Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-04-01400/USCOURTS-caDC-04-01400-0/pdf.json

Parties Involved:
Manhattan Center Studios, Inc.
Petitioner
National Labor Relations Board
Respondent

Document Text:

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued November 8, 2005 Decided June 23, 2006

No. 04-1400

MANHATTAN CENTER STUDIOS, INC.,

PETITIONER

v.

NATIONAL LABOR RELATIONS BOARD,

RESPONDENT

No. 04-1417

MANHATTAN CENTER STUDIOS, INC.,

CROSS-RESPONDENT

v.

NATIONAL LABOR RELATIONS BOARD,

CROSS-PETITIONER

On Petition for Review and Cross-Application for

Enforcement 

of an Order of the National Labor Relations Board

Peter D. Stergios argued the cause for the petitioner/crossrespondent. Patrick M. Collins was on brief.

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Stacy G. Zimmerman, Attorney, National Labor Relations

Board, argued the cause for the respondent/cross-applicant.

Arthur F. Rosenfeld, Acting General Counsel, Margery E.

Lieber, Acting Assistant General Counsel, Aileen A. Armstrong,

Deputy Associate General Counsel, and Jill A. Griffin,

Attorney, National Labor Relations Board, were on brief.

Before: HENDERSON and GRIFFITH, Circuit Judges, and

WILLIAMS, Senior Circuit Judge.

Opinion for the Court filed PER CURIAM.

Dissenting opinion filed by Circuit Judge HENDERSON.

PER CURIAM: Petitioner Manhattan Center Studios (MCS)

seeks review of an order of the National Relations Board (NLRB

or Board) finding that it committed an unfair labor practice

(ULP) in refusing, inter alia, to bargain with a union certified by

employee vote. After the certification election, MCS learned

that one of its supervisory employees had, before the election,

improperly distributed union authorization forms and solicited

the unit employees to sign them. MCS refused to bargain on

that basis, contending the election was not valid. It claimed that

its supervisory employee’s subsequently discovered misconduct

constituted an affirmative defense to the ULP charge. The

Board disagreed. Before us, MCS argues that, in denying it the

opportunity to contest the validity of the election, the Board

misapplied its precedent regarding newly discovered evidence.

The Board cross-petitions for enforcement of its order. Because

we find that the Board erred in applying its “due diligence”

standard—used to permit an untimely election challenge based

on newly discovered evidence—to the facts of this case, we

remand for further proceedings. 

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1

Unless otherwise noted the facts are taken from the Board’s

order, Manhattan Center Studios, Inc., 342 NLRB No. 131 (2004),

reprinted at Joint Appendix (JA) 79. Also all dates refer to 2003

unless otherwise noted. 

2

29 C.F.R. § 102.69(a) provides: “Within 7 days after the tally of

ballots has been prepared, any party may file with the Regional

Director an original and five copies of objections to the conduct of the

election or to conduct affecting the results of the election, which shall

contain a short statement of the reasons therefor.” 

I. 

MCS is a corporation based in New York City that offers its

facility for rent for theatrical and musical productions.1 On

February 19, 2003, stagehands and production staff (production

employees) employed by MCS voted by a 5-1 margin to certify

Theatrical Stage Employees Local No. One (Union or Local

One) as the collective bargaining representative for their sevenemployee bargaining unit. See Tally of Ballots, NLRB Case No.

2-RC-22677 (Feb. 19, 2003), reprinted at Joint Appendix (JA)

10. MCS did not file an objection to the election within seven

days after the election as required by 29 C.F.R. § 102.69(a).2

Eight days later, on February 27, the Board certified the Union

as the representative of the production employees’ bargaining

unit and, on March 7, the Union wrote to MCS’s CEO Russell

Arnold requesting both available dates to begin bargaining and

information on terms and conditions of employment needed to

formulate its bargaining proposals. 

On March 20, MCS responded to the Union’s request,

refusing to bargain or to turn over any employee information.

Its letter stated that “it has recently come to our attention that an

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3

 Section 8(a)(1), in pertinent part, forbids an employer to

“interfere with, restrain, or coerce employees in the exercise of the

rights guaranteed” under section 7 of the Act to organize and bargain

collectively. 29 U.S.C. § 158(a)(1). Section 8(a)(5), in pertinent part,

forbids an employer “to refuse to bargain collectively with the

representative of his employees.” Id. § 158(a)(5). 

MCS supervisor was improperly involved in organizational

activities on behalf of Local One. As a result, it appears that

Local One is not validly and lawfully certified as the bargaining

representative of an uncoerced majority of MCS’s stagehands

and production employees.” Letter from Russell Arnold, CEO,

MCS, to James J. Claffey, Jr., Legitimate Theater Business

Manager, JA 13. The Union then filed two ULP charges against

MCS and on May 30 the Board issued a complaint charging

MCS with a violation of sections 8(a)(1) and (5) of the National

Labor Relations Act (Act), 29 U.S.C. § 158(a)(1), (5), in

refusing the Union’s requests to bargain and to provide

information following a valid certification.3

 JA 18. In its

answer to the complaint MCS admitted it had refused to bargain

but offered an affirmative defense to the ULP charges—namely,

that the “Union’s election petition was tainted by unfair labor

practices, including improper supervisory involvement in the

organizing campaign.” JA 48. MCS maintained that after the

Union was certified on February 27—and, significantly, after the

period to object had expired, see 29 C.F.R. § 102.69(a)—it

learned that one of its supervisory employees, Technical

Coordinator Gustavo Garces, had distributed the Union’s

authorization cards before the election and solicited employees

to sign them, thereby tainting the unit employees’ exercise of

their “right to bargain collectively through representatives of

their own choosing” in violation of section 8(b)(1) of the Act.

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4

Section 8(b)(1) provides in relevant part that “[i]t shall be [a

ULP] for a labor organization or its agents to restrain or coerce

employees in the exercise of the rights guaranteed in section 157”, 29

U.S.C. § 158(b)(1), including “their right to select their [bargaining]

representative,” NLRB v. Int’l Ass’n of Bridge, Structural, &

Ornamental Iron Workers, 434 U.S. 335, 344 (1978). 

See 29 U.S.C. § 158(b)(1);4 JA 63. MCS learned of Garces’s

organizing activities from Michael Spony, a non-unit employee,

sometime in March. JA 52. According to the affidavits of

Spony and CEO Arnold, Spony told Arnold that Garces had

boasted to Spony of Garces’s “spearhead[ing] the Union’s

campaign to organize [MCS’s] production employees” during a

conversation the two had had in November 2002. JA 53, JA 15.

Because the information regarding Garces’s misconduct “was

not previously available” to MCS, MCS argued that,

notwithstanding the representation proceeding had closed when

the unit employees voted to certify the Union as their

representative and the period for filing objections had expired,

it could nonetheless properly raise the issues of his misconduct

and its effect on the election in the then-pending ULP

proceeding in order to challenge the validity of the Union’s

certification and thus undergird its refusal to bargain. MCS

Mem. of Law in Opp’n to Mot. for Summ. J. at 12, JA 67.

Because it was unaware of Garces’s misconduct until March, it

could not have timely objected to the election on that basis.

Nonetheless, MCS argued, it remained free to challenge the

election because, in its words, “a party is entitled to litigate

representation issues concerning coercive pre-election conduct

if the party has obtained newly discovered evidence or did not

otherwise have an opportunity to litigate the issues in the prior

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representation proceeding.” JA 64 (citing San Antonio Portland

Cement Co., 240 N.L.R.B. 1168 (1979)). Its evidence was new,

MCS claimed, because it did not learn of the supervisory taint

until after the seven-day period. Id.

On September 24, 2004, the Board issued its Decision and

Order granting summary judgment to the General Counsel.

Manhattan Ctr. Studios, Inc., 342 NLRB No. 131 (2004) (MCS),

JA 79. It began by noting “the Respondent did not file any

objections to the conduct of the election” within seven days

thereafter; the representation proceeding had therefore closed

and could be “reopened to litigate [election impropriety] issues

only if [MCS] could establish that it has newly discovered

evidence.” Id., slip. op. at 2. It found that MCS had not met

that burden. The Board described newly discovered evidence as

evidence of facts that existed at the time of the representation

proceeding “which could not be discovered by reasonable

diligence.” Id. (citing APL Logistics, Inc., 341 N.L.R.B. No.

132, slip op. at 1 (2004)). It then concluded:

[T]he Respondent has failed to present any

information indicating that prior to the expiration of

time in which to file objections to the election, it

engaged in an attempt to uncover any potential

improprieties in that proceeding. Thus, the Respondent

has failed to establish that the evidence at issue could

not have been discovered earlier through the exercise

of reasonable diligence. 

Id. at 2, JA 80 (emphasis added). Because MCS had no

affirmative defense to its refusal to bargain with the Union, no

genuine issue of material fact existed as to MCS’s refusal to

bargain and, accordingly, the General Counsel was entitled to

summary judgment. MCS timely petitioned for review.

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5

29 C.F.R. § 102.48(d)(1) provides that “[a] party to a

proceeding before the Board may, because of extraordinary

II.

We review the Board’s order to determine “whether the

Board acted arbitrarily or otherwise erred in applying

established law to the facts of the case.” Antelope Valley Bus

Co., Inc. v. NLRB, 275 F.3d 1089, 1092 (D.C. Cir. 2002)

(quotations omitted). The Board cannot “ignore its own relevant

precedent but must explain why it is not controlling.” BB&L,

Inc. v. NLRB, 52 F.3d 366, 369 (D.C. Cir. 1995). “[W]here an

agency departs from established precedent without a reasoned

explanation, its decision will be vacated as arbitrary and

capricious.” ANR Pipeline Co. v. FERC, 71 F.3d 897, 901 (D.C.

Cir. 1995). If we conclude that the Board misapplied or

deviated from its precedent, we often remand with instructions

to remedy the misapplication/deviation. Lee Lumber & Bldg.

Material Corp. v. NLRB, 117 F.3d 1454, 1460 (D.C. Cir. 1997)

(remanding to resolve inconsistency between Board standard

and its application therein). 

As noted, under the Board’s regulations, a party has seven

days after the tally of ballots in a certification election to file

“objections to the conduct of the election or to conduct affecting

the results of the election.” 29 C.F.R. § 102.69(a). The Board’s

seven-day deadline reflects its long-standing policy favoring

finality in election results in order to further industrial peace.

See NLRB v. A.J. Tower Co., 329 U.S. 324, 331–32 (1946).

Section 102.48(d)(1) of the Board’s regulations, however,

permits a party to move for reconsideration or reopening of the

record after the expiration of the specified period based on

“newly discovered evidence.” 29 C.F.R. § 102.48(d)(1).5

 Board

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circumstances, move for reconsideration, rehearing, or reopening of

the record after the Board decision or order. . . . Only newly

discovered evidence, evidence which has become available only since

the close of the hearing, or evidence which the Board believes should

have been taken at the hearing will be taken at any further hearing.”

6

In providing an avenue for relief based on new evidence, the

Board sought to mirror Rule 60(b)(2) of the Federal Rules of Civil

Procedure. See F.R. Civ. P. 60(b)(2) (allowing relief from final

judgment or order based on newly discovered evidence which by due

diligence could not have been discovered in time to move for new trial

under Rule 59(b)); Pace Oldsmobile, Inc., 256 N.L.R.B. 1001, 1003

(1981) (petition for reopening of proceedings based on new evidence

premised on same considerations as under Rule 60(b)(2)). Relief

under Rule 60(b)(2) requires that the moving party show, among other

requirements, that he was diligent in discovering the new evidence.

See Jones v. Lincoln Elec. Co., 188 F.3d 709, 732–35 (7th Cir. 1999).

precedent interpreting section 102.48(d)(1) sets forth two

requirements for newly discovered evidence: one is

straightforward and the other constitutes the nub of this case.

First, newly discovered evidence must be evidence of facts in

existence at the time of the proceeding in question. See MCS,

342 N.L.R.B. No. 131, slip. op. at 1. Second, the moving party

must have been “excusably ignorant” of the existence of the

evidence. See Seder Foods Corp., 286 N.L.R.B. 215, 216

(1987). To find excusable ignorance, the Board applies a “due

diligence”/“reasonable diligence” standard whose aim is to

ensure that the moving party could not have discovered and

brought the evidence to the Board’s attention during the sevenday period.6

 See Fitel/Lucent Techs., Inc., 326 N.L.R.B. 46, 46

n.1 (1998) (party “seeking to introduce evidence as newly

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discovered must also show facts from which it can be

determined that the movant acted with reasonable diligence to

uncover and introduce the evidence”). 

Board precedent includes at least two formulations of the

due/reasonable diligence standard: one—which we dub the

“conducted investigation” version—to be used if the moving

party asserts its due diligence to establish that subsequently

discovered facts constitute new evidence, see, e.g., Superior

Prot., Inc., 341 NLRB No. 86, slip. op. at 4 (2004) (Superior

Protection) (“[i]n order to establish that evidence is ‘newly

discovered,’ the movant must show facts indicating that it ‘acted

with reasonable diligence to uncover and introduce the

evidence’ and that it was therefore ‘excusably ignorant’ of the

evidence previously”) (internal citations omitted); and

another—which we dub the “hypothetical investigation”

version—to be used in circumstances where due diligence was

not exercised, in which case the Board asks whether the exercise

of due diligence would have timely uncovered the evidence.

See, e.g., APL Logistics, 341 NLRB No. 132, slip. op. at 1

(2004) (defining new evidence as “evidence of facts in existence

at the time of the hearing which could not be discovered by

reasonable diligence”); Jason/Empire, 212 N.L.R.B. 137, 138

(1974) (“[A]lthough the alleged [offer to waive union initiation

fees] was made at a preelection union meeting, the Respondent

has failed to show that with due diligence it could not have

uncovered the evidence in time to file timely objections . . . .”);

see also Amalgamated Clothing Workers of Am. v. NLRB, 424

F.2d 818, 827 (D.C. Cir. 1970) (affirming Board determination

that employer’s evidence was not new because “no explanation

was offered as to why this evidence was not discovered or could

not have been discovered by the exercise of due diligence”)

(emphasis added). 

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Apart from the two formulations of the Board’s due

diligence standard, the Board has been less than clear as to

which one it is applying in a particular case. The decision in

Dickerson Florida, Inc., 272 N.L.R.B. 63 (1984) is an example.

In that case, after the seven-day period closed and the employer

refused to bargain, it asserted as an affirmative defense to the

ULP charge that the election was invalid due to election

improprieties including a threat by a union member and the

union’s pre-election offer to waive initiation fees. As in this

case, a non-unit employee subsequently advised the employer of

the threat and the offer and the employer sought to use both as

newly discovered evidence. The Board found that the employer

had not demonstrated “that the facts of the alleged threat and

unlawful offer of waiver were not previously discoverable [by

the employer] through the exercise of due diligence” and

therefore disallowed them. Id. at 63. Whether the Board meant

that the employer had not shown that the evidence was not

discoverable earlier because it had not exercised due diligence

or because the evidence would not have been discovered had the

employer exercised due diligence is not clear. 

If, as the Board argues here, the standard is that an

employer has an affirmative duty to exercise due diligence to

discover any evidence of irregularity in any election in order to

use that evidence to permit the untimely reopening of the

representation proceeding, the employer will almost certainly

run a risk inasmuch as a post-election investigation conducted

within the seven-day period, as the Board order counsels, see

MCS, 342 NLRB No. 131, slip. op. at 2, without specific

evidence of misconduct would almost always involve

questioning of employees. See 29 U.S.C. § 158(a)(1); cf.

Crossing Recovery Sys., Inc., 2005 NLRB LEXIS 375, *73

(2005) (employer questioning employees regarding upcoming

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7

The Board points to decisions in which it has “allowed

management representatives to conduct post-election interviews of

employees for purposes of seeking information in support of

objections.” Resp’t’s Br. 22–23 n.5 (citing Johnnie’s Poultry Co., 146

N.L.R.B. 770, 774–76 (1964), enforcement denied, 344 F.2d 617 (8th

Cir. 1965); W.T. Grant Co., 185 N.L.R.B. 88 n.1 (1970); Summa

Corp., 220 N.L.R.B. 877, 879–80 (1975)). Those cases give an

employer a limited privilege to question its employees regarding

election irregularities without incurring section 8(a)(1) liability “where

an employer has a legitimate cause to inquire.” Johnnie’s Poultry

Co., 146 N.L.R.B. at 774 (emphasis added). An employer’s good faith

doubt regarding the certification election results has been found to be

“a legitimate cause to inquire,” see Summa Corp., 220 N.L.R.B. at

879–80. Here, however, the Board apparently decided that the

obligation to inquire attaches whether or not the employer has cause

to do so. In Summa Corp., the employer interviewed unit employees

two days after the certification election in response to a rumor

regarding the union’s misrepresentation made at a precertification

meeting. Summa Corp., 220 N.L.R.B. at 878. In W.T. Grant, the

employer interviewed unit employees to investigate rumors regarding

pre-election threats made by pro-union employees on the workroom

floor. What distinguishes those employers from MCS is that they had

cause to inquire; MCS did not. 

certification vote constituted coercive conduct and unlawful

interrogation in violation of section 8(a)(1)); Overnite Transp.

Co., 254 N.L.R.B. 132, 133 (1981) (employer questioning

employees before and immediately after certification vote

violated section 8(a)(1) because it “implied surveillance of the

employees’ union activities”).7 Moreover, employer-side

counsel might have to advise their client to communicate with

its supervisors and perhaps even its employees during the

organizational campaign whether or not the employer has cause

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8

It appears that this was the course of action offered by the

Board’s counsel at oral argument. See Oral Arg. Tr. 14 (“Well, I think

in that case [where the employer had no reason to suspect election

impropriety] they would have to come to the Board and say that they

found out about this misconduct and, you know, make some sort of

representation about, oh, [how] they were–you know, maybe–you

know, communicating with employees or something to that extent. I

mean, generally in these situations when you have a company that is

involved in the organization campaign they use their supervisors as a

way to keep their employees informed about the company’s position

and things.”).

9

The Board’s counsel acknowledged at oral argument that the

Board has never expressly declared what an employer must do to

establish that it was reasonably diligent. See Oral Arg. Tr. 12–13.

to believe anything is amiss.8 A union would be exposed to

similar risks. See 29 U.S.C. § 158(b)(1); cf. Am. Postal Workers

Union, 328 NLRB 281, 282 (1999) (union member interrogating

employee regarding her union support violated section 8(b)(1)).

Because the Board has been less than clear in applying its

newly discovered evidence standard, it is unlikely that an

employer in MCS’s circumstances knows if it must make an

effort to uncover a problem of any kind in order to mount an

untimely challenge to an election or whether, consistent with

APL Logistics, it will be required to show that it could not have

with due diligence discovered the particular evidence it seeks to

submit as newly discovered. The first interpretation is

deceptively straightforward: the employer either conducted an

investigation or it did not. But what makes an investigation

diligent enough to meet the standard?9

 Does the employer have

to show that it interviewed all of its supervisors? Here, that

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10The Board has found that conduct similar to Garces’s alleged

conduct “interfered with employees’ freedom of choice to such an

extent that it materially affected the outcome of the election.” Chinese

Daily News, 344 N.L.R.B. No. 132, slip. op. at 3–5 (2005) (unit

supervisor distributing union authorization cards to unit employees

“interfered with employees’ freedom of choice to such an extent that

it materially affected the outcome of the election”). 

probably would have been futile because the supervisor Garces

was himself the culprit.10 The second interpretation, on the other

hand, requires the employer to prove a negative: that the

evidence could not have been discovered had due diligence been

exercised. One would assume under this interpretation that, if

a non-investigating employer could show the evidence was not

discoverable even with due diligence, such as where the

employer had no reasonable way of knowing or discovering

whether improprieties had occurred, its burden would be met.

But this is unclear from the Board’s order here. Instead of

choosing either the “conducted investigation” version or the

“hypothetical investigation” version of the due diligence

standard and explaining its choice, the Board confused the two,

treating them as if they were the same.

MCS argues that it was excusably ignorant of Garces’s

actions and should therefore be allowed to submit evidence of

those actions as newly discovered evidence because it had no

reason to inquire of Spony or any other employee about election

improprieties before March and it acted with reasonable

diligence to proffer the evidence once it learned of them from

Spony. See Pet’r’s Br. 12–13. And even if it had investigated

for any impropriety either before the election or within the

seven-day period, MCS maintains that it would be reasonable to

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14

assume, given Garces’s supervisory status, that neither he nor

his subordinates would have voluntarily disclosed his

involvement in the organizing drive. Id. at 12. On the other

hand, MCS contends, if it is held to the Superior Protection

iteration of the test, according to which it must show that “it

acted with reasonable diligence to uncover and introduce the

[newly discovered] evidence” and “was therefore excusably

ignorant of the evidence previously,” Superior Prot., Inc., 341

NLRB No. 86, slip. op. at 4 (quotations omitted), it is effectively

foreclosed from using the newly discovered evidence rule

because it did not know, nor have reason to know, of Garces’s

misconduct. It argues therefore that it should not be held to

have failed to exercise due diligence to investigate an election

irregularity of which it was excusably ignorant. 

In response the Board points to rumors circulating among

employees in late 2002 regarding Garces’s support of the Union,

alluded to in Spony’s affidavit as Garces’s own claim that he

“[did]n’t care who kn[ew]” about his pro-Union actions.

Resp’t’s Br. 17; JA 15. The Board suggests that MCS cannot

use the newly discovered evidence rule because, given the

rumors and small size of the bargaining unit, due diligence

would have uncovered Garces’s misconduct. See Resp’t’s Br.

17 (“MCS offers no explanation why, in a bargaining unit of

only seven employees, it could not have discovered earlier that

its own supervisor was ‘spearheading’ the union campaign,

especially given MCS’s own assertion that rumors about

Garces’s involvement were circulating among its employees

months before the election.”). But the Board mischaracterizes

MCS’s “own assertion”; it was Spony, not MCS, who stated that

he knew that rumors regarding Garces’s misconduct were

circulating among employees in late 2002. MCS did not hear of

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11Garces’s own knowledge of his misconduct plainly cannot be

imputed to MCS because his interest was adverse to MCS’s. See

Comprehensive Care Corp. v. RehabCare Corp., 98 F.3d 1063,

1066–67 (8th Cir. 1996) (“Knowledge obtained by a corporation’s key

employees, officers, and directors, obtained in the course of their

duties, is generally imputed to the corporation. We recognize, of

course, that if the employee, officer, or director has an interest adverse

to the corporation, his knowledge is not to be imputed.”) (citations

omitted). 

12Under Excelsior Underwear, Inc., 156 N.L.R.B. 1236, 1240–41

(1966), an employer must provide the union with the names and

addresses of all employees eligible to vote in a bargaining unit

these rumors until March 2003.11 See Spony Decl. ¶ 3, JA 15;

Arnold Decl. ¶ 7, JA 54.

It is true that in Soft Drink Workers Union Local 812 v.

NLRB, 937 F.2d 684 (D.C. Cir. 1991), we stated that in order to

challenge election results in a ULP proceeding based on newly

discovered evidence, the moving party “ ‘must have made some

effort to obtain the evidence at the time’ ” challenges could have

been made, that is, within the seven-day period. Id. at 688

(quoting Teamsters Local 911 (General Felt), 275 N.L.R.B. 980,

981 (1985)). But that statement was based on circumstances

absent here: evidence of impropriety, or leading to a showing of

impropriety, was in fact timely discoverable. The union in Soft

Drink Workers, in addition to arguing that the picketing it

engaged in after it lost a certification election did not violate the

Act, sought to offer evidence showing that the employer had

padded the payroll with sufficient replacement employees to

ensure the union would lose. Before the election, however, the

employer had given the union an Excelsior list12 of all

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16

certification election. 

replacement workers. We concluded that, because the union had

that list, “[b]oth the number of replacement workers and their

possible effect upon the election were thus apparent to the Union

as of the time of the representation proceeding. Having failed

then to raise its objection to the election, or to ‘ma[k]e some

effort to obtain the evidence’ necessary to make good such an

objection, the Union cannot be heard now to complain of its

preclusion.” Id. (alteration in original). The union’s failure to

inquire into the validity of the list before the representation

proceeding barred it from using the list as newly discovered

evidence. MCS, however, had no reason to suspect pre-election

misconduct that, according to the Board, it was required to

exercise due diligence to uncover—much less did it possess

evidence on which it could have based its exercise of due

diligence. 

On remand, the Board should explain (1) the relationship

between the “conducted investigation” and “hypothetical

investigation” iterations of the due diligence standard, (2) which

iteration it is applying here and why it chose that iteration under

the facts of this case, (3) if the Board is applying the “conducted

investigation” iteration of the standard, whether there is a

minimum level of investigation in the absence of notice of a

violation or, alternatively, whether that standard requires

specific inquiries in the absence of some notice of misconduct,

and, if so, what these inquiries must be and how they are to be

conducted without engaging in coercive and unlawful

interrogation or interfering with the election in violation of § 8

(a)(1) or § 8 (b)(1), and (4) if the Board is applying the

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“hypothetical investigation” iteration, how a party in MCS’s

position—that is, an employer without notice—shows that the

information sought to be admitted as new could not have been

discovered in the exercise of due diligence. 

For the foregoing reasons, we remand to the Board for

further proceedings consistent with this opinion.

So ordered.

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KAREN LECRAFT HENDERSON, Circuit Judge, dissenting:

I dissent from the remand because I believe the Board erred

as a matter of law in concluding that an employer without notice

of management misconduct that tainted an election is not

excusably ignorant under the due diligence test. Accordingly,

I would grant MCS’s petition for review and vacate the Board’s

order.

If a Board decision is contrary to law, we are well within

our authority to grant a petition for review. See Int’l Alliance of

Theatrical and Stage Employees v. NLRB, 334 F.3d 27, 34 (D.C.

Cir. 2003) (International Alliance) (granting petition for review

and vacating unfair labor practice finding because Board

interpretation of “any employee who engages in a strike” under

section 8(d) of Act was “in conflict with both interpretive

precedent and the statute’s structure” and produced “internal

inconsistency” and “irrational results in practice”); see also

Detroit Typographical Union v. NLRB, 216 F.3d 109, 122 (D.C.

Cir. 2000) (granting petition for review because Board

conclusion constituted legal error). Legal error can take the

form of an inconsistent application of relevant precedent, see

BB&L, Inc. v. NLRB, 52 F.3d 366, 369 (D.C. Cir. 1995), an

unreasonable interpretation of the agency’s enabling statute, see

Jacoby v. NLRB, 325 F.3d 301, 308 (D.C. Cir. 1994) (citing

Chevron U.S.A. v. Natural Res. Def. Council, Inc., 467 U.S. 837,

842–45 (1984)), or an “unreasoned” extension of a standard to

the facts of a particular case, see Detroit Typographical Union,

216 F.3d at 118 (Board committed legal error in applying

doctrine disallowing employer’s implementation of standardless

merit pay plan after impasse to case where merit pay plan

standard was known to union). 

I believe the Board erred if, as it appears, it applied the

“conducted investigation” version of the due diligence standard

here. The “conducted investigation” iteration cannot apply if

the employer had no reason to know of any

impropriety—including any rumors that might have spurred it

to investigate any impropriety—and, for that reason, did not

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exercise due diligence. To conclude that MCS must have

conducted a far-flung investigation into any irregularity in order

to use the newly discovered evidence rule directly contradicts

the Johnnie’s Poultry Co. line of cases, see maj. op. at 20 note

7, which authorizes an employer to conduct an investigation

only if it has cause to inquire. The Board should have found

MCS excusably ignorant due to lack of notice regarding

Garces’s conduct. Whether this resolution fits under the

“hypothetical investigation” label fashioned by the majority I do

not know but, because I believe remand is unwarranted in view

of the Board’s error of law, I see no need to tell the Board

anything other than “you got it wrong.” Here MCS has

explained why the evidence “could not have been

discovered”—it had no notice of the existence of the facts on

which the evidence it now seeks to submit as new are based and

therefore did not investigate. It has established its excusable

ignorance of the existence of those facts and should now be

permitted to introduce evidence based on them as newly

discovered. 

Like the Board’s decision in International Alliance, its

decision here is “in conflict with both interpretive precedent and

the [Act]’s structure,” “set[s] a standard that could never be

met” on these facts, and leads to “irrational results in practice,”

International Alliance, 334 F.3d at 34–35, 37. Accordingly,

because I would grant MCS’s petition for review and deny the

Board’s cross-petition for enforcement, I respectfully dissent.

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