Macy's, Incorporated v. NLRB , 824 F.3d 557 ( 2016 )

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IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
No. 15-60022 FILED
June 2, 2016
MACY’S, INCORPORATED,
Lyle W. Cayce
Clerk
Petitioner Cross-Respondent
v.
NATIONAL LABOR RELATIONS BOARD,
Respondent Cross-Petitioner
On Petition for Review and Cross-Application
for Enforcement of an Order of the
National Labor Relations Board
Before BENAVIDES, DENNIS, and COSTA, Circuit Judges.
JAMES L. DENNIS, Circuit Judge:
The National Labor Relations Board (NLRB or the Board) certified a
collective-bargaining unit consisting of all cosmetics and fragrances employees
at the Saugus, Massachusetts, Macy’s department store. After Macy’s refused
to bargain with Local 1445, United Food and Commercial Workers Union (the
Union), which was certified as the unit’s bargaining representative, the Board
filed an unfair labor practices order. Macy’s filed a petition for review with
this court, contending that (1) the Board applied a legal standard that violated
the National Labor Relations Act (NLRA or the Act) and otherwise committed
an abuse of discretion; and (2) under the proper legal standard as well as the
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incorrect legal standard upon which the Board relied, all selling employees
must be included in the petitioned-for unit. 1 The Board filed a cross-
application for enforcement of its order. Because the Board did not violate the
NLRA or abuse its discretion in certifying the unit of cosmetics and fragrances
employees, we DENY the petition for review and GRANT the Board’s cross-
petition for enforcement of its order.
I.
A.
Macy’s operates a national chain of department stores, including one in
Saugus, Massachusetts. The Saugus store is divided into eleven primary sales
departments: juniors, ready-to-wear, women’s shoes, handbags, furniture (also
known as big ticket), home (also referred to as housewares), men’s clothing,
bridal, fine jewelry, fashion jewelry, and cosmetics and fragrances. The
petitioned-for unit includes all full-time, part-time, and on-call employees
employed in the Saugus store’s cosmetics and fragrances department,
including counter managers, beauty advisors, and all selling employees in
cosmetics, women’s fragrances, and men’s fragrances.
The cosmetics and fragrances department is located in two areas within
the Saugus store, on the first and second floors; the two areas are connected by
a bank of elevators. Each of the two selling areas is spatially distinct from the
other primary sales departments. Cosmetics beauty advisors are specifically
assigned to one of eight counters in the first floor cosmetics area, each of which
is dedicated to selling products from one of eight primary cosmetics vendors.
Cosmetics beauty advisors typically sell only one vendor’s products, which they
1 Although the underlying conduct occurred within the First Circuit, this court has
jurisdiction because Section 10(f) of the NLRA allows review of Board decisions not only in
the Circuit in which the unfair labor practice was alleged to have occurred, but also in the
Circuit in which the person aggrieved by the Board’s order “resides or transacts business.”
29 U.S.C. § 160(f).
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also use to give customers makeovers. Fragrances beauty advisors are
assigned to either the men’s or the women’s fragrances counter, and they sell
all available men’s or women’s products, regardless of the vendor. Cosmetics
and fragrances beauty advisors keep lists of their regular customers, which
they use to invite customers to product launches or to book appointments to
give customers makeovers. Although cosmetics and fragrances employees
occasionally assist other departments with inventory, the record is clear that
cosmetics and fragrances employees are never asked to sell in other
departments, nor are other selling employees asked to sell in the cosmetics and
fragrances department.
Six of the eight cosmetics counters, the women’s fragrances counter, and
the men’s fragrances counter each have a counter manager who, in addition to
selling products, helps organize promotional events, monitors the counter’s
stock, coaches beauty advisors on customer service and selling technique,
ensures that the counter is properly covered by beauty advisors, and schedules
visits by vendor employees, such as sprayers and makeup artists. Finally, the
department has seven on-call employees who, unlike the beauty advisors, may
work at any of the ten counters. There is no indication that any other primary
sales department has the equivalent of counter managers, and the record is
unclear as to whether the other primary sales departments have the equivalent
of on-call employees.
Outside of the cosmetics and fragrances department the Saugus store
has approximately thirty non-selling employees (a receiving team, a
merchandising team, and staffing employees) and eighty selling employees
organized within the other ten primary sales departments. Most, but not all,
of the other departments have their own sales manager, and at least some of
them are divided into sub-departments. Certain other primary sales
departments have specialist sales employees who, like the cosmetics beauty
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advisors, specialize in selling a particular vendor’s products; in those
departments, vendor representatives monitor stock and train selling
employees on selling technique and product knowledge.
Cosmetics and fragrances employees and other selling employees have
some incidental contact: cosmetics and fragrances employees occasionally
assist in storewide inventory, and all employees whose shifts correspond with
the store’s opening attend brief daily “rallies” at which management reviews
the previous day’s sales figures and any in-store events that are taking place
that day. In addition, all selling employees work shifts during the same time
periods, use the same entrance, have the same clocking system, and use the
same break room. However, the record contains little evidence of temporary
interchange between cosmetics and fragrances employees and other selling
employees.
Although compensation differs, all selling employees enjoy the same
benefits, are subject to the same employee handbook, and have access to the
same in-store dispute resolution program. All selling employees are evaluated
based on the same criteria. Finally, all selling employees are coached through
the same program designed to improve selling techniques and product
knowledge.
B.
In October 2012, the Union filed a petition with the Board seeking a
representation election among all cosmetics and fragrances employees at the
Saugus store. In November 2012, the Board’s Acting Regional Director (ARD)
issued a Decision and Direction of Election in which he found that a petitioned-
for bargaining unit of cosmetics and fragrances employees, including counter
managers, employed by Macy’s at its Saugus store was appropriate.
Thereafter, Macy’s filed a timely request for review. Macy’s contended that
the smallest appropriate unit must include all employees at the Saugus store
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or, in the alternative, all selling employees at the store. The Union filed an
opposition. In December 2012, the Board granted the Employer’s request for
review.
In making a determination as to the appropriateness of the bargaining
unit, the Board applied the “overwhelming community of interest” test set
forth in Specialty Healthcare and Rehabilitation Center of Mobile, 357 NLRB
No. 83, 2011 WL 3916077 (2011), enforced sub nom. Kindred Nursing Centers
East, LLC v. NLRB, 727 F.3d 552 (6th Cir. 2013). The Board determined that
the cosmetics and fragrances employees share a community of interest, finding
that all of the petitioned-for employees: work in the same department and in
the same two connected, distinct work areas; have common, separate
supervision; work with a shared distinct purpose and functional integration;
have little contact with other selling employees; and are paid on the same
basis, receive the same benefits, and are subject to the same employer policies.
The Board then addressed Macy’s contention that the smallest
appropriate unit must include a wall-to-wall unit of all Saugus store
employees, or, alternatively, all selling employees at the store. The Board
explained that Specialty Healthcare requires an employer to demonstrate that
the excluded employees share an “overwhelming community of interest” with
the employees in the petitioned-for unit, such that their community of interest
factors “overlap almost completely.” While acknowledging that the petitioned-
for unit shared some factors with certain other selling employees, the Board
concluded that a storewide unit was not required.
Finally, the Board addressed Macy’s contention that Specialty
Healthcare deviated from a line of precedent holding that a storewide unit is
“presumptively appropriate” within the retail industry. After considering the
relevant precedent, the Board concluded that it has, “over time, developed and
applied a standard that allows a less-than-storewide unit so long as that unit
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is identifiable, the unit employees share a community of interest, and those
employees are sufficiently distinct from other store employees.” It therefore
found that the petitioned-for unit was appropriate under Board precedent even
without reference to Specialty Healthcare.
After Macy’s refused to bargain with the Union, the Board filed an unfair
labor practices order. Macy’s petitioned for review, arguing that the unit
sanctioned by the Board was clearly not appropriate, that the Board applied a
test that cannot be squared with the NLRA or prior Board precedent governing
initial unit determinations, and that, even under Specialty Healthcare, the
Board approved an inappropriate unit. The Board cross-applied for
enforcement of its order.
II.
Under Section 10(e) of the NLRA, which governs petitions for
enforcement of Board orders, the Board’s factual findings are conclusive if they
are “supported by substantial evidence on the record considered as a whole.”
29 U.S.C. § 160(e). Section 10(f), which governs petitions for review of Board
orders, contains the same standard of review for factual findings. 29 U.S.C.
§ 160(f). As for questions of law, the Supreme Court has repeatedly held that
“the NLRB has the primary responsibility for developing and applying national
labor policy” and that the Board’s rules should therefore be accorded
“considerable deference.” NLRB v. Curtin Matheson Scien., Inc., 494 U.S. 775,
786 (1990).
“This court’s review of the Board’s determination of an appropriate
bargaining unit is exceedingly narrow.” Elec. Data Sys. Corp. v. NLRB, 938
F.2d 570, 572 (5th Cir. 1991) (quoting NLRB v. S. Metal Serv., 606 F.2d 512,
514 (5th Cir. 1979) (internal quotation marks omitted)). This court therefore
reviews unit determinations only to determine “whether the decision is
arbitrary, capricious, an abuse of discretion, or lacking in evidentiary support.”
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Id. at 573. An employer who challenges the Board’s determination has the
burden of establishing “that the designated unit is clearly not appropriate.” Id.
at 574 (quoting NLRB v. Purnell’s Pride, Inc., 609 F.2d 1153, 1155-56 (5th Cir.
1980)).
III.
Section 9(a) of the NLRA provides that a union will be the exclusive
bargaining representative if chosen “by the majority of the employees in a unit
appropriate for” collective bargaining. 29 U.S.C. § 159(a). Section 9(b)
authorizes the Board to “decide in each case whether, in order to assure to
employees the fullest freedom in exercising the rights guaranteed by [the Act],
the unit appropriate for the purposes of collective bargaining shall be the
employer unit, craft unit, plant unit, or subdivision thereof.” 29 U.S.C.
§ 159(b). The Act does not, however, tell the Board how to determine whether
a bargaining unit is appropriate.
In making its determination, the Board has traditionally looks at the
“community of interest” of the employees involved. Elec. Data Sys., 938 F.2d
at 573. As this court has explained:
Whether employees have a community of interests is determined
by looking at such factors as: similarity in the scale and manner of
determining earnings; similarity in employment benefits, hours of
work and other terms and conditions of employment; similarity in
the kind of work performed; similarity in the qualifications, skills
and training of employees; frequency of contact or interchange
among employees; geographic proximity; continuity or integration
of production processes; common supervision and determination of
labor-relations policy; relationship to the administrative
organization of the employer; history of collective bargaining;
desires of the affected employees; and extent of union organization.
NLRB v. Catalytic Indus. Maint. Co. (CIMCO), 964 F.2d 513, 518 (5th Cir.
1992). This court has made clear that “[t]hese factors have no independent
significance.” Purnell’s Pride, 609 F.2d at 1156. Rather, in assessing the
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employees’ community of interests “[t]he Board must consider the entire
factual situation, and its discretion is not limited by a requirement that its
judgment be supported by all, or even most, of the potentially relevant factors.”
Elec. Data Sys. Corp., 938 F.2d at 573 (quoting NLRB v. DMR Corp., 795 F.2d
472, 475 (5th Cir. 1986)). In addition, the Supreme Court has stated that
“employees may seek to organize ‘a unit’ that is ‘appropriate’—not necessarily
the single most appropriate unit.” Am. Hosp. Ass’n v. NLRB, 499 U.S. 606, 610
(1991). Applying this standard, this court has held that where there is
evidence that an alternative unit “might also [be] an appropriate bargaining
unit,” the unit approved by the NLRB will nevertheless be enforced unless it
was “clearly not appropriate.” Elec. Data Sys. Corp., 938 F.2d at 574 (quoting
Purnell’s Pride, 609 F.2d at 1156).
In Specialty Healthcare, the Board clarified the principles that apply in
cases, such as this one, where a party contends that the smallest appropriate
bargaining unit must include additional employees beyond those in the
petitioned-for unit. If the Board determines that the smaller unit is readily
identifiable as a group—based on job classifications, departments, functions,
work locations, skills, or similar factors—and the employees in the smaller unit
share a community of interest according to the traditional criteria,
the Board will find the petitioned-for unit to be an appropriate
unit, despite a contention that employees in the unit could be
placed in a larger unit which would also be appropriate or even
more appropriate, unless the party so contending demonstrates
that employees in the larger unit share an overwhelming
community of interest with those in the petitioned-for unit.
Specialty Healthcare, 357 NLRB No. 83, at *17. Even before the Board decided
Specialty Healthcare, the D.C. Circuit had approved an “overwhelming
community of interest standard, holding that “[i]f the employees in the
proposed unit share a community of interest, then the unit is prima facie
appropriate,” and the employer bears the burden of showing that it is “truly
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inappropriate.” Blue Man Vegas, LLC v. NLRB, 529 F.3d 417, 421 (D.C. Cir.
2008). As the court explained, this burden is satisfied where there “is no
legitimate basis upon which to exclude certain employees from [the proposed
unit].” Id.; accord Specialty Healthcare, 357 NLRB No. 83, at *16.
A.
Macy’s begins by arguing that the unit approved by the Board was
clearly not appropriate because all sales employees at the Saugus store
represent “a homogenous work force.” Citing to Amalgamated Clothing
Workers, 491 F.2d 595 (5th Cir. 1974), Macy’s argues that a unit limited to
cosmetics and fragrances employees is inappropriate because “there are no
material distinctions among the sales employees in the Saugus store.” In
Amalgamated Clothing Workers, the Board had approved a unit of cutters,
markers, and spreaders solely on the grounds that they were “highly skilled.”
Id. at 598. This court rejected the Board’s unit determination because of “the
complete lack of separate interests in any conditions of employment” that
distinguished the petitioned-for unit from the rest of the employees. Id. at 598.
The Board’s findings in this case, which are supported by substantial
evidence, do not demonstrate a “complete lack of separate interests.” In
making its argument, Macy’s simply ignores or contradicts the Board’s explicit
findings that illustrate the distinct interests of the cosmetics and fragrances
employees. Contrary to Macy’s claim that all employees “collaborate in the
same integrated workplace,” the Board found “little evidence of temporary
interchange between the petitioned-for employees and other selling
employees.” Macy’s & Local 1445, 361 NLRB No. 4, *6 (July 22, 2014).
Specifically, the Board found “no examples of (1) other selling employees
actually assisting the cosmetics and fragrances department, (2) cosmetics and
fragrances employees actually assisting other departments, or (3) a selling
employee from one department picking up shifts in another department.” Id.
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And while Macy’s asserts that “[e]xtensive training and coaching opportunities
are available to all sales employees,” the Board in fact found that much of the
training was department-specific. Id. at *4 (“[S]ales departments hold various
seminars during the year that train employees in their departments in selling
technique, product knowledge, and related topics.”). Even Macy’s assertion
that all selling employees “perform the same basic job function of selling
merchandise to customers” ignores the Board’s finding that cosmetics and
fragrances employees perform a unique function, that of “selling cosmetics and
fragrances.” Id. at *10.
Macy’s concedes that there are distinctions between the cosmetics and
fragrances sales employees and the rest of the selling staff. It acknowledges
that the department is organized as a separate department, supervised by a
separate sales manager, and operated primarily in distinct areas of the store.
But it asserts that the Board failed to explain why these distinctions outweigh
the similarities between the petitioned-for employees and the other selling
employees, and it argues that, under Purnell’s Pride, this “lack of explanation
is fatal to the Board’s decision.” In Purnell’s Pride, the Regional Director had
simply listed the factors that guided his unit determination. 609 F.2d at 1159-
60. Finding that the Board, in upholding the Regional Director’s ruling, had
failed to adequately explain its weighing of the community interest factors, see
id. at 1160, this court remanded the case to allow the Board to disclose the
basis of its order, id. at 1162. Here, the Board satisfied Purnell’s Pride’s
requirements: the decision identified some factors that could weigh against
the petitioned-for unit and explained—with citation to Board precedent—why
these factors did not render the petitioned-for unit inappropriate. Macy’s &
Local 1445, 361 NLRB No. 4, *11.
Finally, Macy’s advances two policy-based arguments. First, it contends
that the petitioned-for unit is inappropriate because its approval by the Board
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will “wreak havoc in the retail industry” by disrupting employer operations
and frustrating customer experience. Next, it contends that the certification
of departmental units will undermine workers’ rights. These arguments are
unsuccessful. Macy’s does not cite to any controlling authority for the
proposition that the effect on an employer’s business is a factor to be considered
in unit determinations. And the Board’s history of approving multiple units in
the retail and other industries suggests that neither workers nor businesses
will suffer grave consequences as a result of the Board’s order. See, e.g.,
Teledyne Economic Dev. v. NLRB, 108 F.3d 56, 57 (4th Cir. 1997) (enforcing
Board’s decision certifying two units at one employer, a Job Corps Center);
Banknote Corp. of Am., Inc. v. NLRB, 84 F.3d 637, 647 (2d Cir. 1996) (enforcing
Board order requiring employer to bargain with three different units at a
printing facility); Stern’s Paramus, 150 N.L.R.B. 799, 802-03, 806 (1965)
(approving separate units of selling, non-selling, and restaurant employees at
a department store; and observing that while the Board has regarded a
storewide unit as the “basically appropriate” or “optimum” unit in retail
establishments, it has approved “a variety” of less-than-storewide units
representing various “occupational groupings” in department stores); I.
Magnin & Co., 119 N.L.R.B. at 643 (1957).
As we noted above, the Board may certify “‘a unit’ that is ‘appropriate’—
not necessarily the single most appropriate unit.” Am. Hosp. Ass’n, 499 U.S. at
610. Although the unit composition argued for by Macy’s may have also been
“an appropriate bargaining unit,” we cannot say that the one approved by the
NLRB was “clearly not appropriate” based on the employees’ “community of
interests.” Elec. Data Sys. Corp. 938 F.2d at 574 (quoting Purnell’s Pride, 609
F.2d at 1156).
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B.
Next, Macy’s contends that the Board’s “overwhelming community of
interest” test cannot be squared with the NLRA or prior Board precedent
governing initial unit determinations. We disagree.
As the Supreme Court has recognized, the Board has the authority to
develop rules, whether through adjudication or by the exercise of its
rulemaking authority, to guide its resolution of unit determinations. Am.
Hosp. Ass’n, 499 U.S. at 611-12. As interpretations of the Act, such rules are
subject to the principles of Chevron U.S.A., Inc. v. Natural Resources Defense
Council, Inc. 467 U.S. 837, 843 (1984). See NLRB v. UFCW, Local 23, 484 U.S.
112, 123-24 (1987). Under Chevron, where “the statute is silent or ambiguous
with respect to the specific issue, the question for the court is whether the
agency’s answer is based on a permissible construction of the statute.” Id., at
843. The courts must “respect the judgment of the agency empowered to apply
the law ‘to varying fact patterns,’ even if the issue ‘with nearly equal reason
[might] be resolved one way rather than another.’” Holly Farms Corp. v. NLRB,
517 U.S. 392, 398-99 (1996) (citation omitted). This court will not disturb the
Board’s reading of the Act if it is “reasonably defensible.” Ford Motor Co. v.
NLRB, 441 U.S. 488, 497 (1979).
Further, the Board has authority to depart from precedent and change
its rules and standards as long as it “set[s] forth clearly the reasons for its new
approach.” NLRB v. Sunnyland Packing Co., 557 F.2d 1157, 1160 (5th Cir.
1977). However, where the Board has not departed from a “uniform rule,” the
Board need not give a detailed rationale for its chosen approach. See NLRB v.
H. M. Patterson & Son, Inc., 636 F.2d 1014, 1017 (5th Cir. 1981).
We agree with our sister circuits that in Specialty Healthcare the Board
“clarified—rather than overhauled—its unit-determination analysis.” Nestle
Dreyer’s Ice Cream Co. v. NLRB, No. 14-2222, 2016 WL 1638039 (4th Cir. Apr.
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26, 2016); accord FedEx Freight, Inc. v. NLRB, 816 F.3d 515, 525 (8th Cir.
2016) (“We conclude that the overwhelming community of interest standard
articulated in Specialty Healthcare is not a material departure from past
precedent.”); Kindred, 727 F.3d at 561 (“The Board has used the overwhelming-
community-of-interest standard before, so its adoption in Specialty Healthcare
. . . is not new.”); Blue Man Vegas, 529 F.3d at 421 (the Board’s “consistent
analytic framework” includes the question whether “the excluded employees
share an overwhelming community of interest with the included employees”).
In Specialty Healthcare, the Board laid out the “traditional standard”
applicable when an employer contends that the smallest appropriate unit
contains employees not in the petitioned-for unit. 357 NLRB No. 83, at *15.
Citing its own precedent and decisions of the D.C. Circuit and the Seventh
Circuit, the Board explained: “Given that the statute requires only an
appropriate unit, once the Board has determined that employees in the
proposed unit share a community of interest, it cannot be that the mere fact
that they also share a community of interest with additional employees renders
the smaller unit inappropriate.” Id. (citing Montgomery Ward & Co., 150
N.L.R.B. 598, 601 (1964); Blue Man Vegas, 529 F.3d at 421; Dunbar Armored,
Inc. v. NLRB, 186 F.3d 844, 847 (7th Cir. 1999)). In such a situation, the Board
determined that its precedent requires the proponent of the larger unit to
demonstrate that all employees “share ‘an overwhelming community of
interest’ such that there ‘is no legitimate basis upon which to exclude certain
employees from it.’” Id. at *16 (quoting Blue Man Vegas, 529 F.3d at 421). The
Board acknowledged that it “has sometimes used different words to describe
this standard and has sometimes decided cases such as this without
articulating any clear standard,” id. at 17, but an evaluation of the cited cases
reveals that the newly-formulated standard was not a departure from Board
precedent.
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Macy’s urges us to overrule Specialty Healthcare for several reasons.
First, it asserts that the overwhelming community of interest test improperly
affords controlling weight to the extent of union organization, in violation of
Section 9(c)(5) of the NLRA. Second, it argues that the test departs from
established Board precedent. Third, it contends that the test was improperly
taken from the “accretion” context. Fourth, it claims that the Board violated
the Administrative Procedure Act (APA) by promulgating the overwhelming
community of interest test through adjudication rather than rulemaking.
Finally, Macy’s asserts that the test’s application is particularly inappropriate
in the retail context, where it “discard[s] decades of precedent favoring
storewide bargaining units.” Contending that the Board was able to find the
unit of cosmetics and fragrances employees appropriate only by following
Specialty Healthcare, Macy’s argues that this court’s invalidation of the
overwhelming community of interest test—or its determination that the test is
inapplicable in the retail context—would preclude enforcement of the Board’s
order. Each of these arguments is unavailing.
1. The Overwhelming Community of Interest Test and Section 9(c)(5)
Section 9(c)(5) of the Act provides that the Board, in making unit
determinations, shall ensure that “the extent of organization shall not be
controlling.” 29 U.S.C. § 159(c)(5). The Supreme Court has construed this
language to mean that “Congress intended to overrule Board decisions where
the unit determined could only be supported on the basis of extent of
organization,” but that Congress did not preclude the Board from considering
organization “as one factor” in making unit determinations. NLRB v. Metro.
Life Ins. Co., 380 U.S.438, 441-42 (1965).
Citing NLRB v. Lundy Packing Co., 68 F.3d 1577 (4th Cir. 1995), Macy’s
argues that the Board’s overwhelming community of interest test contravenes
Section 9(c) by “accord[ing] controlling weight to the extent of union
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organization” by making union-proposed units presumptively appropriate.
However, the Fourth Circuit has expressly rejected this characterization of its
holding in Lundy. See Dreyer’s, 2016 WL 1638039. In Lundy, the Fourth
Circuit rejected the Board’s use of a standard under which “any union-proposed
unit is presumed appropriate unless an ‘overwhelming community of interest’
exists between the excluded employees and the union-proposed unit.” 68 F.3d
at 1581 (emphasis added). In Dreyer’s, the court explained:
Lundy does not establish that the overwhelming-community-of-
interest test as later applied in Specialty Healthcare fails to
comport with the NLRA. Instead, Lundy prohibits the
overwhelming-community-of-interest test where the Board first
conducts a deficient community-of-interest analysis—that is,
where the first step of the Specialty Healthcare test fails to guard
against arbitrary exclusions.
2016 WL 1638039, at *7. Where the Board “rigorously weigh[s] the traditional
community-of-interest factors to ensure that the proposed unit was proper
under the NLRA,” the Court concluded, the “overwhelming community of
interest” does not conflict with the Act. Id. at *8. That is precisely what the
Board did in the instant case. As a result, the test and its application do not
violate Section 9(c).
2. The Board’s Unit Determination Precedent
Macy’s next argues that the Specialty Healthcare standard departs from
established Board precedent. Macy’s asserts that, contrary to Board
precedent, the Specialty Healthcare analysis looks, “solely and in isolation,” at
“whether the employees in the unit sought have interests in common with one
another.” This argument is unconvincing. The community of interest test
articulated in Specialty Healthcare and applied in this case was taken from the
Board’s 2002 decision in United Operations and was based on Board precedent
going back to 1964. That test does not look only at the commonalities within
the petitioned-for unit. Rather, it asks:
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whether the employees are organized into a separate department;
have distinct skills and training; have distinct job functions and
perform distinct work, including inquiry into the amount and type
of job overlap between classifications; are functionally integrated
with the Employer’s other employees; have frequent contact with
other employees; interchange with other employees; have distinct
terms and conditions of employment; and are separately
supervised.
Specialty Healthcare, 357 NLRB No. 83, at *14 (emphasis added). The Board’s
initial unit determination in Specialty Healthcare and in this case thus
conformed to established precedent. See, e.g., In re United Operations, Inc.,
338 N.L.R.B. 123; Bartlett Collins Co., 334 N.L.R.B. 484 (2001); The Dahl Oil Co.,
221 N.L.R.B. 1311 (1964). The Board did not abuse its discretion by applying the
traditional community of interest test in its initial unit determination.
3. “Overwhelming Community of Interest” in the Accretion Context
An “accretion” is the addition of a small group of employees to an
established bargaining unit without first holding an election. Michael J.
Frank, Accretion Elections: Making Employee Choice Paramount, 5 U. Pa. J.
Lab. & Emp. L. 101, 102 (2002). Because of accretion’s “interference with the
employees’ freedom to choose their own bargaining agents,” the Board does not
apply the traditional community of interest test to determine whether the
enlarged unit would be appropriate; rather, the Board generally finds that “[a]
group of employees is properly accreted to an existing bargaining unit when
they have such a close community of interests with the existing unit that they
have no true identity distinct from it.” DMR Corp., 795 F.2d at 476 (citation
omitted) (emphasis in original). While the structure and the underlying policy
motivations of this standard resemble those of the Specialty Healthcare
overwhelming community of interest test, Macy’s contention that the latter
was “improperly imported” from the accretion context fails to persuade us. As
an initial matter, as the Fourth Circuit observed in Dreyer’s, “[it is not]
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unreasonable . . . for the Board to use the same overwhelming-community-of-
interest test in this context that it has historically used in the context of
accretions.” 2016 WL 1638039, at *9. Furthermore, the Board has applied the
overwhelming community of interest test in the initial determination context
since at least 1967, when, in Jewish Hospital Association of Cincinnati, it held
that a unit limited to service employees was inappropriate because of their
“overwhelming community of interest” with maintenance employees. 223
N.L.R.B. at 617. Macy’s premise that the overwhelming community of interest
test is inappropriate when applied in an initial unit determination thus falls,
and its related contention that the test is therefore inappropriate necessarily
fails.
4. The NLRB’s Adjudicative Rulemaking Authority
In NLRB v. Bell Aerospace Co. Div. of Textron, Inc., 416 U.S. 267, 294
(1974), the Supreme Court announced that “the Board is not precluded from
announcing new principles in an adjudicative proceeding and that the choice
between rulemaking and adjudication lies in the first instance within the
Board’s discretion.” Yet Macy’s contends that, because Specialty Healthcare
announced “‘policy-type rules or standards’ to be applied in all future unit
determination cases,” the Board was required by the APA to resort to
rulemaking and the decision should be set aside.
The Supreme Court has previously rejected a claim identical to that
advanced by Macy’s. In SEC v. Chenery Corp., 332 U.S. 194 (1947), the
respondent corporation argued that the Commission was required to resort to
its rulemaking procedures if it desired to promulgate a new standard that
would govern future conduct, rather than applying a general standard that it
had formulated for the first time in that proceeding. The Court rejected this
contention, noting that the Commission had a statutory duty to decide the
issue at hand in light of the proper standards and that this duty remained
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“regardless of whether those standards previously had been spelled out in a
general rule or regulation.” Id. at 201. The Court concluded that “the choice
made between proceeding by general rule or by individual, ad hoc litigation is
one that lies primarily in the informed discretion of the administrative
agency.” Id., at 203. Even accepting the premise that Specialty Healthcare
announced a new standard, the contention that the Board violated the APA is
therefore unavailing.
5. Presumptively Appropriate Units
In early cases dealing with the retail industry, the Board stated that a
storewide unit was “basically appropriate,” I. Magnin, 119 N.L.R.B. at 643, or
was “the optimum unit,” May Department Stores, 97 N.L.R.B. 1007, 1008 (1952).
But even in the cases announcing that “presumption,” the Board recognized
that smaller units can be appropriate. See Allied Store of New York, Inc., 150
N.L.R.B. 799, 803 (1965). This is consistent with the policies underlying the
Board’s general approach to unit determination: recognition that a unit is
presumptively appropriate does not lead to a requirement that only that unit
can be appropriate. As the Board explained in Specialty Healthcare:
the suggestion that there is only one set of appropriate units in an
industry runs counter to the statutory language and the main
corpus of our unit jurisprudence, which holds that the Board need
find only that the proposed unit is an appropriate unit, rather than
the most appropriate unit, and that there may be multiple sets of
appropriate units in any workplace.
357 NLRB No. 83, at *10. Thus, even if a store-wide unit were presumptively
appropriate in the retail industry—a contention to which the Board
strenuously objects, Macy’s & Local 1445, 371 NLRB No. 4, *17-22—the
application of Specialty Healthcare to the retail context would not mark a
deviation from Board precedent.
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*
The standard articulated by the Board in Specialty Healthcare does not
violate the NLRA. The Board did not depart from a uniform rule by applying
it, and its basis and application were cogently explained. The standard was
not improperly imported from another context, and it was not adopted in
violation of the APA. Finally, the application of the standard in the retail
context is not inconsistent with prior Board decisions. We therefore decline to
reject the Specialty Healthcare standard and hold that the Board did not abuse
its discretion by articulating and applying this standard in the instant case.
C.
Finally, Macy’s argues that, even under Specialty Healthcare, the Board
approved an inappropriate unit because it carried its burden of showing that
all selling employees within the store share an overwhelming community of
interest. However, as explained in Part III.A, supra, the Board’s factual
findings illustrate numerous distinctions between the cosmetics and
fragrances employees and the other selling employees, such that it cannot be
said that there is “no legitimate basis upon which to exclude [those] employees”
from the unit. Specialty Healthcare, 357 NLRB No. 83, at *15. We therefore
hold that the Board did not abuse its discretion when it determined that the
other selling employees do not share an overwhelming a community of interest
with the petitioned-for employees.
IV.
The Board reasonably concluded the unit of cosmetics and fragrances
employees at the Saugus store was appropriate. Macy’s has failed to establish
that the unit is clearly not appropriate and has failed to demonstrate that the
Board abused its discretion by articulating and applying the overwhelming
community of interest test. The Board’s cross-application for enforcement is
therefore GRANTED and Macy’s petition for review is DENIED.
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