Endicott Interconnect Technologies, Inc. v. National Labor Relations Board
179 L.R.R.M. (BNA) 3276, 372 U.S. App. D.C. 60, 453 F.3d 532 (2006)
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Rule of Law:
An employee's communications to a third party lose the protection of Section 7 of the National Labor Relations Act if they constitute a sharp, public, disparaging attack on the employer's product or business policies, demonstrating a degree of disloyalty that provides "cause" for termination.
Facts:
- In 2002, Endicott Interconnect Technologies (EIT) acquired a manufacturing facility from IBM, which then became EIT's primary customer, accounting for 60% of its sales.
- On November 15, 2002, EIT laid off 200 employees.
- At the request of a union, employee Richard White spoke to a newspaper reporter about the layoffs.
- On November 16, 2002, an article was published quoting White, an employee of 28 years, stating the layoffs left 'gaping holes' and 'voids in the critical knowledge base' of the company.
- Upon reading the article, an IBM vice president contacted EIT owner William Maines to express concern about EIT's ability to supply circuit boards.
- On November 19, 2002, Maines met with White, told him his comments were disparaging, and threatened him with termination if it happened again.
- On December 1, 2002, White posted a message on the newspaper's public website stating that EIT was 'being tanked by a group of people that have no good ability to manage it' and would be put 'into the dirt.'
- On December 19, 2002, Maines discharged White for again making disparaging comments about the company.
Procedural Posture:
- The NLRB General Counsel filed a complaint against Endicott Interconnect Technologies (EIT).
- An Administrative Law Judge (ALJ) conducted a hearing and found that EIT violated section 8(a)(1) of the NLRA.
- EIT filed exceptions to the ALJ's decision with the National Labor Relations Board (NLRB).
- In a 2-1 decision, the NLRB affirmed the ALJ's finding that EIT's actions violated the NLRA.
- EIT, as petitioner, filed a petition for review of the NLRB's order in the U.S. Court of Appeals for the D.C. Circuit, and the NLRB, as respondent, filed a cross-application for enforcement of its order.
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Issue:
Do an employee's public statements that disparage a company's technical expertise and management's competence, causing concern to its primary customer, constitute protected 'concerted activities' under Section 7 of the National Labor Relations Act, or are they so disloyal as to provide cause for termination?
Opinions:
Majority - Henderson
No. The employee's statements were not protected because they were so detrimentally disloyal as to provide cause for termination. The court applied the standard from NLRB v. Jefferson Standard, which holds that an employee's concerted activity loses NLRA protection if it constitutes 'insubordination, disobedience or disloyalty.' White's statements, made by an experienced insider, were a 'sharp, public, disparaging attack' on EIT's product quality and business policies at a critical time for the new company. The immediate, concerned reaction from EIT's main customer, IBM, demonstrated the damaging effect of this disloyalty. His subsequent internet post, which caustically attacked management's competence, compounded the disloyalty. The court found that the NLRB erred by failing to properly consider the 'disloyalty' element of the Jefferson Standard test, and concluded White's attacks deprived him of the Act's protection, justifying his discharge 'for cause.'
Concurring - Henderson
No. While agreeing with the majority's disloyalty analysis, this opinion adds that White's statements also failed the first prong of the Jefferson Standard test, which requires the communications to be related to an ongoing labor dispute. The specific statements for which White was discharged were not about labor issues but were instead attacks on the capabilities of EIT and its management. Therefore, the communications did not qualify for Section 7 protection in the first place, independent of their disloyal nature.
Analysis:
This decision reinforces the 'disloyalty' exception to NLRA protections established in Jefferson Standard. It clarifies that an employee's right to engage in concerted activity is not absolute and does not shield public attacks on the employer's product quality, reputation, or managerial competence. The court's focus on the actual harm to customer relationships signals that the impact of the speech is a critical factor in determining whether it crosses the line from protected activity to unprotected disloyalty. This ruling provides employers with greater latitude to discipline employees whose communications, even if linked to a labor dispute, threaten the company's core business interests.
