Nestle Dreyer's Ice Cream Co v. NLRB

Filing

PUBLISHED AUTHORED OPINION filed. Motion disposition in opinion granting Motion for enforcement of agency order (FRAP 15) [999490087-2] in 14-2339 Originating case number: 31-CA-74297,31-RC-66625. [999804444]. [14-2222, 14-2339]

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PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT

No. 14-2222

NESTLE DREYER’S ICE CREAM COMPANY,
Petitioner,
v.
NATIONAL LABOR RELATIONS BOARD,
Respondent,
and
INTERNATIONAL UNION OF OPERATING ENGINEERS LOCAL 501, AFLCIO,
Intervenor.
------------NATIONAL ASSOCIATION OF MANUFACTURERS; RETAIL LITIGATION
CENTER, INC.; THE CHAMBER OF COMMERCE OF THE UNITED STATES
OF
AMERICA;
COALITION
FOR
A
DEMOCRATIC
WORKPLACE;
INTERNATIONAL FOODSERVICE DISTRIBUTORS ASSOCIATION; NATIONAL
ASSOCIATION OF WHOLESALER-DISTRIBUTORS; NATIONAL COUNCIL OF
CHAIN
RESTAURANTS;
NATIONAL
FEDERATION
OF
INDEPENDENT
BUSINESS; NATIONAL RETAIL FEDERATION; SOCIETY FOR HUMAN
RESOURCE MANAGEMENT,
Amicus Curiae.

No. 14-2339

NATIONAL LABOR RELATIONS BOARD,
Petitioner,

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v.
NESTLE DREYER’S ICE CREAM COMPANY,
Respondent.
------------NATIONAL ASSOCIATION OF MANUFACTURERS; RETAIL LITIGATION
CENTER, INC.; THE CHAMBER OF COMMERCE OF THE UNITED STATES
OF
AMERICA;
COALITION
FOR
A
DEMOCRATIC
WORKPLACE;
INTERNATIONAL FOODSERVICE DISTRIBUTORS ASSOCIATION; NATIONAL
ASSOCIATION OF WHOLESALER-DISTRIBUTORS; NATIONAL COUNCIL OF
CHAIN
RESTAURANTS;
NATIONAL
FEDERATION
OF
INDEPENDENT
BUSINESS; NATIONAL RETAIL FEDERATION; SOCIETY FOR HUMAN
RESOURCE MANAGEMENT,
Amicus Curiae.

On Petition for Review of an
Relations Board. (31−CA−74297)

Argued:

October 28, 2015

Order

of

the

Decided:

National

Labor

April 26, 2016

Before SHEDD, DIAZ, and HARRIS, Circuit Judges.

Petition for review denied and cross-petition for enforcement
granted by published opinion. Judge Diaz wrote the opinion, in
which Judge Shedd and Judge Harris joined.

ARGUED: Bernard J. Bobber, FOLEY & LARDNER LLP, Milwaukee,
Wisconsin, for Petitioner/Cross-Respondent.
Gregory P. Lauro,
NATIONAL
LABOR
RELATIONS
BOARD,
Washington,
D.C.,
for
Respondent/Cross-Petitioner.
Matthew James Ginsburg, AFL-CIO,
Washington, D.C., for Intervenor.
ON BRIEF: Ryan N. Parsons,
FOLEY & LARDNER LLP, Milwaukee, Wisconsin, for Petitioner/CrossRespondent.
Jennifer Abruzzo, Deputy General Counsel, John H.
Ferguson, Associate General Counsel, Linda Dreeben, Deputy
Associate
General
Counsel,
Jill
A.
Griffin,
Supervisory
Attorney, NATIONAL LABOR RELATIONS BOARD, Washington, D.C., for
Respondent/Cross-Petitioner. Brian A. Powers, James B. Coppess,
Washington,
D.C.,
for
Intervenor.
Bernard
P.
Jeweler,
2

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Christopher R. Coxson, Harold P. Coxson, OGLETREE, DEAKINS,
NASH, SMOAK & STEWART, P.C., Washington, D.C.; Linda E. Kelly,
Patrick N. Forrest, MANUFACTURERS’ CENTER FOR LEGAL ACTION,
Washington, D.C., for Amicus The National Association of
Manufacturers.
Deborah White, RETAIL LITIGATION CENTER, INC.,
Arlington, Virginia; Jason C. Schwartz, Thomas M. Johnson, Jr.,
Alexander K. Cox, GIBSON, DUNN & CRUTCHER LLP, Washington, D.C.,
for Amicus Retail Litigation Center, Inc.
Mark Theodore, Los
Angeles, California, Ronald Meisburg, Joshua F. Alloy, PROSKAUER
ROSE, LLP, Washington, D.C.; Kate Comerford Todd, Steven P.
Lehotsky, U.S. CHAMBER LITIGATION CENTER, INC., Washington,
D.C.,
for
Amici
Coalition
for
a
Democratic
Workplace,
International Foodservice Distributors Association, National
Association of Wholesaler-Distributors, National Council of
Chain Restaurants, National Federation of Independent Business,
National
Retail
Federation,
Society
for
Human
Resource
Management, and The Chamber of Commerce of the United States.

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DIAZ, Circuit Judge:
The National Labor Relations Board certified a collectivebargaining unit consisting of all maintenance employees at an
ice-cream production facility operated by Nestle-Dreyer’s Grand
Ice Cream, Inc.

Dreyer’s contends that (1) the Board applied a

legal standard that violated the National Labor Relations Act
(the “NLRA”) and otherwise represented an abuse of discretion;
and (2) under the proper legal standard as well as the incorrect
legal standard upon which the Board relied, production employees
must be included in the petitioned-for unit.

Because the Board

did not violate the NLRA or abuse its discretion in certifying
the maintenance-only unit, we deny Dreyer’s petition for review
and

grant

the

Board’s

cross-petition

for

enforcement

of

its

order.

I.
A.
At

a

production

facility

in

Bakersfield,

California, 1

Dreyer’s manufactures ice-cream products: cartons, cones, bars,
and other frozen novelties.

Known as the Bakersfield Operations

1

We have jurisdiction because Dreyer’s operates a
production facility in Maryland.
See 29 U.S.C. § 160(f)
(permitting “[a]ny person aggrieved by a final order of the
Board” to obtain review where the person “resides or transacts
business”).
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Center (the “BOC”), the facility contains a factory with twentysix

production

lines,

a

palletizing

area

and

distribution

center, warehouses for dry goods and frozen goods, and a machine
shop for making and repairing parts for the production lines.
It also houses a research and development center.
At the time relevant to this litigation, the BOC employed
about 113 maintenance employees and 578 production employees.
Most

production

employees

work

on

the

production

lines,

operating the manufacturing equipment, stacking the product on
pallets, and storing it for distribution.

Others work in pre-

manufacturing, where they order materials and mix ingredients
for

the

lines.

Production

employees

generally

work

on

a

specific production line, and they do not work in the machine
shop or the research and development center.
The

majority

of

maintenance

employees

work

on

the

production lines, where they are assigned to multiple production
lines or the adjacent palletizing areas.
maintenance

and

equipment.

The

as-needed
rest

of

the

repairs

on

maintenance

variety of tasks throughout the BOC.

They perform routine
the

manufacturing

employees

perform

a

Process technicians, who

work in pre-manufacturing, assist with the computer-controlled
mixing equipment and troubleshoot problems as they arise.

The

utilities group maintains the BOC’s refrigeration systems, as
well

as

its

electrical,

heating,
5

plumbing,

and

ventilation

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systems.

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Other

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maintenance

employees

work

as

control

technicians, in facilities maintenance, or in the machine shop.
On

the

maintenance

production

and

lines

production

and

employees

in

pre-manufacturing,

sometimes

work

together.

While production workers are trained to solve minor or routine
technical problems—for example, simple packaging jams that can
be

fixed

training
repairs

by
is

and

removing
limited,
routine

the
and

jammed

material—their

maintenance

maintenance.

workers

When

technical

perform

production

most

employees

encounter technical problems they cannot solve, they call for
the

assistance

of

a

maintenance

employee.

The

maintenance

employee diagnoses the problem and performs the repair, relying
on

input

from

the

production

worker.

Every

third

shift,

production workers disassemble the equipment for cleaning while
maintenance workers stand by to replace broken parts or address
problems that may occur during reassembly and start-up.
Maintenance and production employees have similar working
conditions.

They receive the same employment benefits, annual

performance evaluations, and they use the same parking lots,
time clocks, break rooms, and lockers.

They must also follow

the same workplace policies, including wearing similar uniforms.
But the two groups are distinguished in several significant
respects.

Maintenance

workers

are

generally

better

paid,

receiving $20–$30 an hour, compared with $15–$22 for production
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workers.

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This reflects the fact that maintenance employees have

significantly
electronics.

more

training,

Maintenance

particularly

employees

in

rarely

mechanics

do

the

and

work

of

production employees, and they work on a different schedule.
Whereas

maintenance

employees

work

four

ten-hour

shifts

each

week, production employees work five eight-hour shifts, which
results

in

different

Furthermore,

the

two

overtime,
groups

are

holiday,

and

organized

sick

into

departments with different immediate supervisors.

pay.

separate

Maintenance

employees are part of the Technical Operations Team; production
employees

are

on

either

Manufacturing Team.
two

to

lines.

four

weeks

the

Manufacturing

Team

or

the

Pre-

Finally, the BOC shuts down annually for
for

a

complete

rebuild

of

the

production

All maintenance employees are required to work during

this period, whereas only a few production employees work if
they volunteer or are selected to participate.
Near

the

end

of

2009,

Dreyer’s

put

in

place

a

pilot

program, limited to one production line, intended to partially
integrate

the

roles

of

production

and

maintenance

employees.

The purpose of the program was to increase production employees’
ability

to

perform

lubricating),
less

on

routine

thereby

breakdowns

maintenance

allowing

and

more

(cleaning,

maintenance
on

7

preventive

inspecting,

employees

to

focus

maintenance.

The

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program was put on hold sometime in 2011 and was restarted in
early 2012.
B.
Late

in

2011,

the

International

Union

of

Operating

Engineers Local 501, AFL–CIO filed a petition with the Board,
seeking to represent the BOC’s maintenance employees.
objected
include
(the

to

the

proposed

production

“RD”)

unit,

employees.

approved

the

arguing
The

that

Board’s

maintenance-only

it

Dreyer’s

should

Regional

unit

also

Director

over

Dreyer’s

objections, and the Board denied Dreyer’s request for review.
After maintenance employees voted 56–53 in favor of joining the
Union,

Dreyer’s

refused

to

bargain

and

the

Union

filed

an

unfair-labor-practice charge with the Board. 2
The

Board

granted

summary

judgment

Dreyer’s sought review in this court.

to

the

Union,

and

We placed the case in

abeyance pending the Supreme Court’s decision in NLRB v. Noel
Canning, 134 S. Ct. 2550 (2014), which ultimately held that the
appointments of some members of the Board were unconstitutional.
On the Board’s motion, we vacated its order and remanded.
On
committed

remand,
an

the

unfair

Board
labor

again

found

practice,

2

that
and

Dreyer’s

Dreyer’s

had
again

To challenge the Board’s unit determination, “the employer
must refuse to bargain, triggering unfair labor practice
proceedings under Section 8(a)(5).”
Wellman Indus., Inc. v.
NLRB, 490 F.2d 427, 430 (4th Cir. 1974).
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petitioned this court for review.

The Board cross-petitioned

for enforcement.

II.
A.
The

NLRA

appropriate
U.S.C.

requires

for

§ 159(b).

the

the

purposes
In

Board
of

making

to

determine

collective

this

bargaining.”

determination,

exercises “the widest possible discretion.”

“the

the

unit
29
Board

Sandvik Rock Tools,

Inc. v. NLRB, 194 F.3d 531, 534 (4th Cir. 1999).

The Board may

approve any appropriate unit; it need not identify and select
“the single most appropriate unit.”

NLRB v. Enter. Leasing Co.

Se., 722 F.3d 609, 625 (4th Cir. 2013) (quoting Am. Hosp. Ass’n
v. NLRB, 499 U.S. 606, 610 (1991)).

Therefore, to resist the

Board’s determination that a petitioned-for unit is appropriate,
an employer cannot merely demonstrate that a different unit is
also appropriate, or even more appropriate.
at 537.

Sandvik, 194 F.3d

Rather, “[a]n employer challenging the Board’s unit

determination . . . has the burden to prove that the bargaining
unit selected is ‘utterly inappropriate.’”

Enter. Leasing, 722

F.3d at 626-27 (quoting Sandvik, 194 F.3d at 534); see also
Arcadian

Shores,

Inc.

v.

NLRB,

1978).

9

580

F.2d

118,

120

(4th

Cir.

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But despite granting broad discretion, the NLRA prohibits
the Board from blindly deferring to a union’s proposed unit.
NLRB v. Lundy Packing Co., 68 F.3d 1577, 1580 (4th Cir. 1995).
Rather, the NLRA states that “[i]n determining whether a unit is
appropriate . . .

the

extent

to

which

organized shall not be controlling.”

the

employees

have

29 U.S.C. § 159(c)(5).

This means that the happenstance of a union’s organizing efforts
may

not

be

the

dominant

factor

in

the

Board’s

approve the unit.

See Lundy, 68 F.3d at 1580.

will

propose

ordinarily

a

unit

decision

to

Because a union

controlled

by

organized

employees, the Board violates the statute if it presumes the
appropriateness

of

a

proposed

unit.

See

id.

at

1581.

Nevertheless, the Board may consider the extent of organization
as one relevant factor, which may even be the “determinative”
factor in a “close case.”

Overnite Transp. Co. v. NLRB, 294

F.3d 615, 620 (4th Cir. 2002).
To guide its discretion, and to avoid giving controlling
weight

to

traditionally

the

extent

asked

of

whether

organization,
“employees

in

the

the

Board

has

requested

unit

shar[e] a sufficient community of interest to be included in the
same unit.”

Overnite Transp. Co., 322 N.L.R.B. 723, 725 (1996).

The community-of-interest test incorporates several factors:
(1) similarity in the scale and manner of determining
the earnings; (2) similarity in employment benefits,
hours of work, and other terms and conditions of
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employment;
(3) similarity
in
the
kind
of
work
performed;
(4) similarity
in
the
qualifications,
skills and training of the employees; (5) frequency of
contact
or
interchange
among
the
employees;
(6) geographic
proximity;
(7) continuity
or
integration
of
production
processes;
(8) common
supervision
and
determination
of
labor-relations
policy;
(9) relationship
to
the
administrative
organization
of
the
employer;
(10) history
of
collective bargaining; (11) desires of the affected
employees; [and] (12) extent of union organization.
Enter. Leasing, 722 F.3d at 626 n.8 (quoting Lundy, 68 F.3d at
1580).
share

The test ensures not only that the employees in the unit
common

interests,

but

also

that

these

distinct from those of excluded employees.

interests

are

See Newton-Wellesley

Hosp., 250 N.L.R.B. 409, 411 (1980).
In Specialty Healthcare & Rehabilitation Center of Mobile,
357 N.L.R.B. No. 83 (2011), the Board set out to clarify this
longstanding unit-determination analysis.
that the analysis proceeds in two steps.

The Board explained
In step one, “the

Board examines the petitioned-for unit . . . .

If that unit is

an appropriate unit, the Board proceeds no further.”
*12.

Id. at

In essence, this is the traditional community-of-interest

test outlined above.
of-interest

factors

See id. at *14 (examining the communityto

determine

that

the

included

employees

“share a community of interest” and “are unlike all the other
employees the Employer would include in the unit”).

Once the

Board determines in step one that the members of the proposed
unit

share

a

community

of

interest—and
11

the

unit

is

thus

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appropriate—the burden then shifts to the employer to show that
the approved unit is inappropriate.

Id. at *15.

In step two, the employer “is required to demonstrate that
a proposed unit consisting of employees readily identifiable as
a group who share a community of interest is nevertheless not an
appropriate unit because the smallest appropriate unit contains
additional employees.”

Id.

The employer’s required showing is

necessarily “heightened”: because the Board need not select the
most appropriate unit, the employer must do more than show that
its preferred unit is also appropriate.

Id. at *16.

The Board acknowledged in Specialty Healthcare that it and
the courts of appeals had over time used “different words . . .
to describe this heightened showing,” and it concluded that the
use

of

serve

“slightly
the

varying

statutory

verbal

purpose”

of

formulations . . .
the

NLRA.

Id.

[did]
at

not

*16-17.

Accordingly, to describe the employer’s required showing when
asking the Board to include additional employees in the unit,
the Board settled on a phrase accepted by the D.C. Circuit: “an
overwhelming community of interest.”

Id. at *16 (quoting Blue

Man Vegas, LLC v. NLRB, 529 F.3d 417, 421 (D.C. Cir. 2008)).
To summarize the Specialty Healthcare framework: in step
one,

the

Board

performs

a

community-of-interest

analysis

to

determine whether the proposed unit is appropriate; if the unit
is found appropriate, in step two the employer must demonstrate
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the

Filed: 04/26/2016

excluded

“overwhelming
employees.

employees

community

Pg: 13 of 27

it

of

wishes

to

interest”

include

with

share

the

an

included

Id. (emphasis added).
B.

We hold that the Board acted within its broad discretion in
certifying the Union’s petitioned-for unit.

After a thorough

analysis of the facts, the RD applied the traditional communityof-interest factors to determine not only that the maintenance
employees share a community of interest amongst themselves, but
also

that

maintenance

employees

production employees.

form

a

group

distinct

from

By doing so, the RD did not allow the

extent of organization to control his decision.
In

applying

the

Specialty

Healthcare

framework,

the

RD

began by determining that the maintenance employees are “readily
identifiable
J.A. 416.

as

a

separate

group”

from

production

employees.

Maintenance employees “are in their own department,

and are in different job classifications, have different skills,
and perform different functions from production employees.”

Id.

The RD focused in particular on the “very different skills” of
the

two

employee

groups

and

on

the

fact

that

maintenance

employees have “much more technical knowledge” than production
employees.
required

Id.
to

maintenance

have

Specifically,
one

management,

year[’s]
two
13

maintenance
experience
years[’]

employees
in

“are

computerized

experience

in

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troubleshooting

pneumatics,

manufacturing,
industrial

and

high

five

speed

Pg: 14 of 27

hydraulics,

to

seven

and

years[’]

maintenance.”

Id.

requirements apply to production employees.
“[m]aintenance

mechanics

spend

electrical

about

experience
None

Id.

90%

and

of

in

these

And whereas

of

their

time

performing skilled maintenance work,” “production employees lack
the

appropriate

skill”

for

adjustment[s] or repair[s].”

such

work

and

make

only

“minor

J.A. 416-17.

Having distinguished maintenance and production employees,
the RD next determined that “[t]he maintenance employees share a
sufficient community of interest amongst themselves for purposes
of collective bargaining.”
community-of-interest

J.A. 417.

factors,

he

Applying the traditional
determined

that

the

maintenance employees share similar wages, similar hours, common
supervision, and common functions.
Throughout
maintenance

this

employees

analysis,
are

J.A. 418-19.

the

distinct

RD

continued

from

to

production

note

how

employees.

He found that “[t]he greater skill of the maintenance employees
is . . . reflected by the fact that the maintenance employees
are significantly higher paid than the production employees” and
that

“there

is

virtually

no

temporary

maintenance and production employees.”

interchange

J.A. 419–20.

between
Moreover,

any overlap in wages of the two groups is limited to one of five
classes

of

maintenance

employees
14

and

is

ultimately

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“insignificant.”

J.A.

418.

Pg: 15 of 27

The

two

groups

work

different

shifts, the RD found, and as a result, “[o]vertime is calculated
differently

for

maintenance

employees

than

production

employees,” “maintenance employees tend to work more overtime
than production [employees],” and maintenance employees receive
more hours of sick pay than production employees.
groups’

essential

functions

also

differ:

Id.

“The

The two

maintenance

employees are primarily in charge of maintaining the Employer’s
machinery, and the production employees are primarily in charge
of

producing

maintenance

the

ice

employees

cream.”
“come

J.A.
into

419.

And

contact

with

while

many

production

employees on the production lines,” some maintenance employees
who do not work on the lines have “more limited” or “very little
contact” with production employees.

J.A. 420.

Moving on to step two of the Specialty Healthcare analysis,
the RD found that Dreyer’s could not meet its burden to show
that

the

production

and

maintenance

overwhelming community of interest.
several of Dreyer’s arguments.
prior

Board

cases

approving

maintenance employees.
N.L.R.B.
(2004)).

201

(2004);

employees

J.A. 420–21.

share

an

He rejected

First, he found distinguishable
joint

units

of

production

and

J.A. 421 (citing Buckhorn, Inc., 343
TDK

Ferrites

Corp.,

342

N.L.R.B.

1006

Second, he found that the petitioned-for unit is not

arbitrary or fractured because the Union sought “to represent
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all
Id.

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classifications

of

the

Pg: 16 of 27

Employer’s

maintenance

employees.”

Third, he found the bargaining history at the facility

inconclusive.
Dreyer’s

Id.

argument

And finally, the RD gave “little weight” to
that

its

pilot

program

for

increasing

the

integration of the production and maintenance employees’ work
renders the unit inappropriate.

J.A. 422.

The success of the

program remained speculative, he found, and even assuming its
success,

the

program

would

not

skill between the two groups.
By

properly

applying

close

the

significant

gap

in

Id.
the

community-of-interest

factors

before shifting the burden to Dreyer’s, the RD appropriately
exercised

his

discretion

organization to control.
15-1848,

2016

WL

and

did

not

permit

the

extent

of

Cf. FedEx Freight, Inc. v. NLRB, No.

859971,

at

*7

(8th

Cir.

Mar.

7,

2016)

(published) (holding that “the use of an overwhelming community
of interest test at the second step of the Board’s analysis does
not violate section 9(c)(5)”); Kindred Nursing Ctrs. E., LLC v.
NLRB, 727 F.3d 552, 565 (6th Cir. 2013) (enforcing the Board’s
order in Specialty Healthcare); Blue Man, 529 F.3d at 423 (“As
long as the Board applies the overwhelming community-of-interest
standard only after the proposed unit has been shown to be prima
facie appropriate, the Board does not run afoul of the statutory
injunction that the extent of the union’s organization not be
given controlling weight.”).
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This conclusion is supported by the fact that the approved
unit tracks Dreyer’s own departmental lines and is consistent
with prior Board unit determinations.

See, e.g., Ore-Ida Foods,

Inc., 313 N.L.R.B. 1016, 1020 (1994) (finding that maintenance
employees
production

shared

a

workers

community
because

of

of

interest

differences

distinct
in

from

skill

and

compensation, despite “extensive contact with, and, at times the
assistance of, the production employees”).

And it is of no

consequence that a unit including production employees may also
be

appropriate.

[Dreyer’s]
appropriate

points

See
to

unit”).

J.A.

might

421

show

Dreyer’s

(RD
that

burden

noting
a

F.3d at 626-27.

combined

is

approved unit is “utterly inappropriate.”

that

to

“factors

unit

show

is

that

an
the

Enter. Leasing, 722

That it cannot do, as we explain in the next

section.
C.
Dreyer’s offers several objections, focusing its attack on
Specialty Healthcare rather than on the Board’s decision in this
case. 3

We consider each objection in turn.

3

Dreyer’s focus on Specialty Healthcare rather than on the
RD’s analysis in this case is telling.
Indeed, the dissenting
member of the Specialty Healthcare panel also participated in
this case, and, while he refused to rely on Specialty
Healthcare, he nevertheless found here “that, under the
traditional community-of-interest test, the interests of the
petitioned-for
unit
are
sufficiently
distinct
from
the
(Continued)
17

Appeal: 14-2222

Doc: 72

Filed: 04/26/2016

Pg: 18 of 27

First, Dreyer’s contends that the overwhelming-communityof-interest test in Specialty Healthcare violates the NLRA by
giving controlling weight to the extent of union organization.
For this contention, Dreyer’s relies primarily on our decision
in

Lundy

Packing.

In

Lundy,

the

Board

approved

a

unit

of

production and maintenance employees at a pork-products plant,
rejecting the employer’s argument that industrial engineers and
some quality-control employees should also be included.
at 1579.

68 F.3d

While the Board conceded that the larger unit might

also be an appropriate unit, it determined that the excluded
employees did not share an “overwhelming community of interest”
with

those

in

the

proposed

unit.

Id.

at

1581.

The

Board

therefore denied the employer’s request to include additional
employees.

Id. at 1579.

We denied enforcement of the Board’s order, finding several
problems
exclusion

with
of

differences,”

the

decision.

some
which

interest’ standard.”

First,

employees
was

on

“problematic

Id. at 1581.

the

Board

the
under

basis
the

permitted
of

the

“meager

‘community

of

Second, the Board “adopted a

production employees.” J.A. 426. And at oral argument, counsel
for Dreyer’s conceded that the RD’s community-of-interest
analysis “looks a lot like the . . . historical analysis that
used to be done.”
Oral Argument at 14:15, Nestle Dreyer’s Ice
Cream
Co.
v.
NLRB,
14-2222
(Oct.
28,
2015),
http://coop.ca4.uscourts.gov/OAarchive/mp3/14-2222-20151028.mp3.
18

Appeal: 14-2222

novel

Doc: 72

Filed: 04/26/2016

legal

exclusion.
presumed

standard

Pg: 19 of 27

which

effectively

accomplished

the

Under this new standard, any union-proposed unit is
appropriate

unless

an

‘overwhelming

community

of

interest’ exists between the excluded employees and the unionproposed unit.”

Id.

We held that this use of the overwhelming-

community-of-interest
appropriateness

of

standard,
a

proposed

which

bargaining

presumed
unit,

the

“effectively

accorded controlling weight to the extent of union organization”
in violation of the NLRA.

Id.

According to Dreyer’s, Lundy held that the overwhelmingcommunity-of-interest

test

necessarily

violates

the

NLRA

when

used in the context of unit determinations: “Instead of using a
range

of

factors

to

determine

whether

a

proposed

unit

is

appropriate, as the Board did with its traditional [communityof-interest]

test,

the

overwhelming

test

skews

the

analysis

‘overwhelmingly’ in favor of the union-proposed unit.”

Pet’r’s

Br. at 41.
Dreyer’s reads Lundy too broadly.
that

the

Lundy does not establish

overwhelming-community-of-interest

test

as

later

applied in Specialty Healthcare fails to comport with the NLRA.
Instead, Lundy prohibits the overwhelming-community-of-interest
test where the Board first conducts a deficient community-ofinterest analysis—that is, where the first step of the Specialty
Healthcare

test

fails

to

guard
19

against

arbitrary

exclusions.

Appeal: 14-2222

The

Doc: 72

“meager

Filed: 04/26/2016

differences”

we

Pg: 20 of 27

identified

in

Lundy

between

the

excluded quality-control employees and the included production
and maintenance employees were the following: “(1) the method
for calculating their earnings; (2) supervision; and (3) a lack
of

interchangeability

positions.”

with

other

Id. at 1580.

questionable:

at

least

[production

and

maintenance]

And even these distinctions were
one

included

employee’s

pay

was

calculated in the same manner as the excluded employees, and
many of the included employees had different supervisors from
one another.

Id. at 1580–81.

In other words, the petitioned-

for unit was an apparent union gerrymander.
it

and

then

applying

the

By rubber-stamping

overwhelming-community-of-interest

test, “the Board effectively accorded controlling weight to the
extent of union organization.”

Id. at 1581.

But in Lundy we had no occasion to determine whether the
overwhelming-community-of-interest test would offend the NLRA in
a case where the Board properly conducts Specialty Healthcare’s
step-one

analysis

petitioned-for

by

unit

determining

share

a

that

distinct

the

members

community

of

of

the

interest.

With such a case now before us, we find Lundy distinguishable.
Here, in addition to the differences cited in Lundy, the RD
identified

several

community-of-interest

factors

that

distinguished maintenance employees from production employees:
higher

wages,

greater

training
20

and

education

requirements,

Appeal: 14-2222

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Pg: 21 of 27

higher skill levels, and different hours.
effectively

assumed

the

In Lundy, the Board

proposed-unit

employees

shared

a

community of interest; here, in contrast, the Board rigorously
weighed the traditional community-of-interest factors to ensure
that the proposed unit was proper under the NLRA.
We need not and do not hold that an application of the
Specialty Healthcare standard will never run afoul of Lundy.
Our

assessment

of

a

prior

Board

policy

regarding

unit

determinations remains applicable here:
The Board’s announced standard may lead to some
decisions where the extent of organization will be the
dominant factor in unit selection (such as in cases
where the community of interest considerations in
support of the union’s proposed unit are weak), but
not all cases will be like that. And that did not
happen here, where the Board supported its decision to
exclude the [production employees] from the . . . unit
with numerous community of interest factors.
Overnite Transp., 294 F.3d at 621 (addressing the Board’s policy
of considering “only whether the unit requested [by the union]
is

an

optimum
before

appropriate
or

most

us,

the

one,

even

though

appropriate
imposition

unit”).
of

the

it

may

At

not

least

be
on

the
the

most
facts

overwhelming-community-of-

interest test did not give controlling weight to the extent of
union organization, unlike in Lundy.
Next,
Healthcare

Dreyer’s
failed

to

contends
provide

that
a

the

reasoned

Board

in

explanation

Specialty
for

its

adoption of the overwhelming-community-of-interest test, which
21

Appeal: 14-2222

Doc: 72

resulted

in

precedent.”

Filed: 04/26/2016

a

“repudiation

Pg: 22 of 27

of

Pet’r’s Br. at 44.

more

than

forty

years

of

Dreyer’s overstates the changes

the Board made in Specialty Healthcare.

Indeed, we agree with

our

clarified—rather

sister

circuits

that

the

Board

overhauled—its unit-determination analysis.

than

See FedEx, 2016 WL

859971, at *7 (“We conclude that the overwhelming community of
interest standard articulated in Specialty Healthcare is not a
material departure from past precedent . . . .”); Kindred, 727
F.3d at 561 (“The Board has used the overwhelming-community-ofinterest

standard

before,

Healthcare . . .

is

(describing

Board’s

the

not

so

new.”);

its
Blue

“consistent

adoption
Man,

529

analytic

in

Specialty

F.3d

at

framework”

421
as

including the question whether “the excluded employees share an
overwhelming

community

of

interest

with

the

included

employees”).
We acknowledge that some statements in Specialty Healthcare
may be read to indicate significant changes in Board policy.
For example, some passages suggest that whether employees are
appropriately excluded from the petitioned-for unit is addressed
only

in

step

two,

the

overwhelming-community-of-interest

analysis, not in step one, the traditional community-of-interest
analysis.

Specialty Healthcare, 357 N.L.R.B. No. 83, at *26

(Hayes, dissenting); see also id. at *17 (majority opinion).
This would indeed constitute a significant change, as it would
22

Appeal: 14-2222

mean

Doc: 72

that

Filed: 04/26/2016

the

Board

no

Pg: 23 of 27

longer

determines

for

itself

whether

employees are arbitrarily excluded from the petitioned-for unit.
Applying

Specialty

conflict

with

Healthcare

Lundy,

in

which

such

a

requires

manner

well

before

that

might

the

overwhelming-community-of-interest test is applied, the Board at
the very least must ensure that employees are not excluded on
the basis of “meager differences.”

Lundy, 68 F.3d at 1581.

The RD’s application of Specialty Healthcare here, however,
is entirely consistent with our precedent.

The analysis of the

proposed unit did not “address[], solely and in isolation, the
question whether the employees in the unit sought have interests
in

common

N.L.R.B.

with

at

one

411.

another.”
Instead,

Newton-Wellesley

the

analysis

Hosp.,

“proceed[ed]

250
to

a

further determination whether the interests of the group sought
[were] sufficiently distinct from those of other employees to
warrant the establishment of a separate unit.”

Id.

This was a

proper application of the well-worn community-of-interest test,
and it represented a finding that the petitioned-for unit was
appropriate.

At that point, a challenge to the unit faced a

high burden.

In our words, the unit had to be proven “utterly

inappropriate”; in the Board’s newly chosen words, the excluded
employees had to share an overwhelming community of interest
with

those

in

the

unit.

These

consistent.
23

standards

are

entirely

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Doc: 72

Filed: 04/26/2016

Pg: 24 of 27

Nor is it unreasonable, as Dreyer’s urges, for the Board to
use

the

context

same

overwhelming-community-of-interest

that

accretions.

it

has

historically

used

in

test

the

in

this

context

of

In an accretion, new employees become part of an

existing bargaining unit without taking part in a representative
election.
the

Lundy, 68 F.3d at 1581.

opportunity

to

vote,

the

Because these employees lack

Board

will

not

permit

their

addition to a unit unless they share an overwhelming community
of interest with the unit.
Board

may

not

import

Id.

this

As we explained in Lundy, the
test

to

determine

petitioned-for unit is appropriate.

Id. at 1582.

analysis

the

test.

for

that

determination

a

The proper

community-of-interest

But in determining whether the Board’s approved unit is

“utterly

inappropriate,”

test is reasonable.
is

is

whether

whether

some

the

overwhelming-community-of-interest

As in the accretion context, the question

employees

share

more

than

a

community

of

interest with the members of the unit.
Moreover, to the extent the Board in Specialty Healthcare
departed

from

explanation

so

its
that

prior
a

precedent,

reviewing

court

it

provided

could

changes the Board intended to make and why.

enough

understand

what

See J.P. Stevens &

Co. v. NLRB, 623 F.2d 322, 329 (4th Cir. 1980) (determining that
the Board had not sufficiently explained itself where it was
“difficult to ascertain . . . why the Board apparently departed
24

Appeal: 14-2222

Doc: 72

Filed: 04/26/2016

from its precedents”).

Pg: 25 of 27

Specifically, the Board explained that

the overwhelming-community-of-interest test, though somewhat new
in name, was consistent with the Board’s prior precedent and
with the precedent of the courts of appeals, and that using
varying

terminology

did

not

serve

the

purposes

of

the

Specialty Healthcare, 357 N.L.R.B. No. 83, at *16-17.
a sufficient explanation for our review.
not

significantly

alter

its

prior

NLRA.

This was

Because the Board did
rulings

in

Specialty

Healthcare, and because it reasonably explained the changes it
was making, the Board did not abuse its discretion.
Finally, Dreyer’s argues that in Specialty Healthcare, “the
Board

exceeded

process

and

the

reasonable

abused

its

discretion,”

Administrative Procedure Act.
to

encompass

two

boundaries

of

in

the

violation

Pet’r’s Br. at 59.

sub-arguments:

first,

adjudicative
of

the

This appears

Specialty

Healthcare

changed the law so significantly that rulemaking rather than
adjudication

was

required;

second,

whether

to

adopt

the

overwhelming-community-of-interest test was not before the Board
in

Specialty

without

Healthcare,

either

proper

so

the

Board

adjudication

was
or

announcing

a

rulemaking.

rule
Both

arguments lack merit.
Ordinarily, the Board may adopt new regulatory principles
through

adjudication

Aerospace

Co.

Div.

rather
of

than

Textron,
25

rulemaking.
416

U.S.

267,

NLRB
294

v.

Bell

(1974).

Appeal: 14-2222

Doc: 72

Filed: 04/26/2016

Pg: 26 of 27

However, courts have sometimes found the choice of adjudication
inappropriate where an agency purports to establish a new rule
of widespread application.

See Ford Motor Co. v. FTC, 673 F.2d

1008, 1009 (9th Cir. 1981).

In Ford, for example, the FTC was

required to proceed by rulemaking rather than adjudication when
it created a rule that “would require a secured creditor to
credit

the

debtor

with

the

‘best

possible’

value

of

[a]

repossessed vehicle, and forbid the creditor from charging the
debtor with overhead and lost profits.”

Id.

In Specialty Healthcare, by contrast, the Board did not
create

a

new

obligation

for

employers

in

operating

their

businesses.

Rather, the Board merely clarified the employer’s

evidentiary

burden

bargaining

unit

when

in

the

it

challenges

course

of

an

a

union’s

adjudication.

proposed
Such

a

clarification of agency law through adjudication is hardly the
kind

of

Ford.

abuse

of

discretion

the

Ninth

Circuit

identified

in

See FedEx, 2016 WL 859971, at *8 (holding that “the

Board’s decision to proceed by adjudication was not an abuse of
discretion”); cf. Bell Aerospace, 416 U.S. at 295 (finding that
rulemaking was not required for the Board to change course from
prior decisions, when industry reliance on past decisions would
not result in “substantial” adverse consequences).
We

also

reject

Dreyer’s

contention

that

the

issue

of

whether to adopt the overwhelming-community-of-interest test was
26

Appeal: 14-2222

not

Doc: 72

before

parties

Filed: 04/26/2016

the

did

Board

not

raise

in

Pg: 27 of 27

Specialty

the

Healthcare.

question

of

what

Although
standard

the

should

apply, the employer was asking the Board to include additional
employees in a proposed bargaining unit.
357 N.L.R.B. No. 83, at *2.
applicable

standard.

See

Specialty Healthcare,

The Board was free to clarify the
Bell

Aerospace,

416

U.S.

at

294

(“[T]he Board is not precluded from announcing new principles in
an adjudicative proceeding . . . .”).
We therefore conclude that the Board did not violate the
Administrative Procedure Act.

III.
For

the

reasons

stated,

we

deny

Dreyer’s

petition

for

review and grant the Board’s cross-petition for enforcement.
PETITION FOR REVIEW DENIED AND CROSS-PETITION FOR
ENFORCEMENT GRANTED

27