IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 12-60752

FLEX FRAC LOGISTICS, L.L.C.; SILVER EAGLE LOGISTICS, L.L.C.,

Petitioners/Cross-Respondents,

v.

NATIONAL LABOR RELATIONS BOARD,

Respondent/Cross-Petitioner.

Petition for Review and Cross Petition for Enforcement

of an Order of the National Labor Relations Board

Before STEWART, Chief Judge, and HIGGINBOTHAM and JONES, Circuit 

Judges.

CARL E. STEWART, Chief Judge:

Flex Frac Logistics, L.L.C. and Silver Eagle Logistics, L.L.C. 

(collectively, “Flex Frac”)1 petition for review of an order by the National Labor 

Relations Board (“NLRB”) holding that Flex Frac’s employee confidentiality 

policy is an unfair labor practice in violation of Section 8(a)(1) of the National 

Labor Relations Act (“NLRA”). The NLRB cross-petitions for enforcement of 

the order. We DENY Flex Frac’s petition for review and ENFORCE the NLRB’s 

order.

1 For purposes of this appeal, we treat Flex Frac Logistics, L.L.C. and Silver Eagle 

Logistics, L.L.C. as joint employers.

United States Court of Appeals

Fifth Circuit

FILED

March 24, 2014

Lyle W. Cayce

Clerk

 

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I. FACTUAL AND PROCEDURAL HISTORY

A. Facts

Flex Frac is a non-union trucking company based in Fort Worth, Texas. 

Flex Frac relies on its employees as well as independent contractors to deliver 

frac sand to oil and gas well sites. The rates Flex Frac charges its customers 

are confidential.

Each Flex Frac employee is required to sign a document which includes 

a confidentiality clause. The clause reads as follows:

Confidential Information

Employees deal with and have access to information that must 

stay within the Organization. Confidential Information includes, 

but is not limited to, information that is related to: our customers, 

suppliers, distributors; Silver Eagle Logistics LLC organization 

management and marketing processes, plans and ideas, processes 

and plans, our financial information, including costs, prices; 

current and future business plans, our computer and software 

systems and processes; personnel information and documents, and 

our logos, and art work. No employee is permitted to share this 

Confidential Information outside the organization, or to remove or

make copies of any Silver Eagle Logistics LLC records, reports or 

documents in any form, without prior management approval. 

Disclosure of Confidential Information could lead to termination, 

as well as other possible legal action.

B. Procedural History

In 2010, Flex Frac fired Kathy Lopez and she filed a charge with the 

NLRB. The Acting General Counsel for the Board subsequently issued a 

complaint, alleging, inter alia, that Flex Frac promulgated and maintained a 

rule prohibiting employees from discussing employee wages.2

2 The complaint also alleged that Flex Frac unlawfully interfered with or restrained 

Lopez’s Section 7 rights when it terminated her; however, the NLRB severed and remanded 

that portion of the complaint. Thus, Lopez’s termination is not currently before us on appeal.

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The administrative law judge (“ALJ”) found that although there was no 

reference to wages or other specific terms and conditions of employment in the 

confidentiality clause, the clause nonetheless violated Section 8(a)(1) of the 

NLRA because it was overly broad and contained language employees could 

reasonably interpret as restricting the exercise of their Section 7 rights. In a 

split decision, the NLRB affirmed the ALJ’s ruling that Flex Frac’s 

confidentiality clause violated Section 8(a) of the NLRA.3 Flex Frac Logistics 

LLC & Silver Eagle Logistics LLC, Joint Employers & Kathy Lopez, 358 

N.L.R.B. No. 127 (2012). Thereafter, Flex Frac filed its petition for review, and 

the NLRB filed a cross-petition for enforcement.

II. STANDARD OF REVIEW

We review the NLRB’s legal conclusions de novo and its “factual findings 

under a substantial evidence standard.” Sara Lee Bakery Grp., Inc. v. NLRB, 

514 F.3d 422, 428 (5th Cir. 2008). “Substantial evidence is that which is 

relevant and sufficient for a reasonable mind to accept as adequate to support 

a conclusion. It is more than a mere scintilla[] and less than a preponderance.” 

El Paso Elec. Co. v. NLRB, 681 F.3d 651, 656 (5th Cir. 2012) (emphasis, 

internal quotation marks, and citations omitted). In making this 

determination, “[w]e may not reweigh the evidence, try the case de novo, or 

substitute our judgment for that of the [NLRB], even if the evidence 

preponderates against the [NLRB’s] decision.” Id. at 656–57 (internal 

quotation marks and citation omitted). “Only in the most rare and unusual 

cases will an appellate court conclude that a finding of fact made by the [NLRB]

is not supported by substantial evidence.” Merchs. Truck Line, Inc. v. NLRB, 

577 F.2d 1011, 1014 n.3 (5th Cir. 1978) (internal quotation marks and citation 

omitted).

3 The NLRB delegated its authority to a three-member panel for this proceeding.

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III. DISCUSSION

As an initial matter, we address a belated constitutional challenge raised 

by Flex Frac regarding the NLRB’s authority to render the decision currently 

before us. In its reply brief, Flex Frac argued that the NLRB’s decision was 

invalid because the President’s appointment of two members of the panel was 

unconstitutional. According to Flex Frac, the President lacked the authority 

to make putative recess appointments when the U.S. Senate was not in recess 

and the vacancies did not occur during an intersession recess. Because two 

members of the three-member panel were not validly appointed, Flex Frac 

contended that the NLRB did not have the quorum necessary to issue its 

decision. 

We decline to address the merits of Flex Frac’s constitutional argument 

and instead hold that Flex Frac waived its constitutional challenge by failing 

to raise it in its initial brief. See In re Rodriguez, 695 F.3d 360, 365 n.4 (5th 

Cir. 2012) (“An appellant abandons all issues not raised and argued in its 

initial brief on appeal.” (internal quotation marks and citation omitted)). 

Ordinarily, arguments raised for the first time in a reply brief are waived. 

United States v. Jackson, 426 F.3d 301, 304 n.2 (5th Cir. 2005). Moreover, 

appellate courts shall not consider objections that have not been raised before 

the NLRB “unless the failure or neglect to urge such objection shall be excused 

because of extraordinary circumstances.” 29 U.S.C. § 160(e). Flex Frac argues 

that we should nevertheless consider its belated constitutional challenge 

because it implicates our jurisdiction. However, another panel of this Court 

faced a similar issue and concluded that the constitutionality of the President’s 

authority to make recess appointments was not a jurisdictional issue it must 

consider, especially considering that the challenge was not raised during the 

parties’ initial briefing. D.R. Horton, Inc. v. NLRB, 737 F.3d 344, 351 (5th Cir. 

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2013). We agree. Accordingly, we proceed to address Flex Frac’s remaining 

arguments.

Flex Frac argues that the NLRB’s order should be set aside because it 

was unreasonable, not supported by substantial evidence, and inconsistent 

with precedent. Under Section 8(a)(1) of the NLRA, it is “an unfair labor 

practice for an employer . . . to interfere with, restrain, or coerce employees in 

the exercise of the rights guaranteed in section 157 of this title.” 29 U.S.C. § 

158. These rights include self-organization; forming, joining, and assisting 

labor organizations; collective bargaining; and engaging “in other concerted 

activities for the purpose of collective bargaining or other mutual aid or

protection.” 29 U.S.C. § 157. 

A “workplace rule that forb[ids] the discussion of confidential wage 

information between employees . . . patently violate[s] section 8(a)(1).” NLRB 

v. Brookshire Grocery Co., 919 F.2d 359, 363 (5th Cir. 1990). When 

determining whether a workplace rule violates Section 8(a)(1), we must first 

decide “whether the rule explicitly restricts activities protected by Section 7.” 

Lutheran Heritage Village-Livonia, 343 N.L.R.B. 646, 646 (2004). If the 

restriction is not explicit, a workplace rule violates Section 8(a)(1) when it falls 

within one of the following categories: “(1) employees would reasonably 

construe the language to prohibit Section 7 activity; (2) the rule was 

promulgated in response to union activity; or (3) the rule has been applied to 

restrict the exercise of Section 7 rights.” Id. at 647. In making this inquiry, 

we “must refrain from reading particular phrases in isolation.” Id. at 646.

Moreover, we may not presume that a workplace rule impermissibly interferes 

with employees’ right to exercise their Section 7 rights. Id. The ALJ found, 

and the parties do not dispute, that the rule does not explicitly restrict Section 

7 activities. The parties also agree that the second category is not at issue. We

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therefore limit our discussion to whether employees would reasonably construe 

Flex Frac’s confidentiality provision to prohibit Section 7 activity.

Flex Frac’s contention that the NLRB’s interpretation of the 

confidentiality clause was unreasonable is without merit. As the NLRB noted, 

the list of confidential information encompasses “financial information, 

including costs[, which] necessarily includes wages and thereby reinforces the 

likely inference that the rule proscribes wage discussion with outsiders.” Flex 

Frac Logistics, 358 N.L.R.B. No. 127 at 3. The confidentiality clause gives no 

indication that some personnel information, such as wages, is not included 

within its scope. See Cintas Corp. v. NLRB, 482 F.3d 463, 469 (D.C. Cir. 2007) 

(“[T]he Company has made no effort in its rule to distinguish section 7 

protected behavior from violations of company policy . . . .”).

Flex Frac’s argument that the NLRB’s decision is not supported by 

substantial evidence fails. The confidentiality clause’s express terms prevent 

discussion of personnel information outside the company, and Flex Frac 

presents no evidence that its non-management employees discussed their 

wages with non-employees. Rather, Flex Frac points to evidence that its 

employees discuss wages amongst themselves and its management and 

recruiters discuss wage information with current and prospective employees. 

Thus, Flex Frac’s evidence does not support the point it wishes to prove: that 

employees were free to discuss terms and conditions of employment, including 

wages, outside the company.

Flex Frac also argues that its employees did not interpret the 

confidentiality provision to restrict their Section 7 rights; however, the actual 

practice of employees is not determinative. See id. at 467 (“The Board is merely 

required to determine whether employees would reasonably construe the 

[disputed] language to prohibit Section 7 activity and not whether employees 

have thus construed the rule.” (internal quotation marks and citation 

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omitted)). Moreover, “the Board need not rely on evidence of employee 

interpretation consistent with its own to determine that a company rule 

violates section 8 of the Act.” Id. Nor is the employer’s enforcement of the rule 

determinative. See Lafayette Park Hotel, 326 N.L.R.B. 824, 825 (1998) (“[T]he 

appropriate inquiry is whether the rules would reasonably tend to chill 

employees in the exercise of their Section 7 rights. Where the rules are likely 

to have a chilling effect . . . , the Board may conclude that their maintenance 

is an unfair labor practice, even absent evidence of enforcement.” (internal 

footnote omitted)).

We are also unpersuaded by Flex Frac’s argument that the NLRB’s 

decision conflicts with its decisions in Lafayette Park Hotel, K-Mart, 330 

N.L.R.B. 263 (1999), and In re Mediaone of Greater Fla., Inc., 340 N.L.R.B. 277 

(2003). In Lafayette Park Hotel, the employer promulgated “standards of 

conduct” for its employees, including a statement that it was unacceptable to 

“[d]ivulg[e] Hotel-private information to employees or other individuals or 

entities that are not authorized to receive that information.” 326 N.L.R.B. at 

824. The rule failed to define “hotel-private information.” Id. at 826. A split 

panel held that employees “reasonably would understand that the rule is 

designed to protect that interest rather than to prohibit the discussion of their

wages.” Id. at 826. Likewise, in K-Mart, the employer’s policy stated, 

“Company business and documents are confidential. Disclosure of such 

information is prohibited.” 330 N.L.R.B. at 263. The NLRB found this 

language to be similar to the language in Lafayette Park Hotel and, thus, 

dismissed the complaint. Id. at 263–64.

Contrary to Flex Frac’s assertion, its confidentiality provision is not 

similar to the rules in Lafayette Park Hotel and K-Mart. There is a substantial 

difference between “Hotel-private information” and “company business and 

documents” on the one hand and “personnel information” on the other. By 

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specifically identifying “personnel information” as a prohibited category, Flex 

Frac has implicitly included wage information in its list, especially in light of 

its prohibition against disclosing costs.

Moreover, the NLRB’s decision here does not conflict with its decision in 

Mediaone. In Mediaone, a divided panel of the NLRB agreed that an 

employer’s prohibition against disclosure of “proprietary information . . . 

includ[ing] . . . customer and employee information, including organizational 

charts and databases [and] financial information” would not chill employees in 

the exercise of their Section 7 rights. 340 N.L.R.B. at 278–79. The NLRB noted 

that the prohibitions were listed as examples of “intellectual property,” and 

thus employees who read the rule as a whole would not believe it extended to 

terms and conditions of employment. Id. at 279.

Mediaone is distinguishable from the confidentiality provision at issue 

here. In Mediaone, the information was listed as a sub-set of “intellectual 

property.” Therefore, employees would not reasonably understand their wages 

to be a form of intellectual property. Flex Frac’s confidentiality provision

contains no limitation on the type of “personnel information” that is prohibited. 

Instead, it is a part of the larger category of “confidential information.”

Flex Frac’s remaining attempts to justify its confidentiality provision are 

equally unavailing. Flex Frac contends that its rule prohibits only disclosure 

of confidential personnel information, not all personnel information; however, 

it fails to point to any language making this distinction. Moreover, Flex Frac 

defines confidential information as including personnel information. 

Therefore, contrary to Flex Frac’s contentions otherwise, we hold that the 

NLRB’s order does not contravene its precedent.4

4 By its terms, the NLRB’s enforcement order acknowledges that the employer is only 

prohibited from “[p]romulgating and maintaining an overly broad and ambiguous 

confidentiality rule that . . . may reasonably be read to prohibit employees from discussing 

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IV. CONCLUSION

Accordingly, based on the foregoing reasons, we DENY Flex Frac’s 

petition for review and ENFORCE the NLRB’s order.

wages or other terms and conditions of employment.” The order does not impair the majority 

of the company’s confidentiality policy. Further, the order does not prevent Flex Frac from 

redrafting its policy to maintain confidentiality for employee-specific information like social 

security numbers, medical records, background criminal checks, drug tests, and other similar 

information.

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