Voices for Int'l Bus. & Educ., Inc. v. Nat'l Labor Relations Bd.

• Decision Date: 21 September 2018
• Docket Number: No. 17-60364,17-60364
• Citation: 905 F.3d 770
• Parties: VOICES FOR INTERNATIONAL BUSINESS AND EDUCATION, INCORPORATED, doing business as International High School of New Orleans, Petitioner Cross-Respondent v. NATIONAL LABOR RELATIONS BOARD, Respondent Cross-Petitioner
• Court: U.S. Court of Appeals — Fifth Circuit

905 F.3d 770

VOICES FOR INTERNATIONAL BUSINESS AND EDUCATION, INCORPORATED, doing business as International High School of New Orleans, Petitioner Cross-Respondent

v.NATIONAL LABOR RELATIONS BOARD, Respondent Cross-Petitioner

No. 17-60364

United States Court of Appeals, Fifth Circuit.

FILED September 21, 2018

Martin A. Stern, Adams & Reese, L.L.P., New Orleans, LA, Aaron Gavin McLeod, Attorney, Adams & Reese, L.L.P., Birmingham, AL, for Petitioner Cross-Respondent.

Linda Dreeben, Esq., Deputy Associate General Counsel, Elizabeth Ann Heaney, Esq., Gregory Paul Lauro, Trial Attorney, National Labor Relations Board, Appellate & Supreme Court Litigation Branch, Washington, DC, M. Kathleen McKinney, National Labor Relations Board, Region 15, New Orleans, LA, for Respondent Cross-Petitioner.

Louis L. Robein, Jr., Nancy Picard, Julie M. Richard-Spencer, Esq., Robein, Urann, Spencer, Picard & Cangemi, A.P.L.C., Metairie, LA, for Intervenor.

Thomas A. Fuller, Fuller Law Group, P.L.L.C., Arlington, TX, for Amici Curiae.

Before ELROD, COSTA, and HO, Circuit Judges.

GREGG COSTA, Circuit Judge:

The National Labor Relations Act does not apply to a "political subdivision" of a state. 29 U.S.C. § 152(2). We decide whether a Louisiana charter school qualifies for that exemption from federal labor law.

I.

Nowhere in the country has the charter school movement garnered a greater foothold than New Orleans. More than 90% of public-school students in Orleans Parish now attend charters. The reconstruction of the city after Hurricane Katrina was the impetus for the meteoric growth of charter schools. See Amelia A. DeGory, The Jurisdictional Difficulties of Defining Charter-School Teachers Unions Under Current Labor Law, 66 DUKE L.J. 379, 387 (2016) ; Amy Moore, Brokering Education: A Study of Charter Receipt, Renewal, and Revocation in Louisiana’s Charter Schools , 11 LOY J. PUB. INT. L. 343, 343–44 (2010).

But the Louisiana law allowing charter schools predates that disaster. Enacted in 1995, the Louisiana Charter School Demonstration Programs law "authoriz[es] the creation of innovative kinds of independent public schools for pupils." La. Rev. Stat. Ann. § 17:3972(A). It allows various groups and entities, such as "ten or more citizens" or a "business or corporate entity registered to do business in Louisiana" to form a nonprofit corporation for the purpose of forming a charter school. Id. § 17:3983(A)(1)(a), (d). A local school board may enter into a charter with such a corporation if the board finds that the charter is "valid, complete, financially well-structured, and educationally sound." Id. § 17:3983(A)(4)(a). The state board of education may also approve charters. Id. § 17:3983(A)(4)(b). A charter school’s governing board, not the state, employs faculty and staff, and the nonprofit operator shall have "exclusive authority over all employment decisions at the charter schools." Id. § 17:3997(A)(1)(a)–(b).

A group of citizens incorporated Voices for International Business and Education as a nonprofit in 2009. That same year Voices began operating the International High School of New Orleans under a Type 2¹ charter with the Louisiana Board of Elementary and Secondary Education. The charter provides that Voices will not participate in the Teachers’ Retirement System of Louisiana or the Louisiana School Employees’ Retirement System; that Voices shall be the "final authority" in all matters affecting the school; and that Voices is "not acting as the agent of, or under the direction and control of" the state education board, except as specifically required by law or the charter.

Voices’ corporate bylaws vest its powers in a board of directors. The articles of incorporation name the original directors. The original board has to approve any new directors, officers, and committee chairs. Any board member may be removed with or without cause by a three-fourths vote of the remaining members. The state can remove a board member only if the member violates state ethics rules. La. Rev. Stat. Ann. § 17:3996(B)(20) ; La. Rev. Stat. Ann. § 42:1153(B).

A labor union, the United Teachers of New Orleans, filed a petition with the National Labor Relations Board seeking to represent Voices employees. Voices objected on the ground that the Board lacked jurisdiction because Voices is a political subdivision of Louisiana. A hearing officer rejected that argument. Over a dissent, the NLRB agreed that Voices is not a political subdivision because it "was neither created directly by the state of Louisiana so as to constitute a department or administrative arm of the government nor administered by individuals who are responsible to public officials or the general electorate." The Board also rejected Voices’ request that it exercise its discretion to decline jurisdiction under 29 U.S.C. § 164(c)(1).

In the election that followed, the employees voted in favor of union representation. Voices refused to recognize or negotiate with the union, maintaining the view that it is exempt from NLRB jurisdiction. The union then filed a charge against Voices for refusal to bargain. The NLRB found that Voices had committed an unfair labor practice and ordered it to recognize and bargain with the union. This petition for review, which presents only the "political subdivision" question, followed.

II.

The National Labor Relations Act applies to most private employers. But its jurisdiction does not extend to the federal government or "any State or political subdivision thereof." 29 U.S.C. § 152(2). The reason it does not regulate the labor relations of government employees is that they "did not usually enjoy the right to strike." N.L.R.B. v. Nat. Gas Util. Dist. of Hawkins Cty. , 402 U.S. 600, 605, 91 S.Ct. 1746, 29 L.Ed.2d 206 (1971). That is not the case in Louisiana, Davis v. Henry , 555 So.2d 457, 461–62, 464–66 (La. 1990), but its anomalous state labor law does not affect the question of federal labor law we confront: whether Voices is a political subdivision of Louisiana. Hawkins Cty. , 402 U.S. at 604, 91 S.Ct. 1746.

The Act does not define "political subdivision." Id. The NLRB has long defined it to include two situations: when an entity is "(1) created directly by the state, so as to constitute departments or administrative arms of the government, or (2) administered by individuals who are responsible to public officials or to the general electorate." Id. at 604–05, 91 S.Ct. 1746. The Supreme Court has said that this agency definition is "entitled to great respect." Id. at 605, 91 S.Ct. 1746.

But we need not give any deference to the Board on this question.² The Board’s definition is consistent with the common meaning of "political subdivision" of a state. The Board’s first category—entities created by and operated as part of state or local government—fits easily within that ordinary meaning. So does an entity that is controlled by public officials or the polity more generally. The key is that for both of the Board’s definitions of political subdivision, ultimate authority over policymaking remains with the public. N.L.R.B. v. Natchez Trace Elec. Power Ass’n , 476 F.2d 1042, 1045 (5th Cir. 1973) (characterizing the Board’s two-part definition as capturing when "[t]he general public exercises [ ] control" over the entity).

Voices lacks that political accountability. That is by design. One of the perceived virtues, if not the virtue, of charter schools is that a lack of political oversight gives them freedom to experiment.³ See La. Rev. Stat. Ann. § 17:3972(A). Successful innovations, the idea is, will not just benefit the school that tests them but will set an example for reform that even traditional public schools might later adopt. Cf. New State Ice Co. v. Liebmann , 285 U.S. 262, 311, 52 S.Ct. 371, 76 L.Ed. 747 (1932) (Brandeis, J., dissenting) ("It is one of the happy incidents of the federal system that a single courageous state may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country.").

Louisiana charter school operators like Voices enjoy that greater freedom to innovate because they are not controlled by political actors. The corporation selected the inaugural board of directors. Those privately selected board members are the only ones who can nominate and select additional or replacement members. The self-perpetuating board can also remove a member with or without cause. Unlike traditional public schools, which are typically governed by elected school boards, there is thus no public mechanism for changing the policies in schools Voices operates. Privately selected citizens set those policies and get to decide whether they are altered. See N.L.R.B. v. Highview, Inc. , 590 F.2d 174, 176 (5th Cir.) (explaining that because the board of a nonprofit corporation operating nursing homes in county-owned facilities was "self-perpetuating," the "county cannot influence the directors selection or affect the directors’ decisions"), vacated in part on reh’g on other grounds , 595 F.2d 339 (5th Cir. 1979).

Voices points to one narrow way in which public officials can affect the composition of its board. The charter allows the Louisiana Ethics Adjudicatory Board to remove a Voices director for violations of laws it enforces. See La. Rev. Stat. Ann. § 42:1153(B). But this possibility of for-cause termination when a Voices board member violates state ethics laws does not give public officials policymaking authority over the corporation. In the event of a director’s removal for ethics violations (something that has never happened at Voices), the corporation’s board of directors would have sole authority to select any replacement. That distinguishes Louisiana’s removal authority from the remove-and-replace authority the public enjoyed for corrupt commissioners of a Tennessee natural gas utility district that the Supreme Court classified as a political subdivision. See Hawkins Cty. , 402 U.S. at 607–08, 91...