Medco Health Sol. of Las Vegas v. NLRB

Filing

OPINION filed [1410076] (Pages: 14) for the Court by Judge Williams [11-1282, 11-1321]

USCA Case #11-1282

Document #1410076

Filed: 12/14/2012

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued September 20, 2012

Decided December 14, 2012

No. 11-1282
MEDCO HEALTH SOLUTIONS OF LAS VEGAS, INC.,
PETITIONER
v.
NATIONAL LABOR RELATIONS BOARD,
RESPONDENT
UNITED STEEL, PAPER AND FORESTRY, RUBBER,
MANUFACTURING, ENERGY, ALLIED INDUSTRIAL AND SERVICE
WORKERS INTERNATIONAL UNION, AFL-CIO, CLC, LOCAL
675,
INTERVENOR

Consolidated with 11-1321

On Petition for Review and Cross-Application for
Enforcement
of an Order of the National Labor Relations Board

Marc L. Zaken argued the cause and filed the briefs for
petitioner.

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Amy H. Ginn, Attorney, National Labor Relations
Board, argued the cause for respondent. With her on the brief
were John H. Ferguson, Associate General Counsel, David
Habenstreit, Assistant General Counsel, and Jill A. Griffin,
Supervisory Attorney. Daniel A. Blitz, Attorney, entered an
appearance.
Amanda M. Fisher argued the cause and filed the brief
for intervenor. Daniel M. Kovalik entered an appearance.
Before: ROGERS and KAVANAUGH, Circuit Judges, and
WILLIAMS, Senior Circuit Judge.
Opinion for the Court filed by Senior Circuit Judge
WILLIAMS.
WILLIAMS, Senior Circuit Judge: This case arises mainly
from an employer’s belief that exclaiming “WOW” to
celebrate workers’ special achievements would hearten the
workers and quicken their zeal. As so often in human
relationships, things proved more complicated.
Petitioner Medco Health Solutions of Las Vegas, Inc. is a
pharmacy benefits management company that sells
pharmaceuticals out of a mail-order facility in Las Vegas,
Nevada. It receives and fills prescriptions through an
automated process and mails completed orders to patients.
The company employs nearly 850 people at its Las Vegas
facility,
including
pharmacists,
coverage
review
representatives, and pharmacy technicians. These workers are
represented by the United Steel Workers Local No. 675. The
pharmacists belong to the “pharmacists unit,” the others to the
confusingly labeled “pharmacy unit.”

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In the summer of 2009, in an effort to encourage superior
performance, Medco introduced what it called the “WOW
program.” (WOW is apparently just an exclamation, not an
acronym.) The program centers on weekly events at which
designated employees receive “WOW awards” in recognition
of their achievements. The awards do not entitle the recipient
to monetary compensation, and they carry no weight in
determining promotions or wage increases (though
presumably the conduct underlying the awards may do so).
Employees may decline WOW awards and are not required to
attend the weekly recognition ceremonies.
Medco thought the program was a nice gesture, one that
employees would appreciate.
It clearly believed that
customers and potential customers—e.g., firms that use
Medco to meet the pharmacy needs of insured workers—
would view the program as manifesting Medco’s commitment
to service.
When Medco’s managers showed the
representatives of such firms around the facility, a regular stop
was an installation in the cafeteria called the “Wall of WOW,”
displaying recent WOW awardees, along with the reasons
they received their awards. Approximately one hundred such
customer tours take place each year, about two a week.
Medco also featured the WOW program in a slide
presentation that it routinely showed to tour groups.
Not all employees shared Medco’s sunny outlook on the
program. On February 12, 2010, employee Michael Shore
(vice-chairman of the “pharmacy unit”) wore a T-shirt to
work, its front bearing the union logo and its back the
message, “I don’t need a WOW to do my job.”
The same day, representatives of the Land O’Lakes
company, a Medco client, were scheduled to tour the facility.
Word that Shore had been wearing the T-shirt in the cafeteria
during his lunch break reached Vice President and General

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Manager Tom Shanahan, who summoned Shore to his office.
Shanahan expressed surprise and disappointment at Shore’s
decision to wear the shirt, which he felt was “insulting” to
Medco, and asked Shore to remove it. Shanahan added that if
Shore did not feel he could support the WOW program, “there
were plenty of jobs out there.” Shore complied with
Shanahan’s request and did not wear the T-shirt again. In the
ensuing proceedings before the National Labor Relations
Board, Medco invoked in support of its conduct a provision of
its dress code then in effect banning “Phrases, Words,
Statements, pictures, cartoons or drawings that are degrading,
confrontational, slanderous, insulting or provocative.” Medco
appears never to have objected to clothing bearing a union
logo or name.
Out of these events sprang charges of violations of
§ 8(a)(1) of the National Labor Relations Act, 29 U.S.C.
§ 158(a)(1), charges that the Board upheld in almost every
aspect. Medco Health Solutions of Las Vegas, Inc., 357
NLRB No. 25, at 1 (2011).
At the same time another dispute arose, unrelated except
that it involved a dress code provision, Medco, and the same
general time period. This clash started November 19, 2009,
when Medco notified the chairman of the pharmacists unit of
a change in dress code policy to be announced the following
day. The Board’s General Counsel charged Medco with
violating §§ 8(a)(1) & (5) of the Act, 29 U.S.C. §§ 158(a)(1)
& (5), by refusing to bargain over the change, and the Board
upheld the charge. Medco, 357 NLRB No. 25, at 2.
Medco now timely petitions for review of the Board’s
order as to both matters, and the Board cross-applies for
enforcement. As to the amendment of the dress code, we
uphold the Board. Various aspects of the T-shirt dispute,
however, require us to remand the matter to the Board for

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further proceedings. The dress code amendment issue being
fairly simple, we will clear it out of the way first, then tackle
the T-shirt question.
* * *
Pharmacists’ dress code changes. On November 19,
2009, Medco alerted William Webb, chairman of the
pharmacists unit, to a change in dress code policy to be
announced the following day. Effective January 1, 2010, the
company would require pharmacists to wear lab coats during
working hours and dress in business casual on scheduled tour
days. Management also told Webb that if the union had any
questions or concerns it should let Medco know by the
following day.
On December 9, Webb emailed Medco a request to
bargain over the issue. Medco responded that it “would be
happy to . . . discuss the upcoming change,” but said it did
“not believe this is a mandatory subject for bargaining.” Joint
Appendix (“J.A.”) 497. The next day, Medco and the union
met to discuss the changes to the dress code. Medco began
the meeting by reiterating its view that the dress code was not
subject to mandatory bargaining. Union representatives left
the meeting after concluding that Medco was immovable.
The new dress code went into effect as scheduled.
Medco does not now appear to contest that dress codes
qualify as a mandatory subject of bargaining contemplated by
the Act. See Yellow Enterprise Systems, 342 NLRB 804, 827
(2004). Rather, it argues that the United Steel Workers had
agreed that a management rights clause in an expired contract
between Medco and a predecessor union would remain in
effect while the United Steel Workers negotiated a new
collective bargaining agreement with Medco. This clause, it
contends, entitled Medco to promulgate the dress code

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changes when the union failed to raise questions or concerns
within 24 hours of Medco sharing the policy with the union
chair of the pharmacists unit. But the ALJ explicitly refused
to credit the testimony offered by Medco in support of the
alleged agreement to let the old contract continue in effect,
and the Board accepted that ruling. 357 NLRB No. 25, at 2-3.
Medco offers nothing to suggest that this case is among the
rare instances where we can properly overturn such a
credibility finding.
See, e.g., Federated Logistics &
Operations v. NLRB, 400 F.3d 920, 923 (D.C. Cir. 2005).
Medco argues in the alternative that it did bargain with
the Union, and that the Board erred by focusing solely on
Medco’s statement that it would not bargain. Medco urges us
to look at the totality of its conduct, which it asserts
demonstrated a good-faith effort to bargain that ended in
impasse. But in fact that pattern consisted of repeatedly
denying any intent to bargain, and then declining to entertain
any concessions. Sustaining Medco’s objection would require
us and the Board to accept the idea that such a strategy
amounts to “bargaining” under the Act, a notion that would
vitiate § 8(a)(5)’s language making it an unfair labor practice
to “refuse to bargain.”
The anti-WOW T-shirt. After a hearing on the General
Counsel’s complaint, an ALJ found against Medco with
respect to the T-shirt charge. Specifically, he found: (1) that
Shore’s wearing of the T-shirt was a “union supported protest
of a working condition” protected by § 7 of the Act; (2) that
Medco, through Shanahan’s observation that if Shore did not
feel he could support the WOW program there were plenty of
jobs out there, had unlawfully invited Shore to quit his
employment in response to his protest of working conditions;
and (3) that Medco’s application to Shore of the dress code’s
ban on “insulting” language had restricted the employees’ § 7
rights in violation of § 8(a)(1). 357 NLRB No. 25, at 7-8 &

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n.3. Finally, reading the dress code’s prohibitions on
“provocative” and “confrontational” statements as being
reasonably understandable as restraining protected activity,
the ALJ found that Medco had violated § 8(a)(1) by
“maintaining overly broad work rules,” seemingly a kind of
facial invalidation. Id. at 8.
In affirming, the Board departed from the ALJ’s analysis
only in declining to reach the merits of his finding that
employees would reasonably read the dress code to restrict § 7
activity, explaining that such a violation would not change the
remedy awarded the union. Id. at 2. Yet, among the other
remedies, the Board ordered Medco to cease enforcement of
and to rescind the ban on “provocative, insulting, or
confrontational” statements. Id. at 3-4.
Section 7 of the Act grants employees the right “to
engage in . . . concerted activities for the purpose of collective
bargaining or other mutual aid or protection.” 29 U.S.C.
§ 157. Section 8(a)(1) enforces § 7 by making it unlawful for
employers to “interfere with, restrain, or coerce” employees’
exercise of their rights under that provision. Id. § 158(a)(1).
Medco contends that Shore’s behavior was not protected
by § 7, and that therefore no § 8(a)(1) violation occurred. Its
challenge rests on three arguments. First, it claims that
Shore’s activity was not concerted because he was not acting
on behalf of his colleagues or in furtherance of a group
purpose. Second, Medco asserts that, even if Shore’s
behavior was concerted, it was not for the purpose of
“collective aid or protection” in that it did not seek to improve
a term or condition of employment. Finally, Medco maintains
that even if Shore’s behavior was concerted and relating to a
condition of employment, it was not protected by § 7 because
of “special circumstances”—principally that the message on

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Shore’s shirt disparaged Medco and threatened to harm
Medco’s relationship with its customers.
In fact the record adequately supports the Board’s
conclusion that Shore was engaging in concerted activity in
wearing the T-shirt. The shirt’s presence in Las Vegas
stemmed from a January 2010 trip by pharmacy unit
chairperson Marissa Osterman to Tampa for a meeting of
union leaders from across Medco offices. There she received
the T-shirt from the president of a Medco sister unit in
Pittsburgh. The shirt had been designed for a union unity
protest against the WOW program. She brought it back to Las
Vegas and gave it to Shore.
Shore testified that he had worn the T-shirt “because of
the [union] logo, first of all,” but when asked for his opinion
of the WOW program, he replied: “[M]y T-shirt said it all. I
don’t need a WOW to do my job.” J.A. at 240. Although he
testified that he did not discuss the T-shirt with anyone before
wearing it to work, he also said that in his capacity as union
vice-chairman he had received complaints about the WOW
program. He added that on the day he wore his shirt he
received words and gestures of approval from his colleagues.
We have upheld the Board’s definition of “concerted
activity” as encompassing “those circumstances where
individual employees seek to initiate or to induce or to prepare
for group action, as well as individual employees bringing
truly group complaints to the attention of management.” Prill
v. NLRB, 835 F.2d 1481, 1484 (D.C. Cir. 1987). In evaluating
whether an employee acted concertedly, “[t]he touchstone for
concerted activity . . . must be some relationship between the
individual employee’s actions and fellow employees.” Int’l
Transp. Service, Inc. v. NLRB, 449 F.3d 160, 166 (D.C. Cir
2006). The account above amply shows that Shore “brought a
group complaint to management’s attention.” His and

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Osterman’s testimony leaves little doubt that some Medco
employees in both Las Vegas and Pittsburgh disliked the
WOW program and that the T-shirt reflected that discontent.
Medco offers two specific points against this conclusion.
First it notes Shore’s failure to discuss his T-shirt plans with
his colleagues. But we have never said that the Board can
find concerted action only where an employee obtained the
consent or acknowledgment of his or her coworkers before
bringing a group complaint to the attention of management.
In fact, we have recognized the opposite contention. “[A]n
individual who brings a group complaint to the attention of
management is engaged in concerted activity even though he
was not designated or authorized to be a spokesman by the
group.” Citizens Inv. Services Corp. v. NLRB, 430 F.3d 1195,
1198-99 (D.C. Cir. 2005) (citations omitted).
Second, Medco asserts that Shore said he didn’t wear the
T-shirt as a protest of the WOW program. But the passage of
the transcript that Medco cites in support of its claim contains
no such remark. See Petitioner’s Brief at 7 (citing J.A. at 241,
254). We thus sustain the Board’s finding of concerted
activity.
Medco’s second argument is likewise unavailing. Section
7 protects workers’ concerted action “for the purpose of
collective bargaining or other mutual aid or protection.”
Under this language the purposes of protected concerted
activities extend beyond “the narrower purposes of ‘selforganization’ and ‘collective bargaining.’” Eastex, Inc. v.
NLRB, 437 U.S. 556, 565 (1978). Before the Board, Medco
argued that the object of Shore’s protest, the WOW program,
is not a “term or condition of employment” (Eastex’s phrase
for the subjects for which workers may engage in concerted
activity, id.) because it is unrelated to “discipline,” “wage
increases,” or “promotions” and does not involve “monetary

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compensation.” Respondent’s Brief at 26, Medco Health
Solutions of Las Vegas, Inc., 357 NLRB No. 25 (2011) (Nos.
28-CA-22914, 22915). The Board rejected these arguments,
reasoning that “a program intended to create an incentive for
employees to work harder or be more productive” qualifies as
a condition of employment. Medco, 357 NLRB No. 25, at 2
n.6. The Board’s position is obviously sounder than Medco’s,
which would exclude from § 7’s protection not only Medco’s
WOW program but a host of other issues that are not merely
“terms and conditions of employment” within the meaning of
Eastex but are mandatory subjects of collective bargaining,
such as worker safety. See, e.g., United Steelworkers, AFLCIO-CLC v. Marshall, 647 F.2d 1189, 1236 (D.C. Cir 1980).
Before the Board and on appeal Medco has invoked New
River Industries, Inc. v. NLRB, 945 F.2d 1290 (4th Cir. 1991),
in which the court held that employees’ concerted satirical
attacks, leveled at an employer’s one-time provision of free
ice-cream cones in celebration of the firm’s execution of a
favorable contract, were unprotected. The only links between
the two cases are (1) ice cream (which was provided to Medco
employees at the weekly WOW events), and (2) the satirical
nature of the worker “protest.” But in New River the
company’s ice cream distribution was a one-time event, and
was related solely to management’s enthusiasm for a thirdparty contract, not to its effort to create, in the words of the
Board, “an incentive for employees to work harder or be more
productive.” New River is thus no obstacle to our affirming
the Board’s finding on this point.
Medco’s final argument is that Shore’s wearing the Tshirt potentially affected its relationship with its customers in
a way that created “special circumstances” justifying its
response. Here the ALJ and Board offered no clear answer.
The Board’s opinion adopted wholesale the ALJ’s cursory
reasoning that no “absolute ban” was justifiable because “the

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tours were not a daily occurrence.” 357 NLRB No. 25, at 2.
The Board further found that, even if the tours were conducted
daily, Medco’s argument would still fail because the company
had not offered any evidence that the T-Shirt posed a real risk
of harm to the customer relationship. Id.
We note first that the fact that the tours were not an
everyday occurrence does not mean that they were so
predictable that Medco could have devised a rule that would
have reliably screened customers from messages such as the
one on Shore’s T-shirt. Shanahan and another Medco
manager both testified that unscheduled tours occurred
periodically, and that visitors sometimes entered the Las
Vegas facility without advance notice. See J.A. at 148, 317.
The Board did not directly address this testimony, but rather
observed in a footnote that “[t]he record also shows that
employees generally received advanced notification of
upcoming tours.” 357 NLRB No. 25, at 2 n.7. Even under
our highly deferential standard of review, requiring us to
affirm the Board’s application of law to facts except where
“arbitrary or otherwise erroneous,” Guard Publishing Co. v.
NLRB, 571 F.3d 53, 58 (D.C. Cir. 2009), the Board cannot be
said to have offered a “reasoned explanation” for rejecting
Medco’s argument in favor of a rule applying throughout the
working day, see Int’l Transp. Service, 449 F.3d at 163.
Of course if Medco could not lawfully have banned the
anti-WOW T-shirt even at times coincident with customer
tours, the timing issue would not help it. But on the issue of a
partial ban, the Board’s reasoning was equally deficient.
Medco makes a straightforward argument that the message on
the T-shirt was insulting to the company and would have
undermined its efforts to attract and retain customers. To that
end, Medco has provided considerable evidence that the
WOW program is an important element of the pitch it gives
prospective and current clients; the company even assigns a

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fulltime employee to manage the program. This evidence, and
the tone of the T-shirt gibe at Medco’s management, seem to
preclude an offhand dismissal of the contention that the Tshirt would threaten to damage Medco’s relationship with its
customers. Yet the Board concluded that Medco had “not
offered any evidence that the slogan reasonably raised the
genuine possibility of harm to the customer relationship.” 357
NLRB No. 25, at 2.
We find this conclusion puzzling, for the Board has had
no difficulty in identifying potential harm to customer
relations in prior rulings. In Pathmark Stores, Inc., 342
NLRB 378, 379 (2004), the Board held that a grocery store
could, because of its “legitimate interest in protecting its
customer relationship,” lawfully prohibit its employees from
displaying the message “Don’t Cheat About the Meat!” in
protest of the store’s use of prepackaged meat products. And
in Noah’s New York Bagels, Inc., 324 NLRB 266, 275 (1997),
the Board upheld a ban on T-shirts reading “If its [sic] not
Union, its [sic] not Kosher.” In neither of these cases did the
Board require the employer to offer additional evidence
beyond a relationship between its business and the banned
message. In Pathmark the Board explicitly acknowledged
that the company had “presented no evidence that customers
decided not to buy” its products in response to the banned
slogan, but upheld the ban because it found “the slogan
reasonably threatened to create concern among [the
company’s] customers.” 342 NLRB at 379.
We do not think the Board has adequately explained why
Medco’s claim of harm to customer relations requires
evidence beyond what it has already adduced, while those of
the employers in Pathmark and Noah’s New York Bagels
required none. At oral argument Board counsel proposed to
read these cases as limited to disparagements of an employer’s
merchandise. But obviously an employee can harm an

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employer’s customer relations by belittling or critiquing other
aspects of the employer’s operations. Especially for a firm
selling a service, concern for customers’ appraisal of its
employees’ attitudes seems natural. Obviously we don’t mean
to suggest that employers are free to suppress employee
speech in the interest of presenting a Potemkin village of
intra-firm harmony, but that is quite different from trying to
exclude the display of slogans that an outsider might read as
sullen resentment (especially when the object of discontent is
something so seemingly inoffensive as the WOW program).
We recognize that “the Board draws on a fund of
knowledge and expertise all its own,” NLRB v. Gissel Packing
Co., 395 U.S. 575, 612 n.32 (1969), but that expertise is
surely not at its peak in the realm of employer-customer
relations. And the Act of course protects a wide spectrum of
lawful means of protesting employer policies and actions,
some of which may occur in the presence of customers. But if
the Board wishes to locate an employee’s behavior within that
spectrum, it must supply a more meaningful analysis than it
has offered here.
In describing the ALJ’s and the Board’s analyses, we
noted that while the ALJ had not only condemned Medco’s
application of the dress code’s ban on “insulting” language to
Shore but also found its prohibition of “provocative” or
“confrontational” messages overly broad, the Board explicitly
refrained from endorsing the ALJ’s second finding. Yet the
Board’s order directs Medco to “[r]escind the overly broad
work rules that prohibit employees from wearing clothing
with messages that are provocative, insulting, or
confrontational.” 357 NLRB No. 25, at 3. In adopting this
provision, the Board neither followed the reasoning of the
ALJ nor substituted its own. It offered no explanation for its
implicit ruling that each of the three adjectives was overly
broad.

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In the past we have found the Board “remarkably
indifferent to the concerns and sensitivity” that lead
employers to adopt rules intended “to maintain a civil and
decent workplace.” Adtranz ABB Daimler-Benz Transp., N.A.
v. NLRB, 253 F.3d 19, 25, 27 (D.C. Cir. 2001). In Lutheran
Heritage Village-Livonia, 343 NLRB 646, 647 (2003), the
Board appeared to accept Adtranz’s holding on employers’
rights to maintain such a workplace. Moreover, when a rule
neither expressly nor inherently restricts protected activity, the
Board appeared in Lutheran Heritage to condition any
decision that the rule’s mere existence violated the Act on a
finding either that the rule was promulgated in response to
union activity or that a reasonable employee reading the rule
would construe it to prohibit protected conduct. Id. For no
apparent reason the Board seems to have abandoned that
analysis in proscribing Medco’s ban on provocative and
confrontational words. As a general matter, we suspect that
such expressions are seldom found in civil and decent places
of employment.
* * *
For the reasons above, we deny Medco’s petition to
review the Board’s determination that Medco committed an
unfair labor practice by refusing to bargain on its amendment
of the pharmacists’ dress code. We grant the Board’s crossapplication for enforcement on this issue. But we set aside the
Board’s determination that Medco violated the Act in ordering
Shore to remove his T-shirt, and in its ban on insulting,
provocative and confrontational expressions on clothing. We
remand for further proceedings consistent with this opinion.
So ordered.

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