Tuesday, January 25, 2011

New Standard Proposed for NLRB "Olin" Deferrals

Nlrb On Thursday of last week, National Labor Relations Board Acting General Counsel Lafe Solomon announced (in Memorandum GC 11-05) that he will urge the Board to adopt a new approach for determining whether to defer to arbitration decisions and grievance settlements in unfair labor practice cases brought under the NLRA's prohibitions on employer interference and discrimination.  Solomon said that he has concluded that in such cases, “the Board should no longer defer to an arbitral resolution unless it is shown that the statutory rights have adequately been considered by the arbitrator.”

Finding that the Board's existing deferral standards “tolerate substantive outcomes from arbitrators that differ significantly from those that the Board itself would reach,” Solomon said the Board should require any party urging deferral to demonstrate that (1) a collective bargaining agreement incorporated the statutory right in issue, or the parties presented the statutory issue to an arbitrator, and (2) an arbitrator “correctly enunciated” and applied NLRA principles in deciding the dispute. Solomon also said that he will urge board members not to give effect to a pre-arbitration grievance settlement unless evidence shows that the parties intended to settle unfair labor practice issues as well as alleged contract violations.

Two commentators who would prefer to remain nameless have weighed in on the proposed change.  Says one:

The proposed change, especially the "correctly enunciated" standard, is pretty radical.  Any standard that requires the arbitrator to correctly determine exactly what the Board would do would guarantee post-award challenges and undercut arbitral finality.

Responds another:

I don’t see how the proposed position is radical since it is a return to pre-Olin standards that the Board used for many years.  Also, I wouldn’t say that it “undercut arbitral finality” since the NLRB would not be overturning an arbitrator’s determination of contract rights at all, but rather adjudicating a statutory issue.  What I do find interesting is how broadly both Liebman and Solomon are willing to challenge pretty longstanding pro-Employer Board practices and precedents that survived the Clinton administration--without apparent fear of a backlash from a Republican House in the form of oversight hearings, budget cuts or restrictive riders.

Rejoins the first:

I meant radical only in the sense that it would overturn a 27-year-old precedent and would introduce a fundamentally different regime for review of arbitration awards.  The effect on finality is just as you describe.  I don't suggest that it's improper for the NLRB to adjudicate statutory rights --- the Board never had to defer at all --- just that by doing so it would undercut the arbitral interpretation of  those rights.  That means that the many arbitration decisions on the statutory questions would not be final.  I'm not questioning the wisdom of the proposal, just noting that in our little corner of the legal world, this would be a pretty big development.  (My own preference would be to simply require the arbitrator to address the statutory issues; that's a clear matter of fact, which wouldn't prompt so many Spielberg/Olin challenges.)

Like you, I agree that the most interesting part is Solomon's willingness to tackle a precedent that survived the Clinton administration.  It will be interesting to see what the Board itself does.  The Clinton Board, although clearly pro-union, tried to avoid picking fights with Congress.  If this Board does pick a fight, it's bound to pay for it in just the ways you mention.  That might not matter so much if the NLRB (and NLRA, for that matter) had strong support in the Senate and White House, but I don't see that support.  I haven't gotten the impression that Obama has any interest in labor law, certainly not enough to expend his political capital to protect NLRB funding or the like.  Without that strong support, the NLRB is pretty exposed.

As always, comments are welcome.



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I like Solomon's proposal. Contrary to the first commentator's assertion, Solomon's proposed deferral standard would not "require[] the arbitrator to correctly determine exactly what the Board would do."
If the party requesting deferral shows (1) and (2) above "the Board should, as
now, defer unless the award is clearly repugnant to the Act." GC Memo at 7.
"The award should be considered clearly repugnant if it reached
a result that is 'palpably wrong,' i.e., the arbitrator’s
decision or award is not susceptible to an interpretation
consistent with the Act." Id. Thus, it's not as though the Board will be performing a de novo review of the arbitrator's decision -- which wouldn't be much of a deferral standard.

Posted by: H. Blankenhorn | Jan 25, 2011 2:00:48 PM

As a former Board field attorney I can tell you that as a matter of practice almost not analysis goes into Collyer/Spielberg(pre/post arbitral deferral) decisions. Whatever the merits of consistency as a matter of practices charges in which there was a possibility of arbitration at the front end or an arbitral award at the back end were simply "gone." This change could at least cause regional offices to think for more than two minutes about what actually happens in the arbitral forum. About time.

Posted by: Michael Duff | Jan 26, 2011 5:57:20 AM

H. Blankenhorn: The whole point of the GC Memo is to make arbitration awards less final by increasing the Board's power to reject them. Requiring the arbitrator to address the legal issues is certainly appropriate; that corrects what may have been an unintended omission in Olin. The proposed changes, however, would (a) shift the burden of proof from those challenging deferral to those seeking it; and (b) require that the arbitrator "correctly enunciated the applicable statutory principles and applied them." The combination of those factors would mean that many more arbitration decisions will be challenged through the NLRB, and that many of them will be overturned.

It may not be total de novo review, but it will be darned close. How else could the Board be sure that the arbitrator "correctly enunciated" and applied the statutory principles? The "palpably wrong" standard may protect some marginal awards, but only after the parties have had to relitigate the issue before the Board.

Posted by: Dennis Nolan | Jan 26, 2011 7:05:00 AM

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