Monday, May 23, 2005

NLRB Holds that the Harborside Applies Retroactively

In December 2004, the NLRB reversed precedent and held that a supervisor commits objectionable conduct (i.e., conduct that will invalidate an election) if she asks employees to sign union authorization cards, absent mitigating circumstances. Harborside Healthcare, Inc., 343 NLRB No. 100 (2004) (overruling Millsboro Nursing, 327 NLRB 879 (1999)).

On May 17, 2005, a divided Board held that Harborside’s rule against supervisory card solicitation applied retroactively to conduct that predated Harborside. SNE Enterprises, Inc., 344 NLRB No. 81 (2005). The events in SNE Enterprises occurred before the Board issued its Harborside decision. During an organizing campaign, two supervisors asked employees to sign authorization cards. The union later won the election. The employer alleged that the supervisors tainted the election by soliciting authorization cards. Applying then-current law, a regional director upheld the union’s election victory, finding that the supervisory card solicitation was not objectionable.

Reviewing the regional director’s decision, the Board majority held that Harborside’s new rule applies retroactively to supervisory card solicitation that occurred before the Board issued Harborside. The majority, Chairman Battista and Member Schaumber, first claimed that the Board had already given retroactive application to the new rule in Harborside itself. The majority then explained that the Board normally gives retroactive effect to new rules unless doing so would cause “manifest injustice.” Factors relevant to determining whether retroactive application of a new rule would cause manifest injustice include: (1) the extent to which parties relied on preexisting law; (2) the effect of retroactivity on the accomplishment of purposes of the Act; and (3) any particular injustice arising from retroactive application. Weighing those factors, the majority found that retroactive application of Harborside’s rule would not cause manifest injustice. Id., slip op. at 1.

First, the majority noted that the record contained no evidence that the supervisors at issue actually relied upon the Board’s pre-Harborside law. Second, the majority found that retroactive application would not significantly prejudice any party. Retroactive application would, at worst, require the Board to hold a new election and the union to conduct another campaign. The majority thought that an order requiring a new election is not nearly as burdensome as an order imposing backpay liability and requiring reinstatement. The majority found that “to the extent that the Union may be harmed, we believe that the statutory interest in protecting employees’ Section 7 rights under the Act and assuring free and fair elections outweigh any injustice resulting from the retroactive application of the Harborside standard.” Consequently, the majority remanded the case back to the regional director to evaluate the employer’s objections under Harborside’s new rule.

Member Liebman dissented. She argued that the Board would cause manifest injustice if it applied Harborside’s new rule retroactively. She emphasized that Harborside overruled precedent on the card solicitation issue and therefore argued that retroactive application would implicate reliance interests. She further argued that applying Harborside retroactively to invalidate election victories would inflict significant harm on unions. Liebman asserted that a Board certification is a valuable legal interest and the most important asset to unions under the Act. She explained that “[s]tripping a union of its electoral victory, and requiring it to expend the resources to conduct another electoral campaign (and perhaps pursue related legal proceedings), is a substantial burden.” She contended that there was no meaningful distinction between the burdens imposed by an order invalidating an election and an order imposing monetary or other legal liability. Thus, Liebman found that the relevant factors weighed in favor of finding “manifest injustice” and against retroactive application of Harborside.

Finally, Liebman challenged the majority’s assertion that Harborside itself applied the new rule retroactively:

"In fact, the new rule was not actually applied by the full majority in Harborside itself. One member of the three-member majority (Member Meisburg) did not find that the supervisor at issue in that case actually solicited any authorization cards from any unit employees she supervised, and thus he did not rely on that particular conduct in voting to set aside the election. Thus, a majority of the Board did not in fact apply this new principle retroactively. My colleagues insist that, despite Member Meisburg’s individual position, the 'standard set forth in Harborside' was applied retroactively. But had supervisory card solicitation been the only issue presented, there would have been no majority to set aside the election there and no retroactivity issue."

Id., slip op at 3 n.1.

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