BITING THE HAND THAT FEEDS: THIRD PARTY APPEALS AND NLRA OBJECTIVES.

• Author: Matthew, Knowlesm
• Position: National Labor Relations Act

Introduction 762 I. The NLRA, the NLRB, and Jefferson Standard 764 A. Freedom of Contract and Employment At-Will 764 B. The National Labor Relations Act 766 C. Jones & Laughlin Steel Corp. and the Taft-Hartley Amendments of 1947 767 D. Jefferson Standard 769 II. Past and Present Problems with the Disloyalty Exception 773 A. Ongoing Confusion Over the Holding of Jefferson Standard 774 B. DirecTV v. NLRB 774 C. MikLin v. NLRB 776 D. Confusion over the Factors Relevant to Disloyalty Analysis 778 1. Early Interpretations of Jefferson Standard 779 2. The Ninth Circuit Shifts Focus to the "Connection" Inquiry that Would Become Prong 1 of the Mountain Shadows Test 780 3. The D.C. Circuit Breathes New Life into the "Disloyalty" Inquiry that Would Become Prong 2 of the Mountain Shadows Test 781 E. The Disloyalty Exception Is Inconsistent with NLRA Provisions that Expressly Protect Strikes, Boycotts, and Other Concerted Activity 782 F. Courts Disagree over the Source and Status of the Disloyalty Exception and the Proper Scope of Deference to the Board 782 G. The Disloyalty Exception Is Out of Date 783 III. An Alternative Reading of Jefferson Standard 784 A. The Mountain Shadows Test Fails to Choose Between Competing Visions of NLRA Policy 784 B. The Differing Views on the Role of Disloyalty Doctrine Reflect Wider Disagreement over the Act's Purpose in Light of the Taft-Hartley Amendments 785 C. The Debate over Whether Taft-Hartley Changed NLRA Policy Is Misguided 788 D. The Board Is Free to Abandon the Disloyalty Exception 790 E. The Board's Test Must Respond to the Concerns of the Jefferson Standard Court 792 F. A Connection-Based Test Is Objective and Can Be More Consistently Applied 796 Conclusion 796 INTRODUCTION

Words hurt--and your boss has feelings too. Criticism of a company's products, services, management, or labor practices is never good for business. But when the attacker is an employee, trained and paid to work towards the firm's prosperity, his words can cut deeper than the bottom line. The employer may feel betrayed and amply justified in firing such an 'ungrateful' or 'disloyal' employee.

But this sentiment might elicit little sympathy from the single parent who, unable to find cover the day a child is sick, wants to speak out against a company policy of firing all absentees, or from the long-serving employee whose co-workers are thoughtlessly fired in a downturn. These workers feel they have a right to express their concerns, and that the public has a right to hear them.

Both perspectives are valid. Each has a place in the nation's labor law. On the one hand, most employees in the United States are employees at-will, meaning they can be fired for any reason or for none at all, (1) and courts have found a duty on the worker's part to refrain from harming his employer's interests. (2) An employer is not obliged to pay unwanted or unnecessary workers. On the other hand, the National Labor Relations Act (3) ("NLRA" or "the Act") protects a worker's efforts to better her conditions of employment, (4) and this includes working against the employer's interests by forming unions, (5) organizing strikes, (6) or appealing to third parties for support in a dispute. (7) An employer commits an unfair labor practice when it fires an employee for engaging in conduct covered by the Act. (8)

These features of U.S. Labor Law can coexist, however uneasily. Activity that is protected by the NLRA cannot justify a worker's termination; any unprotected activity can. But the National Labor Relations Board ("NLRB" or "the Board") and Federal Courts of Appeals have recognized a third class of activity: conduct otherwise protected by the Act may nonetheless be grounds (or "cause") (9) for termination if it is deemed to be 'disloyal.' (10) Both the Board and the courts have struggled to define the scope of this class, as illustrated by a recent split between the Eighth and D.C. Circuits on the issue. (11)

This Note addresses the problems caused by the disloyalty exception to section 7 of the NLRA and argues that the exception can and should be abandoned. Part I introduces the National Labor Relations Act and the National Labor Relations Board, discusses the Act's conflicting policies and provisions, and presents the Supreme Court decision that gave birth to the disloyalty exception: Jefferson Standard} (1) Part II traces the Board's struggle to formulate an objective test for disloyalty amenable to consistent application, and explores criticisms of the exception as subjective, indeterminate, outdated, and fundamentally inconsistent with the Act. Finally, Part III argues that the true problem lies with the Board's failure to choose between conflicting theories of the Act's policy in light of the Taft-Hartley Amendments. It suggests that the Board recognizes the difficulties inherent in the disloyalty exception but feels bound by Jefferson Standard to retain the doctrine in some form. Part III asserts that the Board is in fact free to create its own test and goes on to offer an approach that would respond to both the problems with the present doctrine and the concerns of the Jefferson Standard Court.

1. THE NLRA, THE NLRB, AND JEFFERSON STANDARD

   Part I describes labor relations in the United States prior to passage of the NLRA. This part considers the effects on working conditions of the 'employment-at-wil' doctrine and lays out the key protections of the Act. Part I next explores the Supreme Court's decision in NLRB v. Jones & Laughlin Steel Corp. (13) and Congress' passage of the 1947 Taft-Hartley Amendments, as well as the influence of both developments on Justice Burton's opinion for the Court in Jefferson Standard and on subsequent interpretations of that case.

   1. Freedom of Contract and Employment At-Will

      When Congress enacted the National Labor Relations Act in 1935 the legal landscape was bleak for the American worker. Under the dominant freedom of contract doctrine all interference in employer-employee relations was viewed, at best, as inefficient, and at worst as a denial of each party's God-given right to dispose of his labor or capital as he wished. (14)

      Freedom of contract shaped labor law in at least two ways. First, it provided a tool with which pro-industry judges could strike down laws passed for the common good on the grounds that they unconstitutionally regulated agreement--most famously in Lochner v. New York. (15) Second, it served to justify the American 'at-will' employment regime. (16) Under this system, according to the Supreme Court of Tennessee in 1884:

      [M]en must be left, without interference to buy and sell where they please, and to discharge or retain employees at will for good cause or for no cause, or even for bad cause without thereby being guilty of an unlawful act per se. It is a right which an employee may exercise in the same way, to the same extent, for the same cause or want of cause as the employer. (17) But the at-will system was not as even-handed as the court implies. While the law imposed few duties on employers, courts did find a duty on the worker's part to "do nothing to injure his Master's Business." (18) This vague duty, which has been described as "a basic obligation of faithfulness to the master's interests," (19) was used to support "just cause" discharge of workers who had violated neither the law nor the terms of their employment contracts. (20) Even contracted workers, then, could find themselves without protection when they acted to further their own vital interests--if furthering such interests came at the expense of the employer's.

      In an environment hostile to regulation, meanwhile, wages and conditions were determined by the market. (21) Here, employers held the cards. Incorporation allowed consumers of labor to band together and bargain as a unit, while labor bid down its own wages in a scramble for work, of any kind, at any price. (22) Workers who tried to organize were fired (or worse), (23) and were without recourse under the at-will doctrine. The results were predictable: dangerous conditions, low pay, and long hours. (24) Discontent fostered unrest and, ultimately, industrial strife; strikes plagued the early twentieth-century workplace. (25)

   2. The National Labor Relations Act

      Senator Robert Wagner, author of the first version of the NLRA ("the Wagner Act"), (26) hoped by the legislation to promote industrial peace through "industrial democracy." (27) Although the Wagner Act pursued several different policies, (28) Congress enacted the NLRA "to protect the rights of employees and employers, to encourage collective bargaining, and to curtail certain private sector labor and management practices, which can harm the general welfare of workers, businesses and the U.S. economy." (29) Section 7 of the NLRA, "the essence of the entire statute," (30) grants employees the right to unionize, to strike, and to bargain collectively for mutual aid and protection. (31) Section 10(c) empowers the Board to remedy employer action violating employees' section 7 rights. (32) That same section, however, prohibits the Board from ordering reinstatement of any employee terminated "for cause." (33)

      Section 3 of the Act establishes and governs the procedures of the National Labor Relations Board. (34) The Board, an independent federal agency charged with enforcing the Act, (35) determines national labor relations policy--within the limits set by Congress. (36) The Board is composed of five members, appointed to five-year terms by the President with the advice and consent of the Senate. (37)

      The NLRB is responsible for investigating unfair labor practice allegations, finding relevant facts, and adjudicating such complaints in the first instance. Board orders are not self-enforcing, however, and appeals are heard in the federal circuit with jurisdiction over the dispute. The Board's conclusions enjoy great deference in the U.S. Courts of Appeals: (38) from 2010 to 2015...