On January 21, 2025, the Ninth Circuit United States Court of Appeals determined the National Labor Relations Board ("NLRB" or "Board") did not abuse its discretion by expanding its monetary remedies. This 2-1 ruling upheld an order by the NLRB requiring Macy's ("the Company") to provide expanded "make-whole" remedies to workers who experienced unfair labor practices. Notably, this Ninth Circuit decision creates a split among the United States Court of Appeals regarding remedies available to the NLRB, which increases the likelihood of a Supreme Court review in the future.
Background
After months of failed negotiations regarding a successor collective bargaining agreement, Union members rejected a final offer from Macy's proposing terms related to wages and pensions. Subsequently, the Union went on strike from September 4, 2020, to December 4, 2020. In December 2020, the Union rejected an additional offer from Macy's and notified the Company that it was making "an unconditional offer to return our members to work immediately." In response, the Company asked the Union members not to return to work, which ultimately led to a dispute regarding the Company's lockout of Union members. The Union filed its original unfair practice charge against Macy's in December 2020 (later amended to February 2021), alleging unfair labor practices when it locked out Union members. On February 11, 2021, the NLRB filed its complaint asserting the Company violated Section 8(a)(1) and 8(a)(3) of the National Labor Relations Act ("NLRA").
The Administrative Law Judge ("ALJ") ruled against Macy's, concluding the Company did violate the NLRA since it did not provide the Union "with a timely, clear, or complete offer, which set[s] forth the conditions necessary to avoid the lockout." The ALJ then suggested remedies that would make the Union whole, including "any losses of pay and benefits that they may have suffered by reason of the lockout," including "search-for-work and interim employment expenses, regardless of whether those expenses exceed interim earnings." The NLRB affirmed the ALJ's ruling with two modifications; most significantly, the NLRB amended the "make-whole" remedy ordering that Macy's "shall also compensate the employees for any other direct or foreseeable pecuniary harms incurred as a result of the unlawful lockout, including reasonable search-for-work and interim employment expenses, if any, regardless of whether these expenses exceed interim earnings."
NLRB has Authority for Heightened Remedies Pursuant to Thryv v. NLRB
The Ninth Circuit agreed with the remedies issued by the NLRB, ordering the enforcement of the "make-whole" remedies for the Union members. This decision highlighted that "[t]he Board's discretion in selecting remedies is exceedingly broad, and [the Court] will enforce a remedy unless it represents a clear abuse of discretion." (referencing National Labor Relations Board v. Ampersand Publishing, LLC (Ninth Cir. 2022) 43 F.4th 1233.) Because the Court found no clear abuse of discretion, it deferred to the Board's order for remedies.
In doing so, the Ninth Circuit upheld the NLRB's make whole remedy standard established in Thryv, Inc. (2022) 372 NLRB No. 22. In Thryv, the NLRB found that the respondent company violated Sections 8(a)(1) and (5) of the NLRA, and as a remedial measure, ordered "the respondent [to] compensate affected employees for all direct or foreseeable pecuniary harms suffered as a result of the respondent's unfair labor practice." The Fifth Circuit later vacated the Board's remedies against Thryv because it found unfair labor practices did not occur. (Thryv, Incorporated v. National Labor Relations Board (Fifth Cir. 2024) 102 F.4th 727 ("Thryv").) Though skeptical, the Fifth Circuit did not vacate the portion of the Thryv decision outlining the NLRB's "make-whole" remedy standard.
In Macy's, the Ninth Circuit found that following the Thryv standard of "direct or foreseeable pecuniary harms" allows the Union members to be restored to the position they would be in, but for the occurrence of the unlawful lockout. Accordingly, the Ninth Circuit determined the NLRB's Order is aligned with the purpose of making an employee whole and promoting industrial peace.
Moving Forward
This Ninth Circuit court ruling is significant in that it disagrees with a Third Circuit United States Court of Appeals decision, creating a split in the two circuits. In the 2024 decision, the Third Circuit declined to apply the Thryv "make-whole" standard. In National Labor Relations Board v. Starbucks Corporation (3d Cir. 2024) 125 F.4th 78, the Third Circuit held the expanded remedies did exceed the NLRB's authority under the NLRA as consequential damage orders. The Third Circuit explained broad consequential damage orders are beyond remedial since they improperly exceed the amount the employer unlawfully withheld.
In addition, the Fifth Circuit United States Court of Appeals vacated portions of Thryv when it held the employer did not partake in unfair labor practices. The Fifth Circuit, however, did not rule against the Board's authority to impose heightened "make-whole" remedies, though the court noted that the heightened standard was "a novel, consequential-damages-like labor law remedy."
The varying treatments by the Third, Fifth, and Ninth Circuit Courts could cause varying results among the other Circuits in the Court of Appeals and potentially create a situation requiring review from the Supreme Court. Also notable, the current administration has made changes regarding the composition of the NLRB. Given the changes in the Board, the Thryv standard could get revised or revisited by the NLRB and result in a change in law. Kronick will continue to follow developments on this new law and will update this legal alert as those developments warrant.
Originally published February 6, 2025
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
