Labor & Employment Law Daily On remand, NLRB must clarify its treatment of ALJ’s credibility findings as to pretext evidence
Tuesday, May 8, 2018

On remand, NLRB must clarify its treatment of ALJ’s credibility findings as to pretext evidence

By Ronald Miller, J.D.

The D.C. Circuit remanded a decision by a divided NLRB for clarification of the agency’s treatment of credibility findings by an administrative law judge and evidence presented by an employer that its contract decisions were non-pretextual. Because the Board may have relied on “reasons not considered” by the ALJ which failed to account for evidence addressing the employer’s non-pretextual reason for non-renewal of a dancer’s contract, the Board was required to clarify its treatment of the ALJ’s credibility findings as to the employer’s reasons for its decision (David Saxe Productions, LLC v. NLRB, May 4, 2018, Rogers, J.).

Where an employer claims to have discharged an employee for reasons unrelated to the employee’s protected activity, the Board applies the two-part test of Wright Line to determine whether the discharge was an unfair labor practice. First, the General Counsel is required to make a prima facie showing sufficient to support the inference that protected conduct was a “motivating factor” in the employer’s decision to take adverse action. If that case is made, then the burden shifts to the employer to show, by a preponderance of the evidence, that it would have taken the same action even if the employees had not engaged in protected activity. The second prong of Wright Line was at issue in this case.

Credibility and pretext. Applying Wright Line, the Board found the employer’s decision to discharge the dancer was motivated by her protected concerted activity but divided on the question whether the employer had met its burden to show, by a preponderance of evidence, the same action would have been taken even in the absence of her protected activity. A majority of the Board found pretext but functionally rejected a key credibility finding by the ALJ without acknowledging that it was doing so. How the Board reconciled its conclusion on pretext and the credibility finding is unclear. The Board also appears not to account for evidence detracting from its finding of pretext.

In May 2010, the employee signed a six-month contract to dance in Vegas! The Show. Her contract was extended twice. In spring 2011, she began dancing part-time in another show co-owned by the employer. She did not have an employment contract for this show. In December 2011, the employee was informed that her employment for both shows would not be continued.

Performance issues. The evidence showed that after the first few months of observing the employee, the choreographer for Vegas! The Show, was dissatisfied with her lack of versatility in performance because the show required dancers to portray different dancing and acting styles. Efforts to work with the employee proved unsuccessful. In December 2010, it was recommended that her contract not be renewed. Ultimately, her contract was extended to January 2, 2012.

In November 2011, auditions were held for new dancers for Vegas! The Show, specifically for a replacement for the employee. Other evidence showed that a dance captain reported that the employee would get defensive when she received feedback on her performance, and he informed management that her performance did not match the style required for the show. Another dance captain expressed concern about the employee’s negative attitude backstage, and its impact on other cast members. He also shared his concerns with management, including her complaining about paid leave, scheduling, and accommodations for injuries. The employee was also unhappy with second show, expressing safety concerns after being asked to move a heavy prop. Additionally, she was unhappy because she wanted additional shifts in the show.

Non-renewal of contract. On December 13, 2011, the employee and other dancers met with the employer to discuss pay and other working conditions, such as time off for injuries and adequate time to prepare in between shows. The employee apparently spoke the most. After that meeting, employer officials met to discuss non-renewal of the employee’s contract. When she later brought up the subject of the renewal, she was advised that the employer was not renewing her contract due to her constant negative attitude and lackluster performance. She was also dropped from the second show because she lacked the proper appearance.

After a five-day hearing, an ALJ recommended dismissing the unfair labor practice charges relating to the employee’s discharge from both shows. The ALJ found that the employer had shown by a preponderance of the evidence, that it would have taken the same action even if the employee had not engaged in protected activity. However, two members of the Board disagreed with the ALJ’s conclusion that the employer would still have let her contract expire. Rather, they found that the employer seized upon concerns about the employee’s performance and attitude as pretext for discharging her.

Member Miscimarra dissented. He did not regard the timing of the discharge suspicious because the employee’s contract was due to expire in a couple of weeks. Moreover, he pointed out that evidence showed her non-renewal was “under serious consideration” in November. The employer petitioned for review.

Board choice. The appeals court may not “displace the Board’s choice between to fairly conflicting views, even though it might have made a different choice.” Still, the Board’s findings of fact are conclusive only if supported by substantial evidence on the record as a whole. Here, the employer did not challenge the Board’s finding that the employer was motivated by the employee’s protected activity when it made the decision not to renew her contract, and discharged her from the second show. Rather, it asserted that it would have made the same decisions about her even absent her protected activity.

According to the employer, the Board’s decision must be partially vacated because it functionally disagreed with the ALJ’s credibility findings in evaluating the employer’s testimony without acknowledging that rejection, and because the Board’s finding that the employer’s explanation for its decision was pretextual was not supported by substantial evidence in the record.

The Board’s “established policy” is not to overrule an ALJ’s credibility findings “unless the clear preponderance of the relevant evidence convinces the Board that they are incorrect.” At the heart of the matter was the employer’s conflicting testimony. The ALJ resolved the conflict by explaining that “the timing of events, the content of an email and witness testimony, corroborated the employer’s testimony that he decided to let the employee go after consulting with others. The Board never directly disputed this credibility finding. Rather, it concluded that the employer seized upon concerns about the employee’s performance and attitude as pretext for discharging her.

However, it was unclear whether the Board determined that the employer’s testimony that he decided to let the employee go after December 13 because of performance and attitude was inherently incredible in view of other circumstances on which it relied. If not, then the Board needs to explain how it considered the employer’s explanation to be pretextual while at the same time purporting not to reject the ALJ’s credibility finding.

If the Board’s reliance on “reasons not considered” by the ALJ fails to account for evidence addressing the employer’s non-pretextual reasons for non-renewal of the employee’s contract, then its findings would be unsupported by substantial evidence. Accordingly, the appeals court remanded the matter for clarification of the Board’s treatment of the ALJ’s credibility findings.

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