United States Court of Appeals, District of Columbia Circuit
February 23, 2017
Application for Enforcement and Cross-Petition For Review of
an Order of the National Labor Relations Board
K. Shanmugam argued the cause for CNN America, Inc. With him
on the briefs were Kevin T. Baine, Paul Mogin, and Zachary D.
Maurice Baskin, Michael J. Lotito, and Elizabeth Parry were
on the brief for amici curiae Chamber of Commerce of the
United States of America, et al. in support of CNN America.
E. Hoyte-Hayes, Supervisory Attorney, National Labor
Relations Board, argued the cause for the National Labor
Relations Board. With her on the brief were Richard F.
Griffin, Jr., General Counsel, John H. Ferguson, Associate
General Counsel, and Linda Dreeben, Deputy Associate General
Counsel. Usha Dheenan, Attorney, entered an appearance.
R. Bolek argued the cause for intervenors. With him on the
brief was Patricia McConnell.
Before: Garland, Chief Judge, and Kavanaugh and Pillard,
GARLAND, CHIEF JUDGE.
many years, Cable News Network (CNN) used outside contractors
to provide technicians to operate the electronic equipment at
its Washington, D.C. and New York City bureaus. In 2003, CNN
changed that longstanding arrangement, terminating its latest
contracts and hiring a new in-house workforce. The National
Labor Relations Board found that CNN's replacement of its
unionized contractor with a nonunion, in-house workforce
violated the National Labor Relations Act in several
Board now applies for enforcement of its decision and order.
CNN cross-petitions for review. For the reasons set forth
below, we grant each request in part and deny each in part.
a leading television and online news provider. Its
Washington, D.C. and New York City bureaus, from their
inception, relied on outside contractors to operate the
equipment necessary to produce and broadcast the news.
Pursuant to exclusive service contracts -- known as
Electronic News Gathering Service Agreements -- camera
operators, sound technicians, studio technicians, and
broadcast engineers (hereinafter, "technicians")
employed by the contractors performed much of the technical
work at both bureaus.
technicians were consistently represented by a union. In
1982, the Board certified the National Association of
Broadcast Employees and Technicians (hereinafter, "the
union") as the collective-bargaining representative of
the technicians staffing the Washington bureau. In 1985, the
Board certified the same union to represent the New York
bureau's technicians. Over the following years, the union
and the contracting companies employing the technicians
entered into successive collective-bargaining agreements.
When CNN switched contracting companies -- which happened
several times -- the new company would hire nearly all of its
predecessor's employees and continue to recognize the
1997, Asgard Entertainment Group successfully bid for the
Washington contract and created Team Video Services (TVS) for
the sole purpose of staffing the Service Agreement with CNN.
In 2001, Asgard won the New York contract, which it also
serviced through TVS. The Service Agreements at the two
bureaus were materially identical. Broadly, they required TVS
to furnish CNN with technicians, as well as supervisors for
those technicians, in exchange for CNN covering TVS'
labor expenses and paying a monthly management fee. The
Service Agreements provided that TVS would supply full-time
technicians for at least 40 hours per week, in addition to
part-time technicians available 24/7 as needed by CNN. They
also provided that CNN: could require changes in TVS staffing
levels; could audit TVS' books without cause or notice;
would fund a 4% increase in salary expenses per year; would
provide all equipment used by TVS technicians; and had the
sole option to renew the agreement and could terminate it for
any reason upon four weeks' notice.
September 29, 2003, CNN announced that it was terminating its
contracts with TVS and would begin directly hiring employees
to perform the camera, studio, and engineering work at the
Washington and New York bureaus. CNN expressed appreciation
for TVS' performance and service. It said, however, that
it wanted a new workforce to allow it to take advantage of
technological developments in the industry, particularly
computer-related technology. When the union requested
recognition and bargaining, and asked to discuss future
employment prospects for bargaining-unit employees, CNN
denied the requests.
named the process by which it would directly hire its new
workforce the "Bureau Staffing Project." According
to CNN executives, the company planned to use a multistep
"behavioral interviewing process" to hire over 200
skilled technicians for the two bureaus. Former TVS employees
could apply for the new jobs, but they would have to go
through the Staffing Project's interviewing process. In
the end, more than 100 TVS bargaining-unit employees were not
hired and lost their jobs.
months after CNN officially terminated the Service
Agreements, the union filed unfair-labor-practice charges
with the National Labor Relations Board (NLRB). Three years
later, in 2007, the Board's General Counsel filed his own
complaint against CNN. In November 2008, after an 82-day
trial, an administrative law judge (ALJ) ruled against CNN in
an 83-page opinion.
first determined that CNN had been a joint employer of
TVS' employees before the termination of the Service
Agreements and was thus bound by TVS'
collective-bargaining agreements with the union. He further
determined that CNN became a successor employer after it
terminated TVS and hired a new workforce. The ALJ found that
"the reasons given by CNN for its termination of its
contracts with [TVS] and its implementation of the Bureau
Staffing Project [were] pretextual. A major motive in these
decisions was CNN's desire to operate its Washington and
New York bureaus without a union." CNN America,
Inc., 361 NLRB No. 47, at 51 (2008) (ALJ Op.). The ALJ
also found that "the Bureau Staffing Project was a sham
process, " during which "CNN engaged in widespread
and blatant discrimination against [TVS] bargaining unit
members." Id. at 50. "CNN did so, "
the ALJ found, "with the objective of depriving
employees of [union] representation." Id. On
the basis of these findings, and others discussed below, the
ALJ determined that CNN committed multiple violations of the
National Labor Relations Act (NLRA).
appealed to the Board, which finally issued its decision in
2014, affirming the ALJ in all relevant respects. CNN
America, Inc., 361 NLRB No. 47, at 1 & n.1 (2014)
(Board Op.). The Board found that, as a joint employer, CNN:
violated NLRA § 8(a)(3) and (1), 29 U.S.C. §
158(a)(3), (1), by terminating the Service Agreements out of
anti-union animus; and violated § 8(a)(5) and (1),
id. § 158(a)(5), (1), by failing to bargain
with the union about its decision to terminate those
agreements. The Board further found that, as a successor
employer, CNN violated § 8(a)(5) and (1) by failing to
recognize and bargain with the union and unilaterally
changing the employees' terms and conditions of
employment. The Board also found that CNN: violated §
8(a)(3) and (1) by discriminating against union members in
its hiring process; and violated § 8(a)(1) on four
occasions by making coercive statements through its
remedy for those violations, the Board ordered that, among
other things, CNN: (1) provide backpay and benefits to all
TVS technicians who either lost their jobs or received
reduced wages as a result of CNN's violations; (2)
reinstate and provide necessary training to all TVS
technicians who were discharged and not hired by CNN; and (3)
recognize and bargain with the union.
filed a motion for reconsideration, which the Board denied.
CNN America, Inc., 362 NLRB No. 38 (2015). The Board
now applies for enforcement of its decision and order, and
CNN cross-petitions for review. The union has intervened in
support of the Board.
Board first had to decide whether CNN was a joint employer of
TVS' employees. The Board's affirmative answer to
that question led it to find that CNN committed two unfair
labor practices: terminating the Service Agreements due to
anti-union animus, in violation of § 8(a)(3) and (1);
and failing to bargain with the union before terminating the
Service Agreements, in violation of § 8(a)(5) and (1).
If, as CNN argues, the Board wrongly concluded that CNN was a
joint employer, then those two unfair-labor-practice findings
must fall away. This is so because, if CNN was not a joint
employer of TVS' employees, it would not have been bound
by the collective-bargaining agreement between TVS and the
union, and its termination of the Service Agreements would
thus have been lawful. See Computer Assocs. Int'l,
Inc. v. NLRB, 282 F.3d 849, 852-53 (D.C. Cir. 2002);
see also Computer Assocs. Int'l, Inc., 324 NLRB
285, 286 (1997) ("[A]n employer does not violate Section
8(a)(3) by ceasing to do business with another employer
because of the union or nonunion activity of the latter's
employees."), enforcement denied on other
grounds, 282 F.3d 849 (D.C. Cir. 2002).
conclude that the Board's determination that CNN and TVS
were joint employers cannot stand. This is not because we
find that the two companies lacked a joint-employer
relationship. Rather, it is because the Board applied a
standard for determining whether companies are joint
employers that appears to be inconsistent with its
precedents, without addressing those precedents or explaining
why they do not govern. Our conclusion does not bar the Board
from finding CNN to be a joint employer by applying a
different standard or sufficiently explaining the one it did
apply. It means only that we cannot enforce the Board's
determination in this proceeding.
two 1984 decisions, the Board began its joint-employer
analysis by setting forth the governing standard it intended
to apply: "The Board will find that two separate
entities are joint employers of a single workforce if the
evidence shows that they 'share or codetermine
those matters governing the essential terms and conditions of
employment.'" CNN America, Inc., 361 NLRB
No. 47, at 3 (quoting TLI, Inc., 271 NLRB 798, 803
(1984)) (emphasis added); see id. (citing Laerco
Transp., 269 NLRB 324, 325 (1984)); see also
ALJ Op., 361 NLRB No. 47, at 52-53.
sentences in a footnote, the Board acknowledged that its
subsequent 2002 opinion in Airborne Express
"stated that the test for joint-employer status requires
'direct and immediate' control by the
putative joint employer over employment matters." 361
NLRB No. 47, at 3 n.7 (quoting Airborne Express, 338
NLRB 597, 597 n.1) (emphasis added). But the Board noted that
the case Airborne Express cited for that
proposition, TLI, Inc., had "ma[de] no mention
that control over employment matters must be direct and
immediate." Id. Apparently sidestepping the
"direct and immediate" control requirement, which
it never mentioned again, the Board concluded that CNN and
TVS were joint employers.
Board's decision was issued by a three-member panel.
After the panel's decision, but before the briefing of
this appeal, the full Board sat in another case to consider
"its current standard for assessing joint-employer
status." Browning-Ferris, 362 NLRB No. 186, at
1 (2015). In Browning-Ferris, the full Board
canvassed a 30-year history of its joint-employer cases -- a
period beginning with TLI and Laerco
Transportation and running through
Browning-Ferris itself -- and concluded that the
prevailing standard during that period required an
employer's exercise of "direct [and] immediate"
control. Id. at 13. "Most significantly, "
the Board said,
the Board's decisions have implicitly repudiated . . .
reliance on reserved control and indirect control as indicia
of joint-employer status. The Board has foreclosed
consideration of a putative employer's right to control
workers, and has instead focused exclusively on its actual
exercise of that control -- and required its exercise to be
direct, immediate, and not "limited and routine."
Browning-Ferris, 362 NLRB No. 186, at 13.
Among other cases, the Board said, Airborne Express
had "held that '[t]he essential element in
[the joint-employer] analysis is whether a putative joint
employer's control over employment matters is direct and
immediate.'" Id. at 14 (quoting
Airborne Express, 338 NLRB at 597 n.1) (emphasis
established that the existing standard was "direct and
immediate" control, Browning-Ferris then went
on to criticize that standard. Following an extensive
discussion, the Board concluded that "the current
joint-employer standard is not mandated by the Act and . . .
does not best serve the Act's policies."
Id. at 15. "[W]e will no longer require, "
the Board continued, "that a joint employer not only
possess the authority to control employees' terms and
conditions of employment, but must also exercise that
authority, and do so directly, immediately, and not in a
'limited and routine' manner." Id. at
19. "Accordingly, we overrule Laerco,
TLI, A&M Property, and Airborne
Express, . . . and other Board decisions, to the extent
that they are inconsistent with our decision today. The right
to control, in the common-law sense, is probative of
joint-employer status, as is the actual exercise of control,
whether direct or indirect." Id. Under its
revised standard, the Board said, "two or more entities
are joint employers of a single work force if they are both
employers within the meaning of the common law, and if they
share or codetermine those matters governing the essential
terms and conditions of employment." Id.
difference between the case now before us and
Browning-Ferris should be apparent. In
Browning-Ferris, the Board carefully examined three
decades of its precedents and concluded that the
joint-employer standard they reflected required "direct
and immediate" control. It then criticized that
standard. Thereafter, it forthrightly overruled those cases
and set forth, as "a new rule" for identifying
joint employment, a standard quite similar to the one the
Board in the case before us claimed had been the standard all
along. Id. at 3; see id. at 19. This an
agency may do, as long as it provides a reasoned explanation
for its change of course. See FCC v. Fox Television
Stations, Inc., 556 U.S. 502, 515 (2009). In fact,
whether the Board did so in Browning-Ferris is a
question at issue in a petition for review of that decision
that is currently pending before another panel of this court.
See Browning-Ferris Indus. of Cal. v. NLRB, No.
16-1028 (D.C. Cir. filed Jan. 20, 2016).
case on review here, however, the Board did none of those
things. In characterizing the prevailing joint-employer
standard, it did not grapple with its precedents in the
manner of Browning-Ferris. It did not explain why it
thought precedents that seemed to "focus exclusively
on [the employer's] actual exercise of . . . control --
and require its exercise to be direct [and] immediate,
" Browning-Ferris, 362 NLRB No. 186, at 13,
instead supported a more flexible "share or
codetermine" standard. Indeed, it did not even mention
many of the important precedents at all, including those that
expressly used the "direct and immediate" control
formulation. Nor did the Board mention the fact that,
just three months earlier, its own General Counsel's
amicus brief in Browning-Ferris had said:
"[T]he Board [has] made clear that the essential element
in its current analysis is 'whether a putative joint
employer's control over employment matters is direct
and immediate.'" Amicus Brief of the General
Counsel at 8, Browning-Ferris Indus., Docket No.
32-RC-109684 (June 26, 2014) (quoting Airborne
Express, 338 NLRB at 597 n.1) (emphasis added in brief).
And because it did not acknowledge the precedent suggesting
that "direct and immediate" control was the
existing standard, it certainly did not forthrightly overrule
"[s]ilence in the face of inconvenient precedent is not
acceptable." Jicarilla Apache Nation v. Dep't of
Interior, 613 F.3d 1112, 1120 (D.C. Cir. 2010). "An
agency's failure to come to grips with conflicting
precedent constitutes 'an inexcusable departure from the
essential requirement of reasoned decision making.'"
Ramaprakash v. FAA, 346 F.3d 1121, 1125 (D.C. Cir.
2003) (quoting Columbia Broad. Sys. v. FCC, 454 F.2d
1018, 1027 (D.C. Cir. 1971)). Indeed, it is "elementary
that an agency must conform to its prior decisions or explain
the reason for its departure from such precedent."
Gilbert v. NLRB, 56 F.3d 1438, 1445 (D.C. Cir.
1995). "[A]n agency changing its course must supply a
reasoned analysis indicating that prior policies and
standards are being deliberately changed, not casually
ignored, and if an agency glosses over or swerves from prior
precedents without discussion it may cross the line from the
tolerably terse to the intolerably mute." Greater
Boston Television Corp. v. FCC, 444 F.2d 841, 852 (D.C.
Cir. 1970).Because the Board crossed that line here,
we must set aside its finding that CNN was a joint employer.
See, e.g., E.I. Du Pont De Nemours & Co. v.
NLRB, 682 F.3d 65, 70 (D.C. Cir. 2012). And as a
consequence, we must vacate the two unfair-labor-practice
findings that rested on CNN's joint-employer status.
See Computer Assocs. Int'l, 282 F.3d at 853.
emphasize that nothing in our holding in this case precludes
the Board from adopting a "share or codetermine"
standard that takes into account a putative employer's
indirect control of a group of workers. As we have noted, the
validity of the Board's rejection of the "direct and
immediate" control requirement in
Browning-Ferris is at issue in the pending petition
for review of that decision. Nor does anything in our holding
preclude the Board, on remand, from applying the "direct
and immediate" control standard and concluding that CNN
satisfied that standard. But it did not do so in the
proceedings in this case, and this court lacks authority to
resolve the case by applying that standard itself. As the
Supreme Court held over 70 years ago in SEC v. Chenery
Corp., "[t]he grounds upon which an administrative
order must be judged are those upon which the record
discloses that its action was based." 318 U.S. 80, 87
(1943); see Michigan v. EPA, 135 S.Ct. 2699, 2710
(2015); see also Williams Gas Processing - Gulf Coast Co.
v. FERC, 373 F.3d 1335, 1345 (D.C. Cir. 2004) ("It
is axiomatic that we may uphold agency orders based only on
reasoning that is fairly stated by the agency in the order
under review . . . .").
we cannot affirm the NLRB's finding that CNN was a joint
employer with TVS, the Board's three remaining
unfair-labor-practice findings do not depend on CNN's
joint-employer status. The first of the three survives if CNN
was a successor employer to TVS, even if the two were not
joint employers. The Board found that CNN was a successor,
and on that basis found that CNN violated NLRA § 8(a)(5)
and (1) by failing to bargain with the union after it
completed its hiring and became the technicians'
employer. "When the Board concludes that a violation of
the NLRA has occurred, we must uphold that finding unless it
'has no rational basis' or is 'unsupported by
substantial evidence.'" Bally's Park Place,
Inc. v. NLRB, 646 F.3d 929, 935 (D.C. Cir. 2011)
(quoting United Mine Workers of Am., Dist. 31 v.
NLRB, 879 F.2d 939, 942 (D.C. Cir. 1989)); see
29 U.S.C. § 160(e). And because the Board largely
adopted "the ALJ's findings and conclusions as its
own, we apply the same deferential standard to those findings
and conclusions." Weigand v. NLRB, 783 F.3d
889, 895 (D.C. Cir. 2015).
§ 8(a)(5) makes it an unfair labor practice for an
employer "to refuse to bargain collectively with the
representatives of [its] employees." 29 U.S.C. §
158(a)(5). A new employer, however, "generally assumes
an obligation to bargain with the representative of its
predecessor's employees only if the new employer is
considered a 'successor' to the old."
Waterbury Hotel Mgmt., LLC v. NLRB, 314 F.3d 645,
653 (D.C. Cir. 2003). An entity qualifies as a successor
employer when: (1) it "does not make a 'significant
change' in the 'essential nature' of the
business, and (2) 'a majority of the new [employer's]
employees were employed by the predecessor.'"
Capital Cleaning Contractors, Inc. v. NLRB, 147 F.3d
999, 1005 (D.C. Cir. 1998) (quoting Elastic Stop Nut Div.
of Harvard Indus., Inc. v. NLRB, 921 F.2d 1275, 1281
(D.C. Cir. 1990)); see Waterbury Hotel Mgmt., LLC,
314 F.3d at 653; see also Fall River Dyeing &
Finishing Corp. v. NLRB, 482 U.S. 27, 41-43 (1987).
does not contend that it made a significant change in the
essential nature of TVS' operations. And for good reason.
As the Board found, after CNN took over from TVS, "CNN
continued the same business operations with employees who
performed the same work, at the same locations, and using the
same equipment, as the TVS technicians." Board Op., 361
NLRB No. 47, at 21; see also ALJ Op., 361 NLRB No.
47, at 108. The only question, then, is whether a majority of
CNN's new employees were previously employed by TVS.
answering this question requires an exercise in counting. But
when "a successor refuses to hire predecessor employees
because of anti-union animus, the Board presumes that but for
such discrimination, the successor would have hired a
majority of incumbent employees." Waterbury Hotel
Mgmt., LLC, 314 F.3d at 655; see Capital Cleaning
Contractors, Inc., 147 F.3d at 1008. "In effect,
when a successor refuses to hire its predecessor's
employees based upon anti-union animus, the successor loses
the right unilaterally to set the initial terms and
conditions of employment; it must first bargain with the
union." Capital Cleaning Contractors, Inc., 147
F.3d at 1008. The Board took this tack in finding that CNN
was a successor employer -- and thus violated § 8(a)(5)
by refusing to bargain --because it determined that CNN
discriminated against TVS employees (who were invariably
union members) in its hiring process. See Board Op.,
361 NLRB No. 47, at 18, 21.
determine whether an employer engaged in discriminatory
hiring, the Board employs a burden-shifting analysis known as
the Wright Line test. See Wright Line, 251
NLRB 1083 (1980), enforced, 662 F.2d 899 (1st Cir.
1981).First, the General Counsel must show that
the employer's hiring decisions were "motivated by
anti-union considerations." Waterbury Hotel Mgmt.,
LLC, 314 F.3d at 651 (quoting Teamsters Local Union
No. 171 v. NLRB, 863 F.2d 946, 955 (D.C. Cir. 1988)).
"The Board may rely on both direct and circumstantial
evidence in resolving this question of fact."
Id. "Once the General Counsel has established
that the employer was in fact motivated by anti-union animus,
the Board must find a violation of the Act unless the
employer can show ...