Page 3
Ninth Circuit Judge Bumatay Lambastes NLRB’s ‘Power Grab’
Jurist Says Agency Lacks Authority to Award Consequential Damages to Employees for Harms Resulting From Lockout of Workers, Dissenting From Opinion Granting Enforcement of Decision Awarding ‘Foreseeable’ Costs
By a MetNews Staff Writer
Ninth U.S. Circuit Court of Appeals Judge Patrick J. Bumatay yesterday dissented from a decision granting the National Labor Relations Board’s application for enforcement of its final order requiring a national retailer to pay for any “direct or foreseeable pecuniary harms” incurred by employees due to what the agency declared to be an unfair lockout of workers following a strike.
Saying that the remedy amounts to a “power grab” by the agency that allows for the compensation of union members for ongoing harms still accumulating four years after the lockout, the jurist argued that “the Board has no authority to order this type of monetary relief” and that “the Board wrongly concluded” that the lockout was unlawful.
The question arose following a 2020 strike by building engineers and craftsmen employed by retail giant Macy’s Inc. A collective bargaining agreement between Macy’s and the engineers’ union, the International Union of Operating Engineers, Stationary Engineers, Local 39, expired on Aug. 31, 2020, after the parties failed to agree on terms going forward.
On Nov. 25, 2020—the day before Thanksgiving—Jay Vega, the lead negotiator for the union, emailed Macy’s representative, Rose Ashmore, a proposal on wages and pensions. On Dec. 4, Ashmore rejected the proposal.
Vega responded, the same day, with the notice that the union no longer wished to continue the dispute and was making an “unconditional offer to return our members to work immediately.” Ashmore asked the union to not send workers back as “we won’t be ready for them” until there is a formal agreement in place.
Workers Turned Away
After some of its members who reported for work on Dec. 7, 2020 were turned away, the union filed charge forms with the National Labor Relations Board (“NLRB”), alleging that the retailer committed an unfair labor practice under the National Labor Relations Act, codified at 29 U.S.C. §151 et seq., by locking out the engineers without presenting a timely, clear, and complete offer setting forth the necessary conditions for the return to work.
An Administrative Law Judge (“ALJ”) agreed with the union and ordered Macy’s to make the union members whole for any losses of pay and benefits they may have suffered because of the lockout. The NLRB adopted the ALJ’s conclusion that Macy’s actions violated the law but amended the recommended order, saying that the “make-whole remedy” must include damages for direct and foreseeable harms resulting from the lockout.
Both Macy’s and the union petitioned for review by the Ninth Circuit, and the NLRB cross-applied for enforcement of its final order.
In an opinion authored by Senior Federal Circuit Judge Evan J. Wallach, sitting by designation, and joined in by Circuit Judge Jacqueline H. Nguyen, the court denied the petitions for review and granted the enforcement application.
Authority to Award
Bumatay noted that “the Board had never claimed the authority to award consequential damages, like the ones ordered against Macy’s” until the 2022 decision in NLRB v. Thryv in which the agency declared:
“We find…that it is necessary for the Board to revisit and clarify our existing practice of ordering relief that ensures affected employees are made whole for the consequences of a respondent’s unlawful conduct. We conclude that in all cases in which our standard remedy would include an order for make-whole relief, the Board will expressly order that the respondent compensate affected employees for all direct or foreseeable pecuniary harms suffered as a result of the respondent’s unfair labor practice.”
Looking to the statutory authority, Bumatay said that “the Act restricts the Board to ordering only ‘back pay’ and ‘affirmative action…as will effectuate the policies of” the act, and concluded:
“Somehow, the Board has transformed this limited statutory grant into something that covers credit card debt, withdrawals from retirement accounts, car loans, mortgage payments, childcare, immigration expenses, and medical expenses….Never mind that granting the Board this authority would violate the Seventh Amendment [right to a trial by jury].”
Citing the Third Circuit case of NLRB v. Starbucks Corp.—in which that court concluded that an NLRB order requiring compensation of employees for direct or foreseeable pecuniary harms exceeded the Board’s authority under the Act—Bumatay said that “[w]e create a needless circuit split in affirming the Board’s power grab.”
NLRB’s Authority
Saying that the NLRB is not a court but “a limited-authority agency with a limited purpose and limited enforcement mechanisms,” Bumatay remarked:
“[The Board’s] authority to order relief is ‘merely incidental to the primary purpose of Congress to stop and to prevent unfair labor practices.’….Given this, the Board can’t award consequential or foreseeable damages, which go beyond compensatory damages and include damages for harms that do not flow directly from an unfair labor practice.”
He continued:
“So what’s covered by ‘direct or foreseeable harm’? Quite a lot, it turns out. While the Board declined ‘to enumerate all the pecuniary harms that may be considered direct or foreseeable in the myriad of unfair labor practices that come before us[,]’ they made clear it’s very expansive….The Board explained that foreseeable harms include indirect costs, ‘such as out-of-pocket medical expenses, credit card debt, or other costs simply in order to make ends meet.’….The Board’s General Counsel added even more costs to the list: unreimbursed tuition payments, job search costs, day care costs, specialty tool costs, utility disconnection/reconnection fees, relocation/moving costs, legal representation costs in eviction proceedings, and expenses resulting from a change in immigration status….So now everything is on the table under the Board’s newly claimed authority—the only limit is the Board’s imagination.”
Bunatay added:
“Of course, the Board denied that these broad remedies make up ‘consequential damages.’ But that’s hard to believe given that the Board specifically invited briefing on whether it should adopt consequential damages as part of its make-whole remedy in [the Thryv] case.”
Arbitrary, Capricious Actions
The dissenter wrote:
“[W]e never should have gotten this far. The Board’s actions were arbitrary and capricious and unsupported by the record….The Board wrongly concluded that Macy’s needed to have a detailed proposal on the table within one working day of the Union’s offer of return to justify its lockout. This rule is as novel as it is unrealistic. It contradicts both Ninth Circuit precedent and the Board’s own precedent. The Board also ignored evidence that the lockout could have been justified as defensive given Macy’s reasonable concerns of sabotage and misconduct.”
Turning to the facts presented, he noted that “[t]here’s nothing inherently problematic with the use of lockouts” and commented:
“Indeed, labor disputes often involve complex circumstances that can’t be resolved on the short fuse that the Board requires here. Under the Board’s arbitrary rule, Macy’s could have only responded two ways to the Union’s Friday-night offer: (1) immediately reinstate the workers and lose its bargaining position after the three-month strike, or (2) institute the offensive lockout but come up with a new offer essentially overnight. Nothing in the Act requires these grim choices.”
He added:
“According to Macy’s, strikers orally abused its employees, attacked its customers, flouted COVID safety protocols, caused a sewage backup by blocking a drain outside its San Francisco store, and sabotaged its facilities. It was especially concerned about having the employees return to work given the upcoming holiday season, which accounts for much of the company’s profits….The Board rejected Macy’s defensive lockout justification because it believed that the defensive lockout concern was simply a pretext to pressure the Union to accept the company’s offer. But that conclusion was arbitrary and capricious and unsupported by the record.”
Under these circumstances, Bumatay declared that “[w]hile I agree with denying the Union’s petition for review, I respectfully dissent from the denial of Macy’s petition for review and from the grant of the Board’s application for enforcement.”
The case is International Union of Operating Engineers v. NLRB, 23-124.
Copyright 2025, Metropolitan News Company