Local 23, American Federation of Musicians v. NLRB
12 F.4th 778 (2021)
Rule of Law:
An agency's application of its own newly established legal test is arbitrary and capricious if the agency fails to provide a consistent and coherent explanation for the test's conditions and fails to properly apply the burdens of proof it deems central to the test's coherence.
Facts:
- The San Antonio Symphony, an orchestra whose musicians are represented by Local 23, American Federation of Musicians, leases performance space from the Tobin Center for the Performing Arts.
- The Symphony musicians are employees of the Symphony, not the Tobin Center, and perform at the Tobin Center for 22 weeks out of their 30-week annual season, also performing at other venues.
- During the 2016-2017 season, the Symphony musicians faced a work shortage, exacerbated when Ballet San Antonio, another Tobin Center resident, opted to use recorded music instead of live Symphony music for some productions.
- Local 23 members, primarily Symphony musicians, gathered in the Tobin Center's front plaza to distribute leaflets to Ballet patrons, informing them about the lack of live music and encouraging insistence on it.
- Tobin Center staff informed the Local 23 members they could not leaflet on Tobin Center property and directed them to a public sidewalk across the street, which the members complied with for subsequent performances.
Procedural Posture:
- Local 23 filed unfair labor practice charges against Bexar Performing Arts Center Foundation (d/b/a the Tobin Center).
- The National Labor Relations Board's General Counsel subsequently brought a complaint.
- An Administrative Law Judge (ALJ) applied the then-governing framework from New York New York, LLC and found that the Tobin Center violated Section 8(a)(1) of the NLRA.
- A divided National Labor Relations Board reversed the ALJ's decision, overruled New York New York, LLC, announced a new standard, and dismissed the General Counsel’s complaint.
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Issue:
Is the National Labor Relations Board's application of its new two-step test for determining when a property owner can prohibit an onsite contractor's employees from engaging in Section 7 labor organizing activity on its premises arbitrary and capricious?
Opinions:
Majority - Chief Judge Srinivasan
Yes, the National Labor Relations Board's application of its new two-step test for determining when a property owner can prohibit an onsite contractor's employees from engaging in Section 7 labor organizing activity on its premises is arbitrary and capricious because the Board's implementation of both steps was inconsistent with its stated rationale and failed to properly apply the burden of proof. The court noted that while the Board has discretion to revise its standards for employee access, its new approach was arbitrarily applied. The court found the Board's application of the first step, which requires contractor employees to work "regularly" and "exclusively" on the property, to be arbitrary. The Board's definition of "regularly" based on frequency (22 out of 52 weeks being irregular) was inconsistent with its own example of a vending machine operator working once a week being regular. The Board's attempt to redefine "regularity" in its briefing as "constant or definite intervals" was rejected as an impermissible post hoc justification, citing SEC v. Chenery Corp. The "exclusively" requirement was also deemed arbitrary because it focused solely on work for a specific contractor at the site, failing to effectively distinguish between employees with marginal and substantial connections to the property. The court further found the Board's application of the second step, which places the burden on the property owner to show "reasonable nontrespassory alternative means" of communication, was also arbitrary. The Board emphasized that this burden shift was critical to distinguishing contractor employees with greater Section 7 rights from nonemployee organizers, as in Lechmere, Inc. v. NLRB. However, the Board failed to impose this burden on the Tobin Center, relying on alternative means (social media, public sidewalks) that the Tobin Center never introduced or proved viable. Local 23 was denied the opportunity to argue or develop the record against these alternatives. The court concluded that the Board failed to follow through on applying the burden shift it deemed essential to its own test's coherence, thus remanding the case to the Board for further proceedings consistent with the opinion.
Concurring - Circuit Judge Henderson
While joining the majority's opinion that the Board misapplied its new framework in this dispute, Circuit Judge Henderson emphasized her view that the Board's new framework itself is not arbitrary or capricious per se. She noted that agencies may overrule precedent with a reasoned explanation, citing NLRB v. CNN Am., Inc. and FCC v. Fox Television Stations, Inc. She stated that if the Board had adequately explained and applied the "exclusivity" and "alternative means" prongs of its new framework, the court would have been obligated to affirm its decision.
Analysis:
This case is significant because it reiterates the principle that even when an agency has the discretion to change its legal standards, its application of those new standards must be coherent, consistent, and logically connected to its stated justifications. It highlights the importance of an agency providing a clear, non-arbitrary rationale and following its own established procedures, especially regarding burdens of proof. Future cases involving agency rulemaking or changes in interpretative policy will likely cite this decision to challenge applications that deviate from the agency's own articulated framework or rely on post hoc rationalizations.
