NLRB Cannot Change Law During Appeal, 5th Circuit Rules

Takeaway: The 5th Circuit’s ruling reinforces that significant shifts in policy should not occur mid-appeal without due process.

While the National Labor Relations Board (NLRB) typically changes in composition when a new party takes control of the White House, it should not dramatically reinterpret the law in the middle of a case pending on appeal, the 5th U.S. Circuit Court of Appeals ruled.

Lion Elastomers manufactures synthetic rubber in Port Neches, Texas. Around 85 to 90 of its approximately 200 employees are part of a bargaining unit represented by the United Steelworkers, Local 228.

Section 8 of the National Labor Relations Act (NLRA) bars employers from interfering with, restraining, or coercing employees in the exercise of protected activities. The NLRA is silent, however, as to when bad behavior during union activities, such as threats or the use of racial epithets during grievances or strikes, renders these activities unprotected and therefore reasonable grounds for employee discipline.

Until July 2020, the NLRB decided whether union members’ behavior constituted protected activity based on setting-specific standards, and it applied different factors depending on where the behavior took place. For workplace outbursts, for instance, the NLRB applied a four-factor standard determined in a 1979 decision that considered: 1) the place of the discussion; 2) the subject matter of the discussion; 3) the nature of the employee’s outburst; and 4) whether the outburst was in any way provoked by an employer’s unfair labor practice.

In May 2020, the board found that Lion Elastomers had committed unfair labor practices by threatening, disciplining, and discharging an employee for engaging in protected activities. In so holding, the board adopted an administrative law judge’s decision that applied the 1979 standard to assess whether the employee’s behavior lost its protected status. Lion Elastomers filed a petition for review of the NLRB ruling with the 5th Circuit in June 2020.

In July 2020, when Donald Trump was president and the NLRB had a Republican majority, the board issued a new decision announcing it would no longer use the 1979 decision or other setting-specific standards to assess whether employers have unlawfully discharged or disciplined employees that engage in abusive conduct in connection with protected activity. Instead, it would apply a burden-shifting framework that requires the NLRB general counsel to show a causal relationship between the discipline and the protected activity. This standard would make it easier for employers to show that misconduct, rather than protected activity, caused the discipline or discharge.

Based on this new decision, the NLRB filed an unopposed motion with the 5th Circuit to remand the case to the board. It explained that it had overruled the 1979 decision and announced a new framework for analyzing whether an outburst to management in the workplace causes an employee to lose NLRA protection. The court granted the motion in a single-sentence order.

After Joe Biden became president in January 2021, the NLRB gained a Democratic majority. In May 2023, the board issued a decision in the Lion Elastomers case that overruled the 2020 decision and returned to earlier board precedent, including the 1979 decision, applying setting-specific standards to decide whether an employee has lost NLRA protection. The board thus reaffirmed its original decision finding that the company had violated the NLRA.

Lion Elastomers appealed again and argued that the NLRB had violated the 5th Circuit’s mandate in remanding the case. On appeal, the 5th Circuit considered how the mandate rule and law-of-the-case doctrine applied to the situation. While the NLRB argued that it is an adjudicatory body with the right to interpret and overrule prior board precedent, the 5th Circuit determined that there were limits to these powers.

The 5th Circuit found that, even though it had not specifically limited the NLRB’s discretion on remand, the NLRB limited its request to applying the 2020 precedent to the case against Lion Elastomers. The board did not give Lion Elastomers an opportunity to submit a new brief and make new arguments before reverting to the 1979 analysis and applying it to the current case instead. At the very least, the board should have let Lion Elastomers argue concerning the change in law.

As a result, the 5th Circuit overturned the NLRB’s decision and remanded the case for the board to reconsider under its 2020 decision.

Lion Elastomers LLC v. NLRB, 5th Cir., No. 23-60270 (July 9, 2024).

Jeffrey Rhodes is an attorney with McInroy, Rigby & Rhodes LLP in Arlington, Va.