Strategic Technology Institute v. NLRB ( 2023 )

United States Court of Appeals
For the Eighth Circuit
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No. 22-2958
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Strategic Technology Institute, Inc.
Petitioner
v.
National Labor Relations Board
Respondent
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No. 22-3045
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Strategic Technology Institute, Inc.
Respondent
v.
National Labor Relations Board
Petitioner
____________
National Labor Relations Board
____________
Submitted: September 20, 2023
Filed: December 6, 2023
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Before LOKEN, WOLLMAN, and BENTON, Circuit Judges.
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BENTON, Circuit Judge.
Strategic Technology Institute, Inc. (“STI”) petitions for review of the
National Labor Relations Board’s order that it violated subsections 8(a)(1) and (3)
of the National Labor Relations Act, 29 U.S.C. § 158(a)(1) and (3). See Strategic
Tech. Inst., Inc. and Int’l Ass’n of Machinists & Aerospace Workers, AFL-CIO,
371 NLRB No. 137, 2022 WL 4237157 (Sept. 13, 2022). The Board seeks to enforce
the order. Having jurisdiction under 29 U.S.C. § 160(f), this court grants the petition
for review, vacates the order, and remands.
I.
From August 2017 until July 2020, STI had a contract to maintain engines and
propellers for the U.S. Air Force. Tyler Boyd of STI fired 17 employees from its
Little Rock facility—three on September 27, 2019, and fourteen on October 9, 2019.
Boyd, the program manager for the contract, who was based in Texas, did not visit
the Little Rock facility before the terminations. He managed remotely through site
supervisor Gerald Kiihnl, who resigned the day after the last terminations.
In the summer before the terminations, STI’s Little Rock employees began
discussing unionizing. Mechanic Eric Rambo resigned on August 30, 2019. That
day, by a phone call, he told Boyd that employees were discussing unionizing. In an
exit interview, Rambo told Kiihnl that employees were considering “trying to get a
union in.” Kiihnl relayed this to Boyd in a phone call.
From March to September 2019, the Air Force issued STI five corrective
action reports (“CARs”) for safety and performance issues. On September 18, a
CAR cited STI with leaving a screwdriver in an aircraft engine it had serviced. The
CAR required STI to explain the corrective acts it would take to prevent similar
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issues. STI responded with tool-accountability training and procedural changes. STI
added: “Training and re-training have unfortunately proven not to be effective.
Counseling is in order before loss of limb or life occurs. These issues shall require
actions to be taken.”
STI found three employees responsible for the error. On September 23, Kiihnl
verbally reprimanded them (the first discipline for the three). Later that day Boyd
told Kiihnl that the discipline should be more severe. On September 27, Boyd fired
the three employees.
On September 20, the day after learning of the CAR, Boyd had instructed
Kiihnl to evaluate and rank 41 Little Rock employees, STI’s first rankings at Little
Rock. Kiihnl completed this evaluation on September 23. He scored each employee
as “3-out-of-5.” He then ranked them based on performance, attendance, and how
well they worked with others. There is no evidence that union activity was
considered in the rankings.
On October 9 (a day after Kiihnl returned from vacation), Boyd fired the 14
lowest ranked employees for “poor performance.” Boyd prepared an identical
verbal-counseling form for each fired employee’s personnel file. The ALJ and Board
found that these forms, which cited the five 2019 CARs, were “full of falsifications”
and “outright lies.” On each form, Boyd copied Kiihnl’s signature without his
authorization. (While Kiihnl was on vacation, STI had begun recruiting
replacements.)
After the firings, STI performed even more poorly on the contract.
Questioned by the Air Force, STI attributed its poor performance to “false union
claims/union litigation.” In July 2020, the Air Force awarded the contract to a
competitor.
After the three initial firings on September 27, union activity increased at STI.
Five days later, about ten STI employees met during lunch with union
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representatives at a food hall on the Air Force base (separate from STI’s worksite).
Conversations about unionizing continued during breaks and before work. By
October 4, about 35 STI employees had signed authorization cards. In November,
STI’s employees voted for union representation.
On October 11, the union had filed an unfair labor practice charge against STI,
challenging all the terminations. The General Counsel’s complaint alleged STI
violated Sections 8(a)(1) and (3) of the NLRA by firing the employees for union
activity. The administrative law judge found that the firings were violations. The
Board adopted the ALJ’s rulings, findings, and conclusions. The Board added that
the false verbal-counseling forms violated the NLRA.
This court will enforce the Board’s order “if the Board has correctly applied
the law and its factual findings are supported by substantial evidence on the record
as a whole.” Town & Country Elec., Inc. v. NLRB, 106 F.3d 816, 819 (8th Cir.
1997).
II.
The Board found that STI fired all 17 employees for union activity in violation
of 8(a)(1) and (3) of the NLRA. Section 8(a)(1) makes it an unfair labor practice for
an employer “to interfere with, restrain, or coerce employees in the exercise of” their
rights to engage in concerted activities such as organizing and collectively
bargaining. 29 U.S.C. § 158(a)(1). By Section 8(a)(3), “discrimination in regard to
hire or tenure of employment … to encourage or discourage membership in any
labor organization” is an unfair labor practice. 29 U.S.C. § 158(a)(3). “Although
an employer violates Section 8(a)(1) and (3) of the Act if it discharges an employee
for engaging in protected activities, ‘employers retain the right to discharge workers
for any number of other reasons unrelated to the employee’s union activities.’”
Nichols Aluminum, LLC v. NLRB, 797 F.3d 548, 554 (8th Cir. 2015), quoting
NLRB v. Transp. Mgmt. Corp., 462 U.S. 393, 394 (1983).
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“Wright Line analysis is applied when an employer articulates a facially
legitimate reason for its termination decision, but that motive is disputed.” NLRB
v. RELCO Locomotives, Inc., 734 F.3d 764, 780 (8th Cir. 2013), citing Wright Line,
251 NLRB 1083 (1980).
[T]he Board’s General Counsel must prove “that the employee’s
protected conduct was a substantial or motivating factor in the adverse
action.” … If, and only if, the General Counsel meets that burden, the
burden shifts to the employer to exonerate itself by showing that it
would have taken the same action for a legitimate, nondiscriminatory
reason regardless of the employee’s protected activity.
Nichols Aluminum, 797 F.3d at 554 (some internal quotation marks omitted),
quoting Transp. Mgmt., 462 U.S. at 401. To prove an employee’s protected conduct
was a substantial or motivating factor, “the General Counsel must prove a connection
or nexus between the animus and the firing.” Tschiggfrie Props., Ltd. v. NLRB, 896
F.3d 880, 886 (8th Cir. 2018).
The Board here relied on circumstantial inferences to find animus and the
required connection or nexus to the firings. Whether substantial evidence exists
depends on “‘the inherent strengths and weaknesses of the inferences drawn by the
Board.’” Carleton Coll. v. NLRB, 230 F.3d 1075, 1078 (8th Cir. 2000), quoting
GSX Corp. of Mo. v. NLRB, 918 F.2d 1351, 1357 (8th Cir. 1990). In its findings
and conclusions, the Board “is permitted to draw reasonable inferences” but “cannot
rely on ‘suspicion, surmise, implications, or plainly incredible evidence.’” Mead &
Mount Constr. Co. v. NLRB, 411 F.2d 1154, 1157 (8th Cir. 1969), quoting Universal
Camera Corp. v. NLRB, 340 U.S. 474, 484 (1951). To affirm, the record “‘must do
more than create a suspicion of the existence of the fact to be established.’” Bussen
Quarries, Inc. v. Acosta, 895 F.3d 1039, 1045 (8th Cir. 2018), quoting NLRB v.
Columbian Enameling & Stamping Co., 306 U.S. 292, 300 (1939).
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The three September 27 firings
As for the first three terminations, the Board ruled that STI’s reason for the
firings was “overwhelmingly pretextual” because STI had not previously fired
employees for CARs and that the three employees did not have a history of
violations. Strategic Tech. Inst., Inc., 2022 WL 4237157 at *9. The Board inferred
that any termination must have been based on Boyd’s learning that STI employees
were considering unionizing. Id. (The Board agreeing with the ALJ’s finding that
STI’s reasons for the firings were “overwhelmingly pretextual” because the
“draconian punishment … was an unprecedented response” to a CAR.).
The Board relied on suspicion and unreasonable inferences. “[E]mployers
retain the right to discharge workers for any number of … reasons unrelated to the
employee’s union activities.” Transp. Mgmt. Corp., 462 U.S. at 394. See generally
Cottrell v. Cottrell, 965 S.W.2d 129, 130 (Ark. 1998) (“It is well established under
Arkansas law that when an employment contract is silent as to its duration, either
party may terminate the relationship at will and without cause”).
STI’s response to the CAR noted an increase in similar incidents. It stated
that “training and re-training have unfortunately proven not to be effective” and
“these issues shall require action to be taken.” Each of the three fired employees
played a role in leaving the screwdriver in the engine, justifying remedial action.
STI stated a facially legitimate reason for the firings. See RELCO, 734 F.3d at 780.
The General Counsel then has the burden to prove that union activity was a
substantial or motivating factor in the terminations. Nichols Aluminum, 797 F.3d
at 554. While pretext can justify an inference of improper motive, that STI had not
previously fired employees for other CARs does not render the three firings
pretextual. STI’s response to the Air Force shows that performance errors were
recurring, retraining was insufficient, and the incident was severe (“Counseling is in
order before loss of limb or life occurs”). Heightened remedial action was
reasonable.
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The record lacks substantial evidence of pretext. The three employees were
not linked to any union activity, making any connection or nexus a matter of
suspicion. That Boyd knew some STI employees were discussing unionizing at the
time of the three firings is not substantial evidence that the firings were motivated
by anti-union animus. At most it creates a suspicion, which is an insufficient basis
for an inference of improper motive. Mead & Mount Constr. Co., 411 F.2d at 1157.
The Board erred in finding that the three September 27 firings were motivated
by anti-union animus because the record lacks substantial evidence to infer pretext.
The fourteen October 9 firings
Direct, demonstrated instances of anti-union hostility can support an inference
of a causal connection between anti-union animus and a termination. See, e.g.,
RELCO, 734 F.3d at 781 (inferring improper motive after employer disparaged
unions at an hour-long meeting, using abusive language toward a union defender);
Hall v. NLRB, 941 F.2d 684, 688 (8th Cir. 1991) (inferring a hostile motive when
the employer interrogated and coerced employees about union activity); York Prods.,
Inc. v. NLRB, 881 F.2d 542, 543 (8th Cir. 1989) (inferring motive from pretextual
explanations when the employer threated to close the facility if employees
unionized).
Here, STI did not make any union-based threats or outbursts, question
employees on union involvement, or ever comment on unionization before the
October 9 firings. In fact, there is no evidence that Boyd reacted at all when he heard
that employees were considering unionizing. Boyd oversaw other union and non-
union contracts at STI and was never previously accused of anti-union bias.
The General Counsel contends that STI’s later comments to the Air Force are
direct evidence of animus. Responding to an Air Force inquiry, STI attributed its
waning performance to “false union claims/union litigation.” STI made these
comments after the firings, responding to a performance inquiry by the Air Force
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after the union initiated its unfair labor practice charge against STI. STI’s comments
do not establish animus at the time of the firings.
In the absence of direct evidence, the Board inferred animus by STI, and a
nexus between animus and firings, from Boyd’s knowledge of unionizing
discussions and the firings. The only evidence of knowledge is the two phone calls
where Boyd learned that some STI employees were considering unionizing. There
is no evidence that Boyd knew of the escalating union activity after he fired the first
three employees.
To infer knowledge of organizational efforts, the Board invokes the “small
plant doctrine,” which can infer employer knowledge of union activity when it
occurs in a small facility. See Amyx Indus., Inc. v. NLRB, 457 F.2d 904, 907 (8th
Cir. 1972) (“The essence of the small plant doctrine is that in a small plant certain
activities are likely to be noticed.”). “In this circuit, however, the small plant
doctrine will not in itself support an inference of an employer's knowledge of union
activities. The smallness of the plant may be material but only if other evidence
exists indicating a likelihood of such knowledge.” Alumbaugh Coal Corp. v.
NLRB, 635 F.2d 1380, 1384 (8th Cir. 1980).
Here, no other evidence indicates a likelihood that Boyd knew of the union
activities (other than the two August phone calls). Boyd was not present at the Little
Rock worksite to see first-hand any discussions or organizational activity. There is
no evidence that onsite management reported union activity to Boyd. STI employees
and a union official met at an Air Force dining hall, not at STI’s worksite where
management observation would be more likely. Except for this meeting, discussions
occurred at lunch, in the breakroom, and outside of work hours. While the ALJ and
the Board did not credit any of Boyd’s testimony (including that he was never
informed of any unionizing until receiving the election petition after the firings),
there is no affirmative evidence, except for the two August phone calls, that he knew
of the efforts.
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With the small plant doctrine inapplicable, any inference of animus must come
from the two phone calls and the timing of the firings. The Board concluded that
the context of the firings indicates animus and pretext.
The Board found it suspicious and indicative of unlawful motive that Boyd
fired 14 employees six weeks after learning that some STI employees were
discussing unionizing. While this court considers the timing of terminations in
evaluating improper motive, it typically does so when the record also contains some
direct evidence of anti-union animus. See, e.g., RELCO, 734 F.3d at 781; McGraw-
Edison Co. v. NLRB, 419 F.2d 67, 75 (8th Cir. 1969); Greater Omaha Packing Co.
v. NLRB, 790 F.3d 816, 821 (8th Cir. 2015). Here, there is no direct evidence of
animus.
The timing of these firings does not reasonably infer an improper motive. Cf.
EEOC v. Kohler Co., 335 F.3d 766, 773 n.7 (8th Cir. 2003) (holding in a Title VII
case that “timing alone is usually insufficient to establish that the employer's
legitimate non-discriminatory reason for discharge is pretext”). Boyd learned of
potential union activity on August 30, but took no action against the 14 employees
until September 20, when he asked Kiihnl to rank the Little Rock employees. The
critical intervening event was the September 18 CAR. Boyd asked Kiihnl for the
rankings within a day of learning of the CAR and began recruiting replacements.
Just over two weeks after receiving the rankings (when Kiihnl returned from
vacation), he carried out the terminations.
The Board also asserts that the circumstances of the firings indicate that STI’s
“poor performance” justification was pretextual. Pretext can infer an improper
motive, and an employer’s justification may be pretextual when it fails to withstand
scrutiny. York Prods., 881 F.2d at 545–46.
The Board found that the rankings and falsified disciplinary forms indicate
pretext. Kiihnl testified that his rankings were based on characteristics such as
performance, attendance, and interpersonal skills—all legitimate factors. Nothing
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in the record suggests that Boyd ordered Kiihnl to, or that Kiihnl actually did,
consider union activity when ranking the employees. Although Kiihnl scored each
employee a “3-out-of-5”, the rankings themselves were based on legitimate
characteristics and determined who was fired.
The General Counsel argues Boyd used the falsified verbal-counseling forms
to cover up his anti-union motive for the firings. Boyd’s inclusion of these forms
may create suspicion, but does not overcome the evidence that the firings were
performance-based. The Board “cannot rely on suspicion.” Mead & Mount Constr.
Co., 411 F.2d at 1157 (internal quotation omitted). The falsified verbal-counseling
forms are not substantial evidence of pretext or improper motive. 1
The General Counsel failed to meet its burden of providing substantial
evidence that STI harbored anti-union animus and that the terminations were
motivated by animus. The Board erred in finding that the fourteen October 9
terminations were motivated by anti-union animus.
III.
The General Counsel asserts that this case is a “mass discharge” case. The
Board has ruled that when terminations constitute a mass discharge “the General
Counsel [is] not required to show a correlation between each employee's union
activity and his or her discharge.” ACTIV Indus., Inc., 277 NLRB 356, 356 n.3
(1985) (citation omitted). This court has not adopted that standard. See Ballou
Brick Co. v. NLRB, 798 F.2d 339, 342 (8th Cir. 1986) (“We note also that other
courts have found it is not necessary that the general counsel prove the employer's
knowledge of a specific employee's opinion as to the union, when there is a mass
layoff for the unlawful purpose of discouraging union membership.”) (emphasis
added). The General Counsel relies on NLRB v. Cell Agricultural Manufacturing
1
Because, as discussed, no link to anti-union animus has been shown, the
falsified verbal-counseling forms are not violations, contrary to the Board’s
conclusion.
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Co. for the proposition that this court has adopted the “mass discharge” standard.
Cell Agricultural, 41 F.3d 389, 394 (8th Cir. 1994). Cell Agricultural, analyzing a
“mass layoff,” did not adopt the NLRB’s standard.
Even if this standard were applied, it would not affect this case. Under the
Board’s “mass discharge” standard, the General Counsel must establish by
substantial evidence “that the mass discharge was implemented to discourage union
activity or in retaliation for the protected activity of some.” David Saxe Prods.,
LLC, 370 NLRB 103, 157–158 (Apr. 5, 2021). The Board’s standard requires a
nexus between anti-union animus and the terminations. As discussed, the record
lacks substantial evidence of animus or nexus.
*******
STI’s petition is granted. This court vacates the Board’s order, denies
enforcement, and remands for proceedings consistent with this opinion.
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