Davidson Hotel Company, LLC v. NLRB

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued September 10, 2020 Decided October 23, 2020
No. 19-1235
DAVIDSON HOTEL COMPANY, LLC, (CHICAGO MARRIOTT AT
MEDICAL DISTRICT/UIC),
PETITIONER
v.
NATIONAL LABOR RELATIONS BOARD,
RESPONDENT
UNITE HERE LOCAL 1,
INTERVENOR
Consolidated with 19-1259
On Petition for Review and Cross-Application for
Enforcement of an Order of
the National Labor Relations Board
Mark W. DeLaquil argued the cause for petitioner. With
him on the briefs were Peter G. Fischer and Renee M. Knudsen.
Kellie Isbell, Senior Attorney, National Labor Relations
Board, argued the cause for respondent. With her on the brief
were Usha Dheenan, Supervisory Attorney, Peter B. Robb,
General Counsel, Ruth E. Burdick, Acting Deputy Associate
2
General Counsel, and David Habenstreit, Assistant General
Counsel.
Richard Treadwell argued the cause for intervenor. With
him on the brief was Paul L. More. Kristin L. Martin entered an
appearance.
Before: ROGERS and RAO, Circuit Judges, and RANDOLPH,
Senior Circuit Judge.
Opinion for the Court filed by Senior Circuit Judge
RANDOLPH.
RANDOLPH, Senior Circuit Judge: Davidson Hotel
Company petitions for review of the National Labor Relations
Board’s decision that Davidson committed unfair labor practices
by refusing to bargain with a union in two Board-certified units.
Davidson challenges the Board’s certification of the two units.
The Board cross-petitions for enforcement of its order. Because
the Board did not distinguish its precedents, we grant the
petition for review, deny the cross-application for enforcement,
and remand to the Board.
The National Labor Relations Act, 29 U.S.C. § 157, protects
the right of employees “to bargain collectively through
representatives of their own choosing[.]” The Act empowers the
Board to “decide in each case . . . the unit appropriate for the
purposes of collective bargaining[.]” 29 U.S.C. § 159(b). To
make this determination, the Board applies what it calls the
community-of-interest standard. PCC Structurals, Inc., 365
N.L.R.B No. 160, *6-7 (2017). First, the Board determines
whether the employees in the petitioned-for unit share a
community of interest. Id.; Blue Man Vegas, LLC v. NLRB, 529
F.3d 417, 421 (D.C. Cir. 2008) (citing NLRB v. Action Auto.,
Inc., 469 U.S. 490, 494 (1985)). Second, the Board determines
3
whether the proposed unit “share[s] a community of interest
sufficiently distinct from employees excluded from the proposed
unit to warrant a separate appropriate unit[.]” PCC Structurals,
Inc., 365 N.L.R.B. at *9. Many factors are considered, ranging
from organizational structure to the terms and conditions of
employment. Id. at *6 (listing the traditional factors); see also
Sundor Brands, Inc. v. NLRB, 168 F.3d 515, 518 (D.C. Cir.
1999); United Operations, Inc., 338 N.L.R.B. 123, 123 (2002).
The Board is not required to pick the most appropriate unit –
only an appropriate one. Dean Transp., Inc. v. NLRB, 551 F.3d
1055, 1063 (D.C. Cir. 2009) (quoting Serramonte Oldsmobile,
Inc. v. NLRB, 86 F.3d 227, 236 (D.C. Cir. 1996)). But the
Board’s discretion is not unlimited. NLRB v. Tito Contractors,
Inc., 847 F.3d 724, 729 (D.C. Cir. 2017).
Davidson operates the Chicago Marriott at Medical
District/UIC, a relatively small full-service hotel providing
dining, banquet, and other services. Three groups of employees
are at issue here: those at the front desk, those in housekeeping,
and those handling food and beverage. The union, UNITE
HERE Local 1, initially petitioned the Board’s Chicago
Regional Office to certify a single bargaining unit composed of
housekeeping and food and beverage employees. The union’s
proposed unit did not include the front desk employees. The
Regional Director declined to certify the unit. Walking through
the traditional community-of-interest factors, the Regional
Director found “that the interests of front desk employees . . .
are not sufficiently distinct from the interests of employees in
the petitioned-for unit to warrant establishment of a separate
unit.” J.A. 231. In his conclusion, the Regional Director briefly
suggested that separate units would be appropriate. J.A. 232,
n.11.
Taking the cue, the union filed two new petitions the next
day to certify a unit of housekeeping employees and a separate
4
unit of food and beverage employees. As before, the union
excluded the front desk employees. The Regional Director
again applied the community-of-interest standard to the newly
proposed units. The Regional Director then certified the two
units as appropriate and directed elections. Shortly thereafter,
the employees in each unit voted in favor of the union.
Davidson complained to the Board that the Regional
Director had departed from Board precedents and the precedent
set in the first unit decision in this case. Request for Review, 3-
4, 13-14, 25-28, NLRB Case No. 13-RC-217487 (Sept. 11,
2018). The Board rejected Davidson’s contentions by a 2-1 vote
explaining that its petition “raise[d] no substantial issues
warranting review.” J.A. 542-43. To obtain judicial review of
the certifications, Davidson refused to bargain.1
The well-worn standard is that the court will “review the
Board’s factual conclusions for substantial evidence, defer to
[the Board’s] rules if they are rational and consistent with the
Act, and uphold the Board’s application of law to facts unless
arbitrary or otherwise erroneous.” Dean Transp., Inc., 551 F.3d
at 1060 (quoting Harter Tomato Prods. Co. v. NLRB, 133 F.3d
934, 937 (D.C. Cir. 1998)) (internal quotation marks omitted).
“A decision of the Board that departs from established precedent
without a reasoned explanation is arbitrary.” NLRB v. Sw. Reg’l
Council of Carpenters, 826 F.3d 460, 464 (D.C. Cir. 2016)
1
“[R]epresentation proceedings before the Board are not subject
to direct judicial review because they do not result in a final agency
order, and an employer seeking review of the record in a
representation proceeding must refuse to bargain with the union, and
suffer an unfair labor practice charge[.]” Alois Box Co. v. NLRB, 216
F.3d 69, 76 (D.C. Cir. 2000) (quoting Wackenhut Corp. v. NLRB, 178
F.3d 543, 548 (D.C. Cir. 1999)) (internal quotation marks and original
brackets omitted).
5
(quoting Comau, Inc. v. NLRB, 671 F.3d 1232, 1236 (D.C. Cir.
2012)) (internal quotation marks omitted).
The Board must explain its reasoning when certifying
bargaining units. LeMoyne-Owen College v. NLRB, 357 F.3d
55, 60-61 (D.C. Cir. 2004). In LeMoyne-Owen College, the
Board certified a bargaining unit of full-time faculty over the
College’s objections that the Regional Director had ignored
precedent addressing the same facts. Id. at 58-60. In granting
the College’s petition for review and remanding to the Board,
this court pointed out that “the Regional Director . . . did not
discuss or even mention a single one of the precedents on which
the College relied.” Id. at 60. Neither did the Board in either of
its terse orders denying review. Id. When “a party makes a
significant showing that analogous cases have been decided
differently, the agency must do more than simply ignore that
argument.” Id. at 61. Rather, the Board must explain its
departure. Id. “The need for an explanation is particularly acute
when an agency is applying a multi-factor test through case-by-
case adjudication.” Id.Here we face a similar situation. Neither the Regional
Director nor the Board distinguished contrary Board precedents
or the Regional Director’s first decision in this case. See
Ramada Beverly Hills, 278 N.L.R.B. 691, 691-92 (1986)
(explaining differences with a prior decision regarding the same
hotel). The previous unit decision by the same Regional
Director was sufficiently analogous that it should have been
distinguished or otherwise addressed – at least when the
Regional Director and Board were presented with the argument
that the first decision required rejection of the union’s later
petitions. See Request for Review, 13-14, NLRB Case No. 13-
RC-217487 (Sept. 11, 2018); id. Ex. 7, 13-14, 85-86 (Hr’g Tr.,
Apr. 9, 2018). Yet the Regional Director never mentioned the
prior decision beyond incorporating the record and stating that
6
“the petitioned-for unit in the instant case is different[.]” J.A.
305 n.5, 325 n.5. The Regional Director did not explain why the
same factors that counseled against excluding the front desk in
the first decision did not govern the second petitions as well.
See J.A. 231 (listing the shared conditions among the employee
groups).
We do not say that the Board cannot reach a different
conclusion in the second unit determination. But the Board
must explain why the balance of those factors differed from the
factors considered in the Regional Director’s first decision.2
Otherwise, the court “is left to attempt to discern for itself which
factual differences might have been determinative, without
guidance from the agency, and to assess whether making such
distinctions controlling is rational or arbitrary, again without any
agency explanation of why particular factors make a difference.”
LeMoyne-Owen College, 357 F.3d at 61.
In addition, the Board failed to cite – let alone distinguish
– a single contrary precedent even though Davidson cited
several Board precedents that rejected separate units of hotel
employees under similar circumstances.3 Despite that showing,
2
The Board and the union provided some explanation in their
briefs in this court, Red Br., 39-41, Green Br., 35-37, and at oral
argument, 36:33-37:22 (counsel for the union). But the explanation
must come from the Board itself. See Burlington Truck Lines, Inc v.
United States, 371 U.S. 156, 168-69 (1962); Erie Brush & Mfg. Corp.
v. NLRB, 700 F.3d 17, 23 (D.C. Cir. 2012).
3
Davidson relied most heavily on Ramada Beverly Hills, 278
N.L.R.B. 691 (1986), in which the Board rejected separate units for
hotel employees relying on the same community-of-interest factors.
See Request for Review, 25-28, NLRB Case No. 13-RC-217487 (Sept.
11, 2018); id. Ex. 6, 236-42 (Hr’g Tr., Mar. 14, 2018); id. Ex. 7, 89
(Hr’g Tr., Apr. 9, 2018). Davidson also relied on Atlanta Hilton &
7
there is no paragraph, sentence, citation, or footnote that
distinguishes these decisions. Under LeMoyne-Owen College,
this failure is fatal. See id.We should not be understood as requiring the Board to
distinguish every case cited to it by a party. See id. at 60; see
also Sw. Reg’l Council of Carpenters, 826 F.3d at 464 (quoting
Lone Mountain Processing, Inc. v. Sec’y of Labor, 709 F.3d
1161, 1164 (D.C. Cir. 2013)). To say otherwise would be to
hold the Board to a higher standard than we hold ourselves. Nor
is there a specific way that the Board must explain its prior
decisions. See, e.g., Hilton Hotel Corp., 287 N.L.R.B. 359, 359-
60 n.3 (1987) (distinguishing cases in text and footnotes); W.
Lodging Corp., 287 N.L.R.B. 1291, 1292 n.1 (1988)
(distinguishing cases in a footnote). We simply reiterate that
when faced with contrary precedent directly on point, the Board
must distinguish it.4
For the foregoing reasons, we grant the petition for review,
deny the Board’s cross-application for enforcement, and remand
to the Board for further proceedings consistent with this opinion.
So ordered.
Towers, 273 N.L.R.B. 87 (1984). See id. Ex. 6, 236 (Hr’g Tr., Mar.
14, 2018).
4
Because we grant the petition for review on this ground, we do
not address Davidson’s other challenges to the Board’s decision.