Brighter Days Ahead Dealing with the NLRB?

By: Tom Davies | Harmon & Davies

Since day one of the Biden-Harris Administration, when Joe Biden fired the Trump-appointed General Counsel of the National Labor Relations Board (NLRB), employers have faced the most union-friendly NLRB in the agency’s 95-year history. The Board has issued new regulations and a series of decisions designed to make union organizing easier and make it more difficult for employers to explain the pitfalls of union representation to their employees. However, within the last few months, several United States Supreme Court decisions (and I emphasize “may”) may give employers a fighting chance in litigation brought against them by the NLRB and other federal agencies.

From an overall standpoint, the first, and perhaps the most important, of these cases is Loper Bright Enterprises v. Raimondo, which was decided on June 28, 2024. As an administrative agency without enforcement power, the NLRB must go to the Federal Court to get its decisions enforced. For the 40 years since the Supreme Court’s Chevron decision in 1984, federal courts have been instructed to make significant deferences to an agency’s interpretation of the law they administer. If the law was ambiguous or silent on a particular issue, the Court should “defer” to the agency’s interpretation, even if the reviewing Court might have reached a different result. Deference to NLRB decisions pre-dated Chevron based on Supreme Court cases as far back as 1944.

The Loper Bright majority ended Chevron’s deference because it countered the long-standing prerogative of judges to interpret statutes independently and violated the Administrative Procedure Act’s directive that courts are to determine “all relevant questions of law” when reviewing administrative action. As such, courts should independently review all legal determinations made by federal agencies unless a specific statutory directive instructs otherwise. The Supreme Court noted that courts routinely interpret ambiguous statutes, and there is nothing unique about statutory interpretation when reviewing agency determinations. Since NLRB deference has not relied solely on Chevron, it is still being determined to what extent reviewing courts will feel free to disregard the Board’s statutory interpretations. However, given the Board’s history of changing many such interpretations each time, there is a change in party control following a change at the White House, and the NLRB will likely face more challenges in the future.

In Starbucks v. McKinney, decided on June 14, 2024, a unanimous Supreme Court raised the bar the NLRB must meet if it wants to secure a preliminary injunction requiring the alleged wrongdoer (almost always an employer) to take specific remedial steps before it is ever found to have committed an unfair labor practice. The Supreme Court held that when considering temporary injunction requests under Section 10(j) of the National Labor Relations Act (NLRA), courts must apply the traditional equitable four factors outlined in the High Court’s 2008 decision in Winter v. Natural Resources Defense Council, Inc. This decision means that courts must consider 10(j) injunction requests under the same equitable principles they do for other preliminary injunctions. The Biden NLRB had dramatically increased the use of such injunctions, significantly raising the costs of litigating these cases. The Starbucks decision will make it much more difficult for the Board to obtain injunctive relief.

Historically, federal agencies such as the DOL, SEC, and NLRB have relied upon a cadre of in-house Administrative Law Judges (ALJs) to act as factfinders in the first level of litigation with those agencies. Not surprisingly, the parties that appear before them feel the agency has a home-court advantage. In another June 2024 decision, the majority of the Court ruled that defendants have a constitutional right to present their case to a federal jury when the Securities and Exchange Commission seeks financial penalties rather than appearing before an administrative law judge (Jarkesy v. SEC). This case is already being used to challenge the jurisdiction of DOL ALJs when hearing specific claims by whistleblowers. While most NLRB cases might not implicate Jarkesy, the NLRB General Counsel seeks to expand penalties, and such a challenge may be possible.

Suppose Vice President Harris is elected in November. In that case, it might provide some comfort to know that these recent Supreme Court decisions may offer new arguments to counter the actions of another heavily pro-union administration.