Fast Food Workers Comm. v. Nat'l Labor Relations Bd.

31 F.4th 807

FAST FOOD WORKERS COMMITTEE and Service Employees International Union, Petitioners

v.NATIONAL LABOR RELATIONS BOARD, Respondent

2Mangas, Inc., et al., Intervenors

No. 20-1516

United States Court of Appeals, District of Columbia Circuit.

Argued December 10, 2021

Decided April 22, 2022

John M. West argued the cause for petitioners. On the briefs were Nicole G. Berner, Kathy L. Krieger, Michael Ellement, and G. Micah Wissinger.

Joel A. Heller, Attorney, National Labor Relations Board, argued the cause for respondent. With him on the brief were Jennifer A. Abruzzo, General Counsel, Ruth E. Burdick, Deputy Associate General Counsel, and Elizabeth Heaney, Supervisory Attorney.

Pratik A. Shah argued the cause for intervenor McDonald's USA, LLC in support of respondent. With him on the brief were E. Michael Rossman, James E. Tysse, and Patricia A. Dunn.

Thomas M. O'Connell, Joseph A. Hirsch, and Louis P. DiLorenzo were on the brief for intervenors 2Mangas, Inc., et al. in support of respondent.

Before: Rogers and Rao, Circuit Judges, and Silberman, Senior Circuit Judge.

Opinion concurring in part and dissenting in part filed by Circuit Judge Rogers.

Silberman, Senior Circuit Judge:

Petitioners, the Fast Food Workers Committee and Service Employees International Union, seek review of the NLRB's approval of the settlement agreements between the Board's General Counsel on the one hand, and McDonald's and a group of McDonald's franchisees on the other. Although Petitioners raise a host of objections, their primary concern is the agreements’ failure to determine whether McDonald's is a joint employer with its franchisees. Another significant objection is directed to the participation of one of the Board's Members in this decision. It is claimed that he should have been recused.

We think that the Board's approval of the settlement agreements was within the Board's discretion. As to the claim that one of the panel members should have been recused, Petitioners fail to raise a due process challenge, either before the Board or before us. Therefore, the recusal issue is not properly presented. Accordingly, we deny the petition for review.

I.

Petitioners—the unions—launched an organizing campaign directed at McDonald's franchisees. During the campaign, Petitioners filed unfair labor practice charges against McDonald's and certain franchisees.

The Board's General Counsel issued complaints in December 2014 alleging that the franchisees "violated Section 8(a)(1) of the Act by threatening employees, promising benefits to them, interrogating them, and surveilling their protected activity." The complaints also alleged that some of the franchisees violated Section 8(a)(3) "by unlawfully discharging 3 employees and suspending, reducing work hours of, or sending home early 17 others, all in retaliation for their union and other protected concerted activity."

Importantly, the complaints alleged that McDonald's could be held jointly and severally liable with its franchisees as a "joint employer," even though it was not alleged that McDonald's independently violated the Act. One of the General Counsel's stated objectives was to "update Joint Employer law within the Board context and to clarify the relationship between franchisor and franchisee as it fits within the broader framework of what constitutes a Joint Employer under the National Labor Relations Act." McDonald's responded that, far from an attempt to "update" and "clarify" the law, the General Counsel was making an "unprecedented claim" that McDonald's is a joint employer and "an unprecedented attempt to change the law on joint employment."

The cases were consolidated for hearing before an administrative law judge. The ALJ severed the New York and Philadelphia franchisee cases for trial and put the rest in abeyance. No evidence on the merits was entered in the stayed cases.

In January 2018, a new General Counsel filed a motion with the ALJ to stay proceedings so the parties could pursue a global settlement. The ALJ granted it. And in March 2018, the General Counsel and McDonald's presented proposed settlement agreements between each franchisee and the affected employees. Concurrently, the Board issued a notice of proposed rulemaking on the joint employer issue. See 83 Fed. Reg. 46,681 (Sept. 14, 2018). In 2020, the Board promulgated a final rule. See 85 Fed. Reg. 11,184 (Feb. 26, 2020) (codified at 29 C.F.R. § 103.40 ).

Among other provisions, the settlements provided the following: the 10 franchisees whose alleged violations of Section 8(a)(3) resulted in lost earnings would pay 100% of the backpay owed to the alleged discriminatees, plus interest; those 10 franchisees would each contribute to a $250,000 Settlement Fund that would compensate discriminatees if a franchisee committed the same type of Section 8(a)(3) violation within nine months of the settlement's approval; all franchisees would post a remedial notice for 60 days and mail copies to all former employees; the notice would contain a statement of employees’ rights, state that the franchisee will not take the unlawful actions alleged in the complaint, and provide that the franchisees would comply with the notice. If the settlements were approved, the General Counsel could move to withdraw the complaint within ten days after their approval.

Although the settlements did not treat McDonald's as a joint employer, they did require McDonald's to take certain actions to support the settlements. For example, if a franchisee did not comply with its settlement, McDonald's would mail a Special Notice to the employees of the franchisee stating that the franchisee violated the Act and the settlement, and that McDonald's disavows the conduct. McDonald's was also required to collect money for the Settlement Fund from the franchisees and deposit it with the Board. If McDonald's violated the settlements, the General Counsel could add McDonald's as a party to a new complaint and include a joint employer allegation.

The ALJ denied the General Counsel's and McDonald's motions to approve the settlements. The ALJ was concerned that the settlements did not resolve the joint employer issue. The General Counsel and McDonald's appealed to the Board. Petitioners supported the ALJ's decision. They also moved for the recusal of two Board Members, Chairman Ring and Member Emanuel, on grounds that the Members each had a conflict of interest.

The Board reversed the ALJ and ordered the case remanded with instructions to approve the settlements. The Board relied on its "broad discretion" to "approve settlement[s]." The factors it considers are set forth in Independent Stave Co. , 287 NLRB 740 (1987). See also UPMC , 365 NLRB No. 153 (2017). In considering settlements, the Board evaluates:

all the surrounding circumstances including, but not limited to, (1) whether the charging party(ies), the respondent(s), and any of the individual discriminatee(s) have agreed to be bound, and the position taken by the General Counsel regarding the settlement; (2) whether the settlement is reasonable in light of the nature of the violations alleged, the risks inherent in litigation, and the stage of the litigation; (3) whether there has been any fraud, coercion, or duress by any of the parties in reaching the settlement; and (4) whether the respondent has engaged in a history of violations of the Act or has breached previous settlement agreements resolving unfair labor practice disputes.

287 NLRB at 743.

The Board concluded that "the settlement agreements are reasonable under Independent Stave ." Member McFerran dissented.

* * *

In response to the recusal motions, the Board noted that the motion to recuse Chairman Ring was moot because he did not participate in the case and that Member Emanuel had independently decided that he did not need to recuse after consulting with the Board's Designated Agency Ethics Official.

Petitioners moved to reopen the record and for reconsideration. They sought to introduce a document purporting to be a recusal list for Member Emanuel that included McDonald's. However, the Board noted that Petitioners had access to this document prior to Member Emanuel's decision and the Board's order. And, in any event, the Board unanimously (including Member McFerran) denied the motion, reasoning that Petitioners failed to explain why the document would require a different result under the applicable ethics rules.

This petition for review followed. Petitioners challenge both the order approving the settlement agreements and the order denying the motion to reopen and for reconsideration.

II.

Petitioners face a steep hill in challenging the Board's approval of the settlements because our standard of review of the Board's decision whether to accept a settlement is quite narrow, i.e. abuse of discretion. See, e.g. , Titanium Metals Corp. v. NLRB , 392 F.3d 439, 447 (D.C. Cir. 2004).¹

Petitioners present a slew of objections to the settlements, but only two are significant. (1) Petitioners argue that the Board was arbitrary and capricious (unreasonable) in approving the settlements, in light of the unions’ objections. (2) Petitioners also contend that the Board's order was invalid because Member Emanuel should have recused himself.

In determining that the settlements were reasonable, the Board applied its Independent Stave test, only the first two factors of which are relevant to the case.² Applying the first factor, the Board considered the views of the parties and agreed with the ALJ that the factor was "inconclusive." While the General Counsel, McDonald's, the franchisees, and every affected employee who received front pay instead of reinstatement agreed to the settlements, Petitioners opposed them.

It is noteworthy that the Board's standard specifically refers to the General Counsel's view. And the Board recognized in this case that the General Counsel's support for the settlements was "an important consideration." After all, the General Counsel—a Presidential...