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NLRB joint-employer saga: Hy-Brand mandate recalled by D.C. Circuit

By Pamela Wolf, J.D.

The joint-employer saga continues its “twisty-turny” narrative, with the most recent chapter written by the D.C. Circuit Court of Appeals. On April 6, the appeals court granted the National Labor Relations Board’s motion to recall the mandate in Browning-Ferris following the appeals court’s own decision to remand the case (rather quickly) back to the NLRB in the wake of the Board’s controversial December 14, 2017, ruling in Hy-Brand Industrial Contractors, Ltd., which reversed the Obama-era Board’s joint-employer standard. That Browning-Ferris standard, which swept employers with indirect control of employees into the definition of employment, was widely and intensely disliked by employers and Republicans alike. The D.C. Circuit said that “recalling the mandate is appropriate only because this case presents ‘extraordinary circumstances’”—and that characterization is in no way an understatement.

Pending motion for reconsideration. On its own motion, the appeals court also ordered that the case be “held in abeyance pending prompt disposition by the Board of the pending motion for reconsideration” of the Board’s ruling that later vacated the Hy-Brand decision. The Board must file status reports at 21-day intervals, beginning 21 days from the date of the D.C. Circuit’s order.

Following the December 2017 Hy-Brand Industrial Contractors ruling, and its reversal of the Obama-era standard, the Board quickly asked the D.C. Circuit to remand Browning-Ferris, which had been pending there on appeal. The appeals court obliged, but sharp controversy has continued to surround the Board’s actions. The Teamsters immediately sought reconsideration of the appeals court’s remand, arguing to no avail that the Hy-Brand decision was not yet a final ruling, the period for seeking reconsideration had not yet run, and that the union had not been permitted an opportunity to oppose remand.

William Emanuel’s participation. Then there was the Board’s inspector general’s conclusion in a report, released on February 21, that Trump-era Board Member William Emanuel should not have participated in the Hy-Brand decision, which took place during a narrow window of a Republican majority on the Board—before the departure of Republican Chair Philip Miscimarra would close that window, albeit temporarily. (A return to the Republican majority is anticipated shortly with the anticipated confirmation of Morgan Lewis & Bockius partner John Ring.) According to IG David Berry, who carefully examined the Board’s deliberative process, Hy-Brand was a “do-over” for the Browning-Ferris parties, one of which was represented by Emanuel’s former law firm, Littler Mendelson. Accordingly, under the ethics pledge found in President Trump’s Executive Order 13770 (Ethics Commitments by Executive Branch Appointees), Emanuel should not have participated in the Hy-Brand Decision.

We better take it back … The battle continued its fever pitch, with the Board reacting to the IG’s report and pressure by Democrats in Congress by vacating the Hy-Brand decision on February 26, 2018, without Emanuel participating in the vacatur decision. That, however, has far from concluded the journey of the storied decision.

But wait, was vacatur improper? The employers in the Hy-Brand decision have not taken the vacatur sitting down. They are seeking reconsideration, asserting that the vacatur of the decision infringed upon their rights to due process and that Emanuel should not have been excluded from participating in that decision, among other things. At the time of the vacatur order, the Board was comprised of four Members that included Emanuel, and there can be no delegation of authority by the “Board” unless all Members participate, according to the employers. “To claim otherwise, is to allow any three members of the Board to highjack the authority of the other members to participate in the decision to delegate or not to delegate decisionmaking to a panel,” they contend.

IG out of bounds? And the National Right to Work Legal Defense Foundation has raised other questions aimed at getting Hy-Brand (and with it, the joint-employer standard more friendly to employers and franchisors, such as McDonald’s in particular) reinstated. The Foundation is asking the Council of Inspectors General on Integrity and Efficiency (CIGIE) to review what the Foundation considers wrongdoing by IG David Berry, by making his report and a follow-up public without redactions of the NLRB’s internal deliberative communications.

This is in contrast, according to the Foundation, to a 2012 incident in which then-NLRB Member Terence Flynn resigned after Berry issued a report saying that Flynn had improperly shared information about the Board’s deliberative process. The Foundation is asking the CIGIE to investigate whether Berry himself disseminated confidential Board deliberations and improperly disclosed to people outside the NLRB that he was investigating Member Emanuel.

Speaking of McDonald’s … The hard-fought McDonald’s litigation, the face of the joint-employer battle, was also affected by the continuing saga. When Browning-Ferris was operative (which it is again), McDonald’s USA, LLC, as a joint employer, and multiple franchisees, were accused of violating workers’ rights by, among other things, making statements and taking actions against them for engaging in activities aimed at improving their wages and working conditions—including their participation in nationwide fast-food worker protests.

The Board had sought a stay for negotiations, however, while Hy-brand was operative, only to find itself returned to the earlier Obama-era standard. Then on March 20, proposed settlement agreements were submitted to an NLRB Administrative Law Judge for approval. Under the deal, McDonald’s USA, LLC, and its franchisees would give what is “intended to provide” 100 percent of back pay for workers who allegedly were treated unfairly. The proposed deals represent a full remedy for all unfair labor practice cases pending before ALJ Lauren Esposito, including those previously severed from the litigation. The monetary amount, assuming there is one, has not been disclosed, however, and McDonald’s would not admit any liability.

D.C. Circuit dissent. There is so much going on, with the reactions to the reactions in the intertwined joint-employer cases, that maybe the dissent in the D.C. Circuit’s April 6 order makes sense from a practical point of view. Judge A. Raymond Randolph said he would have denied the motion to recall the mandate. “If the Board grants the pending motion for reconsideration of the order vacating Hy-Brand, this case would be in the same posture as it was when we remanded it to the Board,” he said. “If the Board denies the reconsideration motion [on the vacatur ruling], the Board would again have before it the question whether Browning-Ferris should be overruled. I therefore believe that this court should stay its hand until the Board finally decides Hy-Brand, either by granting the reconsideration motion or on the merits.”