Ronald Miller, J.D. Because the NLRB’s interpretation of the legal standard to apply in unit-determination cases in Specialty Healthcare was reasonable, and the Board properly applied that two-step framework here, the Third Circuit refused to grant FedEx’s petition for review based on its claim that dockworkers should have been included in the bargaining unit. Judge Jordan filed a separate opinion concurring in part and concurring in the judgment, in which he argued that FedEx had waived its challenge to the Specialty Healthcare standard (NLRB v. FedEx Freight, Inc., August 9, 2016, Scirica, A.). The NLRB certified a bargaining unit comprised of drivers at a FedEx facility. To test the appropriateness of the unit, FedEx refused to bargain with the unit’s certified bargaining representative, contending that the terminal’s dockworkers must also be included in the unit. An NLRB regional director issued an unfair labor practices order against FedEx, and the Board granted summary judgment in favor of the union. FedEx filed a petition for review, contending the Board abused its discretion in certifying the unit because it applied a unit-determination standard from Specialty Healthcare & Rehabilitation Center—a decision which, in the company’s view, violated Board precedent, the NLRA, and the APA. Alternatively, FedEx contended that even if the Specialty Healthcare standard applied, the Board abused its discretion by failing to properly apply it here. Drivers and dockworkers. The FedEx employees at issue here are city and road drivers and dockworkers. City drivers transport freight locally, and road drivers transport freight over longer distances. The petitioned-for unit is comprised of all drivers, both city and road, but excludes all dockworkers. The basic requirements for city and road drivers are the same: All drivers must have a commercial driver’s license, at least one year of relevant driving experience, and have acceptable motor-vehicle reports. They must also submit to random drug testing and wear company-issued uniforms. The differences between city and road drivers primarily related to compensation. Unlike drivers, dockworkers worked only in the yard or on the dock. Dockworkers load freight onto outbound trailers and unload freight from inbound trailers. They may occasionally drive forklifts and other vehicles within the yard to move equipment from place to place, but this driving does not require a commercial driver’s license nor involve the types of vehicles city and road drivers use. Moreover, no relevant work experience is required to be a dockworker. Also, dockworkers were not required to wear uniforms, nor were they subject to random drug testing. Dockworkers also earn considerably less than drivers. However, dockworkers have an opportunity to become drivers through a "dock-to-driver" program. The drivers and dockworkers have some common conditions of employment. Both groups are eligible for the same retirement and healthcare benefits, and personal days off. In addition, they share the same break room and locker rooms and must abide by a handbook for all FedEx employees. Moreover, drivers spend a minimal amount of their time doing dock work. Challenge to Specialty Healthcare preserved. The NLRB contended that FedEx waived any challenges to Specialty Healthcare because, in its request for review, it applied the overwhelming-community-of-interest standard described in Specialty Healthcare rather than argue that Specialty Healthcare was wrongly decided. However, the appeals court held that FedEx preserved its challenge, pointing out that FedEx stated its disapproval of the Specialty Healthcare decision in a footnote which clearly stated "that Specialty Healthcare was decided erroneously," and gave the basis for FedEx’s challenge. Because the footnote provided adequate notice to the Board of the company’s challenge to Specialty Healthcare, there was no waiver. Unit-determination analysis. In Specialty Healthcare, the Board articulated a two-step unit-determination test. First, under the initial community-of-interest test, the Board determines whether the unit is an appropriate unit, applying relevant traditional factors. Second, the Board looks at whether the "employees in the more encompassing unit share ‘an overwhelming community of interest’ such that there ‘is no legitimate basis upon which to exclude certain employees from it.’" The primary issue before the appeals court was whether the Board’s clarification of its unit-determination analysis in Specialty Healthcare was reconcilable with Board precedent, the NLRA, and the APA. FedEx argued that the Board misapplied the initial community-of-interest test and that it improperly created a new heightened standard with its overwhelming-community-of-interest test. The Third Circuit held that the initial community-of-interest test described and applied by the Board in Specialty Healthcare was in line with Board precedent. In Specialty Healthcare, the Board explained that for a bargaining unit to be appropriate, its members must share a community of interest. This determination requires an analysis and weighing of "traditional" relevant criteria or factors. This initial community-of-interest test—and its application—reflected the standard used by the Board in prior decisions. Accordingly, the Board’s initial community-of-interest analysis in Specialty Healthcare was not an abuse of discretion. A "clarification"—not a new test. Next, FedEx contended that the Specialty Healthcare Board abused its discretion by standardizing the heightened "overwhelming-community-of-interest" test it applied when an interested party claimed that "the smallest appropriate unit contains additional employees." According to FedEx, the Specialty Healthcare Board failed to provide a reasoned explanation for the "adoption" of the overwhelming-community-of interest test. However, as the Specialty Healthcare Board explained, although it has used different words to describe the heightened standard, it has long required "a showing that the included and excluded employees share an overwhelming community of interest." Because the ultimate holdings of Specialty Healthcare with respect to the unit-determination standards were not departures from Board precedent, the appeals court concluded the Board’s interpretation and clarification of the NLRA was reasonable and not an abuse of discretion. Union choice. Further, the appeals court rejected FedEx’s contention that the Specialty Healthcare Board’s overwhelming-community-of-interest test violated Section 9(c)(5) of the NLRA because it ensured that the union’s choice was almost always the controlling factor. FedEx offered no showing that the Board privileged the unit determinations of employees. Rather, the Board has been clear that it will not approve "fractured" units or arbitrary segments of employees, the appeals court said. Accordingly, the overwhelming-community-of-interest test clarified in Specialty Healthcare did not conflict with Sec. 9(c)(5). Rulemaking versus adjudication. Finally, the court rejected FedEx’s contention that Specialty Healthcare was wrongly decided because the overwhelming-community-of-interest test was a new policy and it therefore should have been promulgated through rulemaking rather than adjudication. The overwhelming-community-of-interest test was not a new policy, but a consolidation and clarification of the heightened standard used by the Board in prior similar situations, the appeals court concluded. Therefore, it declined to address whether the Board abused its sound discretion in this regard. Application of Specialty Healthcare. Having found the Board’s clarification of the unit-determination standard in Specialty Healthcare reasonable, the Third Circuit further concluded that the Board properly applied this two-step framework in this instance. The regional director’s application of the initial community-of-interest test was not an abuse of discretion, the court found. The regional director looked not only at whether the employees in the petitioned-for unit were similar and comprised a readily identifiable group, but also at whether these employees were sufficiently distinct from other employees. He also properly applied the overwhelming-community-of-interest analysis. In agreement with the union, he found sufficient distinctions between drivers and dockworkers, such that they did not share an overwhelming community of interest. Thus, the Board’s conclusion that there was no overwhelming community of interest was not an abuse of discretion.
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