Seyfarth Synopsis: On August 22, 2024, the National Labor Relations Board (“NLRB” or the “Board”) issued a decision in Metro Health, Inc. d/b/a Hospital Metropolitano Rio Piedras ending more than 50 years of the Board’s practice of approving consent orders, whereby an administrative law judge (“ALJ”) resolves unfair labor practice (“ULP”) cases absent the agreement of the charging party and the General Counsel.  Chairman McFerran was joined in the majority opinion by Members Prouty and Wilcox.  Member Kaplan dissented. 

Consent Orders Under the National Labor Relations Act

Historically, once a complaint issued in a ULP, it could be resolved in one of four ways: (1) dismissal by the General Counsel; (2) bilateral settlement (between the respondent and the General Counsel and/or the charging party); (3) litigation through hearing; or (4) consent order.  In the context of ULPs, a consent order is the procedure by which a respondent can propose a resolution for approval by the presiding ALJ, and without agreement from the General Counsel and/or charging party.

The Board approved the first consent order resolving a ULP in 1971.  Local 201, Intl. Union of Electrical Workers, 188 NLRB 855 (1971).  In Electrical Workers, the respondent union proposed a resolution to a pending ULP.  The Board accepted the ALJ’s recommendation that it approve the respondent’s proposed resolution despite objections by the charging party and the General Counsel.  The Board explained that the proposed consent order “provides a full remedy with respect to all aspects of the [. . . ] violations alleged in the complaint,” and further reasoned:

that it will protect the public interest and effectuate the purposes and policies of the Act; and that further hearing herein with respect to Respondent’s defense could not result in any changes in the proposed consent order and notice which would be more favorable to the General Counsel and Charging Party.

Over time, the Board further developed its approach including by applying the “reasonableness” standard adopted in Independent Stave to consent orders.  Copper State Rubber of Arizona, Inc., 301 NLRB 138 (1991) citing Independent Stave Co., Inc., 287 NLRB 740 (1987).  Under the Independent Stave standard, the Board considered whether consent orders “substantially remedied” the alleged violations.

In 2016, the Board issued its decision in United States Postal Service, in which it held that the appropriate standard for reviewing consent orders was a “full remedy” standard.  364 NLRB 1704 (2016).  One year later, the Board overturned United States Postal Service in UPMC, and returned to the Independent Stave standard. 365 NLRB 1418 (2017). UPMC remained the controlling precedent until Hospital Metropolitano.

Factual Background

This case arises from a dispute between Hospital Metropolitano (the “Employer”) in San Juan, Puerto Rico and Unidad Laboral de Enfermeras(os) y Empleados de la Salud (the “Union), which represents four units of the Employer’s employees.  The Board consolidated two charges involving the same Union and employer, but separate bargaining units.  Ultimately, the two Complaints alleged that the Employer violated Sections 8(a)(5) and 8(a)(1) of the Act as follows:

1. In 12-CA-284984, the Union alleged that the Employer failed to produce certain payroll documents in response to a request for information made on October 14, 2021, for one of the four bargaining units the Union represents at the Employer’s hospital.
2. In 12-CA-279497, the Union alleged that the Employer unilaterally subcontracted bargaining unit work and laid off bargaining unit employees from a different one of the four bargaining units the Union represents at the Employer’s hospital.

The hearing opened on June 6, 2022.  At the hearing, the General Counsel and the Employer engaged in settlement negotiations in the request for information case (12-CA-284984), but were unable to reach an agreement. 

On June 17, 2022, the Employer filed a motion to sever the request for information case (12-CA-284984) and to approve a proposed consent order.  The General Counsel and the Union objected to the approval of the consent order.  The ALJ approved the consent order, finding that it “‘wholly comport[ed]’ with the informal settlement agreement proposed by the General Counsel in Case 12-CA-284984 except that it contained a non-admission clause and did not include a provision explicitly requiring the Respondent to distribute the notice to employees by text message.”

On August 10, 2022, the General Counsel filed a request for special permission to appeal the ALJ’s approval of the consent order.  Now – more than two years later – the Board issued its decision ending the Board’s practice of approving consent orders and removing significant authority from its ALJs.

The Board Will No Longer Accept Consent Orders

The Board held “[i]n this case, and in all pending and future unfair labor practice cases, the Board will not terminate the case by accepting or approving a consent order.”  In its decision, the Board also specifically overruled its decision in UPMC. 

The majority’s rationale was four-fold:

1. The Board’s Rules and Regulations.  The Board noted that its “Rules and Regulations do not mention the term ‘consent order,’ much less authorize the Board or an administrative law judge to accept one under any circumstances.”  The Board acknowledged that the Rules and Regulations expressly permit mutual settlements, but that the Rules and Regulations’ silence on the issue of consent orders renders them unlawful.  The Board further explained that “the practice of approving consent orders would seem to violate the Board’s Rules and Regulations insofar as they prohibit judges from ‘adjusting cases.’” 

This perspective seems, irrationally, to ignore the more than 50-year history of the Board permitting such consent orders, albeit under differing standards.

2. Administrative Burden and Inefficiencies.  The Board noted that even the “full remedy” standard announced in United States Postal Service “poses administrative challenges and inefficiencies.”  Ultimately, the Board majority held that it “do[es] not believe the administrative benefit of retaining the consent order practice outweigh the costs.” 

This rationale was not supported by any data, but was rather a blunt proclamation.

3. The General Counsel’s Prosecutorial Authority.  Consent orders undermine the General Counsel’s prosecutorial authority by empowering ALJs to resolve cases over the General Counsel’s objections.  The Board held that an ALJ’s approval of a consent order “intrudes into the General Counsel’s statutory role of exercising her prosecutorial authority.” 

This likely gets to the crux of the issue – the General Counsel does not wish to relinquish any authority, even to a fact finder, and the current Board Majority supports her agenda.

4. Public Policy.  The Board’s public policy aims include “early restoration of industrial peace.”  Independent Stave, 287 NLRB at 742-743.  Consent orders are inferior to settlements between the parties because they do not require the parties to meet in the middle to find a mutually acceptable resolution to the dispute.  Because consent orders were often entered over the objections of the charging party and General Counsel, they “risk[ed] further inflaming the very labor dispute that lead to the fling of unfair labor practice charges in the first place.” 

By this logic, an adverse ALJ or Board decision would have the very same effect on the parties.  It is ironic that an NLRB that permits an ALJ to determine what constitutes “good faith” bargaining, will no longer permit ALJs to weigh in on whether the charging party or the General Counsel is simply being an impediment to a logical conclusion achieved in an expedient manner.

In a statement, Board Chairman McFerran said: “Because consent orders do not represent a real agreement between opposing parties to resolve a case, they do not promote labor peace in the same manner as a true settlement, [. . . . ] Our decision in Hospital Metropolitano preserves the benefits of true settlements, while eliminating a practice that has no foundation in the Act or our regulations.”  It bears repeating that this practice has existed for more than 50 years.

Member Kaplan’s Dissent

In his dissent, Member Kaplan admonished the majority:

The Board’s responsibility is for enforcing the Act in the best interests of the public, and especially those employees whose rights have been violated. When the General Counsel acts in a manner that is contrary to protecting the interests of employees seeking to vindicate their rights under the Act, simply to pursue her own agenda, the Board not only has the authority but it has the duty to use its authority to protect the rights of the public over the interests of the General Counsel. Put simply, I do not believe that my colleagues have acted in the best interests of the public by allowing the significant delay in either the case at issue or the other cases that have been “held” pending this decision.

The dissent notes that the consent order at issue in this case was reasonable under both Independent Stave and UPMC.  Member Kaplan explained that the Union and General Counsel’s argument that the consent order should have been rejected because it lacked a non-admission clause was not compelling because there was nothing to suggest that a non-admission clause was necessary to remedy the violation at issue in the case.  Member Kaplan explained that, ultimately, the majority’s decision to overturn 50 years of Board law does not promote the purposes of the Act and will require:

resources to be spent on needlessly litigating cases where the [r]espondent offered to provide either an eminently reasonable settlement, or, even, a full remedy.  Worse, the misallocation of resources that is the unavoidable result of [the majority decision here] needlessly reduces the amount of available resources for the Board to use actually protecting American workers.

Impact

The ruling in Hospital Metropolitano should be particularly concerning to employers because it eliminates the last best method for resolving ULPs once a complaint issues.  This decision eliminates the option of holding the General Counsel or the charging party to a reasonable standard.  In a world where the General Counsel refuses to accept any settlement proposal that includes non-admission language or without default language, it is a commonly held belief that employers simply cannot reach reasonable bilateral settlement agreements.  Consent orders were one of the last tools available to employers to resolve ULPs short of litigating through trial.  The goal is capitulation.

Only time will tell how much impact Hospital Metropolitano will have on ULP litigation, but ultimately, employers will be faced with the options of agreeing to less favorable settlement terms or litigating ULPs through trial. The result reveals the Board’s ultimate strategy to vest nearly unchecked power in the hands of the General Counsel – take it or litigate it.  Given the Board’s lack of resources, this approach may create even more backlog in ULP investigations and litigation.