By Brandi O. Brown, J.D.
Although the NLRB lacked authority to require reimbursement of litigation costs incurred during its proceedings, it could require an employer that engaged in bad-faith bargaining to reimburse expenses incurred by the union during that bargaining, the District of Columbia Circuit held. The Board's remedial authority under section 10(c) of the National Labor Relations Act allowed for such an award, the appeals court held, granting in part the employer’s joint petition for review and granting in part the Board’s cross-application for enforcement (Camelot Terrace, Inc. v. NLRB
, June 10, 2016, Henderson, K.).
In 2008 and 2009 the two employers involved in the NLRB proceeding, both of which were owned by a single individual, engaged in repeated bad-faith bargaining with the Service Employees International Union. The NLRB's Office of the General Counsel (OGC) became involved and the parties entered into a settlement agreement that imposed specific bargaining obligations on the employers. When the companies failed to abide by those terms and continued to bargain in bad faith, the OGC issued a complaint against them for a violation of the Act.
ALJ orders reimbursement.
An administrative law judge ordered the companies to reimburse both the Board and the union for costs and expenses they had incurred during litigation before the Board and the courts. The ALJ also ordered the employers to reimburse the union for expenses incurred during bargaining negotiations. The Board upheld the remedies and the employers petitioned for review, attacking the Board's authority to award such costs in all cases and not just in this particular case.
The appeals court explained that it was to defer to the Board "only insofar as its interpretation of its statutory power is 'rational' and 'consistent' with the Act."
The Board did not have the authority to award litigation costs, the appeals court found. Citing its prior decision in HTH Corp. v. NLRB
, it explained that, contrary to the Board's argument, the Board did not have the inherent authority to uphold the integrity of its proceedings by awarding litigation costs. Section 10(c) did not authorize an exception to the "American rule" whereby litigants pay their own way. Application of that exception, the court explained, is a punitive measure and remedies under section 10(c) must be remedial in nature, not punitive. Moreover, section 10(c) did not explicitly or implicitly authorize the award of litigation costs.
On the other hand, the Board did have authority under section 10(c) to require the employers to pay the union's bargaining costs as a remedial measure. Upon concluding that a party has committed an unfair labor practice, such as that committed by the employers here, section 10(c) gives the Board the discretion to come up with appropriate remedies. Although the D.C. Circuit had not directly upheld reimbursement of bargaining expenses under that provision, the Board has held it to be a proper measure on several occasions. And the appeals court had discussed that reasoning favorably. Now confronting the question head-on for the first time, the appeals court found that reasoning persuasive. Such an award, the court explained, remedies an unfair labor practice and puts the injured party back on the same footing that it had prior to the violation. Other remedies were of lesser value because they would not remedy the draining of resources faced by the union as a result of the bad-faith bargaining.
Although the employers argued that the "American rule" also applied to this situation, it failed to cite "any case suggesting the American Rule extends beyond the context of litigation or other quasi-judicial adversarial proceedings." Moreover, the court explained, the Act grants both parties the right to good-faith bargaining and violation of that right "supports a remedy making the wronged party whole."
No jurisdiction on scope argument.
While the company also challenged the Board's award of "all" bargaining costs incurred by the union, arguing that at least some of the costs would have been incurred even had the employers bargained in good faith, the employers never presented that argument to the NLRB, so the appeals court lacked jurisdiction to entertain it.