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Camelot Terrace, Inc. v. National Labor Relations Board

United States Court of Appeals, District of Columbia Circuit

June 10, 2016

Camelot Terrace, Inc. and Galesburg Terrace, Inc., Petitioners
National Labor Relations Board, Respondent

          Argued February 9, 2016

         On Petition for Review and Cross-Application for Enforcement of an Order of the National Labor Relations Board

          Christopher Landau argued the cause for the petitioners. John S. Irving, Jr. was with him on brief.

          Barbara A. Sheehy, Attorney, National Labor Relations Board, argued the cause for the respondent. Richard F. Griffin, Jr., General Counsel, John H. Ferguson, Associate General Counsel, Linda Dreeben, Deputy Associate General Counsel, and Usha Dheehan, Supervisory Attorney, were with her on brief.

          Margaret Angelucci was on brief for the intervenor, Service Employees International Union, Healthcare Illinois Indiana (previously SEIU Local 4) in support of the respondent.

          Before: Henderson and Rogers, Circuit Judges, and Williams, Senior Circuit Judge.


          Karen LeCraft Henderson, Circuit Judge:

         Camelot Terrace, Inc. (Camelot) and Galesburg Terrace, Inc. (Galesburg) (collectively, Companies) petition for review of a decision and order of the National Labor Relations Board (Board) determining that the Companies violated the National Labor Relations Act (Act), 29 U.S.C. §§ 151 et seq., by engaging in bad-faith bargaining with the Service Employees International Union (Union). The Companies do not contest the Board's conclusion that they violated the Act; rather, they challenge two of the remedies the Board imposed: (1) reimbursement of litigation costs incurred by both the Board and the Union during Board proceedings and (2) reimbursement of "all" of the negotiation expenses the Union incurred during its bargaining sessions with the Companies. See Camelot Terrace, 357 N.L.R.B. No. 161, 2011 WL 7121892, at *13, *15 (Dec. 30, 2011). The Companies assert that the Board is without authority to impose either remedy. Alternatively, they argue that the amount of the bargaining-costs remedy-"all" of the Union's bargaining expenses-exceeds the amount necessary to remedy the harm caused by the Companies' conduct and is improperly punitive.

         We agree that the Board lacks authority to require the reimbursement of litigation costs incurred during Board proceedings, see HTH Corp. v. NLRB, No. 14-1222, 2016 WL 2941936, at *9-11 (D.C. Cir. May 20, 2016), but hold that the Board may require an employer to reimburse a union's bargaining expenses pursuant to its remedial authority under section 10(c) of the Act. We also conclude that we lack jurisdiction to entertain the Companies' alternative challenge to the amount of the bargaining-costs award because they failed to raise it before the Board. Accordingly, we grant the Companies' joint petition in part and grant the Board's cross-application for enforcement in part.


         Camelot and Galesburg both operate nursing homes in Illinois. In 2007, the Union was certified as the exclusive representative of employees at both facilities. Over the course of 2008 and 2009, the Companies-primarily through the conduct of their common owner, Michael Lerner-repeatedly bargained with the Union in bad faith.[1] The Board's Office of the General Counsel (OGC) got involved, leading to a settlement agreement detailing specific bargaining requirements the Companies were to satisfy. When the Companies failed to abide by the terms of the agreement and continued to bargain in bad faith, the OGC issued a complaint charging the Companies with numerous violations of the Act. After holding a hearing and concluding that the Companies had indeed violated the Act, an Administrative Law Judge (ALJ) ordered, inter alia, that the Companies "[r]eimburse the [Board] . . . and the Union for all costs and expenses incurred in the investigation, preparation and conduct of [the case] before the Board and the courts." Camelot Terrace, 357 N.L.R.B. No. 161, 2011 WL 7121892, at *125. The ALJ also ordered the Companies to "[r]eimburse the Union for all costs and expenses incurred in collective-bargaining negotiations from January 2008 to the [parties'] last bargaining session." Id.

         The Companies filed exceptions with the Board, challenging the imposition of these two remedies. In a two-to-one decision, the Board held that it was authorized to impose both remedies and did so with one modification.[2] The bargaining-costs remedy, the Board concluded, was a necessary exercise of its general remedial power: "[o]nly by ordering the reimbursement of the Union's negotiating expenses [could] the Board reasonably restore the Union's previous financial strength and consequent ability to carry out effectively its responsibilities as the employees' representative." Id. at *6. As for the litigation-costs remedy, the Board concluded that it "has inherent authority to control its own proceedings, including the authority to award litigation expenses through the application of the 'bad-faith' exception to the American Rule." Id. The Board declared that its "inherent authority" was sufficient to support the remedy and therefore found it "unnecessary to pass on the [Companies'] argument that the Board's remedial authority under [section] 10(c) of the Act does not encompass the award of litigation expenses." Id. at *6 n.10. Member Hayes dissented from the Board's decision on the litigation-costs remedy, explaining that the Board is "not free to invoke principles of 'inherent authority' in order to unilaterally vest the Board with powers beyond those contemplated by the legislature." Id. at *17 (Member Hayes, dissenting). The Companies petitioned for review, challenging the Board's authority to impose the two remedies. The Board cross-applied for enforcement.


         At the outset, because "the Board is entitled to enforcement of all unchallenged portions of its order, " we summarily enforce all such provisions of the Board's decision. United Food & Commercial Workers Union Local 204 v. NLRB, 447 F.3d 821, 824 (D.C. Cir. 2006) (per curiam). As for the two reimbursement orders the Companies do challenge, although we generally afford the Board deference in reviewing its chosen remedies, see Great Lakes Chem. Corp. v. NLRB, 967 F.2d 624, 629 (D.C. Cir. 1992) ("The Board has broad authority in devising remedies to effectuate the policies of the Act, subject only to limited judicial review." (citation and internal quotation marks omitted)), deference is limited if a party challenges the Board's authority to order a particular remedy under any circumstance. In that case, to the extent the Board claims its remedial authority arises from the Act, we defer to the Board "only so far as '[its] interpretation is rational and consistent with the statute.' " Unbelievable, Inc. v. NLRB, 118 F.3d 795, 804 (D.C. Cir. 1997) (quoting NLRB v. United Food & Commercial Workers, 484 U.S. 112, 123 (1987)). To the extent the Board relies on extra-statutory authority, we afford no deference at all. See HTH Corp., 2016 WL 2941936, at *9-11 (evaluating Board's "inherent authority" to award litigation costs without deference); ...

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