| During the Biden administration, the National Labor Relations Board (“NLRB” or “Board”) in Cemex Construction Materials Pacific, LLC v. International Brotherhood of Teamsters, 372 NLRB No. 130 (2023), overturned a half-century of agency precedent to provide that if an employer’s unfair labor practices (“ULPs”) were sufficiently serious to overturn the results of a secret-ballot election, they would in nearly all cases justify a bargaining order in favor of the union that lost the election, provided that at one time a majority of employees in the unit signed union authorization cards. The prior precedent, following the Supreme Court’s decision in NLRB v. Gissel Packing Co., 395 U.S. 575, 613-15 (1969), focused on whether a fair rerun election could be held despite the employer ULPs. The Court did note that where “serious” and “pervasive” violations occurred, a bargaining order would be appropriate without inquiry into fair rerun conditions. In less “extraordinary” cases involving “less pervasive practices,” however, the Board would undertake such an inquiry. The Gissel Court made clear that it was applying the Board’s “election preference” approach involving a move away from Joy Silk Mills, Inc., 85 NLRB 1203 (1949), and its progeny, decisions which authorized bargaining orders if the employer by virtue of its ULPs lacked “good faith” doubt of the union’s majority status, and that this departure from Joy Silk was within the agency’s discretion. | | In Brown-Forman Corp v. NLRB, Nos. 24-2107/25-1060 (Mar. 6, 2026), a 2-1 panel of the U.S. Court of Appeals for the Sixth Circuit declined to enforce the Board’s bargaining order in Brown-Forman Corp., 372 NLRB No. 130 (2024), because of the agency’s reliance on Cemex. The court agreed that the Board had demonstrated serious employer ULPs when upon learning of the union’s organizing drive, the company implemented irregular pay increases in order to undermine employee support for the union. This was a clear ULP under NLRB v. Exchange Parts Co., 275 U.S. 405 (1964), which because of its lingering effect on employees has been regarded by the NLRB and the courts as a “hallmark” violation justifying a bargaining order. The Sixth Circuit acknowledged that a Gissel bargaining order could be sustained in this case. But the Board had relied on Cemex, not Gissel, in issuing its order. | | It is longstanding federal administrative law, under SEC v. Chenery Corp., 318 U.S. 80 (1943), that a court can uphold an agency decision only if the grounds the agency in fact relied upon were lawful, even if the agency’s lawyers proffered other bases that might support the decision. Brown-Forman was not, however, a post-hoc rationalization case under Chenery as the NLRB plainly relied on Cemex, which involved a misuse of the agency adjudication mode of decision-making. The Sixth Circuit did not dispute that the NLRB can issue new standards and that it is generally in the agency’s discretion whether to use rulemaking or adjudication in doing so, under NLRB v. Bell Aerospace Co., 416 U.S. 267 (1974). For the panel majority, reliance on Cemex was problematic because the agency’s new standard was based not on the case-specific facts, but on general observations from “'[d]ecades of experience administering the Gissel standard’ in other adjudications.” Slip op. 22 | | For the court of appeals, the underlying issue seems to be that the NLRB had admitted it could issue a bargaining order under Gissel but went out of its way to promulgate “a general forward-looking policy that does not serve its case-specific remedial responsibilities.” Id. at 25. In the panel’s view, the Board in Brown-Forman cited the Cemex standard as precedent and did nothing more. The Board did not explain why the case-specific facts warranted creating and applying an alternative to the Gissel standard as it attempted to resolve the parties’ dispute on an invalid standard (i.e. Cemex), nor can it apply a new standard without proper justification.” Id. at 12 n.1. | | There are several problems with the court’s reasoning. First, it is not at all clear from the court’s citation to the Cemex Board’ s decision that the agency “acknowledged that applying the contemporaneously binding Gissel standard led to the appropriate decision [a bargaining order]…. Id. at 26 (citing Cemex, 2023 WL 5506930 at *27-28, *30). Second, but even the Board had, it does not follow that “the only purpose of the new standard was to deter future hypothetical violations of the Act.” Id. This is an unduly fastidious way to read the agency’s decision, which in dealing with the “case-specific facts” before it determined that a bargaining order was called and that exclusive reliance on Gissel standards might stymie enforcement of such an order (where Gissel bargaining orders have faced difficulty in the courts for decades) and give the company an incentive to continue its unlawful practices. There is no doctrine that requires the Board to adopt the narrowest ground available. Moreover, once it is recognized that the agency can formulate a new standard in an adjudication and that standard can seek deterrence of illegality in addition to compensatory goals, it seems difficult to fault Cemex on that ground. | | Ultimately, the Sixth Circuit’s approach fails to deal substantively with the Cemex decision. As the Supreme Court recognized in Gissel, the Board has the authority to issue a bargaining order without a secret-ballot election, at least where the employer’s ULPs are inconsistent with the employer’s good-faith doubt of the union’s majority status. The Board had not made clear in Cemex what kinds of employer ULPs warrant a bargaining order. If any ULP that justifies overturning an election loss for the union results in a bargaining order, that would be inconsistent with the tenor of the Gissel ruling by not giving sufficient attention to the employees’ interest in being able to decide whether they want union representation, or representation by the particular union, in a secret-ballot election. |
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