and that policy judgment "favor[s] uninhibited, robust, and wide-open debate in labor disputes." Chamber of Commerce of the U.S. v. Brown , 554 U.S. 60, 67–68, 128 S.Ct. 2408, 171 L.Ed.2d 264 (2008) (quotations omitted). Thus, in a labor dispute, both the employer and employees may "express themselves on the merits of the dispute in order to influence its outcome." Va. State Bd. of Pharmacy v. Va. Citizens Consumer Council, Inc. , 425 U.S. 748, 762, 96 S.Ct. 1817, 48 L.Ed.2d 346 (1976) (citing Gissel , 395 U.S. at 617–18, 89 S.Ct. 1918 ). On the other hand, the employer’s right of free speech must be balanced with employees’ right of free association, as "embodied in Section 7 and protected by Section 8(a)(1)." Gissel , 395 U.S. at 617, 89 S.Ct. 1918. And a court’s assessment of that balance "must be made in the context of [the] labor relations setting," where, because of employees’ economic dependence on an employer, they may be more likely to sense intended threats than a disinterested observer. Id.

Distinguishing protected speech from unprotected threats can be difficult because "the only effective way of arguing against the union is for the company to point out to the workers the adverse consequences of unionization." ITT Auto. v. NLRB , 188 F.3d 375, 393 (6th Cir. 1999) (Kennedy, J., concurring in part and dissenting in part) (quoting NLRB v. Village IX, Inc. , 723 F.2d 1360, 1367 (7th Cir. 1983) ). The Supreme Court has explained that the distinction between lawful advocacy and coercive threat turns on whether the employer communicates that predicted adverse consequences of unionization are "outside [the employer’s] control" or instead "taken solely on [the employer’s] own volition." Gissel , 395 U.S. at 619, 89 S.Ct. 1918 (quotation omitted). In order to qualify as lawful advocacy, a prediction that adverse consequences will result "must be carefully phrased on the basis of objective fact." Id. at 618, 89 S.Ct. 1918.

IV

A

The Board found that two of Hendrickson’s statements constituted threats rather than lawful advocacy. The first statement at issue in this case is the comment in Hendrickson’s letter that, if the plant were unionized, contract negotiations would begin "from scratch." The Board concluded that the statement was coercive, in violation of Section 8(a), because it threatened employees with the loss of wages and benefits if they authorized the union. We disagree.

Although the text of Section 8 and the Supreme Court’s decision in Gissel provide the broader context for our analysis, the specific phrase "bargain from scratch" has been the subject of much litigation, and our analysis benefits from well-established precedent. We have held that the phrase is not a per se violation of the NLRA but that it "can be coercive, and therefore a violation of [Section 8], depending on the context of the statement." NLRB v. Gen’l Fabs. Corp. , 222 F.3d 218, 231 (6th Cir. 2000) (citing TRW-United Greenfield Div. v. NLRB , 637 F.2d 410, 420 (5th Cir. 1981) ). The phrase is coercive if used to "indicate that the employer will adopt a regressive bargaining stance or lowered benefits to penalize workers for unionization," and it must be "viewed in the context of other statements or actions by the employer." Id. Thus, when an employer told employees that, "whenever you bargain with the Union, you start at zero, you don’t start where you’re at...