Quicken Loans, Inc. v. Nat'l Labor Relations Bd.

• Decision Date: 29 July 2016
• Docket Number: No. 14-1231,C/w No. 14-1265,14-1231
• Citation: 830 F.3d 542
• Parties: Quicken Loans, Inc., Petitioner v. National Labor Relations Board, Respondent
• Court: U.S. Court of Appeals — District of Columbia Circuit

830 F.3d 542

Quicken Loans, Inc., Petitioner

v.National Labor Relations Board, Respondent

No. 14-1231

C/w No. 14-1265

United States Court of Appeals, District of Columbia Circuit.

Argued March 8, 2016

Decided July 29, 2016

William M. Jay Washington, DC, argued the cause for petitioner. On the briefs were William D. Sargent, Robert J. Muchnick, Christopher R. Kazanowski, Detroit, MI, and S. Libby Henninger, Washington, DC.

Gregoire F. Sauter, Attorney, National Labor Relations Board, argued the cause for respondent. On the brief were Richard F. Griffin, Jr., General Counsel, John H. Ferguson, Associate General Counsel, Linda Dreeben, Deputy Associate General Counsel, and Kira D. Vol, Supervisory Attorney.

Before: Srinivasan, Millett, and Wilkins, Circuit Judges.

Millett

, Circuit Judge:

Quicken Loans, Inc., a company that provides mortgage loan services, imposes a number of workplace rules on its mortgage bankers. As relevant here, Quicken forbids its mortgage bankers to use or disclose a broad range of personnel information without Quicken's prior written consent or to criticize publicly the company and its management. The National Labor Relations Board determined that those rules run afoul of the National Labor Relations Act, 29 U.S.C. § 151 et seq. ,

because they unreasonably burden the employees' ability to discuss legitimate employment matters, to protest employer practices, and to organize. Because there was nothing arbitrary or capricious about that decision and no abuse of discretion in the Board's hearing process, we deny Quicken's petition for review and grant the Board's cross-application for enforcement.

I

A

Section 7 of the National Labor Relations Act guarantees employees “the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection[.]” 29 U.S.C. § 157

. Those rights “necessarily encompass[ ]” employees' rights to communicate with one another and with third parties about collective action and organizing a union, Beth Israel Hospital v. NLRB , 437 U.S. 483, 491, 98 S.Ct. 2463, 57 L.Ed.2d 370 (1978), as well as to “seek to improve terms and conditions of employment or otherwise improve their lot as employees through channels outside the immediate employee-employer relationship,” Eastex, Inc. v. NLRB , 437 U.S. 556, 565, 98 S.Ct. 2505, 57 L.Ed.2d 428 (1978). Section 7 thus protects employees' rights to discuss organization and the terms and conditions of their employment, to criticize or complain about their employer or their conditions of employment, and to enlist the assistance of others in addressing employment matters. See, e.g. , Beth Israel Hospital , 437 U.S. at 491, 98 S.Ct. 2463 ; Stanford Hospital and Clinics v. NLRB , 325 F.3d 334, 343 (D.C.Cir.2003) ; Tradesmen, Int'l, Inc. v.

NLRB , 275 F.3d 1137, 1141 (D.C.Cir.2002). Employers that “interfere with, restrain, or coerce employees in the exercise of the rights guaranteed” by Section 7 commit an unfair labor practice, 29 U.S.C. § 158(a)(1), and are subject to civil sanction by the Board, id. § 160(a).

Whether workplace rules run afoul of Section 7's protections turns on an objective inquiry into “ ‘whether the rules would reasonably tend to chill employees in the exercise’ of their statutory rights.” Adtranz ABB Daimler – Benz Transp. v. NLRB , 253 F.3d 19, 25 (D.C.Cir.2001)

(quoting Lafayette Park Hotel , 326 NLRB 824, 825 (1998) ). Unreasonable chilling of lawful employee activities can take two forbidden forms. First, a rule could on its face restrict protected Section 7 activity by, for example, explicitly barring employees from complaining to third parties about their working conditions. Guardsmark, LLC v. NLRB , 475 F.3d 369, 374–375 (D.C.Cir.2007).

Second, even if facially unobjectionable, a rule is invalid if (i) “ ‘employees would reasonably construe the language to prohibit Section 7 activity’ ”; (ii) the rule “ ‘was promulgated in response to union activity’ ”; or (iii) “ ‘the rule has been applied to restrict the exercise of Section 7 rights.’ ” Guardsmark , 475 F.3d at 374

(quoting Martin Luther Memorial Home , 343 NLRB 646, 647 (2004) ).

In asking whether a workplace rule either expressly infringes Section 7 rights or would reasonably be understood to do so, courts “focus [ ] on the text of the challenged rule.” Guardsmark , 475 F.3d at 379

. That means that the “ ‘mere maintenance’ of a rule likely to chill section 7 activity, whether explicitly or through reasonable interpretation, can amount to an unfair labor practice ‘even absent evidence of enforcement’ ” of the rule by the employer. Id. (quoting Lafayette Park Hotel , 326 NLRB 824, 825 (1998), enforced sub nom.

Lafayette Park Hotel v. NLRB , 203 F.3d 52 (Table) (D.C.Cir.1999) ).

B

Quicken provides mortgage loan services through branch offices located across the United States. The company employs approximately 1,700 mortgage bankers who process loan applications, negotiate the terms of mortgage loans, and provide other financial services to Quicken's clients. As a condition of employment, each Quicken mortgage banker is required to sign a “Mortgage Banker Employment Agreement” that contains several mandatory rules and restrictions. Two of those rules are at issue here: the Proprietary/Confidential Information Rule (“Confidentiality Rule”) and the Non-Disparagement Rule.

As relevant here, the Confidentiality Rule defines “Proprietary/Confidential Information” to include “non-public information relating to or regarding the Company's business, personnel, customers, operations or affairs.” J.A. 32. The Rule further defines confidential “Personnel Information” as “including, but not limited to, all personnel lists, rosters, personal information of co-workers, managers, executives and officers; handbooks, personnel files, personnel information such as home phone numbers, cell phone numbers, addresses, and email addresses.” Id. at 33.

For all of that information, mortgage bankers must “agree that” they will (i) “hold and maintain [it] in the strictest of confidence”; (ii) “not disclose, reveal or expose” that information to “any person, business or entity”; (iii) not use “any [of that] [i]nformation for any purpose except as may be authorized by the Company in writing”; and (iv) “take all necessary precautions to keep [that] [i]nformation secret, private, concealed and protected from disclosure[.]” J.A. 22.

The Non-Disparagement Rule, for its part, provides that:

The Company has internal procedures for complaints and disputes to be addressed and resolved. You agree that you will not (nor will you cause or cooperate with others to) publicly criticize, ridicule, disparage or defame the Company or its products, services, policies, directors, officers, shareholders, or employees, with or through any written or oral statement or image (including, but not limited to, any statements made via websites, blogs, postings to the internet, or emails and whether or not they are made anonymously or through the use of a pseudonym). You agree to provide full cooperation and assistance in assisting the Company to investigate such statements if the Company reasonably believes that you are [the] source of the statements. The foregoing does not apply to statutorily privileged statements made to governmental or law enforcement agencies.

J.A. 29.

C

Lydia Garza began working as a mortgage banker in Quicken's Scottsdale, Arizona office in 2006, and signed a copy of the Employment Agreement containing both the Confidentiality and Non-Disparagement Rules. In 2011, she resigned and took a job with one of Quicken's competitors. Quicken then sued Garza for violating no-contact/no-raiding and no-competition provisions of the Employment Agreement. Garza responded by filing an unfair labor practice charge with the National Labor Relations Board alleging that the Confidentiality and Non-Disparagement Rules interfered with Quicken employees' Section 7 rights, in violation of the National Labor Relations Act. The Board's Regional Director accepted Garza's charge, and filed an unfair labor practice complaint against Quicken alleging that the challenged Rules violated Section 8(a)(1) of the Act, 29 U.S.C. § 158(a)(1)

.

A Board administrative law judge conducted an evidentiary hearing on the Regional Director's complaint. During that hearing, the ALJ excluded as irrelevant certain evidence that Quicken wanted to introduce concerning Garza's understanding of the challenged rules. Specifically, Quicken sought to introduce evidence about (i) whether Garza had read the Employment Agreement prior to signing it, (ii) what conduct Garza believed the Agreement prohibited, (iii) whether Garza believed that she had violated the contested Rules, and (iv) whether Garza had discussed the Agreement with her managers or supervisors at the company. The ALJ also barred as irrelevant evidence concerning the process by which Quicken recruited employees and the types of personnel information that were available on the Company's internal website.

The ALJ subsequently sustained the Regional Director's complaint, finding that both of Quicken's Rules violated Section 8(a)(1) of the National Labor Relations Act, 29 U.S.C. § 158(a)(1)

, because they interfered with Quicken employees' Section 7 rights. With respect to the Confidentiality Rule, the ALJ had “no doubt” that the Rule's prohibition against disclosing personnel information, including “all personnel lists, personal information of coworkers * * * [and] personnel information such as home phone numbers, cell phone numbers, addresses and email addresses” would “substantially hinder employees in the exercise of their Section 7 rights.” J.A. 160. That is because the rule flatly forbade employees “to discuss with others, including their fellow employees or union representatives, the wages and other benefits...