Miklin Enterprises, Inc. v. National Labor Relations Board
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Full Opinion
with whom SMITH, Chief Judge, WOLLMAN, RILEY, GRUENDER, and SHEPHERD, Circuit Judges, join.
MikLin Enterprises, Inc. (âMikLinâ) petitions for review of a National Labor Relations Board (âBoardâ) Order holding that MikLin violated Sections 8(a)(1) and 8(a)(3) of the National Labor Relations Act (âNLRAâ or âthe Actâ), 29 U.S.C. §§ 158(a)(1) and (3), when it (i) discharged and disciplined employees who publicly distributed posters suggesting that Mik-Linâs âJimmy Johnâsâ sandwiches posed a health risk to consumers; (ii) solicited employees to aid in removing the posters; (in) encouraged employees to disparage a union supporter; and (iv) removed union literature from in-store bulletin boards. MikLin argues that the Board misapplied governing law and its decision is not supported by substantial evidence. The Board cross-petitions for enforcement of its Order. A divided panel enforced the Order in its entirety. We granted rehearing en banc and vacated the panel decision. We now conclude that the means the disciplined employees used in their poster attack were so disloyal as to exceed their right to engage in concerted activities protected by the NLRA, as construed in a controlling Supreme Court precedent, NLRB v. Local Union No. 1229, IBEW, 346 U.S. 464, 74 S.Ct. 172, 98 L.Ed. 195 (1953) (âJefferson Standardâ). We therefore decline to enforce the determination that MikLin violated the Act by disciplining and discharging those employees and by soliciting removal of the unprotected posters. We enforce the remainder of the Order, as so modified.
I. Background.
A. The âSick Day Postersâ Campaign. MikLin is a family enterprise that owns and operates ten Jimmy Johnâs sandwich-shop franchises in the Minneapolis-St. Paul area. Michael Mulligan is president and co-owner; Robert Mulligan, his son, is vice-president. In 2007, several MikLin workers began an organizing campaign seeking representation by the Industrial Workers of the World (âIWWâ) union. The IWW lost a Board-conducted election in October 2010, filed unfair labor practice charges and objections to the election with the Board, and continued its organizing campaign by urging MikLin to provide employees holiday pay in late 2010. On January 10, 2011, MikLin and the IWW settled the IWWâs objections. MikLin admitted no wrongdoing but agreed to a Board-conducted rerun election if the IWW filed for'the election after sixty days but not later than after eighteen months.
With the holiday season passed,, the IWW decided its next âmarch on the bossâ group action would be to demand paid sick leave. The IWW concluded that the approach of flu season was a good time to raise the issue. At this time, MikLinâs handbook required any employee who would be absent from a shift to find a replacement and notify the store manager. Rule 11 of Jimmy Johnâs Rules for Employment, which employees received when hired, stated: âFind your own replacement if you are not going to be at work. We do not allow people to simply call in sick! We require our employees and [managers] to find their own replacement! NO EXCEPTIONS!â Failure to follow this procedure resulted in termination. MikLin did not offer paid leave for sick employees, though an employee with sufficient tenure was entitled to paid leave to care for a sick child.
Organizers of the IWW sick leave campaign began their attack in late January
MikLin managers quickly removed the posters from store bulletin boards. On the morning of March 10 â the day before the IWW could request a rerun electionâ IWW supporters distributed a press release, letter, and the sandwich poster to more than one hundred media contacts, including local newspapers and major news outlets such as the Associated Press, Reuters, Bloomberg, and NBC News. The press release highlighted âunhealthy company behavior.â Its second sentence framed the message: âAs flu season continues, the sandwich makers at this 10-store franchise are sick and tired of putting their health and the health of their customers at risk.â The release declared: âAccording to findings of a union survey, Jimmy Johnâs workers have reported having to work with strep throat, colds and even the flu.â The release ended with a threat: if Robert and Michael Mulligan would not talk with IWW supporters about their demands for paid sick leave, the supporters would proceed with âdramatic actionâ by âplastering the city with thousands of Sick Day posters.â
Employees attached to the press release a âsick leave letterâ to the Mulligans which asserted that health code violations occur at MikLin stores nearly every day. The employees complained: âBy working sick, we are jeopardizing the entirety of [the companyâs] image and risking public safety.â The letter accused MikLin of refusing to put customers first, risking customersâ health, and âshoving [customers] to the bottom of the well of importance.â Like the press release, the letter concluded with a threat: if the Mulligans would not meet the employeesâ demands, the campaign would âmove forward with [its] Sick Day posters by posting them not only in stores, but on the Universityâs Campus, in hospitals, on street corners, and any other place where postings are common, eitywide.â
Also on March 10, four organizers met with Robert Mulligan. They told Mulligan that MikLinâs attendance policy and low wages pressured employees to work while sick. Mulligan said MikLin was in the process of reforming its policies. The organizers provided Mulligan a printed version of their letter and press release and warned that, unless MikLin took action to fix the sick day policy within ten days, employees would display sandwich posters throughout the area. Employees who attended felt they had achieved some âcommon ground.â
MikLin posted a new sick leave policy in each store on March 16. The new policy provided a sliding scale of disciplinary points for absences. An employee who did not report but found a replacement would receive no points. An absent employee who
On March 20, IWW supporters implemented their threat to plaster the city with a new version of the Sick Day posters they had placed in MikLin stores in January and February. The bottom of the publicly distributed posters incorporated one change: rather than asking for support of the employeesâ request for paid sick leave, the public posters listed Robert Mulliganâs personal telephone number and instructed customers to call him to âLET HIM KNOW YOU WANT HEALTHY WORKERS MAKING YOUR SANDWICH!â A copy of the publicly distributed posters appears as Appendix A to this opinion. Organizers placed posters in various locations near MikLin stores, including lampposts, trash cans, and mailboxes. Robert Mulligan testified that he was âbombarded by phone callsâ for close to a month from people who thought it was unsafe to eat at Jimmy Johnâs. Concerned about the effect on MikLinâs business, Mulligan and some managers took down the public posters. On March 22, MikLin fired six employees who coordinated the attack and issued written warnings to three who assisted.
The IWW continued its sick leave attack. In a press release issued a day after the terminations, a discharged employee stated: âIt just isnât safe â customers are getting their sandwiches made by people with the flu, and they have no idea.... [Rjather than safeguard public health and do the right thing for their employees and their customers, Jimmy Johnâs owners Mike and Rob Mulligan are trying to silence us.â On March 30, the IWW issued another press release stating that â[c]us-tomers have a right to know that their sandwich could be filled with germs,â that IWW members have a duty to speak out on this âpublic health issue,â and that employees âblew the whistle by posting 3000 copies of a poster advising the public of health risks at the sandwich chain.â The release quoted one employee as stating: âThe unfettered greed of franchise owner Mike Mulligan and Jimmy John Liautaud himself jeopardizes the health of thousands of customers and workers almost every day. We will speak out until they realize that no one wants to eat a sandwich filled with cold and flu germs.â
B. The NLRB Proceedings. Following a two-day evidentiary hearing, the Boardâs Administrative Law Judge (âALJâ) concluded that MikLin violated Sections 8(a)(1) and 8(a)(3) of the Act. Citing prior Board decisions, the ALJ ruled that âSection 7 [29 U.S.C. § 157] protects employee communications to the public that are part of and related to an ongoing labor dispute,â such as the Sick Day posters and related press releases, unless they are âso disloyal, reckless, or maliciously untrue as to lose the Actâs protections.â To lose Section 7 protection, âan employeeâs public criticism ... must evidence âa malicious
The ALJ found that the Sick Day posters were not maliciously untrue. While âit is not literally true that employees could not call in sick,â the ALJ observed, employees âare subject to discipline if they call in sick without finding a replacement.â Thus, the assertion, âSHOOT, WE CANâT EVEN CALL IN SICK,â was âprotected hyperbole.â The ALJ acknowledged record evidence that MikLin had served more than six million sandwiches over its ten-year existence and had been investigated by the Minnesota Department of Health only two times for food borne diseaseâ once in 2006 and once in 2007, when the investigating sanitarian ânoted overall compliance with food code requirements and no critical violations.â The ALJ found, however, âit is at least arguable that [Mik-Linâs] sick leave policy subjects the public to an increased risk of food borne disease,â and MikLin âcould have waged its own publicity campaignâ to attract consumers. The ALJ made no mention of the false assertion in the open letter accompanying the IWW press release that health code violations occurred at MikLin stores nearly every day. Nor did the ALJ even attempt to analyze and apply the disloyalty principle of Jefferson Standard.
A divided panel of the Board affirmed the ALJâs findings and conclusions. MikLin Enters., Inc., 361 N.L.R.B. No. 27, at *7 (2014). The majority concluded âthat neither the posters nor the press release were shown to be so disloyal; reckless, or maliciously untrue as to lose the Actâs protection.â The public communications âwere clearly related to the ongoing labor-dispute concerning the employeesâ desire for paid sick leave.... Indeed, any person viewing the posters and press release would reasonably understand that the motive for the communications was to garner support for the campaign to improve the employeesâ terms and conditions of employment by obtaining paid sick leave rather than to disparage [MikLin] or its product.â Nor were any of the statements maliciously untrue.
Turning to the question of disloyalty, the majority noted that âBoard law has developed considerably in its approach to the question of employee disloyalty.â âTo lose the Actâs protection as an act of disloyalty, an employeeâs public criticism of an employer must evidence a malicious motive,â even if the-public communication âraise[s] highly sensitive issues such as public safety.â Accepting the majorityâs summary of prior Board decisions, the dissenting Member would nonetheless have held the Sick Day posters and press release unprotected, because âit is well established that employees lose the Actâs protection if their means of protest are âflagrantly disloyal, wholly incommensurate with any grievances which they may have, and manifested by public disparagement of the employerâs product or undermining of its reputation,ââ quoting Five Star Transportation, Inc., 349 N.L.R.B. 42, 44-47 (2007), enforced, 522 F.3d 46 (1st Cir. 2008).
II. âSick Dayâ Poster Issues.
It is well established that an employer commits an unfair labor practice if it discharges employees for engaging in concerted activities that are protected by Section 7 of the NLRA, including communications to third parties or to the public that seek to âimprove their lot as employees through channels outside the immediate employee-employer relationship.â Eastex, Inc. v. NLRB, 437 U.S. 556, 565, 98 S.Ct. 2505, 57 L.Ed.2d 428 (1978). Section 10(c) of the Act, however, expressly limits the Boardâs broad authority to remedy un
A. In Jefferson Standard, the Court upheld the Boardâs decision that a broadcasting station did not violate the Act when it fired technicians who distributed handbills âmaking a sharp, public, disparaging attack upon the quality of the companyâs product and its business policies, in a manner reasonably calculated to harm the companyâs reputation and reduce its income.â 346 U.S. at 471, 74 S.Ct. 172. After bargaining negotiations broke down, employees first picketed the station for treating its employees unfairly. When this tactic failed, the employees distributed thousands of handbills, signed âWBT Technicians,â criticizing the stationâs poor programming quality and asserting that Jefferson Standard did not value its customers and considered the local city to be a âsecond-class community.â Id. at 468, 74 S.Ct. 172. The Board found the employee handbills unprotected because the technicians âdeliberately undertook to alienate their employerâs customers by impugning the technical quality of his product.â Jefferson Standard Broadcasting Co., 94 N.L.R.B. 1507, 1511 (1951). Though the techniciansâ purpose was âto extract a concession from the employer with respect to the terms of their employment,â the Board found that they lost the Actâs protection when they failed to disclose their interests as employees. Id at 1511. The Board reasoned that the technicians lost the Actâs protection because âthe gist of [the techniciansâ] appeal to the public was that the employer ought to be boycotted because he offered a shoddy product to the consuming public â not because he was âunfairâ to the employees who worked on that product.â Id. at 1512. The Board declined to decide whether the product disparagement in the handbills would justify discharge âhad it been uttered in the context of a conventional appeal for support of the union in the labor dispute.â Id at 1512 n.18.
The Supreme Court, in affirming the Board, decided the case on broader grounds. After quoting the âfor causeâ language of Section 10(c), the Court declared that â[t]here is no more' elemental cause for discharge of an employee than disloyalty to his employer.â Jefferson Standard, 346 U.S. at 472, 74 S.Ct. 172. Congress in the NLRA âdid not weaken the underlying contractual bonds and loyalties of employer and employee.â Id. at 473, 74 S.Ct. 172. Absent a labor controversy, the techniciansâ conduct âunquestionably would have provided adequate cause for their disciplinary discharge within the meaning of § 10(c).... The fortuity of the coexistence of a labor dispute affords these technicians no substantial defense.â Id. at 476, 74 S.Ct. 172. Thus, the handbill attack targeting âthe quality of the companyâs product ... was as adequate a cause for the discharge of its sponsors as if the labor controversy had not been pending.â Id. at 477, 74 S.Ct. 172. Though the Court noted several times that the technicians failed to disclose a connection between their labor dispute and the handbill attack, the Court declined to remand for further consideration of whether the handbills were an âappeal for support in the pending dispute,â rather than âa concerted separable attack,â because the attack would be unprotected either way:
Even if the attack were to be treated, as the Board has not treated it, as a concerted activity wholly or partly within the scope of those mentioned in § 7, the means used by the technicians in con*820 ducting the attack have deprived the attackers of the protection of that section, when read in the light and context of the purpose of the Act.
Id. at 477-78, 74 S.Ct. 172.
The Supreme Courtâs decision not to remand in Jefferson Standard made clear that the Courtâs disloyalty ruling includes communications that otherwise would fall within Section 7 protection, if those communications âmak[e] a sharp, public, disparaging attack upon the quality of the companyâs product and its business policies, in a manner reasonably calculated to harm the companyâs reputation and reduce its income.â 346 U.S. at 471, 74 S.Ct. 172. In NLRB v. Washington Aluminum Co., 370 U.S. 9, 17, 82 S.Ct. 1099, 8 L.Ed.2d 298 (1962), the Court confirmed that Section 10(c) âcannot mean that an employer is at liberty to punish a man by discharging him for engaging in concerted activities which § 7 of the Act protects.â But the Court explained that Jefferson Standard âdenied the protection of § 7 to activities characterized as âindefensibleâ because they were there found to show a disloyalty to the workersâ employer which [the] Court deemed unnecessary to carry on the workersâ legitimate concerted activities.â Id., quoting Jefferson Standard, 346 U.S. at 477, 74 S.Ct. 172. Thus, we reject the dissentâs suggestion that Jefferson Standard does not apply in this case because the employeesâ disparaging communications âexpressly referenced] ongoing labor disputes.â Post at 832.
B. Board decisions applying Jefferson Standard initially recognized that employers may protect their businesses from detrimental product disparagement whether or not an employee attack referenced a labor dispute. See Patterson-Sargent Co., 115 N.L.R.B. 1627, 1630 (1956) (employeesâ handbill asserting replacement workers produced defective paint was unprotected âpublic disparagement of the quality of the employerâs productâ); Coca Cola Bottling Works, Inc., 186 N.L.R.B. 1050, 1063-64 (1970) (employeesâ leaflet warning that inexperienced workers could leave objects such as roaches, bugs, and dead mice in the companyâs bottles was âthe very type of [disparaging] conductâ held unprotected in Jefferson Standard).
Though the Supreme Courtâs interpretation of the NLRA in Jefferson Standard remains unchanged, âBoard law has developed considerably in its approach to the question of employee disloyalty.â MikLin, 361 N.L.R.B. No. 27, at *5 n.18. In 1987, the Board articulated its modern interpretation: âJefferson Standard held that employees may engage in communications with third parties in circumstances where the communication is related to an ongoing labor dispute and when the communication is not so disloyal, reckless, or maliciously untrue to lose the Actâs protection.â Emarco, Inc., 284 N.L.R.B. 832, 833 (1987); see Am. Golf Corp., 330 N.L.R.B. 1238, 1240 (2000). Although Jefferson Standard did not involve employee public communications that were reckless or maliciously untrue, we do not question the Boardâs view that such communications are not entitled to the protection of Section 7 as limited by Section 10(c).
The issue in this case is the Jefferson Standard disloyalty principle â Section 10(e) permits an employer to fire an employee for âmaking a sharp, public, disparaging attack upon the quality of the companyâs product and its business policies, in a manner reasonably calculated to harm the companyâs reputation and reduce its income.â 346 U.S. at 471, 74 S.Ct. 172. On this issue, while always purporting to apply Jefferson Standardâs holding, the Board has migrated to a severely constrained interpretation of that decision. âTo lose the Actâs protection as an act of disloyalty, an employeeâs public criticism of an employer must evidence a malicious motive.â MikLin, 361 N.L.R.B. No. 27, at *5 (quotation omitted). â[E]ven communications that raise highly sensitive issues such as public safety [are] protected where they are sufficiently linked to a legitimate labor dispute and are not maliciously motivated to harm the employer.â Id. at *4-*5.
In our view, the Board fundamentally misconstrued Jefferson Standard in two ways. First, while an employeeâs subjective intent is of course relevant to the disloyalty inquiry â âsharp, public, disparaging attackâ suggests an intent to harmâ the Jefferson Standard principle includes an objective component that focuses, not on the employeeâs purpose, but on the means used â whether the disparaging attack was âreasonably calculated to harm the companyâs reputation and reduce its income,â 346 U.S. at 471, 74 S.Ct. 172, to such an extent that it was harmful, indefensible disparagement of the employer or its product, id. at 477, 74 S.Ct. 172. By holding that no act of employee disparagement is unprotected disloyalty unless it is âmaliciously motivated to harm the employer,â the Board has not interpreted Jefferson Standard â it has overruled it.
Second, the Boardâs definition of âmalicious motiveâ for these purposes excludes from Jefferson Standardâs interpretation of Section 10(c) all employee disparagement that is part of or directly related to an ongoing labor dispute. While the employees âmay have anticipated that some members of the public might choose not to patronize [MikLinâs] restaurants after reading the posters or press release,â the Board ruled, their public communications were protected activity because âthere is no evidence that [their] purpose was to inflict harm on [MikLin].â Rather, âthey were motivated by a sincere desire to improve their terms and conditions of employment.â MikLin, 361 N.L.R.B. No. 27, at *6. In other words, the Board refuses to treat as âdisloyalâ any public communication intended to advance employeesâ aims in a labor dispute, regardless of the manner in which, and the extent to which, it harms the employer. As the Court held in Jefferson Standard that its disloyalty principle would apply even if the employees had explicitly related their public disparagement to their ongoing labor dispute,
By requiring an employer to show that employees had a subjective intent to harm, and burdening that requirement with an overly restrictive need to show âmalicious motive,â the Board has effectively removed from the Jefferson Standard inquiry the central Section 10(c) issue as defined by the Supreme Courtâ whether the means used reflect indefensible employee disloyalty. This is an error of law. See George A. Hormel & Co. v. NLRB, 962 F.2d 1061, 1065 (D.C. Cir. 1992). Our prior cases confirm that an employeeâs disloyal statements can lose Section 7 protection without a showing of actual malice. In St. Lukeâs, we expressly rejected the contention ⢠that public disparagement of an employer âwas protected activity unless maliciously false.â 268 F.3d at 579. We explained that cases interpreting Jefferson Standard âestablish that an employee exceeds the boundaries of protected activity when she falsely and publicly disparages her employer or its products and services.â Id. at 580. By requiring proof that disloyal conduct was the product of a malicious motive, the Board fundamentally misinterpreted both Jefferson Standard and our decisions construing and applying Jefferson Standard.
Rather than employee motive, the critical question in the Jefferson Standard disloyalty inquiry is whether employee public communications reasonably targeted the employerâs labor practices, or indefensibly disparaged the quality of the employerâs product or services. The former furthers the policy of the NLRA; the latter does not. See Jefferson Standard, 346 U.S. at 476, 74 S.Ct. 172; see also Five Star, 349 N.L.R.B. at 46. This distinction focuses on the type of harm employeesâ methods cause. When employees convince customers not to patronize an employer because its labor practices are unfair, subsequent settlement of the labor dispute brings the customers back, to the benefit of both employer and employee. By contrast, sharply disparaging the employerâs product or services as unsafe, unhealthy, or of shoddy quality causes harm that outlasts the labor dispute, to the detriment of all employees as well as the employer. See Diamond Walnut Growers, Inc. v. NLRB, 113 F.3d 1259, 1267 (D.C. Cir. 1997) (en banc), cert. denied, 523 U.S. 1020, 118 S.Ct. 1299, 140 L.Ed.2d 466 (1998); compare Montefiore, 621 F.2d at 517 (efforts by striking doctors to discourage patients from entering the clinic were unprotected, although related to labor dispute, because they âappealed to patients to turn away not out of sympathy with the aims of the striking workers ..., but in the belief that they could not obtain competent treatment thereâ), and St. Lukeâs, 268 F.3d at 580 (nurseâs public statements relating to ongoing labor dispute were unprotected because she âdisparaged the quality of patient care being provided by [her employer] in a way guaranteed to adversely affect the hospitalâs reputation with prospective patients and the public at largeâ), with NLRB v. Greyhound Lines, Inc., 660 F.2d 354, 357 (8th Cir. 1981) (bus driversâ factual statements regarding anticipated service delays were not unprotected because they âdid not contain any insults or negative insinuations about the Companyâs services or integrity with respect to its customersâ).
C. The Board argues, and our dissenting colleagues agree, that its decision is entitled to judicial deference under Chev
In the first place, we doubt the statement in Brand X even applies in this case, where the Board itself purported to interpret Jefferson Standard, not apply its own contrary interpretation of the proper interplay between Section 7 and Section 10(c) of the NLRA: âIn protecting employee communications that are critical of the employer or its product where the communications relate to a labor dispute, the Board has adhered to the specific holding of Jefferson Standard, ... and its approach has been upheld by numerous courts.â MikLin, 361 N.L.R.B. No. 27, at *5. Brand X does not require a court to defer to an agencyâs interpretations of judicial precedent. Numerous prior court of appeals decisions have held that the Boardâs interpretation of judicial precedent âis not entitled to judicial deference.â N.Y., N.Y., LLC v. NLRB, 313 F.3d 585, 590 (D.C. Cir. 2002); accord Ne. Beverage Corp. v. NLRB, 554 F.3d 133, 139 (D.C. Cir. 2009); NLRB v. U.S. Postal Serv., 660 F.3d 65, 68 (1st Cir. 2011); see Owen v. Bristol Care, Inc., 702 F.3d 1050, 1054 (8th Cir. 2013). Applying these precedents, we interpret Jefferson Standard de novo.
Second, it is far from settled that Brand X applies to prior decisions of the Supreme Court such as Jefferson Standard. See Brand X, 545 U.S. at 1003, 125 S.Ct. 2688 (Stevens, J., concurring) (agency freedom to reject judicial interpretation of an ambiguous statute âwould not necessarily be applicable to a decision by this Court that would presumably remove any pre-existing ambiguityâ); United States v. Home Concrete & Supply, LLC, 566 U.S. 478, 132 S.Ct. 1836, 1851-52, 182 L.Ed.2d 746 (2012) (Kennedy, J., dissenting). In Home Concrete, the Court was badly fractured on the issue of how to apply the broad agency deference statement in Brand X; no position commanded a majority.
Third, the Court in Chevron recognized that statutory construction is first and foremost a judicial function: âIf a court, employing traditional tools of statutory construction, ascertains that Congress had an intention on the precise question at issue, that intention is the law and must be given effect.â 467 U.S. at 843 n.9, 104 S.Ct. 2778. Consistent with this principle, in reviewing Board decisions under the NLRA, the Supreme Court has more than once applied the principle that, â[o]nce we have determined a statuteâs clear meaning, we adhere to that determination under the doctrine of stare decisis, and we judge an agencyâs later interpretation of the statute against our prior determination of the stat