By: Kenneth R. Dolin

Nestle Dreyer’s Ice Cream Co. v. NLRB is a case pending in the U.S. Court of Appeals for the Fourth Circuit that very well may determine the viability of the Board’s Specialty Healthcare standard for ascertaining the appropriateness of bargaining units. The Sixth Circuit previously upheld the Specialty Healthcare standard in Kindred Nursing Centers East LLC v. NLRB, 727 F.3d 552 (2013), but without referencing a prior Fourth Circuit case, NLRB v. Lundy Packaging, 68 F.3d 1577 (1995), that at least arguably proscribed the Board from using the “overwhelming community-of-interest” standard in determining the appropriateness of a unit.

Section 9(b) of the National Labor Relations Act grants to the Board the power to determine “the unit appropriate for the purposes of collective bargaining.” While the Board therefore possesses broad discretion in determining the appropriate unit, Section 9(c)(5) of the NLRA limits that discretion by providing that “whether a unit is appropriate… the extent to which employees have organized shall not be controlling.” In Lundy Packaging, the Fourth Circuit rejected the Board’s attempt to implement an “overwhelming community-of-interest” test when determining whether a petitioned-for unit is appropriate. The court in Lundy Packaging reasoned that the Board’s attempt to favor the union’s petitioned-for unit violated the NLRA by giving controlling interest to the extent of union representation and represented a wholesale reversal of decades of Board precedent in the determination of appropriate units without reasoned explanation.

The issue in Nestle is whether the petitioned-for unit seeking to include only maintenance employees, and excluding production employees, is an appropriate unit. The Regional Director, in a decision adopted by the Board, found that the bargaining unit consisting of just the maintenance employees was an appropriate unit, while the employer contended that the petitioned-for unit of just maintenance employees was inappropriate and that an appropriate unit must include production as well as maintenance employees.

In Specialty Healthcare, 357 NLRB No. 83 (2011), enfd. sub. nom. Kindred Nursing Centers East LLC v. NLRB, 727 F.3d 552 (6th Cir. 2013), the Board returned in large part to the standard announced by the Board (but rejected by the Fourth Circuit) in Lundy Packaging, and set forth the following test for determining whether a petitioned-for unit of employees is an appropriate unit when a party contends that a larger unit is the only appropriate unit:

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[W]hen employees or a labor organization petition for an election in a unit of employees who are readily identifiable as a group (based on job classifications, departments, functions, work locations, skills or similar factors), and the Board finds that the employees in the group share a community of interest after considering traditional criteria, the Board will find the petitioned-for unit to be an appropriate unit, despite a contention that employees in the unit could be placed in a larger unit which would also be appropriate or even more appropriate, unless the party so contending demonstrates that employees in the larger unit share an overwhelming community of interest with those in the petitioned-for unit.

The Board in Nestle found that the maintenance employees were readily identifiable as a separate group because they were in their own department, and were in different job classifications, had different skills, and performed different functions from production employees.

The Board then found that the maintenance employees shared a sufficient community of interest among themselves for purposes of collective bargaining because they shared: (1) similar wages, (2) similar hours, (3) common supervision among themselves, reporting directly to their own maintenance supervisors, and (4) common functions and skills.

Finally, the Board found that the employer had not established the requisite “heightened showing” that maintenance employees shared an “overwhelming community” of interest with production employees because there was not: (1) a significant amount of temporary interchange between production and maintenance employees; and (2) common supervision between maintenance and production employees. Moreover, the Board found that the petition did not seek to represent only a fraction and arbitrary portion of the maintenance employees and the bargaining history of a production and maintenance employee bargaining unit consisting of only one contract and an invalidated certification of election was insufficient to establish that the maintenance employees shared an overwhelming community of interest with production employees.

Thus, the Board concluded that while factors might have shown that a unit containing both production and maintenance employees was “an” appropriate unit, these factors were insufficient to meet the “heightened showing” threshold of an “overwhelming community of interest” under Specialty Healthcare to render the petitioned-for unit inappropriate.

After the union won the election in the voting unit of maintenance employees, the employer refused to bargain in order to challenge the union’s certification in court. The Board ruled that the employer committed an unfair labor practice and on November 7, 2014 the employer petitioned the Fourth Circuit Court of Appeals for review of the Board’s order.

The employer has argued that the “overwhelming community-of-interest” test effectively makes the extent of union organization controlling, contrary to the NLRA and Lundy Packaging, that the “overwhelming” test is unsupported by prior Board precedent and this test is a departure from Board precedent without any reasoned analysis. Finally, the employer has argued that the employees excluded from the bargaining unit were functionally identical to employees that the Fourth Circuit in Lundy Packaging found should necessarily have been included in the voting unit.

It remains to be seen whether the Fourth Circuit will hold in Nestle Dreyer’s Ice Cream that the overwhelming community of interest test of Specialty Healthcare is improper.  We will closely monitor this case and related developments.