Quicken Loans, Inc. v. National Labor Relations Board ( 2016 )

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued March 8, 2016 Decided July 29, 2016
No. 14-1231
QUICKEN LOANS, INC.,
PETITIONER
v.
NATIONAL LABOR RELATIONS BOARD,
RESPONDENT
Consolidated with No. 14-1265
On Petition for Review and Cross-Application
for Enforcement of an Order of
the National Labor Relations Board
William M. Jay argued the cause for petitioner. On the
briefs were William D. Sargent, Robert J. Muchnick,
Christopher R. Kazanowski, and S. Libby Henninger.
Gregoire F. Sauter, Attorney, National Labor Relations
Board, argued the cause for respondent. On the brief were
Richard F. Griffin, Jr., General Counsel, John H. Ferguson,
Associate General Counsel, Linda Dreeben, Deputy Associate
General Counsel, and Kira D. Vol, Supervisory Attorney.
2
Before: SRINIVASAN, MILLETT, and WILKINS, Circuit
Judges.
MILLETT, Circuit Judge: Quicken Loans, Inc., a
company that provides mortgage loan services, imposes a
number of workplace rules on its mortgage bankers. As
relevant here, Quicken forbids its mortgage bankers to use or
disclose a broad range of personnel information without
Quicken’s prior written consent or to criticize publicly the
company and its management. The National Labor Relations
Board determined that those rules run afoul of the National
Labor Relations Act, 29 U.S.C. § 151 et seq., because they
unreasonably burden the employees’ ability to discuss
legitimate employment matters, to protest employer practices,
and to organize. Because there was nothing arbitrary or
capricious about that decision and no abuse of discretion in
the Board’s hearing process, we deny Quicken’s petition for
review and grant the Board’s cross-application for
enforcement.
I
A
Section 7 of the National Labor Relations Act guarantees
employees “the right to self-organization, to form, join, or
assist labor organizations, to bargain collectively through
representatives of their own choosing, and to engage in other
concerted activities for the purpose of collective bargaining or
other mutual aid or protection[.]” 29 U.S.C. § 157. Those
rights “necessarily encompass[]” employees’ rights to
communicate with one another and with third parties about
collective action and organizing a union, Beth Israel Hospital
v. NLRB, 437 U.S. 483, 491 (1978), as well as to “seek to
improve terms and conditions of employment or otherwise
improve their lot as employees through channels outside the
3
immediate employee-employer relationship,” Eastex, Inc. v.
NLRB, 437 U.S. 556, 565 (1978). Section 7 thus protects
employees’ rights to discuss organization and the terms and
conditions of their employment, to criticize or complain about
their employer or their conditions of employment, and to
enlist the assistance of others in addressing employment
matters. See, e.g., Beth Israel Hospital, 437 U.S. at 491;
Stanford Hospital and Clinics v. NLRB, 325 F.3d 334, 343
(D.C. Cir. 2003); Tradesmen, Int’l, Inc. v. NLRB, 275 F.3d
1137, 1141 (D.C. Cir. 2002). Employers that “interfere with,
restrain, or coerce employees in the exercise of the rights
guaranteed” by Section 7 commit an unfair labor practice, 29
U.S.C. § 158(a)(1), and are subject to civil sanction by the
Board, id. § 160(a).
Whether workplace rules run afoul of Section 7’s
protections turns on an objective inquiry into “‘whether the
rules would reasonably tend to chill employees in the
exercise’ of their statutory rights.” Adtranz ABB Daimler-
Benz Transp. v. NLRB, 253 F.3d 19, 25 (D.C. Cir. 2001)
(quoting Lafayette Park Hotel, 326 NLRB 824, 825 (1998)).
Unreasonable chilling of lawful employee activities can take
two forbidden forms. First, a rule could on its face restrict
protected Section 7 activity by, for example, explicitly barring
employees from complaining to third parties about their
working conditions. Guardsmark, LLC v. NLRB, 475 F.3d
369, 374–375 (D.C. Cir. 2007).
Second, even if facially unobjectionable, a rule is invalid
if (i) “‘employees would reasonably construe the language to
prohibit Section 7 activity’”; (ii) the rule “‘was promulgated
in response to union activity’”; or (iii) “‘the rule has been
applied to restrict the exercise of Section 7 rights.’”
Guardsmark, 475 F.3d at 374 (quoting Martin Luther
Memorial Home, 343 NLRB 646, 647 (2004)).
4
In asking whether a workplace rule either expressly
infringes Section 7 rights or would reasonably be understood
to do so, courts “focus[] on the text of the challenged rule.”
Guardsmark, 325 F.3d at 379. That means that the “‘mere
maintenance’ of a rule likely to chill section 7 activity,
whether explicitly or through reasonable interpretation, can
amount to an unfair labor practice ‘even absent evidence of
enforcement’” of the rule by the employer. Id. (quoting
Lafayette Park Hotel, 326 NLRB 824, 825 (1998), enforced
sub nom. Lafayette Park Hotel v. NLRB, 203 F.3d 52 (Table)
(D.C. Cir. 1999)).
B
Quicken provides mortgage loan services through branch
offices located across the United States. The company
employs approximately 1,700 mortgage bankers who process
loan applications, negotiate the terms of mortgage loans, and
provide other financial services to Quicken’s clients. As a
condition of employment, each Quicken mortgage banker is
required to sign a “Mortgage Banker Employment
Agreement” that contains several mandatory rules and
restrictions. Two of those rules are at issue here: the
Proprietary/Confidential Information Rule (“Confidentiality
Rule”) and the Non-Disparagement Rule.
As relevant here, the Confidentiality Rule defines
“Proprietary/Confidential Information” to include “non-public
information relating to or regarding the Company’s business,
personnel, customers, operations or affairs.” J.A. 32. The
Rule further defines confidential “Personnel Information” as
“including, but not limited to, all personnel lists, rosters,
personal information of co-workers, managers, executives and
officers; handbooks, personnel files, personnel information
5
such as home phone numbers, cell phone numbers, addresses,
and email addresses.” Id. at 33.
For all of that information, mortgage bankers must
“agree that” they will (i) “hold and maintain [it] in the
strictest of confidence”; (ii) “not disclose, reveal or expose”
that information to “any person, business or entity”; (iii) not
use “any [of that] [i]nformation for any purpose except as
may be authorized by the Company in writing”; and (iv) “take
all necessary precautions to keep [that] [i]nformation secret,
private, concealed and protected from disclosure[.]” J.A. 22.
The Non-Disparagement Rule, for its part, provides that:
The Company has internal procedures for complaints
and disputes to be addressed and resolved. You
agree that you will not (nor will you cause or
cooperate with others to) publicly criticize, ridicule,
disparage or defame the Company or its products,
services, policies, directors, officers, shareholders, or
employees, with or through any written or oral
statement or image (including, but not limited to, any
statements made via websites, blogs, postings to the
internet, or emails and whether or not they are made
anonymously or through the use of a pseudonym).
You agree to provide full cooperation and assistance
in assisting the Company to investigate such
statements if the Company reasonably believes that
you are [the] source of the statements. The
foregoing does not apply to statutorily privileged
statements made to governmental or law
enforcement agencies.
J.A. 29.
6
C
Lydia Garza began working as a mortgage banker in
Quicken’s Scottsdale, Arizona office in 2006, and signed a
copy of the Employment Agreement containing both the
Confidentiality and Non-Disparagement Rules. In 2011, she
resigned and took a job with one of Quicken’s competitors.
Quicken then sued Garza for violating no-contact/no-raiding
and no-competition provisions of the Employment
Agreement. Garza responded by filing an unfair labor
practice charge with the National Labor Relations Board
alleging that the Confidentiality and Non-Disparagement
Rules interfered with Quicken employees’ Section 7 rights, in
violation of the National Labor Relations Act. The Board’s
Regional Director accepted Garza’s charge, and filed an
unfair labor practice complaint against Quicken alleging that
the challenged Rules violated Section 8(a)(1) of the Act, 29
U.S.C. § 158(a)(1).
A Board administrative law judge conducted an
evidentiary hearing on the Regional Director’s complaint.
During that hearing, the ALJ excluded as irrelevant certain
evidence that Quicken wanted to introduce concerning
Garza’s understanding of the challenged rules. Specifically,
Quicken sought to introduce evidence about (i) whether Garza
had read the Employment Agreement prior to signing it, (ii)
what conduct Garza believed the Agreement prohibited, (iii)
whether Garza believed that she had violated the contested
Rules, and (iv) whether Garza had discussed the Agreement
with her managers or supervisors at the company. The ALJ
also barred as irrelevant evidence concerning the process by
which Quicken recruited employees and the types of
personnel information that were available on the Company’s
internal website.
7
The ALJ subsequently sustained the Regional Director’s
complaint, finding that both of Quicken’s Rules violated
Section 8(a)(1) of the National Labor Relations Act, 29
U.S.C. § 158(a)(1), because they interfered with Quicken
employees’ Section 7 rights. With respect to the
Confidentiality Rule, the ALJ had “no doubt” that the Rule’s
prohibition against disclosing personnel information,
including “all personnel lists, personal information of co-
workers * * * [and] personnel information such as home
phone numbers, cell phone numbers, addresses and email
addresses” would “substantially hinder employees in the
exercise of their Section 7 rights.” J.A. 160. That is because
the rule flatly forbade employees “to discuss with others,
including their fellow employees or union representatives, the
wages and other benefits that they receive,” and “the names,
wages, benefits, addresses or telephone numbers of other
employees.” Id.The ALJ also concluded that the Non-Disparagement
Rule was invalid because it prohibited employees from
“publicly criticiz[ing], ridicul[ing], disparag[ing] or
defam[ing] the Company or its products, services, [or]
policies * * * through any written or oral statement.” J.A.
160. “[E]mployees are allowed to criticize their employer and
its products as part of their Section 7 rights,” the ALJ
explained. Id. So any mortgage banker reading those
restrictions “could reasonably construe them as restricting his
rights to engage in protected concerted activities.” Id.The ALJ accordingly ordered Quicken to rescind both the
Confidentiality and Non-Disparagement Rules.
The Board affirmed the ALJ’s ruling as to the Non-
Disparagement Rule, but amended the remedy for the
Confidentiality Rule. With respect to the latter, the Board
8
required that Quicken “rescind only the offending language”
on which the ALJ had relied—that is, the portions of the Rule
prohibiting disclosure of “non-public information relating to
or regarding * * * personnel” and “personnel information,
including * * * all personnel lists, rosters, personal
information of co-workers, * * * handbooks, personnel files,
personnel information such as home phone numbers, cell
phone numbers, addresses, and email addresses[.]” J.A. 156,
162. The Board did not disturb the ALJ’s evidentiary rulings.
II
Our review of the Board’s decision is limited. Congress
has entrusted the Board with implementing Sections 7 and
8(a)(1) of the Act and determining, in the first instance, when
an employer’s workplace rules run afoul of those provisions.
See Adtranz, 253 F.3d at 25. The Board’s determinations
accordingly “are entitled to considerable deference,” id., and
will be sustained as long as the Board “‘faithfully applies’”
the legal standards, and its textual analysis of a challenged
rule is “‘reasonably defensible’” and adequately explained,
Guardsmark, 475 F.3d at 374 (quoting Adtranz, 253 F.3d at
25). See Cintas Corp. v. NLRB, 482 F.3d 463, 467 (D.C. Cir.
2007).
A
The Board properly determined that Quicken’s
Confidentiality Rule, as applied to personnel information,
directly impinged upon employees’ Section 7 rights. The
very information that portion of the Rule explicitly forbids
employees to share—personnel lists, employee rosters, and
employee contact information—has long been recognized as
information that employees must be permitted to gather and
share among themselves and with union organizers in
exercising their Section 7 rights. See, e.g., International
9
Union of Electrical, Radio and Machine Workers v. NLRB,
502 F.2d 349, 351 (D.C. Cir. 1974) (Board may require
company to provide union “with a list of names and addresses
of its employees” as “necessary and appropriate to guarantee
that rights conferred by section 7 will not be denied[.]”); see
also Albertsons, Inc., 351 NLRB 254, 259 (2014)
(confidentiality rule cannot prevent employee from providing
list of employee names to union organizers); HTH Corp., 356
NLRB 1397, 1421 n.19 (2011) (“[T]he names and addresses
of fellow employees cannot” be “held confidential” because
that would “inhibit[] employees from engaging in conduct
protected by Sec. 7.”), enforced sub nom. Frankl v. HTH
Corp., 693 F.3d 1051 (9th Cir. 2012); Ridgley Manufacturing
Co., 207 NLRB 193, 196–197 (1973) (“[M]emorizing the
names of fellow employees from the timecards for the
purpose of contacting them concerning union representation”
was “protected activity” under the Act.), enforced sub nom.
Ridgley Manufacturing Co. v. NLRB, 510 F.2d 185 (D.C. Cir.
1975).
So too for “handbooks” and other types of workplace
information contained in “personnel files.” J.A. 33.
Quicken’s blanket prohibition directly interferes with
mortgage bankers’ ability to discuss their wages and other
terms and conditions of employment with their fellow
employees or union organizers, which is a core Section 7
right. See, e.g., Cintas Corp., 482 F.3d at 467–468; Flex Frac
Logistics, LLC v. NLRB, 746 F.3d 205, 208 (5th Cir. 2014)
(“A workplace rule that forbids the discussion of confidential
wage information between employees * * * patently violates
[the Act.]”) (internal quotation marks and alterations omitted);
NLRB v. Northeastern Land Services, Ltd., 645 F.3d 475, 478,
483 (1st Cir. 2011) (striking down rule that prevented
discussion of the “terms of * * * employment, including
compensation”); Lily Transportation Corp., 362 NLRB No.
1054, 1 & n.3 (2015) (barring confidentiality rule prohibiting
disclosure of “employee information maintained in
confidential personnel files” because “employees would
reasonably conclude that this language barred them from
disclosing information about wages and other terms and
conditions of employment”).
Quicken’s objections to the Board’s determination all
fail. First, Quicken contends that the Board should have
considered whether (i) Quicken employees actually construed
the Confidentiality Rule to prohibit Section 7 activity, (ii)
Garza herself had understood the Rule that way during her
employment, or (iii) Quicken had ever enforced the Rule to
interfere with Section 7 activity. See Pet. Br. 24–25. Those
arguments, however, fail to come to grips with the governing
law. The validity of a workplace rule turns not on subjective
employee understandings or actual enforcement patterns, but
on an objective inquiry into how a reasonable employee
would understand the rule’s disputed language. Thus “[t]he
Board is merely required to determine whether ‘employees
would reasonably construe the [disputed] language to prohibit
Section 7 activity, * * * and not whether employees have thus
construed the rule.” Cintas Corp., 482 F.3d at 467; see
Guardsmark, 475 F.3d at 375–376; Lafayette Park Hotel, 326
NLRB at 824, 825 (1998) (“[T]he mere maintenance” of rules
that “are likely to have a chilling effect on Section 7 rights”
violates the Act “even absent evidence of enforcement.”),
enforced sub nom. Lafayette Park Hotel v. NLRB, 203 F.3d 52(Table) (D.C. Cir. 1999).
That objective inquiry serves an important prophylactic
function: it allows the Board to block rules that might chill
the exercise of employees’ rights by cowing the employees
into inaction, rather than forcing the Board to “wait[] until
that chill is manifest,” and then try to “undertake the difficult
11
task of dispelling it.” Flex Frac Logistics, LLC, 358 NLRB
1131, 1132 (2012), enforced sub nom. Flex Frac Logistics,
746 F.3d 205. And the Board’s concern about discouraging
protected employee activities exists just the same “whether or
not that is the intent of the employer.” Id. Quicken’s
complaints about the Board’s analysis thus ignore the
National Labor Relations Act’s proactive role in safeguarding
employees’ rights. See id. (noting the “Act’s goal of
preventing employees from being chilled in the exercise of
their Section 7 rights”).
Second, Quicken argues (Pet. Br. 26–28) that the Board
overlooked the company’s “substantial and legitimate
interest” in protecting its non-public information in a business
that is “highly-regulated, competitive, and involves
substantial and significant confidential and proprietary
information.” Id. at 28. But by carefully confining its
decision to the Confidentiality Rule’s operation on the types
of personnel information protected by Section 7, J.A. 162, the
Board left portions of the Rule protecting proprietary
information intact, and it afforded Quicken adequate room to
revise and “narrowly tailor[] the * * * rule to achieve its goal
without interfering with section 7 activity,” Guardsmark, 475
F.3d at 376. See Cintas Corp., 482 F.3d at 470; see also
Community Hospitals of Central California v. NLRB, 335
F.3d 1079, 1088 (D.C. Cir. 2003) (upholding rule that was
narrowly tailored to achieve the employer’s purpose without
chilling protected activity). Indeed, the Board openly invited
Quicken to revise its Confidentiality Rule to contain “the
language of lawful rules.” J.A. 162. In any event, Quicken’s
claim that some sub-portion of the covered information could
properly be protected does nothing to legitimate the
blunderbuss sweep of its existing rule.
12
Third, Quicken argues that the Board ignored that the
Rule’s “disputed language only protects non-public
information of co-workers.” Pet. Br. 29. That matters,
Quicken says, because the company “widely publicize[d]
information related to what it pays employees, its
compensation structure, benefits plans, and virtually all other
terms and conditions of employment,” so (in Quicken’s view)
no employee would construe the Rule as preventing the
disclosure of similar information to co-workers or union
organizers. Id. at 30. The problem with that argument is that
the so-called “widely publicized” personnel information to
which Quicken refers is little more than a general description
on its recruiting website of the mortgage banker position and
the generic salary and benefits packages that might be
available to successful applicants. See id. at 4–6. It beggars
belief—or so the Board could reasonably find—that
Quicken’s mortgage bankers would view the company’s
publication of such generalized information as relaxing the
Rule’s explicit and absolute prohibition against employees
disclosing all manner of “personnel information,” including
actual employee pay and benefits. J.A. 33.
Quicken also claims that contact information for
mortgage bankers would not be understood to be “non-public”
because it is available on an internal company website. Pet.
Br. 3–4. That makes no sense. Information that is only
available internally is, by definition, not “public.”
Quicken next argues that identities, work addresses, and
work phone numbers of its mortgage bankers are available
through publicly accessible third-party databases. See Pet. Br.
3–4. That misses the point. The Section 7 problem is that
Quicken cannot forbid employees to themselves discuss and
disclose personnel information bearing on their investigation
and discussion of employment conditions or organizational
13
efforts. Nor can Quicken compel employees to hazard
potentially career-imperiling guesses about whether the
Employment Agreement—that Quicken unilaterally drafted
and required them to sign—means what it says and says what
it means.
B
The Non-Disparagement Rule similarly flies in the teeth
of Section 7. That Rule, by its plain terms, bars mortgage
bankers from “publicly criticiz[ing], ridicul[ing],
disparag[ing] or defam[ing] the Company or its products,
services, policies, directors, officers, shareholders, or
employees” in any written or oral statement, including on the
internet or even in private emails. J.A. 29. The Board quite
reasonably found that such a sweeping gag order would
significantly impede mortgage bankers’ exercise of their
Section 7 rights because it directly forbids them to express
negative opinions about the company, its policies, and its
leadership in almost any public forum. See Guardsmark, 475
F.3d at 374–375 (striking down rule that only allowed
employees to complain internally); Hills and Dales General
Hospital, 360 NLRB No. 70, 2 (2014) (invalidating a
workplace rule requiring employees to represent the company
“in a positive and professional manner” because it would
“discourage employees from engaging in protected public
protests of unfair labor practices, or from making statements
to third parties protesting their terms and conditions of
employment”); KSL Claremont Resort, Inc., 344 NLRB 832,
832 (2005) (invalidating rule that prohibited “negative
conversations about associates or managers” because
employees would reasonably construe it to bar “discussing
with their coworkers complaints about their managers that
affect [their] working conditions”).
14
Quicken claims (Pet. Br. 38) that employees would read
the Rule as welcoming public complaints because the Rule
references the company’s “internal procedures for complaints
and disputes to be addressed and resolved,” J.A. 29. Quite the
opposite. Pointing employees to an internal process for
venting their complaints underscores that—as the Rule plainly
says—employees may not air their grievances in public.
Quicken also notes that the Rule contains an exception
for “statutorily privileged” statements that are “made to
government or law enforcement agencies.” J.A. 29. That
only digs the hole deeper. The very narrowness of the
exception emphasizes to employees that disclosures to non-
governmental personnel—like co-workers and union
officials—are forbidden.
Quicken’s next argument is that mortgage bankers are
supposed to know that they can pursue their disputes with the
company “in public forums” because another section of the
Employment Agreement contains a clause identifying the
courts in which suits relating to the Agreement and other
employment matters must be brought. Pet. Br. 38 (citing J.A.
30). It should go without saying that an employer’s selection
of the courts in which it can be sued is not the same at all as
permitting workers to voice their employment complaints
publicly.
Finally, Quicken stresses the absence of evidence that
Quicken actually enforced the Non-Disparagement Rule to
restrict mortgage bankers’ rights under the National Labor
Relations Act. That is beside the point. The absence of
enforcement could just as readily show that employees had
buckled under the Employment Agreement’s threat of
enforcement. “[H]aving concluded that employees would
reasonably read the rule to prohibit [the exercise of Section 7
15
rights], the Board had no need to consider the absence of
enforcement” in concluding that the rule violates the Act.
Guardsmark, 475 F.3d at 377; see id. at 374 (The “mere
maintenance” of a challenged rule can violate Section 8(a)(1)
“even absent evidence of enforcement[.]”).
III
Quicken also lodges a procedural complaint, arguing that
the Board erroneously excluded its evidence about whether
Garza (i) actually read the Employment Agreement prior to
filing her charge; (ii) subjectively believed that the Agreement
forbade protected conduct; (iii) believed she had violated the
Confidentiality and Non-Disparagement Rules; or (iv)
discussed the Agreement with her managers or supervisors at
Quicken. Quicken also sought to introduce evidence of its
recruitment methods for mortgage bankers and the types of
employment information available on the internal company
website.
The Board’s evidentiary rulings must be sustained unless
they were an abuse of discretion and unduly prejudiced the
complaining party. See Salem Hospital Corp. v. NLRB, 808
F.3d 59, 67–68 (D.C. Cir. 2015). Reversible prejudice exists
only if admission of the excluded evidence would have
“‘compel[led] or persuade[d] to a contrary result.’” Reno
Hilton Resorts v. NLRB, 196 F.3d 1275, 1285 n.10 (D.C. Cir.
1999) (quoting Cooley v. FERC, 843 F.2d 1464, 1473 (D.C.
Cir. 1988)).
The Board’s evidentiary determination was not even
close to an abuse of discretion. Because the governing legal
inquiry was whether Quicken’s Rules on their face or as
understood by a reasonable employee would chill the exercise
of Section 7 rights, Quicken’s proffered evidence about how
Garza in particular understood the Rules or reacted to them
16
was off the mark. See Cintas Corp., 482 F.3d at 467(Evidence of “employees’ actual interpretation of the
confidentiality rule” is not “required to support the Board’s
conclusion that the rule is overly broad and thus unlawful[.]”).
Likewise, Quicken’s argument about the relevance of its
recruitment methods and the availability of some personnel
information on its internal website simply recycles the
already-rejected claim that those crumbs of information cured
the Confidentiality Rule’s plain prohibition on protected
employee communications.
In sum, because Quicken’s arguments misconceive the
relevancy of information under the governing legal test, the
evidence’s exclusion was both proper and entirely non-
prejudicial.
IV
The Board appropriately determined that employees
would reasonably construe the sweeping prohibitions in
Quicken’s Confidentiality and Non-Disparagement Rules as
trenching upon their rights to discuss and object to
employment terms and conditions, and to coordinate efforts
and organize to promote employee interests. Accordingly, the
Board properly concluded that Quicken’s adoption and
maintenance of those Rules ran afoul of Sections 7 and
8(a)(1) of the National Labor Relations Act, 29 U.S.C.
§§ 157, 158(a)(1). The Board’s evidentiary rulings were also
well within the bounds of its discretion. We therefore deny
Quicken’s petition for review and grant the Board’s cross-
application for enforcement.
So ordered.