Hyundai America Shipping Agency, Inc. v. National Labor Relations Board

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued February 5, 2013 Decided November 6, 2015
No. 11-1351
HYUNDAI AMERICA SHIPPING AGENCY, INC.,
PETITIONER
v.
NATIONAL LABOR RELATIONS BOARD,
RESPONDENT
Consolidated with 11-1413
On Petition for Review and Cross-Application for
Enforcement of an Order of
the National Labor Relations Board
Thomas A. Lenz argued the cause and filed the briefs for
petitioner.
Heather S. Beard, Attorney, National Labor Relations
Board, argued the cause for respondent. With her on the brief
were John H. Ferguson, Associate General Counsel, Linda
Dreeben, Deputy Associate General Counsel, and Ruth E.
Burdick, Supervisory Attorney.
Before: HENDERSON and GRIFFITH, Circuit Judges, and
WILLIAMS, Senior Circuit Judge.
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Opinion for the Court filed by Senior Circuit Judge
WILLIAMS.
WILLIAMS, Senior Circuit Judge: We review an order of
the National Labor Relations Board invalidating five rules in
the employee handbook maintained by the Hyundai America
Shipping Agency. Though the case was argued in February
2013, we placed it in abeyance the same month, pending the
Supreme Court’s decision in NLRB v. Noel Canning, 134
S. Ct. 2550 (2014). That decision made clear that the three
Board members on the panel in this case were validly
appointed, and in December 2014 we restored the case to the
court’s active docket.
The Board had found that Hyundai’s maintenance of the
five handbook rules violated § 8(a)(1) of the National Labor
Relations Act, which requires that employers not “interfere
with, restrain, or coerce employees in the exercise of” their
rights—enumerated in § 7—to form labor organizations,
bargain collectively, and engage in similar concerted
activities. 29 U.S.C. §§ 157, 158(a)(1). (The Board reversed
two other rule invalidations by the administrative law judge;
these are not at issue and we disregard them in our account of
the Board’s process.)
The case began with a charge by Sandra McCullough, a
former Hyundai employee, alleging that Hyundai fired her
“because she engaged in protected concerted activities,” thus
violating her § 7 rights. Joint Appendix (“J.A.”) 42. This led
to a complaint by the Board’s General Counsel alleging not
only that McCullough’s dismissal violated the NLRA but also
that Hyundai had unlawfully maintained five rules violating
§ 8(a)(1) on their face. The ALJ found that Hyundai would
have fired McCullough regardless of whether she had violated
any of the challenged rules, and the Board affirmed. Hyundai
America Shipping Agency, Inc. & Sandra L. McCullough, 357
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N.L.R.B. No. 80, 2011 WL 4830117, at *2 (August 26, 2011)
(“Order”). So McCullough herself is out of the case. But the
ALJ went on to find that all five rules violated § 7. The Board
affirmed that conclusion as well, and Hyundai appealed.
Our first task is to resolve whether the complaint’s
allegations against the five rules were properly before the
Board. As we’ll explain below, we find that the Board had
jurisdiction over the claims against four rules—ones that the
complaint linked to the dismissal by asserting that Hyundai
discharged McCullough because of her violations of those
rules. Not so as to the fifth; as to it, the Board lacked
jurisdiction because the General Counsel never alleged it to
have played a causal role in the dismissal. As to the four rules
properly before the Board, we enforce the Board’s order as to
three but reverse as to the fourth.
* * *
Jurisdiction. Under 29 U.S.C. § 160(b), the General
Counsel may pursue a charge by issuing a complaint, but the
complaint’s allegations must be “closely related” to that
charge. Drug Plastics & Glass Co. v. NLRB, 44 F.3d 1017,
1021 (D.C. Cir. 1995) (citing Nickles Bakery of Indiana, Inc.,
296 N.L.R.B. 927, 928 (1989)). To decide whether such a
close relationship exists, “the Board looks to whether a
complaint allegation (1) involves the same legal theory as the
charge allegation, (2) arises from the same factual
circumstances or sequence of events as the charge allegation,
and (3) raises similar defenses as the charge allegation.” Id.
Drug Plastics also establishes how to apply the test. There we
adopted the dissenting view of then-Judge Stevens in NLRB v.
Braswell Motor Freight Lines, Inc., 486 F.2d 743 (7th Cir.
1973), and held that “the Board’s jurisdiction should be tested
by the General Counsel’s allegations rather than his proof.”
Id. at 747. Moreover, factual relatedness is evaluated “as of
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the time of the allegations.” Drug Plastics, 44 F.3d at 1020.
In other words, the jurisdictional inquiry is wholly
independent of the General Counsel’s actual success in
proving the alleged relationship.
The Drug Plastics standard is met as to four rules whose
violation the complaint said caused McCullough’s dismissal.
For them, the complaint’s allegations invoked the charge’s
legal theory (that McCullough was fired for exercising her § 7
rights), arose from the same sequence of events (the firing),
and would give rise to similar defenses (most notably, that
Hyundai would have fired McCullough for other reasons had
she not violated the challenged rules). But as to the fifth rule,
relating to information in the company’s personnel files, the
absence of any alleged link to McCullough’s firing is fatal to
any claim of the requisite relationship.
Merits. The four disputed rules that satisfied Drug
Plastics were: (1) a rule prohibiting employees from
discussing matters under investigation by Hyundai
(“investigative confidentiality rule”), Compl. ¶ 4(b), J.A. 44;
(2) a rule limiting the disclosure of information from
Hyundai’s electronic communication and information systems
(“electronic communications rule”), Compl. ¶ 4(d), J.A. 44-
45; (3) a rule prohibiting activities other than work during
working hours (“working hours rule”), Compl. ¶ 4(g), J.A. 46;
and (4) a provision urging employees to make complaints to
their immediate supervisors rather than to fellow employees
(“complaint provision”), Compl. ¶ 4(f), J.A. 45-46.
We address the four in that order. As usual, we accept
the Board’s findings of fact if they are supported by
substantial evidence, 29 U.S.C. § 160(e), and we defer to the
Board’s reasonable interpretations of the National Labor
Relations Act under Chevron, U.S.A., Inc. v. Natural
Resources Defense Council, Inc., 467 U.S. 837 (1984),
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“which . . . means (within its domain) that a ‘reasonable
agency interpretation prevails.’” Northern Natural Gas Co. v.
FERC, 700 F.3d 11, 14 (D.C. Cir. 2012) (quoting Entergy
Corp. v. Riverkeeper, Inc., 556 U.S. 208, 218 n.4 (2009)).
To decide whether an employer’s rule violates § 8(a)(1),
the Board asks “whether the rule[ ] would reasonably tend to
chill employees in the exercise of their statutory rights.”
Guardsmark v. NLRB, 475 F.3d 369, 374 (D.C. Cir. 2007)
(citations and internal quotation marks omitted). That inquiry
requires the Board to determine, first, whether the rule
restricts § 7 activity explicitly. If the rule does not do so—and
none of these rules does—the Board asks next whether the
rule (1) could be reasonably construed by employees to
restrict § 7 activity, (2) was adopted in response to such
activity, or (3) has been used to restrict such activity. Id. An
affirmative answer to any of these three questions means that
the employer can retain the rule only by showing an adequate
justification.
There is no allegation that Hyundai’s rules were
promulgated in response to protected concerted activity, and
the Board does not suggest that Hyundai applied them to
restrict such activity. Rather, the Board found that the rules
ran afoul of the first of the three tests, i.e., were facially
invalid. The Board’s reasoning is that, even in the absence of
enforcement, “mere maintenance of a rule likely to chill
section 7 activity, whether explicitly or through reasonable
interpretation, can amount to an unfair labor practice.” Id.
(citations and internal quotation marks omitted).
On review, we ask whether the Board reasonably
concluded that “employees would reasonably construe [each
rule] to prohibit Section 7 activity.” Cintas Corp. v. NLRB,
482 F.3d 463, 468 (D.C. Cir. 2007) (citations and internal
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quotation marks omitted). We accept the Board’s conclusions
with respect to all but the employee complaint provision.
Investigative confidentiality rule: The Board found, and
Hyundai does not dispute, that Hyundai maintained an oral
rule prohibiting employees from revealing information about
matters under investigation. Order, 2011 WL 4830117, at
*26. Since this blanket confidentiality rule clearly limited
employees’ § 7 rights to discuss their employment, the
question is whether Hyundai has presented a legitimate and
substantial business justification for the rule, outweighing the
adverse effect on the interests of employees. Desert Palace,
Inc., 336 N.L.R.B. 271, 272 (2001); see also Jeannette Corp.
v. NLRB, 532 F.2d 916, 918 (3d Cir. 1976).
Hyundai argues that federal and state antidiscrimination
statutes and guidelines, which require confidentiality in many
investigations, constitute a legitimate and substantial business
justification for its rule. For example, Equal Employment
Opportunity Commission guidelines suggest that information
about sexual harassment allegations, as well as records related
to investigations of those allegations, should be kept
confidential. Enforcement Guidance on Vicarious Employer
Liability for Unlawful Harassment by Supervisors, § V(C)(1)
(915.002, June 18, 1999), available at
http://www.eeoc.gov/policy/docs/harassment.html. We agree
that the obligation to comply with such guidelines may often
constitute a legitimate business justification for requiring
confidentiality in the context of a particular investigation or
particular types of investigations. But Hyundai has not shown
that these concerns offer a legitimate business reason to ban
discussions of all investigations, including ones unlikely to
present these concerns. The Board therefore reasonably
concluded that the rule was overbroad.
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In enforcing the Board’s order, we need not and do not
endorse the ALJ’s novel view that in order to demonstrate a
legitimate and substantial justification for confidentiality, an
employer must “determine whether in any give [sic]
investigation witnesses need protection, evidence is in danger
of being destroyed, testimony is in danger of being fabricated,
and there is a need to prevent a cover up.” Order, 2011 WL
4830117, at *27. Instead, we simply hold that Hyundai’s
confidentiality rule was so broad and undifferentiated that the
Board reasonably concluded that Hyundai did not present a
legitimate business justification for it.
Electronic communications rule: Hyundai’s employee
handbook included a rule describing limitations on the use of
the company’s electronic communications systems and
concluding with the requirement that “employees should only
disclose information or messages from theses [sic] systems to
authorized persons.” Compl. ¶ 4(d), J.A. 45. The Board held
that a reasonable employee could read this rule to prevent the
sharing of any information exchanged on Hyundai’s electronic
communications network, thereby restricting employees’
ability to share information about the terms and conditions of
employment. We note the somewhat academic nature of the
dispute: both parties agree that the electronic communications
rule cannot legally apply to information about terms and
conditions of employment (absent adequate justification).
There is therefore no substantive dispute over the scope of the
employer’s authority to maintain confidentiality.
We hold that the Board’s conclusion was a reasonable
application of the existing case law. The disposition of this
issue depends largely on whether the electronic
communications rule is more analogous to the policy
challenged in Community Hospitals of Central California v.
NLRB, 335 F.3d 1079 (D.C. Cir. 2003), or to the rule at issue
in Cintas, 482 F.3d at 465, 468-70. In Community Hospitals,
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335 F.3d at 1089, we reversed the Board’s order invalidating a
handbook rule prohibiting “[r]elease or disclosure of
confidential information concerning patients or employees,”
id. at 1088. We concluded that a reasonable employee would
not interpret the rule to ban discussion of the terms of his or
her own employment. In Cintas, 482 F.3d at 468-69, by
contrast, this court enforced the Board’s order invalidating a
policy that protected “the confidentiality of any information
concerning the company,” id. at 465. We distinguished that
policy from the rule in Community Hospitals on the ground
that the latter expressly limited its prohibition to confidential
information. Id. at 470.
Hyundai’s rule, unlike the one we held lawful in
Community Hospitals, is not limited by its terms to
confidential information. A reasonable reader, however,
might interpret the provision to apply only to such
information, just as a reasonable reader of the rule in
Community Hospitals would understand confidential
information to exclude the terms and conditions of his or her
own employment. Community Hospitals, 335 F.3d at 1089.
Since these two cases do not clearly dictate the result in this
case, we defer to the Board’s reasonable conclusion that
Cintas controls and that the electronic communications rule is
invalid.
Working hours rule: Hyundai’s employee handbook
included a rule allowing disciplinary action, including
termination, for “[p]erforming activities other than Company
work during working hours.” Compl. ¶ 4(g), J.A. 46. The
Board invalidated this rule because it prohibited employees
from engaging in union-related activities even during breaks.
We have previously accepted the Board’s distinction between
“working time,” which excludes breaks, and “working hours,”
describing the period from the beginning to the end of a shift,
breaks and all. United Servs. Auto. Ass’n v. NLRB, 387 F.3d
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908, 914 (D.C. Cir. 2004). Restrictions on union activity
during working hours are presumptively invalid; similar
restrictions during working time are not. Id. Applying this
distinction, the Board reasonably concluded that Hyundai’s
rule restricted union activity during a work shift but outside of
working time.
Complaint Provision: Hyundai’s Employee Handbook
included an employee conduct provision:
Voice your complaints directly to your immediate
superior or to Human Resources through our ‘open door’
policy. Complaining to your fellow employees will not
resolve problems. Constructive complaints
communicated through the appropriate channels may help
improve the workplace for all.
Compl. ¶ 4(f), J.A. 45-46. The ALJ concluded that this rule
implicitly prohibited complaints protected by § 7. We
disagree. In Guardsmark, 475 F.3d at 376, we enforced the
Board’s order invalidating a rule banning workplace
complaints because the rule prevented employees from
complaining to customers or to other non-supervisor
employees. In enforcing that order, however, we relied
specifically on the rule’s “mandatory language.” Id; see also
SNE Enters., Inc., 347 N.L.R.B. 472, 492 (2006) (invalidating
anti-complaint rule that led to dismissal of employee); Kinder-
Care Learning Centers, 299 N.L.R.B. 1171 (1990)
(invalidating policy that expressly prohibited complaints to
customers and threatened disciplinary action for
noncompliance).
Here, by contrast, the handbook urges employees to voice
their complaints to their supervisors or to Human Resources,
but the language is neither mandatory nor preclusive of
alternatives: “Constructive complaints communicated through
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the appropriate channels may help improve the workplace for
all” (emphasis added). Moreover, the handbook does not
prescribe penalties for complaints to fellow employees. A
reasonable employee would not read the provision, with its
exhortatory language and lack of penalties, to prohibit
complaints protected by § 7.
* * *
In sum, we enforce the Board’s order with respect to the
investigative confidentiality rule, the working hours rule, and
the electronic communications rule. We grant the petition for
review, and reverse the Board’s order, with respect to the
employee complaint rule and the personnel file rule.
So ordered.