Northeastern Land Services, Ltd. v. N.L.R.B.

• Decision Date: 13 March 2009
• Docket Number: No. 08-1878.,08-1878.
• Citation: 560 F.3d 36
• Parties: NORTHEASTERN LAND SERVICES, LTD. d/b/a The NLS Group, Petitioner/Cross-Respondent, v. NATIONAL LABOR RELATIONS BOARD, Respondent/Cross-Petitioner.
• Court: U.S. Court of Appeals — First Circuit

560 F.3d 36

NORTHEASTERN LAND SERVICES, LTD. d/b/a The NLS Group, Petitioner/Cross-Respondent, v. NATIONAL LABOR RELATIONS BOARD, Respondent/Cross-Petitioner.

No. 08-1878.

United States Court of Appeals, First Circuit.

Heard January 5, 2009.

Decided March 13, 2009.

Richard D. Wayne with whom Hinckley, Allen & Snyder LLP was on brief for petitioner.

Ruth E. Burdick, Attorney, with whom Ronald Meisburg, General Counsel, John E. Higgins, Jr., Deputy General Counsel, John H. Ferguson, Associate General Counsel, Linda Dreeben, Deputy Associate General Counsel, Meredith Jason, Supervising Attorney, and Milakshmi V. Rajapakse, National Labor Relations Board, were on brief for respondent.

Before LYNCH, Chief Judge, BOUDIN and LIPEZ, Circuit Judges.

LYNCH, Chief Judge.

This case provides a cautionary tale for employers about the risk of maintaining and enforcing a broad confidentiality clause. Northeastern Land Services, Ltd. ("NLS") petitions for review of the National Labor Relations Board's finding that it violated section 8(a)(1) of the National Labor Relations Act ("NLRA"), 29 U.S.C. § 158(a)(1), by maintaining an overbroad confidentiality provision and by discharging its employee Jamison Dupuy for violating it. Ne. Land Servs., Ltd., 352 N.L.R.B. No. 89, 2008-2009 NLRB Dec. (CCH) ¶ 15,110 (June 27, 2008). The Board has filed a cross-application to enforce the order.

The case also raises an issue of first impression: whether a two-member Board decision complied with the quorum requirement of section 3(b) of the NLRA. We deny the petition and grant the Board's cross-application for enforcement.

I.

Because "the Board is primarily responsible for developing and applying a coherent national labor policy, we accord its decisions considerable deference." NLRB v. Boston Dist. Council of Carpenters, 80 F.3d 662, 665 (1st Cir.1996) (citation omitted). The Board's judgment stands when the choice is "between two fairly conflicting views, even though the court would justifiably have made a different choice had the matter been before it de novo." Universal Camera Corp. v. NLRB, 340 U.S. 474, 488, 71 S.Ct. 456, 95 L.Ed. 456 (1951). A Board order must be enforced if the Board correctly applied the law and if its factual findings are supported by substantial evidence on the record. 29 U.S.C. § 160(e), (f); Yesterday's Children, Inc. v. NLRB, 115 F.3d 36, 44 (1st Cir.1997). Where, as here, "the board has reached a conclusion opposite of that of the ALJ, our review is slightly less deferential than it would be otherwise." C.E.K. Indus. Mech. Contractors, Inc. v. NLRB, 921 F.2d 350, 355 (1st Cir.1990).

II.

The facts are not in dispute. NLS is a temporary employment agency located in East Providence, Rhode Island which supplies workers to clients in the natural gas and telecommunications industries, but pays its workers directly. Dupuy was employed twice by NLS as a right-of-way agent for the acquisition of land rights by clients, from February to November 2000, and from July to October 2001. Dupuy obtained the 2001 placement by contacting Rick Lopez, a project manager for NLS client El Paso Energy, who had once worked with Dupuy at NLS. Lopez directed Dupuy to contact NLS, which soon placed him with El Paso at its Dracut Expansion Project in Massachusetts.

Before both of Dupuy's placements by NLS, NLS required Dupuy to sign a temporary employment contract which said, in relevant part:

Employee ... understands that the terms of this employment, including compensation, are confidential to Employee and the NLS Group. Disclosure of these terms to other parties may constitute grounds for dismissal.

This confidentiality provision is at the heart of this case.

Dupuy complained to NLS about repeated delays in receiving his paycheck. He was particularly concerned because he had to pay for expenses such as his hotel bills up front and later seek reimbursement. After Dupuy tried to negotiate with NLS, and even threatened to quit, Jesse Green, Executive Vice President and Chief Operating Officer of NLS, agreed to call Lopez to see if El Paso would either pay for Dupuy's hotel bill or provide a larger per diem than NLS had offered to help with Dupuy's cash flow problems. Although NLS ultimately billed most of Dupuy's expenses to El Paso, NLS was responsible for reimbursing Dupuy. Green told Dupuy that Lopez would not agree to any alternative arrangements.

In early October 2001, Dupuy raised two additional concerns about his job. The first arose when Dupuy contacted Lopez to tell him that Dupuy's cell phone was not working. Dupuy asked Lopez whether he might be able to work for El Paso through a different employment agency because Dupuy had not been paid in a timely manner by NLS. Lopez refused Dupuy's request and gave Dupuy the contact information of Norm Winters, an agent of NLS, to resolve the pay issues.

The second concern was the reimbursement for Dupuy's work-related use of his personal computer. Dupuy had initially arranged to receive a $15-per-day reimbursement for computer usage. NLS treated this as a "pass-through" business expense for tax purposes, which did not count as income to the employee, and on which NLS did not pay Social Security taxes. On October 2, however, Dupuy received an email from NLS's coordinator of human resources, Susan Green, which referred to the computer usage reimbursement rate as $12 per day. Dupuy replied that El Paso had authorized, and he had been billing, $15 per day for computer usage; he questioned the $12-per-day rate. Green told Dupuy that NLS's accountants had determined that the computer usage cost should be considered taxable compensation, rather than a pass-through expense billed to El Paso. Green stated that the reclassification of the tax status of the computer usage fee had increased NLS's overhead costs, requiring an offsetting reduction of $3 per day.

Dupuy sent a reply email to Green, copying Lopez, stating, "By copy of this email to Rick Lopez, I am asking El Paso to offset your surcharge and additional tax burden." He said that if he did not receive the offset, "I will no longer be using my computer for this job. El Paso will have to furnish me with a digital camera, and I will no longer be available by email.... After today and until the matter has been resolved, my equipment is offline."

On the evening of October 3, he sent an email to everyone working with him on the El Paso project, including Rick Lopez, saying, "Until further notice, my computer is offline and I will not be accepting email. I can still be reached by the contact telephone numbers that you have." Dupuy did not copy any NLS managers on the email. Jesse Green testified that although he tried to contact Dupuy numerous times by paging him, calling his cell phone and leaving messages at his hotel and with other employees, Dupuy did not call him back.

On October 11, 2001, Jesse Green spoke with Dupuy on the phone. Green told Dupuy that NLS had tried to accommodate his requests, but that it seemed that NLS could never make Dupuy happy and, as a result, NLS thought it was best to terminate his employment. Dupuy replied that he would sue NLS for retaliatory discharge, alleging that it fired him because he had threatened to file a complaint against the company with the Massachusetts Attorney General alleging violations of state wage laws.¹ When Dupuy pressed Jesse Green for the reason for his termination, Green replied that NLS had cause to terminate Dupuy's employment, as Dupuy had "not lived up to [his] end of the bargain with [NLS]."

Jesse Green later testified that his statement regarding Dupuy's "failure to live up to his end of the bargain" was a reference to Dupuy's failure to comply with the confidentiality provision in the temporary employment agreement that required him not to disclose the terms of his employment to outside parties. Green, who had drafted the confidentiality provision, further testified that in making the determination that Dupuy had violated the confidentiality provision by contacting El Paso directly, Green thought it was "inappropriate" for Dupuy to "approach a client with [his] ... problems [about salary], [because] then we're not providing the services that we contracted to provide."

Dupuy filed an unfair labor practice charge on October 24, 2001, and filed an amended charge on December 17, 2001. The complaint issued January 16, 2002, alleging that NLS violated section 8(a)(1) of the NLRA by maintaining and enforcing an unlawful confidentiality clause in its employment contract that discouraged employees from engaging in protected concerted activities, and by terminating Dupuy's employment on October 11 for violating the terms of that clause.

The ALJ found that although the provision did restrict the employees' right to discuss their terms and conditions of employment with third parties, "there are different gradations in how seriously employees' Section 7 rights are affected." Relying on his reading of Board precedent, the ALJ found that the confidentiality provision did not violate section 8(a)(1), explaining that "because [NLS] did not prohibit discussions of terms and conditions of employment among fellow employees, I find [NLS's] restriction a less serious infringement upon its employees' Section 7 rights." Relying on language from Desert Palace Inc., 336 N.L.R.B. 271 (2001), the ALJ explained that "[i]t is necessary to strike a proper balance between employees' Section 7 rights and an employer's business justifications." Noting the competitive bidding process in NLS's industry, the ALJ found that NLS "had a legitimate and substantial business justification for the rule outweighing the restriction on the employees' Section 7 rights." Dupuy appealed.

On June 27, 2008, the Board, by a two-member panel, reversed the ALJ's decision, determining that, under Martin Luther Mem'l Home, Inc. (Lutheran Heritage), 343 N.L.R.B. 646 (2004), the confidentiality provision was...