University of Southern CA v. NLRB ( 2019 )

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued September 5, 2018 Decided March 12, 2019
No. 17-1149
UNIVERSITY OF SOUTHERN CALIFORNIA,
PETITIONER
v.
NATIONAL LABOR RELATIONS BOARD,
RESPONDENT
SERVICE EMPLOYEES INTERNATIONAL UNION, LOCAL 721,
CTW, CLC,
INTERVENOR
Consolidated with 17-1171
On Petition for Review and Cross-Application for
Enforcement
of an Order of the National Labor Relations Board
J. Al Latham Jr. argued the cause for petitioner. With him
on the briefs was Cameron W. Fox.
Jessica L. Ellsworth and Joel Buckman were on the brief
for amicus curiae The American Council on Education and
seven other education associations in support of petitioner.
2
Heather S. Beard, Attorney, National Labor Relations
Board, argued the cause for respondent. On the brief were Peter
B. Robb, General Counsel, John W. Kyle, Deputy General
Counsel, Linda Dreeben, Deputy Associate General Counsel at
the time the brief was filed, Usha Dheenan, Supervisory
Attorney, and Joel A. Heller, Attorney. John H. Ferguson,
Assistant General Counsel, entered an appearance.
Maria Keegan Myers argued the cause for intervenor
Service Employees International Union, Local 721, CTW,
CLC. With her on the brief were Glenn E. Rothner and Hannah
S. Weinstein.
Michael S. Wolly was on the brief for amicus curiae The
American Association of University Professors in support of
respondent.
Before: TATEL and PILLARD, Circuit Judges, and
SENTELLE, Senior Circuit Judge.
Opinion for the Court filed by Circuit Judge TATEL.
TATEL, Circuit Judge: Almost four decades ago, in
N.L.R.B. v. Yeshiva University, 444 U.S. 672 (1980), the
Supreme Court sustained the National Labor Relation Board’s
extension of the protections of the National Labor Relations
Act to the faculty of private universities. The Court concluded,
however, that the full-time faculty seeking recognition in that
case qualified as managerial employees exempt from the
NLRA’s coverage because, as at other “‘mature’ private
universit[ies]” where “authority . . . is divided between a
central administration and one or more collegial bodies,” the
faculty at Yeshiva exercised “effective[] control” over central
university policies. Id. at 680, 683. In this case, the Board,
applying standards it set forth in its post-Yeshiva decision,
3
Pacific Lutheran University, 361 N.L.R.B. 1404 (2014), ruled
that the full- and part-time non-tenure-track faculty of the
University of Southern California’s (USC’s) Roski School of
Art and Design exercised no effective control over university
policies and, as non-managerial employees, were therefore
eligible to join a union. USC petitions for review, arguing,
among other things, that the Pacific Lutheran framework
conflicts in several different ways with Yeshiva. Because we
agree that one aspect of the Board’s decision here—namely, its
extension of Pacific Lutheran’s “majority status rule” to
faculty subgroups—conflicts with Yeshiva, we grant the
petition in part and deny the Board’s cross-application for
enforcement.
I.
Designed by Congress to quell “industrial strife” and its
harmful effects on the “channels of commerce,” the National
Labor Relations Act aimed to stabilize industry by vesting
industrial workforces with new labor rights. See Pub. L.
No. 74-198, § 1, 49 Stat. 449, 449 (1935) (codified as amended
at 29 U.S.C. § 151 et seq.). Congress sought to “redress the
perceived imbalance of economic power between labor and
management . . . by conferring certain affirmative rights on
employees and by placing certain enumerated restrictions on
the activities of employers.” American Ship Building Co. v.
N.L.R.B., 380 U.S. 300, 316 (1965). “The central purpose of
[the NLRA] was to protect employee self-organization and the
process of collective bargaining from disruptive interferences
by employers.” Id. at 317.
A.
Years after Congress passed the NLRA, the Supreme
Court issued two opinions central to the question before us in
this case. First, in N.L.R.B. v. Bell Aerospace Co. Division of
4
Textron Inc., the Court held that although the NLRA, by its
terms, covers all employees (except for supervisors and other
exemptions immaterial to this case, see 29 U.S.C. § 152(3),
(12)), it nonetheless excludes “managerial” employees from its
protections. 416 U.S. 267, 283–84 (1974). As the Court
explained, Congress “regarded [managers] as so clearly outside
the [NLRA] that no specific exclusionary provision was
thought necessary.” Id. at 283.
Second, in N.L.R.B. v. Yeshiva University, the Court
clarified for the first time that the NLRA covers university
employees and provided guidance about when university
faculties constitute managerial employees exempt from the
NLRA’s coverage. See 444 U.S. at 682–90. In doing so, the
Court distinguished between the “type of management-
employee relations that prevail in the pyramidal hierarchies of
private industry” and those that exist within a “typical ‘mature’
private university” where “authority . . . is divided between a
central administration and one or more collegial bodies”
composed of academic faculty. Id. at 680. Together,
administration and faculty may manage a university through a
system of shared governance—“‘the process by which various
constituents (traditionally governing boards, senior
administration, and faculty . . .) contribute to decision making
related to college or university policy and procedure.’”
American Council on Education’s (“ACE”) Br. 4 (alteration in
original) (quoting Association of Governing Boards of
Universities and Colleges, Shared Governance: Changing with
the Times 3 (Mar. 2017)). It was respect for the “shared
authority” that can be embedded in university governance,
paired with the need to safeguard the protections afforded by
the NLRA, that guided the Court in Yeshiva. See 444 U.S. at
680.
5
The facts of Yeshiva are straightforward. A union seeking
to represent most of the university’s full-time faculty filed a
representation petition, requesting that the Board certify it as
the faculty’s bargaining agent. Id. at 674–75. The university
argued that the faculty were managerial, but the Board found
otherwise. Id. at 678. Grounding its decision in the NLRA’s
protection of professional employees—a designation
encompassing employees engaged in “predominantly
intellectual” work, 29 U.S.C. § 152(12)—the Board found that
members of Yeshiva’s faculty were professional employees
who enjoy the NLRA’s protections, rather than exempted
managerial ones. Yeshiva, 444 U.S. at 678.
The Supreme Court disagreed. It pointed out that
“professionals, like other employees, may be exempted from
coverage . . . under the judicially implied exclusion for
‘managerial employees.’” Id. at 681–82. In non-university
settings, moreover, the Board classifies as exempted
managerial employees those individuals who “represent[]
management interests by taking or recommending
discretionary actions that effectively control or implement
employer policy.” Id. at 683. Therefore, the Court explained,
the same general analysis must guide the Board in the
university setting. Id. at 686. As relevant here, the Court
dismissed as inconsistent with these precedents the Board’s
arguments that faculty members were non-managerial because
they engaged in collective decision making (true of many
corporate managers working through boards and committees)
and because they enjoyed less than “ultimate” authority (held
in corporate settings by the board of directors). Id. at 684–85,
685 nn. 20–21.
Instead, the Court looked to the principles underlying the
managerial exception—namely, that managers fall outside the
NLRA’s protections because “an employer is entitled to the
6
undivided loyalty of its representatives.” Id. at 682. Unions
divide that loyalty, and the fear of compromised loyalty was
“particularly acute” at a university like Yeshiva, where the
faculty exercised “pervasive[]”—even “absolute”—control
over academic matters. Id. at 679, 686, 689. “The controlling
consideration in this case,” the Court explained, “is that the
faculty of Yeshiva University exercise authority which in any
other context unquestionably would be managerial.” Id. at 686.
Elaborating, the Court stated:
[The faculty’s] authority in academic matters is
absolute. They decide what courses will be offered,
when they will be scheduled, and to whom they will be
taught. They debate and determine teaching methods,
grading policies, and matriculation standards. They
effectively decide which students will be admitted,
retained, and graduated. On occasion their views have
determined the size of the student body, the tuition to
be charged, and the location of a school. When one
considers the function of a university, it is difficult to
imagine decisions more managerial than these. To the
extent the industrial analogy applies, the faculty
determines within each school the product to be
produced, the terms upon which it will be offered, and
the customers who will be served.
Id.With the Yeshiva faculty’s “absolute” academic authority
as a backdrop, the Court explained to the Board—in language
important to the issue before us today—how to identify
managerial faculty in future university cases. Faculty qualify
as managerial when they exercise “effective recommendation
or control” over central employer policies. Id. at 683 n.17.
Faculty exercise such control when a university “depends on
7
the [faculty’s] professional judgment . . . to formulate and
apply crucial policies constrained only by necessarily general
institutional goals,” particularly when the university “requires
faculty participation in governance.” Id. at 689.
That said, the Court took care to avoid “sweep[ing] all
professionals outside the [NLRA] in derogation of Congress’
expressed intent to protect them.” Id. at 690. Faculty are
protected by the NLRA if their “decisionmaking is limited to
the routine discharge of professional duties in projects to which
they have been assigned.” Id. Further cabining its holding, the
Court recognized that faculties are heterogeneous, and that
non-managerial subsets may exist within a faculty entrusted
with managerial authority. For instance, the Board might draw
a “rational line” between “tenured and untenured faculty
members.” Id. at 690 n.31. Such a distinction turns on “how a
faculty is structured and operates.” Id. In saying this, the Court
made clear that “this is a starting point only, and that other
factors not present here may enter into the analysis in other
contexts.” Id.B.
For several decades following Yeshiva, the Board, when
determining a given faculty’s managerial status, applied a
totality-of-the-circumstances approach informed by the
contours of that case. See, e.g., American International
College, 282 N.L.R.B. 189, 190–202 (1986) (discussing at
length whether the faculty at issue fell “within the scope of the
Supreme Court’s decision in [Yeshiva]”). But in LeMoyne-
Owen College v. N.L.R.B., 357 F.3d 55 (D.C. Cir. 2004), we
found the Board’s approach inadequate. There the Board had
classified the full-time faculty of a small private institution in
Memphis as non-managerial. Id. at 55–56, 60. Although the
Board had relied on the fact that circumstances at LeMoyne-
8
Owen were similar to those at other colleges where it had
classified faculty as non-managerial, we were concerned that
the Board failed to “discuss or even mention a single one of the
precedents on which the College relied.” Id. at 60. Ending our
analysis before reaching the managerial status of the college’s
faculty, we observed that, although the Board’s totality-of-the-
circumstances approach followed naturally from Yeshiva’s
“long list of relevant factors” paired with “the exquisite variety
of academic institutions across the country,” the Board must
provide an “adequate explanation for the result it reached in
this case.” Id. at 57, 61. We instructed the Board to delineate
“which factors are significant and which less so, and why” in
managerial-faculty determinations. Id. at 61. Doing so, we
explained, would afford faculty, universities, and reviewing
courts “predictability and intelligibility” concerning the
Board’s “[application of] the test to varied fact situations.” Id.;
see also Point Park University v. N.L.R.B., 457 F.3d 42, 50
(D.C. Cir. 2006) (reiterating this requirement in another faculty
case).
The Board endeavored to satisfy LeMoyne-Owen in
Pacific Lutheran University. Unlike Yeshiva, which involved
full-time faculty, Pacific Lutheran concerned a faculty
subgroup—specifically, full-time “contingent” (non-tenure
eligible) faculty. 361 N.L.R.B. at 1417. Drawing on its “30-
plus years applying Yeshiva” and echoing the Supreme Court’s
language, the Board used Pacific Lutheran as a platform to
launch a new test designed “to answer the question whether
faculty in a university setting actually or effectively exercise
control over decision making pertaining to central policies of
the university such that they are aligned with management.” Id.
Under the Pacific Lutheran framework for determining
whether faculty qualify as managerial, the Board “organize[s]
[its] review of faculty decision-making into five general areas”:
9
academic programs, enrollment management policies,
finances, academic policies, and personnel policies and
decisions. Id. The Board classifies the first three as “primary”
and the last two as “secondary.” Id. at 1420. Although faculty
participation in these areas takes various forms, under the
Pacific Lutheran framework the Board trains its focus on
participation through service on university committees, which
specialize in a given field and then propose policies to the full
faculty or to the university’s administration. See id. at 1424–28
(consistently analyzing faculty participation by looking to
faculty committees).
Again echoing Yeshiva, the Board then considers whether
the faculty exercise “actual control or effective
recommendation” authority over each of these five areas. Id.
at 1421. The test for “effective” control is demanding:
“recommendations must almost always be followed by the
administration. Further, faculty recommendations are
‘effective’ if they routinely become operative without
independent review by the administration.” Id. (internal
citation omitted). Intent on ensuring that faculty exercise
“actual—rather than mere paper—authority,” Pacific Lutheran
requires “specific evidence” of the process by which the
administration adopts faculty recommendations. Id. Under
Pacific Lutheran, the Board looks at “both the structure of
university decisionmaking and where the faculty at issue fit
within that structure, including the nature of the employment
relationship.” Id. at 1421–22. Relevant distinctions include
“tenured vs. tenure eligible vs. nontenure eligible” and “regular
vs. contingent” faculty members. Id. at 1422. Rather than
requiring that managerial faculty control some set number of
decision-making areas, Pacific Lutheran calls for a holistic
review of the control exerted over the five areas. See id. at 1423
(noting that to determine managerial status the Board will
assess faculty’s control “over those areas”).
10
Beyond these context-specific inquiries, and central to this
case, Pacific Lutheran sets a bright-line “majority status rule”
under which a committee’s actual control or effective
recommendation authority over a particular decision-making
area may be ascribed to faculty only if they constitute a
majority of that committee: “[i]f faculty members do not exert
majority control, we will not attribute the committee’s conduct
to the faculty.” Id. at 1421 n.36.
Applying this framework to the situation at Pacific
Lutheran, the Board determined that the contingent faculty
were non-managerial. Although the university had recently
allowed contingent faculty to sit on committees, no such
faculty members had yet joined a committee and, in any event,
it appeared that they would have had no “right to vote within
their respective divisions, schools, or constituent departments.”
Id. at 1424, 1427–28. Contingent faculty did participate in and
have a vote at the faculty assembly, but the Board characterized
the assembly as “little more than a conduit to transmit
previously agreed-upon recommendations to the
administration” and observed that contingent faculty
comprised only about twenty percent of the faculty assembly’s
average attendees. Id. at 1428. According to the Board, the
nature of the contingent faculty members’ employment
relationship with the university also counseled against a finding
of managerial status. In contrast to Yeshiva, where the
university “require[d] faculty participation in governance,” 444
U.S. at 689, the Pacific Lutheran administration rarely
discussed with contingent faculty its expectations for their
university service, such as committee participation, see Pacific
Lutheran, 361 N.L.R.B. at 1423. Contingent faculty had to
renew their contracts annually and received minimal
institutional support (such as funding for professional
development or research). Id.
11
In considering whether faculty held a majority of
committee seats, the Board left uncertain whether the majority
status rule applied to the contingent faculty only or to the
faculty as a whole. Even if contingent faculty members sat on
committees, the Board observed, “they would be a minority on
the . . . committee[s] as their membership is currently
structured.” Id. at 1428. Because the faculty as a whole
constituted a minority on all of these committees, id. at 1424,
however, the significance of this observation was unclear.
Two Board members—Phillip Miscimarra and Harry
Johnson—separately dissented in part. They “generally
agree[d]” with the Board’s “admirable effort” to craft distinct,
workable decision-making areas. Id. at 1430 (Miscimarra,
Member, concurring in part and dissenting in part), 1441
(Johnson, Member, dissenting). Uncertain about how the
Board would weigh the “primary” and “secondary” areas in
future cases, however, the dissenters believed that “substantial”
authority in secondary areas—unaccompanied by effective
control over any of the three primary areas—may sometimes
be sufficient to trigger managerial status. Id. at 1429–30
(Miscimarra, Member, concurring in part and dissenting in
part); see also id. at 1441–42 (Johnson, Member, dissenting).
The dissenters focused primarily on Pacific Lutheran’s
“treatment of authority, control, and effective
recommendation” authority, which they considered “too
onerous and inflexible.” Id. at 1430 (Miscimarra, Member,
concurring in part and dissenting in part). According to the
dissenters, the Pacific Lutheran framework demands too much
because it requires that the administration “almost always”
follow faculty recommendations. Id. at 1430 (Miscimarra,
Member, concurring in part and dissenting in part), 1443
(Johnson, Member, dissenting). “[B]y failing to consider the
actual, diverse processes of university business operations and
12
governance,” Johnson argued, Pacific Lutheran “raised the bar
for establishing managerial status of faculty to an unattainable
height.” Id. at 1442–43. He also believed that the Board had
fashioned “a false dichotomy” when it held that committees
exercise effective control only if administrators routinely
accept the committees’ recommendations and do so without
independent review. Id. at 1443–44. Such a rule, he contended,
flouts the ideal of universities as “places rich in dialogue”
between the administration and faculty. Id. at 1444.
C.
The University of Southern California, a large private
university in Los Angeles, has twenty-two schools, some 6,600
faculty, and between 30,000 and 40,000 students. One of these
schools, the Gayle Garner Roski School of Art and Design
(“Roski”)—the venue for the dispute before us—offers
undergraduate and graduate degrees in fine arts and critical
studies, among others. See University of Southern California
(“USC”), 365 N.L.R.B. No. 11, at *7 (Dec. 30, 2016). In 2015,
the Service Employees International Union, Local 721
(“Union”) petitioned to represent Roski’s full- and part-time
non-tenure-track faculty. Id. at *5.
Reprising the battle lines drawn in Yeshiva, USC
contended that the Roski non-tenure-track faculty were
managerial, and the Union disagreed. In a decision adopted by
the Board without opinion, the Regional Director, applying the
Pacific Lutheran framework, found the Roski non-tenure-track
faculty non-managerial. See id. at *1, *18.
The Regional Director began by addressing several issues
left unresolved in Pacific Lutheran. She first confirmed what
the Board had hinted in that case: to exercise effective control
over a committee, the faculty subgroup seeking recognition—
not just the faculty as a whole—must hold a majority of
13
committee seats. “[E]ven if the faculty on [either committee]
could be said to actually or effectively control decisionmaking
. . . , I would not attribute that control to the nontenure track
faculty at issue here, as they do not constitute a majority of
either committee.” Id. at *16. Second, although Pacific
Lutheran left ambiguous whether, for a committee to exercise
effective control, the administration must “almost always”
accept a committee’s recommendations and those
recommendations must “routinely become operative without
independent review,” Pacific Lutheran, 361 N.L.R.B. at 1421,
or whether just one or the other would do, the Regional
Director indisputably required both: “The Board also clarified
that for faculty recommendations to be ‘effective,’ the
administration must ‘almost always’ adopt the
recommendations, and do so ‘routinely’ without independent
review.” USC, 365 N.L.R.B. at *15. Third, the Regional
Director determined that exercising effective control over one
secondary area “alone” is insufficient to trigger faculty
managerial status. Id. at *17. By affirming the Regional
Director’s decision, the Board has, in effect, adopted these
interpretations as its own. See id. at *1 n.1 (“The Regional
Director’s decision properly applied [Pacific Lutheran].”).
Applying this interpretation of Pacific Lutheran, the
Regional Director classified the Roski non-tenure-track faculty
as non-managerial. For purposes of determining effective
control, the Regional Director centered her discussion around
a dozen or so university-wide committees and other USC
faculty bodies, including the Roski school-level faculty
council, that USC contends provide faculty with opportunities
to weigh in on university governance. Id. at *15–18. The
committees conduct studies, write reports, and make
recommendations to either the Academic Senate or the provost.
Id. at *8. The University Committee on Curriculum, for
instance, approves, rejects, or modifies every proposed USC
14
course, program, major, minor, and degree offering. Id. at *9,
*15. Although the Committee on Finance and Enrollment has
made only a few recommendations, those recommendations
have involved significant issues, including the creation of a
university-wide plan to address graduate student enrollment,
whether to maintain a holistic review process for undergraduate
student admissions, and the payout rate of USC’s endowment.
Id. at *10, *16–17. Other committees make recommendations
on academic programs, teaching guidelines, software upgrades,
grading policies, appointments, promotions, and tenure
decisions. Id. at *8–13.
Most USC university-wide and school-specific
committees are open to all faculty members, including non-
tenure track, though non-tenure-track faculty are excluded
from decisions concerning tenure. Id. at *11. Committees are
almost 100 percent faculty, although some faculty also have
administrative appointments. Administrators occasionally sit
“ex officio” on committees where they have no vote. See id.
at *8–13.
Looking at all committees relevant to each of the five
decision-making areas, the Regional Director determined that
USC had failed to show that the faculty serving on these
committees exercised effective control over any decision-
making area. Id. at *18; see also Pacific Lutheran, 361
N.L.R.B. at 1427 n.65 (noting that the party asserting
managerial status assumes the burden of proof). In support, she
found that USC had failed to provide “specific evidence,” as
required by Pacific Lutheran, 361 N.L.R.B. at 1421, of the type
of review the administration conducted of the committees’
recommendations before accepting them. See USC, 365
N.L.R.B. at *15–18. She also found that the testimony
concerning the work of some committees was vague, see id. at
*15, 17–18, as was the testimony about the decision-making
15
authority of other committees, see id. For still other
committees, she found that they had offered too few
recommendations to characterize their recommendations as
“routinely” followed. See id. at *16.
In further support of her conclusion that the Roski non-
tenure-track faculty exercised no effective control, the
Regional Director found that the nature of their “tenuous
employment” relationship “limit[s]” their role at the university.
Id. at *18. Though non-tenure-track faculty are eligible to join
any committee and make up about three-fourths of the USC
faculty, they represent a minority on almost every committee.
Id. at *7–9. They receive little to no institutional support in the
form of funding, evaluations, or other career guidance; “[i]n
fact, [non-tenure-track faculty witnesses] testified that
administrators in their departments or schools have never met
with them to discuss expectations about their teaching, their
scholarship or artistic work, or their service to the University.”
Id. at *8.
Following her discussion of most every committee
(including all committees in the three primary areas), the
Regional Director also found that, even if the relevant
committees exercised effective control, “nontenure track
faculty do not constitute a majority of [those] committee[s].”
Id. at *17. Therefore, “they cannot be found to possess any
managerial control.” Id.
Upon finding both that no committee exercised effective
control and that the Roski non-tenure-track faculty held a
minority of seats on the key committees, the Regional Director
concluded that USC had “failed to establish that the full-time
and/or part-time nontenure track faculty at . . . the Roski School
actually or effectively exercise control over decision making
pertaining to central policies of the university.” Id. at *18. As
16
noted, on a request for review, the Board adopted the Regional
Director’s opinion in full. Id. at *1 & n.1.
Member Miscimarra, one of the Pacific Lutheran
dissenters, again disagreed. Asserting that the Board holds
managers in other industries to a lower standard, Miscimarra
faulted the Board for ascribing managerial status to only those
faculty with “unreviewable authority.” Id. at *2 (Miscimarra,
Member, dissenting). He also believed that the Court in
Yeshiva had rejected the idea that possessing a majority of
committee seats was a prerequisite for exercising effective
control over a committee. He put it this way:
[Yeshiva] held that a faculty member may possess
managerial authority even though he or she cannot
individually establish policy separate from the
committees on which he or she serves. Similarly,
faculty members in an individual department or
program may be managerial, even if as a group they
are a minority of the total faculty and are outnumbered
and outvoted on every issue.
Id. at *3–4. In Miscimarra’s view, extension of the majority
status rule to determine the managerial status of a faculty
subgroup conflicts with “the principle of collegial managerial
authority that the Supreme Court recognized in Yeshiva.” Id.
at 3.
Following the Regional Director’s decision and the
Board’s adoption of it, the Roski non-tenure-track faculty
voted to form a bargaining unit represented by the Union.
When USC refused to bargain—an unfair labor practice under
the NLRA, see 29 U.S.C. § 158(a)(5)—the Union filed a
complaint with the Board. USC acknowledged its refusal to
bargain, and challenged the certification on the grounds that
Pacific Lutheran conflicts with Yeshiva and that the Roski non-
17
tenure-track faculty in fact exercise managerial authority. The
Board granted summary judgment to the Union. See University
of Southern California, 365 N.L.R.B. No. 89, at *1 (June 7,
2017).
In its petition for review, USC makes three basic
arguments. First, it argues that several elements of the Pacific
Lutheran framework, as applied in this case, conflict with
Yeshiva: its requirement that a faculty subgroup must hold a
majority of committee seats in order to exercise effective
control through a committee, its standard for “effective”
control, and its classification of the five decision-making areas
as primary or secondary. Whether the Pacific Lutheran
framework comports with Yeshiva is an issue of first
impression given that the university in Pacific Lutheran never
petitioned for review and that no other circuit has yet
considered the question. Second, USC argues that, contrary to
LeMoyne-Owen, the Pacific Lutheran framework fails to
provide a workable standard to determine the managerial status
of faculty. And third, even assuming the validity of the Pacific
Lutheran framework, USC argues that the Regional Director
lacked substantial evidence to classify the Roski non-tenure-
track faculty as non-managerial.
In considering USC’s challenges, we defer to the Board’s
judgment, born of its expertise, so long as its decision is
“consistent with controlling precedent,” based on “substantial
evidence,” and neither “arbitrary” nor “capricious.”
International Union of Operating Engineers, Local 147 v.
N.L.R.B., 294 F.3d 186, 188 (D.C. Cir. 2002); see also 5 U.S.C.
§ 706(2)(A); N.L.R.B. v. Curtin Matheson Scientific, Inc., 494
U.S. 775, 786 (1990) (explaining that because “the NLRB has
the primary responsibility for developing and applying national
labor policy,” courts will uphold any rule that is “rational and
consistent with the [NLRA], even if we would have formulated
18
a different rule had we sat on the Board” (internal citation
omitted)).
II.
We begin with USC’s argument that the Pacific Lutheran
framework—and consequently, the decision at issue here—is
“[in]consistent with controlling precedent,” i.e., that it conflicts
with the Supreme Court’s decision in Yeshiva. But as even its
dissenters acknowledge, Pacific Lutheran represents an
“admirable effort” by the Board to tame a thicket of case law
that touches on numerous interrelated features of the faculty
experience at universities. Pacific Lutheran, 361 N.L.R.B. at
1441 (Johnson, Member, dissenting). And for the most part,
that effort succeeds. There is, however, a major problem.
Under Pacific Lutheran, as interpreted by the Board in this
case, a faculty subgroup seeking recognition exercises effective
control over a decision-making area through its participation
on a committee only when that subgroup constitutes a majority
of the committee. See Pacific Lutheran, 361 N.L.R.B. at 1421
n.36; USC, 365 N.L.R.B. at *16. This rule, which we shall refer
to as the “subgroup majority status rule,” is critical because, as
discussed above, see supra at 9, the Board generally looks to a
faculty’s authority at the committee level when determining
whether the faculty exercise effective control over Pacific
Lutheran’s five decision-making areas.
USC first claims that the subgroup majority status rule
resurrects the theory, foreclosed by Yeshiva, that faculty can
attain managerial status based only on authority wielded
individually, as opposed to authority shared collectively with
others. See Yeshiva, 444 U.S. at 685 & n.21 (criticizing the
theory as “flatly inconsistent” with Board precedents that credit
managerial authority to “supervisors who work through
committees”). But in neither Pacific Lutheran nor here did the
19
Board run afoul of that precise holding. Indeed, the Board
agrees that faculty can exercise managerial authority
collectively. See Respondent’s Br. 37 (“Faculty who constitute
the majority of a committee can be managerial based on their
service on that committee, even though the authority they
exercise there is collective.”). The extension of Pacific
Lutheran’s majority status rule to faculty subgroups instead
reflects the Board’s belief that a subgroup, acting collectively,
is unable to exercise managerial authority through a committee
when that subgroup holds a minority of committee seats.
Assuming that understanding of the Board’s subgroup
majority status rule, USC next argues that the rule “simply
disregard[s]” the contributions that minority subgroups can
make to university governance. Petitioner’s Br. 34. Under the
majority status theory, USC continues, even when a university
draws “no distinction” between faculty subgroups “in their
roles in faculty governance,” including situations where the
subgroups “all participate in the effective management of the
University,” the Board will “arbitrarily say that one category
must be in the majority[,] . . . necessarily . . . render[ing] the
other category non-managerial—when in fact, all are
managerial.” Id. at 38 (emphases omitted). Because a
subgroup’s “ability to invoke the rights or protections of the
[NLRA] should not hinge on whether some other group of
faculty control or effectively recommend university policy,”
the Board’s response goes, it would be inappropriate to deny a
subgroup the NLRA’s protections when an entirely different
group of faculty, concerned about advancing its own priorities
rather than the subgroup’s, runs the show. Respondent’s Br. 35
(emphasis in original).
In our view, the Board’s subgroup majority status rule
rests on a fundamental misunderstanding of Yeshiva. To
20
explain why, we return to the Court’s opinion and specifically
to three key themes.
First, as noted above, the Court drew a sharp distinction
between the “pyramidal” hierarchies characteristic of private
industry and the faculty “bodies” at universities. Yeshiva, 444
U.S. at 680. “[T]he authority structure of a university does not,”
the Court explained, “fit neatly within the statutory scheme we
are asked to interpret,” and for that reason, “the Board has
recognized that principles developed for use in the industrial
setting cannot be ‘imposed blindly on the academic world.’”
Id. at 680–81 (quoting Syracuse University, 204 N.L.R.B. 641,
643 (1973)). In the “pyramidal” industrial arena, the Board
looks to whether individuals, or groups of individuals, exercise
managerial authority. Id. at 680. By contrast, the Court in
Yeshiva returned time and again to the question of whether the
“faculty” as a body—as opposed to individual professors or
subgroups—exercises managerial authority. To the Court, the
“controlling consideration” was that the “faculty at Yeshiva
University exercise authority which in any other context
unquestionably would be managerial.” Id. at 686 (emphasis
added). “The ‘business’ of a university is education,” the Court
explained, “and its vitality ultimately must depend on academic
policies that largely are formulated and generally are
implemented by faculty governance decisions.” Id. at 688
(emphasis added). Continuing its focus on the “faculty” as a
body, the Court observed that “[t]he university requires faculty
participation in governance”; that “Yeshiva and like
universities must rely on their faculties to participate in the
making and implementation of their policies”; and that “[t]he
faculty participate in University-wide governance through their
representatives on an elected student-faculty advisory council.”
Id. at 675–76, 689 (emphasis added).
21
These repeated references to the “faculty” as a body are
not linguistic accidents; they are central to the Court’s
reasoning. Take the Court’s discussion of the bedrock principle
underlying the managerial exception: that employers deserve
the loyalty of employees who exercise discretionary authority
over central employer policies. Id. at 687–88. Highlighting that
the faculty functions as a single body, the Court observed that
if, consistent with principles of shared governance, the
university “depends on the professional judgment of its faculty
to formulate and apply crucial policies,” then the university
deserves those employees’ “undivided loyalty,” which in turn
triggers managerial status. Id. at 682, 689 (emphasis added).
The Court’s analysis turned not on an aggregation of the power
delegated to a series of individuals or a mosaic of subgroups—
the focus of the Board’s subgroup majority status rule—but
rather on the role played by the faculty as a body.
Reinforcing this idea—and this is Yeshiva’s second
theme—the Court repeatedly stressed the importance of
collegiality. “[A]uthority in the typical ‘mature’ private
university,” the Court explained, is split between the
administration and “one or more collegial bodies.” Id. at 680.
The Court observed that “[t]he Board itself has noted that the
concept of collegiality ‘does not square with the traditional
authority structures with which th[e] [NLRA] was designed to
cope,’” and that “traditions of collegiality continue to play a
significant role at many universities.” Id. (second alteration in
original) (quoting Adelphi University, 195 N.L.R.B. 639, 648
(1972)).
The Board’s subgroup majority status rule is unfaithful to
this critical aspect of Yeshiva. It ignores the possibility that
faculty subgroups, despite holding different status within the
university, may share common interests and therefore
effectively participate together as a body on some or all of the
22
issues relevant to managerial status. It is entirely plausible that,
for example, non-tenure-track faculty, especially full-time non-
tenure-track faculty, would agree with tenure-track faculty on
questions of course offerings, academic integrity, and grading
policies. Yet the Board’s subgroup majority status rule
presupposes that non-tenure-track faculty have no authority
over such matters unless they constitute a majority of the
relevant committee. Of course, the interests of some minority
faculty subgroups may differ from the majority on certain
issues, such as with respect to promotion and salary. That,
however, is precisely where the concept of collegiality comes
into play. Disregarding this fundamental characteristic of
university governance, the Board’s subgroup majority status
rule assumes that minority subgroups can never work out their
differences with the majority.
Taken together, these two themes of Yeshiva—a focus on
the faculty as a body and an emphasis on collegiality—
demonstrate that the question the Board must ask is not whether
a particular subgroup can force policies through based on crude
headcounts, but rather whether that subgroup is structurally
included within a collegial faculty body to which the university
has delegated managerial authority. This reading finds support
in Yeshiva’s third theme: the Court’s guidance on how the
Board should approach situations where the faculty members
seeking recognition constitute a subgroup, such as in this case
(non-tenure-track) and in Pacific Lutheran (contingent).
Employees, the Court explained, may not be considered
management and thus excluded from the NLRA’s coverage if
their “decisionmaking is limited to the routine discharge of
professional duties in projects to which they have been
assigned.” Yeshiva, 444 U.S. at 690. Indeed, the Court noted
that there may have been “faculty members at Yeshiva” itself
“who properly could be included in a bargaining unit.” Id. at
690 n.31. For example, “a rational line could be drawn between
23
tenured and untenured faculty members, depending upon how
a faculty is structured and operates.” Id. Put another way, the
question the Board must ask is not a numerical one—does the
subgroup seeking recognition comprise a majority of a
committee—but rather a broader, structural one: has the
university included the subgroup in a faculty body vested with
managerial responsibilities? To answer this question, the Board
must, as required by Yeshiva, examine how the faculty is
“structured” and “operates,” as well as the duties employees
have been “assigned.” For example, as in Yeshiva, does the
university “require” faculty members to participate in
committees? If this analysis demonstrates that the subgroup
seeking recognition is structurally part of a faculty body to
which the university has delegated managerial authority, then,
apart from several exceptions we shall discuss below, that ends
the matter: the subgroup is managerial regardless of whether its
members constitute a majority of the relevant committees or
whether they even participate at all.
Two additional considerations support this understanding
of Yeshiva.
First, the Court relied on a line of Board decisions from the
private sector holding that it is possible for minority employee
shareholders “who owned enough stock to give them, as a
group, a substantial voice in the employer’s affairs” to exercise
effective control, even absent majority control. Yeshiva, 444
U.S. at 685 n.21. Indeed, the Board itself has recognized that it
“has excluded groups of shareholder-employees from
bargaining units even though they collectively owned less than
half of the employers’ stock.” Upper Great Lakes Pilots, Inc.,
311 N.L.R.B. 131, 132 n.9 (1993). Although the Board cites
these cases in its brief while discussing this very issue, it fails
to acknowledge their inconsistency with its subgroup majority
status rule.
24
Second, and quite apart from Yeshiva, we just cannot see
how the subgroup majority status rule will work. As USC
notes, “the make-up of a particular committee will necessarily
change from year to year. If only the majority category is
managerial, then from one year to the next, different categories
of perfectly managerial faculty could be deemed non-
managerial for no other reason than a one- or two-person swing
on a committee roster.” Petitioner’s Br. 38. In his dissent,
Member Miscimarra pointed out that, under the subgroup
majority status rule, slicing and dicing the faculty in different
ways—by tenure status, school, seniority, etc.—may allow
“even faculty who indisputably exercise managerial authority”
to qualify as non-managerial. USC, 365 N.L.R.B. at *4 & n.7
(Miscimarra, Member, dissenting). In its amicus brief, the
American Council on Education likewise warns that “any
group of faculty can be sub-divided until it no longer
commands a majority.” ACE Br. 27. The subgroup majority
status rule contributes to this strategic division of faculties;
Yeshiva’s structural approach avoids it.
That said, whether an individual subgroup possesses a
majority of committee seats is not always irrelevant. Quite to
the contrary, determining whether a subgroup holds a decisive
bloc of committee seats may be necessary where a subgroup’s
interests fundamentally diverge from those of the majority.
Although the Court in Yeshiva emphasized the value of faculty
collegiality, there may well be issues on which the interests of
the subgroup and the faculty as a whole differ so significantly
that they cannot be reconciled even through collegial
compromise. Under such circumstances, which the Board can
identify only through a careful analysis of how the faculty
seeking recognition actually functions, the Board might
appropriately conclude that the subgroup cannot exercise
effective control unless it constitutes a majority of the relevant
committees. Likewise, if a subgroup that the university expects
25
to participate in a committee nonetheless fails to do so, this may
signal the presence of structural barriers to that group’s
participation. In this case, for example, the Board may well be
correct that there is something about the status of non-tenure-
track faculty, especially part-time non-tenure-track, that
effectively silences any managerial “voice,” Pacific Lutheran,
361 N.L.R.B. at 1423, that such faculty otherwise might
possess. See Yeshiva, 444 U.S. at 690 n.31 (acknowledging that
“other factors not present here,” such as tenure status, “may
enter into the analysis in other contexts”).
To be sure, the Pacific Lutheran framework accounts for
these factors (diverging interests and the nature of non-tenure-
track employment). See 361 N.L.R.B. at 1421–22 (looking at
the “nature of the employment relationship,” including
“tenured vs. tenure eligible vs. nontenure eligible”). But
Pacific Lutheran, as interpreted by the Board in this case, runs
afoul of Yeshiva by using these factors as part of a
determination focused on whether the petitioning subgroup
alone exercises effective control. The Board should instead, as
required by Yeshiva, think of this analysis as having two
distinct inquiries: whether a faculty body exercises effective
control and, if so, whether, based on the faculty’s structure and
operations, the petitioning subgroup is included in that
managerial faculty body. Only as part of the latter analysis
should the Board dig into whether a subgroup’s actual interests
diverge so substantially from those championed by the rest of
the faculty that holding a minority of seats on the relevant
committees is akin to having no managerial role at all, or
whether a subgroup’s low participation rates stem from a
tenuous employment relationship that vitiates any managerial
role the university expects the subgroup to perform. See
Yeshiva, 444 U.S. at 674–77, 686 (examining closely the
specific operations at Yeshiva).
26
Of course, the Board has flexibility over how to organize
its analysis in any given case. In some situations, it might make
sense to address these two inquiries sequentially: is there a
managerial faculty body and, if so, is the petitioning subgroup
a part of it? But in other situations, it may be unnecessary for
the Board to consider whether a managerial faculty body exists
because, even assuming one did, the petitioning subgroup is so
clearly not included in it—because, for example, university
rules prohibit its participation in committees. The critical point
is this: however the Board proceeds, it must treat these two
inquiries separately and may not conflate them by asking
whether the petitioning subgroup alone exercises effective
control.
A final observation: in Pacific Lutheran, the Board
emphasized that since the Court decided Yeshiva some four
decades ago, universities “are increasingly run by
administrators” and rely more and more on non-tenure-track
faculty “who, unlike traditional faculty, have been appointed
with no prospect of tenure and often no guarantee of
employment.” Pacific Lutheran, 361 N.L.R.B. at 1422.
According to the Board, these trends “ha[ve] the effect of
concentrating and centering authority away from the faculty.”
Id. Building on this point, amicus American Association of
University Professors points out that “[r]ather than relying on
faculty expertise and recommendations, the growing ranks of
administrators increasingly make unilateral decisions on
university policies and programs, often influenced by
considerations of external market forces and revenue
generation.” American Association of University Professors’
Br. 10. By contrast, the American Council on Education,
though acknowledging these trends, emphasizes “the continued
primacy of shared governance.” ACE Br. 13. This is an
interesting debate, and it may even be relevant. Regardless of
national trends, however, the Board must not lose sight of the
27
fact that the question before it in any case in which a faculty
subgroup seeks recognition is whether that university has
delegated managerial authority to a faculty body and, if so,
whether the petitioning faculty subgroup is a part of that body.
As we explained in Point Park, this requires “an exacting
analysis of the particular institution and faculty at issue.” 457
F.3d at 48 (emphasis added).
Having thus concluded that the Board’s subgroup majority
status rule runs afoul of Yeshiva, we turn to USC’s challenge
to Pacific Lutheran’s standard for “effective” control.
III.
Recall that Pacific Lutheran announced the following
standard for determining when faculty exercise effective
control over decision making: “[T]o be ‘effective,’
recommendations must almost always be followed by the
administration. Further, faculty recommendations are
‘effective’ if they routinely become operative without
independent review by the administration.” 361 N.L.R.B. at
1421 (internal citations and footnote omitted). Filling a gap left
by the Board in Pacific Lutheran, the Regional Director
required that both elements—“almost always” followed and
“routinely” adopted “without independent review”—must be
satisfied to support an effective control finding. USC, 365
N.L.R.B. at *15. USC does not challenge the Regional
Director’s conjunctive interpretation. Instead, drawing from
the Pacific Lutheran dissents, the university argues that “there
is no . . . logical conclusion” other than that the Pacific
Lutheran standard, as interpreted in USC, resurrects the
“ultimate authority” requirement for managerial status that
Yeshiva forbids. Petitioner’s Br. 33 (emphasis omitted); see
also Yeshiva, 444 U.S. at 685 & nn.20–21.
28
In Yeshiva, the Court held that, in order to qualify as
managerial, faculty must exercise “effective recommendation
or control” over central university policies. Yeshiva, 444 U.S.
at 683 n.17. The Yeshiva faculty met that standard, the Court
found, because their control was “substantial[] and
pervasive[]”: among other things, the faculty “decide[d] [what]
students will be admitted, retained, and graduated,” “decide[d]
what courses will be offered,” and “determine[d] teaching
methods, grading policies, and matriculation standards.” Id. at
679, 686. The Court also explained that faculty need not have
“final authority” in order to enjoy managerial status; a “rarely
exercised veto power” held by the administration “does not
diminish the faculty’s effective power.” Id at 683 n.17, 685.
We see nothing in the Board’s two-part standard for
“effective” control that runs afoul of Yeshiva. Although USC
argues otherwise, the Board’s standard does not require
“ultimate authority.” Quite to the contrary, its use of the phrase
“almost always” allows for occasional, or as the Court put it,
“rarely exercised,” vetoes. The word “routine” likewise leaves
room for some administrative review. True, the standard is
demanding, but it comports with Yeshiva, and we agree with
the Board that setting a high bar for effective control is
necessary to avoid interpreting the managerial exception so
broadly that it chips away at the NLRA’s protections. See
Pacific Lutheran, 361 N.L.R.B. at 1419 n.32 (“[W]e are
mindful of the fundamental principle that ‘exemptions from
[the NLRA’s] coverage are not so expansively interpreted as to
deny protection to workers the [NLRA] was designed to
reach.’” (quoting Holly Farms Corp. v. N.L.R.B., 517 U.S. 392,
399 (1996))). That said, the Board must be careful to apply its
effective control standard with sensitivity to the notion of
“collegial managerial authority that the Supreme Court
recognized in Yeshiva.” USC, 365 N.L.R.B. at *3 (Miscimarra,
Member, dissenting). “[T]raditions of collegiality continue to
29
play a significant role at many universities,” Yeshiva, 444 U.S.
at 680, and the Board’s test for effective control must
accommodate these traditions.
USC complains about a stray sentence in the Regional
Director’s opinion: “I am not convinced by the conclusory
evidence in the record that the Board of Trustees, for example,
would sign off without second thought on a tuition amount or
endowment payout based solely on the recommendation of a
newly-formed faculty committee that had never before
considered such issues.” USC, 365 N.L.R.B. at *17 (emphasis
added). According to USC, requiring that the administration
accept committee recommendations “without second thought”
sets an even higher bar for effective control than the one we
understand the Board to have established. Petitioner’s Br. 22.
Were this characterization of the Regional Director’s decision
accurate, we would share USC’s concerns. The Regional
Director, however, never suggested that her “without second
thought” statement amounted to a new requirement for
establishing effective control. Instead, she made the statement
in response to USC’s contention that the administration had in
fact accepted the newly formed Committee on Finance and
Enrollment’s recommendations on important financial matters
“without second thought.”
IV.
We can quickly dispose of USC’s remaining arguments.
First, regarding Pacific Lutheran’s classification of the
five decision-making areas as primary and secondary, USC
acknowledges that Yeshiva affords the Board leeway to design
these categories, but nonetheless argues that the Pacific
Lutheran framework inappropriately relegates academic and
personnel policies to secondary status while elevating finances
to primary status. Justifying the classification, the Board
30
explained that the primary areas, more so than the secondary
ones, touch the university as a whole, align faculty with
management, and affect the “product” the university offers—
all considerations taken from the Court’s discussion in Yeshiva.
Pacific Lutheran, 361 N.L.R.B. at 1420; see also Yeshiva, 444
U.S. at 675–77, 686, 690. Although we can imagine different
groupings of these factors, nothing in Yeshiva dictates the
outcome one way or the other, and the Board’s categorization
falls well within its discretion under the NLRA. Indeed, this is
precisely the type of line-drawing that the Board is “entitled”
to make “without our constant second-guessing.” N.L.R.B. v.
Kentucky River Community Care, Inc., 532 U.S. 706, 720
(2001).
USC next argues that, by leaving open exactly how many
of the five decision-making areas over which faculty must
exercise control in order to qualify as managerial, Pacific
Lutheran fails to satisfy this court’s instruction in LeMoyne-
Owen that it identify “which factors are significant and which
less so, and why.” 357 F.3d at 61. We disagree. At the time of
LeMoyne-Owen, the Board was engaging in a totality-of-the-
circumstances analysis that we feared might be nothing more
than “a cloak for agency whim.” Id. In response, the Board
developed the Pacific Lutheran framework, which provides
detailed standards for effective control, five precisely
articulated decision-making areas, a list of the relevant factors
within each area, and a prioritization of the areas. True, the
Board could have been more precise, but nothing in LeMoyne-
Owen requires it to have done so, especially because
managerial status determinations “do[] not lend [themselves]
to ex ante line drawing or a mathematical exercise in box
checking.” Respondent’s Br. 39.
Finally, USC argues that, even if the Pacific Lutheran
framework complies with Yeshiva, the Board’s classification of
31
the Roski non-tenure-track faculty as non-managerial was
unsupported by substantial evidence. Relatedly, USC argues
that the Regional Director erred in denying its motion to reopen
the record concerning allegedly contradictory testimony from
a Union witness. But given our conclusion that the Board’s
subgroup majority status rule runs afoul of Yeshiva, and
because we are uncertain whether the Board would have
reached the same conclusion absent that rule, we think it best
to leave these arguments unaddressed and to instead give the
Board an opportunity to reconsider the case afresh under the
proper legal standard. See Braniff Airways, Inc. v. Civil
Aeronautics Board, 379 F.2d 453, 466 (D.C. Cir. 1967)
(remanding to the agency because the “court [wa]s in
substantial doubt whether the administrative agency would
have made the same ultimate finding with the erroneous
findings or inferences removed from the picture” (internal
quotation marks omitted)).
V.
For the foregoing reasons, the petition for review is
granted in part, the Board’s cross-application for enforcement
is denied, and the case is remanded to the Board for further
proceedings consistent with this opinion. We, of course,
express no opinion as to whether the application of the differing
standard on remand would lead to the same or a different result.
So ordered.