Camelot Terrace, Inc. v. NLRB , 824 F.3d 1085 ( 2016 )


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  •  United States Court of Appeals
    FOR THE DISTRICT OF COLUMBIA CIRCUIT
    Argued February 9, 2016              Decided June 10, 2016
    No. 12-1071
    CAMELOT TERRACE, INC. AND GALESBURG TERRACE, INC.,
    PETITIONERS
    v.
    NATIONAL LABOR RELATIONS BOARD,
    RESPONDENT
    SERVICE EMPLOYEES INTERNATIONAL UNION,
    HEALTHCARE ILLINOIS INDIANA (PREVIOUSLY SEIU LOCAL 4),
    INTERVENOR
    Consolidated with 12-1218
    On Petition for Review and Cross-Application
    for Enforcement of an Order
    of the National Labor Relations Board
    Christopher Landau argued the cause for the petitioners.
    John S. Irving, Jr. was with him on brief.
    Barbara A. Sheehy, Attorney, National Labor Relations
    Board, argued the cause for the respondent. Richard F.
    Griffin, Jr., General Counsel, John H. Ferguson, Associate
    General Counsel, Linda Dreeben, Deputy Associate General
    2
    Counsel, and Usha Dheehan, Supervisory Attorney, were with
    her on brief.
    Margaret Angelucci was on brief for the intervenor,
    Service Employees International Union, Healthcare Illinois
    Indiana (previously SEIU Local 4) in support of the
    respondent.
    Before: HENDERSON and ROGERS, Circuit Judges, and
    WILLIAMS, Senior Circuit Judge.
    Opinion for the Court filed by Circuit Judge HENDERSON.
    KAREN LECRAFT HENDERSON, Circuit Judge: Camelot
    Terrace, Inc. (Camelot) and Galesburg Terrace, Inc.
    (Galesburg) (collectively, Companies) petition for review of a
    decision and order of the National Labor Relations Board
    (Board) determining that the Companies violated the National
    Labor Relations Act (Act), 
    29 U.S.C. §§ 151
     et seq., by
    engaging in bad-faith bargaining with the Service Employees
    International Union (Union). The Companies do not contest
    the Board’s conclusion that they violated the Act; rather, they
    challenge two of the remedies the Board imposed: (1)
    reimbursement of litigation costs incurred by both the Board
    and the Union during Board proceedings and (2)
    reimbursement of “all” of the negotiation expenses the Union
    incurred during its bargaining sessions with the Companies.
    See Camelot Terrace, 357 N.L.R.B. No. 161, 
    2011 WL 7121892
    , at *13, *15 (Dec. 30, 2011). The Companies assert
    that the Board is without authority to impose either remedy.
    Alternatively, they argue that the amount of the
    bargaining-costs remedy—“all” of the Union’s bargaining
    expenses—exceeds the amount necessary to remedy the harm
    caused by the Companies’ conduct and is improperly punitive.
    3
    We agree that the Board lacks authority to require the
    reimbursement of litigation costs incurred during Board
    proceedings, see HTH Corp. v. NLRB, No. 14-1222, 
    2016 WL 2941936
    , at *9–11 (D.C. Cir. May 20, 2016), but hold that the
    Board may require an employer to reimburse a union’s
    bargaining expenses pursuant to its remedial authority under
    section 10(c) of the Act. We also conclude that we lack
    jurisdiction to entertain the Companies’ alternative challenge
    to the amount of the bargaining-costs award because they
    failed to raise it before the Board. Accordingly, we grant the
    Companies’ joint petition in part and grant the Board’s
    cross-application for enforcement in part.
    I.
    Camelot and Galesburg both operate nursing homes in
    Illinois. In 2007, the Union was certified as the exclusive
    representative of employees at both facilities. Over the course
    of 2008 and 2009, the Companies—primarily through the
    conduct of their common owner, Michael Lerner—repeatedly
    bargained with the Union in bad faith. 1 The Board’s Office of
    the General Counsel (OGC) got involved, leading to a
    1
    Because the Companies do not contest their underlying
    violations of the Act, there is no need to describe their bad-faith
    conduct in great detail. Their conduct included “restricting the
    dates and length of bargaining sessions, repeatedly canceling and
    shortening sessions, reneging on or withdrawing from tentative
    agreements without good cause, refusing to bargain on economic
    subjects, and refusing to make economic proposals.” Camelot
    Terrace, 357 N.L.R.B. No. 161, 
    2011 WL 7121892
    , at *1. The
    Companies violated the Act in other ways as well, including dealing
    directly with Union-represented employees, unilaterally changing
    the terms and conditions of employment without providing notice or
    bargaining opportunity to the Union and firing an employee under a
    unilaterally-implemented attendance policy.
    4
    settlement agreement detailing specific bargaining
    requirements the Companies were to satisfy. When the
    Companies failed to abide by the terms of the agreement and
    continued to bargain in bad faith, the OGC issued a complaint
    charging the Companies with numerous violations of the Act.
    After holding a hearing and concluding that the Companies had
    indeed violated the Act, an Administrative Law Judge (ALJ)
    ordered, inter alia, that the Companies “[r]eimburse the
    [Board] . . . and the Union for all costs and expenses incurred
    in the investigation, preparation and conduct of [the case]
    before the Board and the courts.” Camelot Terrace, 357
    N.L.R.B. No. 161, 
    2011 WL 7121892
    , at *125. The ALJ also
    ordered the Companies to “[r]eimburse the Union for all costs
    and expenses incurred in collective-bargaining negotiations
    from January 2008 to the [parties’] last bargaining session.”
    
    Id.
    The Companies filed exceptions with the Board,
    challenging the imposition of these two remedies. In a
    two-to-one decision, the Board held that it was authorized to
    impose both remedies and did so with one modification. 2 The
    bargaining-costs remedy, the Board concluded, was a
    necessary exercise of its general remedial power: “[o]nly by
    ordering the reimbursement of the Union’s negotiating
    expenses [could] the Board reasonably restore the Union’s
    previous financial strength and consequent ability to carry out
    effectively its responsibilities as the employees’
    representative.” 
    Id. at *6
    . As for the litigation-costs remedy,
    the Board concluded that it “has inherent authority to control
    2
    The Board modified the litigation-costs remedy by
    eliminating the award for costs incurred in court proceedings,
    “leav[ing] that determination to the discretion of the court [of
    appeals].” Camelot Terrace, 357 N.L.R.B. No. 161, 
    2011 WL 7121892
    , at *6 n.8.
    5
    its own proceedings, including the authority to award litigation
    expenses through the application of the ‘bad-faith’ exception to
    the American Rule.” 
    Id.
     The Board declared that its
    “inherent authority” was sufficient to support the remedy and
    therefore found it “unnecessary to pass on the [Companies’]
    argument that the Board’s remedial authority under [section]
    10(c) of the Act does not encompass the award of litigation
    expenses.” 
    Id.
     at *6 n.10. Member Hayes dissented from the
    Board’s decision on the litigation-costs remedy, explaining
    that the Board is “not free to invoke principles of ‘inherent
    authority’ in order to unilaterally vest the Board with powers
    beyond those contemplated by the legislature.” 
    Id. at *17
    (Member Hayes, dissenting). The Companies petitioned for
    review, challenging the Board’s authority to impose the two
    remedies. The Board cross-applied for enforcement.
    II.
    At the outset, because “the Board is entitled to
    enforcement of all unchallenged portions of its order,” we
    summarily enforce all such provisions of the Board’s decision.
    United Food & Commercial Workers Union Local 204 v.
    NLRB, 
    447 F.3d 821
    , 824 (D.C. Cir. 2006) (per curiam). As
    for the two reimbursement orders the Companies do challenge,
    although we generally afford the Board deference in reviewing
    its chosen remedies, see Great Lakes Chem. Corp. v. NLRB,
    
    967 F.2d 624
    , 629 (D.C. Cir. 1992) (“The Board has broad
    authority in devising remedies to effectuate the policies of the
    Act, subject only to limited judicial review.” (citation and
    internal quotation marks omitted)), deference is limited if a
    party challenges the Board’s authority to order a particular
    remedy under any circumstance. In that case, to the extent the
    Board claims its remedial authority arises from the Act, we
    defer to the Board “only so far as ‘[its] interpretation is rational
    and consistent with the statute.’ ” Unbelievable, Inc. v.
    
    6 NLRB, 118
     F.3d 795, 804 (D.C. Cir. 1997) (quoting NLRB v.
    United Food & Commercial Workers, 
    484 U.S. 112
    , 123
    (1987)). To the extent the Board relies on extra-statutory
    authority, we afford no deference at all. See HTH Corp., 
    2016 WL 2941936
    , at *9–11 (evaluating Board’s “inherent
    authority” to award litigation costs without deference); see also
    Local 777, Democratic Union Org. Comm. v. NLRB, 
    603 F.2d 862
    , 869 n.17 (D.C. Cir. 1978) (“Ordinarily, we show
    considerable deference to the judgment of the [Board] . . . [but]
    where the issues involved are purely legal . . . , the Board’s
    interpretation is entitled to no particular deference.”).
    Here, the Companies have abandoned (or forfeited, see
    infra at 10–11) any claim that reimbursement of litigation or
    bargaining expenses was inappropriate in their particular case;
    rather, they attack the Board’s authority to award bargaining
    and litigation costs in all cases. Accordingly, we defer to the
    Board’s view of the matter only insofar as its interpretation of
    its statutory power is “rational” and “consistent” with the Act.
    See Unbelievable, Inc., 118 F.3d at 804.
    A. Litigation Costs
    The Companies first claim that “the Board has neither
    statutory nor inherent authority to award litigation expenses,
    including attorney’s fees, as a remedy for an unfair labor
    practice.” Pet’rs’ Br. 12. For the reasons discussed in HTH
    Corp. v. NLRB, we agree. There, as here, the Board “claimed
    that, like a federal court, it has inherent authority to control and
    maintain the integrity of its own proceedings through an
    application of the bad-faith exception to the American Rule”
    and ordered an employer to pay the litigation expenses of a
    union and of the OGC. HTH Corp., 
    2016 WL 2941936
    , at *9
    (internal quotation marks omitted). We declined to enforce
    the order. See 
    id. at *11
    . Recognizing that “[a]s a creature of
    7
    statute the Board has only those powers conferred upon it by
    Congress,” we held that “the Board may apply the bad-faith
    exception to the American rule only if some provision or
    provisions of the Act explicitly or implicitly grant it power to
    do so.” 
    Id. at *9
    . Although the Board “relied solely on its
    inherent authority to control and maintain the integrity of its
    own proceedings,” and the court recognized “that it is wrong to
    speak of agencies as having any inherent authority,” the
    majority—perhaps in an effort to give the Board the benefit of
    the doubt—went on to consider whether the Act’s general
    endowment of remedial authority under section 10(c)
    “implicitly authorizes fee shifting based on bad faith.” See 
    id.
    at *9–10 (emphasis in original) (internal quotation marks
    omitted). The majority ultimately concluded that section
    10(c) did not do so, primarily because “the Supreme Court has
    consistently classified application of the bad-faith exception to
    the American rule as punitive,” 
    id.
     at *10 (citing Hall v. Cole,
    
    412 U.S. 1
    , 5 (1973)), and a “[section] 10(c) remedy . . . ‘must
    be truly remedial and not punitive,’ ” 
    id.
     (quoting Capital
    Cleaning Contractors, Inc. v. NLRB, 
    147 F.3d 999
    , 1009 (D.C.
    Cir. 1998)).
    Our decision in HTH controls. As in HTH, the Board in
    this case claims the power to require the Companies to pay the
    Board’s litigation costs and those of the Union solely on the
    basis of its “inherent authority.” Camelot Terrace, 357
    N.L.R.B. No. 161, 
    2011 WL 7121892
    , at *6 & n.10. But as
    HTH makes plain, the Board possesses no extra-statutory
    “inherent authority.” HTH Corp., 
    2016 WL 2941936
    , at *9.
    Moreover, to the extent the Board meant “implicit in section
    10(c)” when it said “inherent,” see 
    id. at *10
    , it loses on that
    score as well—section 10(c) neither explicitly nor by
    implication authorizes the Board to award litigation costs, see
    
    id.
     at *10–11. Accordingly, we deny enforcement of the
    litigation-costs order. See 
    id. at *11
    .
    8
    B. Bargaining Costs
    The Companies also challenge the Board’s general
    authority to require one party to reimburse another’s
    bargaining costs; in the alternative, the Companies claim that
    the Board may not award the Union “all” of its bargaining costs
    because the Union would have incurred at least some of those
    costs had the Companies bargained in good faith.
    1.
    As a threshold matter, the Board contends that we lack
    jurisdiction to entertain these two claims because the
    Companies failed to raise them with the Board. It is well
    settled that, absent “extraordinary circumstances,” if a party
    fails to “urge[]” an objection before the Board, we lack
    jurisdiction to consider it for the first time on appeal. 
    29 U.S.C. § 160
    (e); see also Woelke & Romero Framing, Inc. v.
    NLRB, 
    456 U.S. 645
    , 665–66 (1982); HTH Corp., 
    2016 WL 2941936
    , at *3. In assessing forfeiture under section 10(e) of
    the Act, “the critical question” is “whether the Board received
    adequate notice of the basis for the objection.” Alwin Mfg.
    Co. v. NLRB, 
    192 F.3d 133
    , 143 (D.C. Cir. 1999); see also
    DHL Express, Inc. v. NLRB, 
    813 F.3d 365
    , 372 (D.C. Cir.
    2016) (considering whether “petitioner’s brief in support of its
    exceptions adequately put the Board on notice of the grounds
    on which the petitioner is objecting” (internal quotation marks
    omitted)). “While we have not required that the ground for
    the exception be stated explicitly in the written exceptions filed
    with the Board, we have required, at a minimum, that the
    ground for the exception be ‘evident by the context in which
    [the exception] is raised.’ ” Parsippany Hotel Mgmt. Co. v.
    NLRB, 
    99 F.3d 413
    , 417 (D.C. Cir. 1996) (alteration in
    original) (quoting Consol. Freightways v. NLRB, 
    669 F.2d 790
    ,
    794 (D.C. Cir. 1981)).
    9
    Here, the Companies’ written exceptions and supporting
    briefs together preserved their argument that the Board
    generally lacks authority to require reimbursement of
    bargaining costs—but just barely. The Companies’ exception
    to the bargaining-costs remedy was indeed “vague,” see DHL
    Express, 813 F.3d at 372, but nonetheless charged that the
    bargaining-costs remedy violated “established Board law and
    policy,” Resp’ts’ Exceptions to the A.L.J.’s Decision 2 (Mar.
    10, 2010). Similarly, although their supporting brief was “no
    paragon of precision or detail,” it included several statements
    “adequate to apprise the Board that the Compan[ies] intended
    to press the question now presented”—that the Board lacked
    the power to require reimbursement of bargaining costs. See
    NLRB v. Blake Constr. Co., 
    663 F.2d 272
    , 284 (D.C. Cir.
    1981).
    The best example is an express statement to that effect in
    one of the brief’s headings, which read, “The Board Lacks
    Authority to Award Litigation Expenses and Bargaining
    Costs.” Resp’ts’ Br. in Supp. of Exceptions to the A.L.J.’s
    Decision 4 (emphasis added). Other parts of the brief also
    apprised the Board that its authority was being questioned.
    The Companies averred that the ALJ “made erroneous legal
    conclusions with regard to the [bargaining-costs] remedy,” id.
    at 2, and in a different subheading stated, “The Board Lacks the
    Inherent Authority to Award Costs,” id. at 6 (emphasis added).
    And notwithstanding these sections of the brief primarily
    addressed litigation costs, the brief transitioned into a new
    section with the statement, “[e]ven if the Board has the
    authority to order a respondent to pay litigation and bargaining
    costs,” id. at 6 (emphasis added), indicating to the Board that
    the brief’s discussion of the generic “costs,” see id., was meant
    to cover bargaining costs as well as litigation costs. We
    therefore conclude that “the Board received adequate notice of
    10
    the basis for the [Companies’] objection,” see Alwin, 
    192 F.3d at 143
    , and we may consider the merits of the challenge.
    The same is not true of the Companies’ alternative
    argument that even if the Board has the authority to award
    bargaining costs generally, it may not award “all” of the
    Union’s costs. The thrust of the claim is that the Board may
    award bargaining costs only to the extent the Companies’
    bad-faith conduct caused the Union to incur such costs
    unnecessarily. Because “the Union undoubtedly would have
    incurred some bargaining costs” even if the Companies had
    properly discharged their duty to negotiate in good faith, the
    Companies argue that, in awarding the Union “all” of its
    bargaining costs, the Board “crossed the line separating
    permissible remedial action from impermissible punitive
    action.” Pet’rs’ Br. 28–29. The Companies never presented
    this argument to the Board but they argue that we should
    nonetheless consider it because the award is “patently in excess
    of [the Board’s] authority,” see Alwin, 
    192 F.3d at
    143 n.13
    (alteration in original) (quoting Detroit Edison Co. v. NLRB,
    
    440 U.S. 301
    , 311 n.10 (1979)), and therefore their failure to
    raise the issue should be “excused because of extraordinary
    circumstances,” 
    29 U.S.C. § 160
    (e).
    Although “a remedy that is patently ultra vires” generally
    warrants review even if not challenged at the Board level, see
    HTH Corp., 
    2016 WL 2941936
    , at *3 (citing Alwin, 
    192 F.3d at
    143 n.13), the bargaining-costs remedy at issue does not
    patently run afoul of the limits on the Board’s power. If the
    Board has the authority to award bargaining costs generally, it
    is not inconceivable that requiring the reimbursement of all of
    a party’s bargaining expenses might be necessary; for instance,
    if an employer repeatedly schedules bargaining sessions with a
    union but is a perpetual no-show, reimbursing all of the
    expenses the union incurred in connection with those planned
    11
    sessions when no bargaining in fact took place would be
    required to return the union to its financial position ex ante,
    which is the Board’s justification for awarding bargaining
    costs in the first place. See Fallbrook Hosp. Corp. v. NLRB,
    
    785 F.3d 729
    , 732 (D.C. Cir. 2015) (bargaining-costs remedy
    “warranted . . . to restore the economic strength that is
    necessary to ensure a return to the status quo ante at the
    bargaining table” (internal quotation marks omitted)). Thus,
    such an award is not “obviously ultra vires” in all
    circumstances. See Alwin, 
    192 F.3d at
    143 n.13.
    Nor is it obvious that an award of all of the Union’s
    expenses was not necessary to remedy the wrong here; indeed,
    the Board may well have concluded as much. This fact
    underscores why we lack jurisdiction to consider this claim on
    the merits—the Board has the first crack at answering whether
    and why awarding “all” of a union’s bargaining expenses is
    necessary in the particular circumstances of the case before it.
    See Local 900, Int’l Union of Elec., Radio & Mach. Workers v.
    NLRB, 
    727 F.2d 1184
    , 1192 (D.C. Cir. 1984) (“Simple fairness
    to those who are engaged in the tasks of administration, and to
    litigants, requires as a general rule that courts should not topple
    over administrative decisions unless the administrative body
    not only has erred but has erred against objection made at the
    time appropriate under its practice.” (quoting United States v.
    L.A. Tucker Truck Lines, Inc., 
    344 U.S. 33
    , 37 (1952))). The
    Board had no reason to do so when the Companies never raised
    this question in an exception or in a motion for reconsideration;
    we lack jurisdiction, then, to address the claim for the first time
    on appeal. 3
    3
    This does not mean, however, that the Companies are
    prohibited from raising this argument before the Board at the
    compliance stage. At oral argument, in comparing the Board order
    in HTH that noted the union bore the burden of establishing a causal
    12
    2.
    Because the Companies forfeited their extent-of-the-
    bargaining-costs claim, only one question remains for
    consideration on the merits—whether the Board ever has the
    authority to require a party to reimburse another’s bargaining
    costs. The Companies contend that the Board has no such
    power. On their theory, the Board’s job is to enforce
    substantive legal rights; it may not, however, require one party
    to reimburse another for the costs incurred in vindicating those
    rights. They view bargaining costs as “indistinguishable from
    litigation costs” in that both “represent the price of attempting
    to vindicate substantive legal rights.” Pet’rs’ Br. 24.
    Therefore, just as awarding litigation costs is aliunde the
    Board’s remedial authority, so is requiring one party to
    reimburse another’s bargaining costs. The Board, in contrast,
    contends that requiring a party that has engaged in particularly
    egregious bad-faith bargaining to reimburse another party’s
    bargaining costs is well within its remedial power under
    section 10(c) of the Act.
    We agree with the Board. When the Board determines
    that a party has committed an unfair labor practice, section
    10(c) of the Act gives it “discretion to fashion appropriate
    remedies.” Fallbrook, 785 F.3d at 734. Specifically, the
    Board “shall issue . . . an order requiring [a violator] to cease
    relationship between the costs awarded and the unfair labor practice,
    see HTH Corp., 361 N.L.R.B. No. 65, at 5 (Oct. 24, 2014), to the
    Board award of “all” bargaining costs here, the Board counsel
    explained, “[I]t was a different sort of remedy [in HTH] than you’ve
    seen, so [the Board] w[as] reminding the Union we’ve not imposed
    something like this before, so FYI, here’s what you need to do in
    compliance, but I don’t think it’s any different than in other typical
    compliance proceeding[s].” Oral Arg. Tr. 50:1–5.
    13
    and desist from such unfair labor practice, and to take such
    affirmative action . . . as will effectuate the policies of [the
    Act].” 
    29 U.S.C. § 160
    (c). “[T]he thrust of affirmative
    action redressing the wrong incurred by an unfair labor
    practice,” according to the United States Supreme Court, “is to
    . . . restor[e] the economic status quo that would have obtained
    but for the company’s wrongful [act]. The task of the [Board]
    in applying § 10(c) is to take measures designed to recreate the
    conditions and relationships that would have been had there
    been no unfair labor practice.” Franks v. Bowman Transp.
    Co., 
    424 U.S. 747
    , 769 (1976) (some alterations in original)
    (citations and internal quotation marks omitted).
    Although we have never directly held that reimbursement
    of bargaining expenses is the type of “affirmative action” that
    “effectuate[s] the policies” of the Act, 
    29 U.S.C. § 160
    (c), the
    Board has repeatedly asserted as much, see, e.g., Unbelievable,
    Inc., 
    318 N.L.R.B. 857
    , 859 (1995), enf’d in relevant part, 
    118 F.3d 795
    ; Fallbrook Hosp. Corp., 360 N.L.R.B. No. 73, 
    2014 WL 1458265
    , at *2 (Apr. 14, 2014), enf’d, 
    785 F.3d 729
    , and
    we have discussed the Board’s reasoning favorably. As we
    explained in Fallbrook Hospital Corporation, “a
    reimbursement remedy is appropriate ‘where it may fairly be
    said that [an employer’s] substantial unfair labor practices have
    infected the core of a bargaining process to such an extent that
    their effects cannot be eliminated by the application of
    traditional remedies.’ ” 785 F.3d at 732 (alteration in
    original) (quoting Fallbrook Hosp. Corp., 360 N.L.R.B. No.
    73, 
    2014 WL 1458265
    , at *2). “Such a remedy is warranted
    both to make the charging party whole for the resources that
    were wasted because of the unlawful conduct, and to restore
    the economic strength that is necessary to ensure a return to the
    status quo ante at the bargaining table.” 
    Id.
     (internal quotation
    marks omitted). Accordingly, we noted that “ ‘[i]n cases of
    unusually aggravated misconduct,’ the Board may order an
    14
    offending party ‘to reimburse the charging party for
    negotiation expenses.’ ” 
    Id. at 734
     (quoting Unbelievable,
    Inc., 318 N.L.R.B. at 859). 4
    Confronted directly with the question for the first time, we
    too find the Board’s reasoning persuasive. An award of
    bargaining expenses remedies an unfair labor practice by
    ensuring that, upon resolution of the unfair labor practice
    charge, the injured party can return to negotiations on the same
    footing it occupied before the violation of the Act occurred.
    See Fallbrook, 785 F.3d at 732. A more traditional remedy,
    such as a bargaining order, is of little value if one party can
    drain another of its resources by bargaining in bad faith and
    then extracting concessions as the money wanes. See
    Unbelievable, Inc., 318 N.L.R.B. at 858 (“[A] bargaining order
    alone will not ensure meaningful bargaining, because it cannot
    restore the Union[] to [its] position[] prior to the futile
    negotiations. In fact, limiting the remedy to the conventional
    bargaining order would effectively permit the [employer] to
    benefit from its violations of the Act by ensuring bargaining
    4
    In Fallbrook and Unbelievable, we were not confronted with
    the question of the Board’s general authority to order reimbursement
    of bargaining costs; rather, we considered only whether the Board
    had misapplied its own precedent in deciding that the
    bargaining-costs remedy was warranted on the factual records those
    cases presented. See Fallbrook, 785 F.3d at 736–37 (employer
    argued Board improperly determined it had engaged in “unusually
    aggravated conduct”); Unbelievable, Inc., 118 F.3d at 799 (“The
    [employer] does not question the Board’s authority to order a
    respondent to reimburse the charging party for negotiation expenses
    if the respondent’s misconduct has been unusually aggravated . . . .
    The Company does argue, however, that there is not substantial
    evidence in the record considered as a whole to support the Board’s
    findings of fact.”). Here, in contrast, the Companies challenge the
    Board’s authority to award bargaining costs generally.
    15
    with [a] Union[] that [has] been economically weakened by the
    [employer’s] misconduct.”). By instead allowing the harmed
    party to be returned to its financial position ex ante, the Board
    “effectuate[s] the policies of the Act.” See id.; see also
    Bowman Transp. Co., 
    424 U.S. at 769
    .
    The Companies do not dispute this rationale per se; in fact,
    they acknowledge that “[a]n award of bargaining costs . . . can
    be deemed ‘remedial’ in a broad sense.” Pet’rs’ Br. 27.
    Rather, they hold fast to their contention that bargaining costs
    and litigation costs are the same, and, if litigation costs cannot
    be shifted under the American Rule, neither can bargaining
    costs. The “harm” a bargaining-costs reimbursement order
    “remedies,” they claim, is “not the sort of harm that is
    generally cognizable in our legal system—the time and
    expense necessary for a party to vindicate its substantive legal
    rights.” 
    Id.
    We reject this approach for several reasons. First,
    although the Companies make broad appeals to “tradition,”
    “our legal culture” and “our legal system,” see id. at 24, 27,
    noticeably absent from their brief is any case suggesting the
    American Rule extends beyond the context of litigation or
    other quasi-judicial adversarial proceedings. That is to say,
    although it is well-established that litigation costs are subject to
    the longstanding, pay-your-own-way tradition the Companies
    describe, see, e.g., Alyeska Pipeline Serv. Co. v. Wilderness
    Soc’y, 
    421 U.S. 240
    , 247–63 (1975), the Companies have
    offered no authority for the proposition that the same tradition
    applies to costs incurred during private contractual
    negotiations outside the litigation context. See Pet’rs’ Br. 24–
    27.
    Second, even granting the Companies their premise, their
    view of bargaining as a means of “vindicat[ing] substantive
    16
    legal rights,” id. at 24, misses the mark. The Act grants the
    employer and the union alike the right to good-faith
    bargaining, 
    29 U.S.C. § 158
    (d), and a violation of the
    right—like any unfair labor practice—supports a remedy
    making the wronged party whole, cf. Bill Johnson’s Rests., Inc.
    v. NLRB, 
    461 U.S. 731
    , 747 (1983) (“[T]he Board may order
    the employer to reimburse the employees whom he had
    wrongfully sued for their attorneys’ fees and other expenses.”).
    Thus, even assuming arguendo that “our legal culture”
    prohibits a party from recovering the costs of “vindicat[ing]”
    substantive rights as a general matter, see Pet’rs’ Br. at 24,
    such a rule would not prohibit the Board from awarding
    bargaining costs for bad-faith conduct during collective
    bargaining.
    Third, and finally, the justifications for awarding
    bargaining costs and for awarding litigation costs pursuant to
    the bad-faith exception to the American Rule are not, contrary
    to the Companies’ claim, “essentially the same,” see id. at 26;
    indeed, there are critical differences. The U.S. Supreme Court
    has explained that a litigation-cost award is, in the context of
    the bad-faith exception, a punitive measure—it “vindicate[s] [a
    court’s] authority over a recalcitrant litigant.” Chambers v.
    NASCO, 
    501 U.S. 32
    , 53 (1991) (some alterations in original)
    (internal quotation marks omitted). Moreover, “[t]hat the
    award ha[s] a compensatory effect does not” deprive it of its
    punitive purpose. See 
    id.
     (some alterations in original)
    (internal quotation marks omitted). In contrast, the Board’s
    rationale for awarding bargaining costs is consistent with the
    “thrust of affirmative action” effectuating the Act’s
    purposes—“restor[ing] the economic status quo that would
    have obtained but for the [Companies’] wrongful [acts].”
    Bowman Transp. Co., 
    424 U.S. at 769
     (internal quotation
    marks omitted). And just as the incidental “compensatory
    effect” of a litigation-costs award does not render that award
    17
    “remedial,” see Chambers, 
    501 U.S. at 53
     (internal quotation
    marks omitted), neither does the incidental deterrent effect of a
    bargaining-costs award render it “punitive.” Indeed, awards
    that our “legal culture,” see Pet’rs’ Br. 24, plainly treats as
    remedial—such as compensatory damages in a tort suit—often
    have (and are intended to have) a deterrent effect. See, e.g., 1
    Dan B. Dobbs, Paul T. Hayden & Ellen M. Bublick, The Law
    of Torts § 14 (2d ed. updated 2015) (West) (“Courts and
    writers almost always recognize that another aim of tort law is
    to deter certain kinds of conduct by imposing liability when
    that conduct causes harm.”). The same is true of bargaining
    expenses in the labor law context. Although an award of such
    costs might make the Companies think twice before again
    wasting the Union’s time, the primary justification for the
    award is to make the Union whole and “to recreate the
    conditions . . . that would have been had there been no unfair
    labor practice.” Bowman Transp. Co., 
    424 U.S. at 769
    (internal quotation marks omitted).
    Accordingly, we have little trouble concluding that
    awarding bargaining costs in the appropriate case is within the
    Board’s statutory remedial authority under section 10(c) of the
    Act. Because the Companies do not challenge the Board’s
    conclusion that they engaged in “unusually aggravated
    misconduct” that “infected the core of a bargaining process,”
    see Fallbrook, 785 F.3d at 732, 734 (internal quotation marks
    omitted), we enforce the Board’s order requiring the
    Companies to reimburse the Union for its bargaining costs.
    For the foregoing reasons, we grant the Companies’
    petition for review with respect to the litigation-costs remedy
    and enforce the remainder of the Board’s order.
    So ordered.
    

Document Info

Docket Number: 12-1071

Citation Numbers: 423 U.S. App. D.C. 74, 824 F.3d 1085

Filed Date: 6/10/2016

Precedential Status: Precedential

Modified Date: 1/12/2023

Authorities (17)

Local 900, International Union of Electrical, Radio and ... , 727 F.2d 1184 ( 1984 )

National Labor Relations Board v. Blake Construction Co., ... , 663 F.2d 272 ( 1981 )

Consolidated Freightways v. National Labor Relations Board, ... , 669 F.2d 790 ( 1981 )

United Food & Commercial Workers Union Local 204 v. ... , 447 F.3d 821 ( 2006 )

Capital Cleaning Contractors, Inc., Petitioner/cross-... , 147 F.3d 999 ( 1998 )

Parsippany Hotel Management Co. v. National Labor Relations ... , 99 F.3d 413 ( 1996 )

Alwin Manufacturing Co. v. National Labor Relations Board , 192 F.3d 133 ( 1999 )

great-lakes-chemical-corporation-c-n-general-services-inc-v-national , 967 F.2d 624 ( 1992 )

Hall v. Cole , 93 S. Ct. 1943 ( 1973 )

Detroit Edison Co. v. National Labor Relations Board , 99 S. Ct. 1123 ( 1979 )

Alyeska Pipeline Service Co. v. Wilderness Society , 95 S. Ct. 1612 ( 1975 )

United States v. L. A. Tucker Truck Lines, Inc. , 73 S. Ct. 67 ( 1952 )

Franks v. Bowman Transportation Co. , 96 S. Ct. 1251 ( 1976 )

Woelke & Romero Framing, Inc. v. National Labor Relations ... , 102 S. Ct. 2071 ( 1982 )

National Labor Relations Board v. United Food & Commercial ... , 108 S. Ct. 413 ( 1987 )

Chambers v. Nasco, Inc. , 111 S. Ct. 2123 ( 1991 )

Bill Johnson's Restaurants, Inc. v. National Labor ... , 103 S. Ct. 2161 ( 1983 )

View All Authorities »