Court Opinion

ID: 5128546
Source: CourtListenerOpinion
Date Created: 2021-11-23 01:00:33.591942+00
Date Added: 2024-06-11T08:23:07.443996
License: Public Domain

Case: 20-61072      Document: 00516103745         Page: 1     Date Filed: 11/22/2021

            United States Court of Appeals
                 for the Fifth Circuit
                                                                       United States Court of Appeals
                                                                                Fifth Circuit

                                                                              FILED
                                                                      November 22, 2021
                                   No. 20-61072                          Lyle W. Cayce
                                                                              Clerk

   New York Party Shuttle, L.L.C., doing business as Onboard
   Tours; Washington DC Party Shuttle, L.L.C., doing business
   as Onboard Tours; OnBoard Las Vegas Tours, L.L.C., doing
   business as Onboard Tours; NYC Guided Tours, L.L.C.;
   Party Shuttle Tours, L.L.C.,

                                                    Petitioners/Cross-Respondents,

                                       versus

   National Labor Relations Board,

                                                     Respondent/Cross-Petitioner.

                Petition for Review of an Order and Decision of the
                          National Labor Relations Board
                                NLRB No. 20-61072

   Before Clement, Southwick, and Willett, Circuit Judges.
   Edith Brown Clement, Circuit Judge:

          After New York Party Shuttle, LLC (“NYPS”) fired Fred Pflantzer
   for attempting to unionize, the NLRB held an unfair labor practice
   proceeding. The Board concluded that NYPS committed an unfair labor
   practice and ordered NYPS to reinstate Pflantzer and make him whole.
   NYPS appealed the Board’s liability finding but failed to file an opening brief;
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   thus, we entered a default judgment against NYPS. The Board then held a
   compliance proceeding to determine damages. At that proceeding, an ALJ
   awarded some $91,000 in backpay to Pflantzer. Petitioners now appeal the
   Board’s backpay award, arguing multiple grounds for reversal. We affirm in
   part and reverse and remand in part.

                                          I.
          NYPS provided sightseeing bus tours in New York City. In October
   2011, NYPS hired Fred Pflantzer to serve as a tour guide. As a tour guide,
   Pflantzer conducted three to four tours a week, with each tour lasting five to
   six hours. He was paid $20 an hour and approximately $35 in tips. Pflantzer
   also created his own tour company, New York See Tours, which he operated
   exclusively on Saturdays that he was not working for NYPS. In February
   2012, NYPS terminated Pflantzer.

          Following Pflantzer’s termination, the NLRB held an unfair labor
   practice proceeding. According to NYPS, Pflantzer was an independent
   contractor who was discharged after management learned that he was
   operating a competing business. The NLRB rejected NYPS’ version of
   events and instead determined that Pflantzer was an employee who was fired
   for talking to fellow employees about unionizing in violation of 29 U.S.C.
   § 158(a)(3) and (1). Based on this finding, the Board ordered NYPS to
   reinstate Pflantzer and make him whole. NYPS timely appealed.

          On its unfair labor practices appeal, NYPS failed to file its opening
   brief. The court consequently entered default judgment against NYPS,
   thereby affirming the Board’s 2013 merits order. It then denied NYPS’

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   subsequent motion for reconsideration. With the 2013 merits order affirmed
   and the mandate issued, the NLRB advanced to the compliance proceeding
   phase to determine damages.

          During the compliance proceeding phase, the Board’s regional
   director issued a compliance specification. The specification calculated the
   backpay NYPS owed Pflantzer. In the third amendment to the compliance
   specification, the director asserted that New York City Guided Tours, LLC
   (“NYCGT”), OnBoard Las Vegas Tours, LLC (“OBLV”), Party Shuttle
   Tours, LLC (“PST”), and Washington DC Party Shuttle, LLC (“DCPS”)
   (collectively, “non-NYPS petitioners”) were one single employer with
   NYPS.1 In response, petitioners filed a motion challenging, among other
   things: (1) the board’s jurisdiction over the non-NYPS petitioners; and (2)
   the validity of the 2013 merits order given the holding in NLRB v. Noel
   Canning, 573 U.S. 513, 519 (2014).             The Board rejected petitioners’
   challenge, dismissed petitioners’ attempts to relitigate the underlying merits,
   and found that it lacked jurisdiction to modify the 2013 merits order. The
   compliance proceeding then went to a hearing before an ALJ.

          At the hearing, the ALJ found that the backpay calculation was
   reasonable, petitioners constituted a single employer, and Pflantzer
   reasonably mitigated his damages. The Board affirmed the ALJ’s rulings,

          1
             NYPS and the non-NYPS petitioners are hereinafter referred to jointly as
   “petitioners.” When necessary, the companies are referred to separately as NYPS or non-
   NYPS petitioners.

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   findings, and conclusions and adopted the recommended order. Petitioners
   again appealed, asserting this time, among other things, that: (1) they are not
   a single employer; (2) the Supreme Court’s decision in Noel Canning, 573
   U.S. at 519, voids the 2013 merits order; and (3) the backpay award is
   arbitrary, unreasonable, and without substantial evidence.

                                            II.

          Congress afforded the NLRB broad discretion, with limited judicial
   review, when fashioning backpay awards. See Fibreboard Paper Prods. Corp. v.
   NLRB, 379 U.S. 203, 216 (1964). As such, the court should not disturb an
   order “unless it can be shown that the order is a patent attempt to achieve
   ends other than those which can fairly be said to effectuate the policies of the
   Act.” Id. (quoting Va. Elec. & Power Co. v. NLRB, 319 U.S. 533, 540 (1943)).
   So long as the Board “was not arbitrary in the selection of [its backpay]
   formula, its choice may not be rejected.” NLRB v. Charley Toppino & Sons,
   Inc., 358 F.2d 94, 97 (5th Cir. 1966).

          Despite the discretion afforded to the Board, it does not receive a
   blank check. The court must ensure that the Board’s factual findings are
   supported by “substantial evidence on the record considered as a whole.”
   NLRB v. McCullough Env’t Servs., Inc., 5 F.3d 923, 927 (5th Cir. 1993) (citing
   NLRB v. Delta Gas, Inc., 840 F.2d 309, 311 (5th Cir. 1988)). When findings
   of fact concern credibility determinations, however, the court defers to the
   Board and should only disregard a determination if it is contradictory, “based
   on an inadequate reason, or no reason at all.” Id. at 928 (quoting NLRB v.
   Moore Bus. Forms, Inc., 574 F.2d 835, 843 (5th Cir. 1978)).

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                                             III.
           Because the Board’s single employer finding necessarily affects our
   Noel Canning analysis, we review that finding first.2 We hold that substantial
   evidence supports the Board’s single employer finding.

           Several nominally separate business entities are considered “to be a
   single employer where they comprise an integrated enterprise.” Alcoa, Inc.
   v. NLRB, 849 F.3d 250, 255 (5th Cir. 2017) (quoting S. Prairie Constr. Co. v.
   Loc. No. 627, Int’l Union of Operating Eng’rs, 425 U.S. 800, 802 n.3 (1976)
   (per curiam)). “To determine whether several entities are a single employer
   within the meaning of the Act, the Board looks to four factors: (1) common
   ownership; (2) interrelation of operations; (3) common management; and (4)
   centralized control of labor relations.” Id. (citing Radio & Television Broad.
   Technicians Loc. Union 1264 v. Broad. Serv. of Mobile, Inc., 380 U.S. 255, 256
   (1965) (per curiam)). No one factor is controlling, and all factors do not need
   to be present, but the last three factors are considered the most important.
   Id.; see also Oaktree Cap. Mgmt., L.P. v. NLRB, 452 F. App’x 433, 438 (5th
   Cir. 2011) (per curiam) (citing Covanta Energy Corp., 356 NLRB 706, 726
   (2011)) (same). Ultimately, single employer status “depends on ‘all the
   circumstances of the case’ and is characterized as an absence of an ‘arm’s

           2
            The Board adopted the ALJ’s determination that NYPS, NYCGT, OBLV, PST,
   and DCPS constitute a single employer, which can be held jointly and severally liable for
   any unfair labor practices. It did not, however, adopt the ALJ’s cumulative holdings that
   NYCGT is liable as an alter ego and as a Golden State successor to NYPS. Because the
   Board did not consider the alter ego or Golden State issues, neither will we. See SEC v.
   Chenery Corp., 318 U.S. 80, 87–88 (1943).

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   length relationship found among unintegrated companies.’” Alcoa, 849 F.3d
   at 255 (quoting NLRB v. DMR Corp., 699 F.2d 788, 791 (5th Cir. 1983)).

                                        A.

         Substantial evidence supports the Board’s finding that there is
   common ownership and financial control among petitioners. As the Board
   found and the record confirms, PST owns 100% of OBLV and NYCGT;
   92.46% of NYPS; and nearly 99% of DCPS. Furthermore, Charles Thomas
   Schmidt—the CEO or former CEO of every involved company—owns
   69.44% of Infinity Trade Capital, which respectively owns over 70% of PST.
   The Board also found that Schmidt exercises “almost unfettered control over
   the financial aspects of all five entities.” Records demonstrate hundreds of
   banking transactions and expenditures through PST. Similarly, the Board
   found a significant amount of outstanding monetary loans from PST to
   DCPS, NYCGT, NYPS, and OBLV absent any formal loan agreements.

         Government’s exhibit 73 confirms the Board’s finding of common
   financial control—although the Board itself did not rely on such evidence. In
   2012, for instance, PST had a total of $866,581.79 in outstanding loans to
   petitioners. In 2013, those outstanding loans rose to $1,245,892.44. And, by
   2016, PST’s outstanding loans rose to a total of $3,189,661.95. The Board
   concluded that its findings evidenced a lack of an arm’s length relationship
   between petitioners, which, in turn, evidenced common ownership and
   financial control. Thus, notwithstanding petitioners’ claim that “no two
   petitioners have common ownership,”—which Schmidt’s own testimony at
   the compliance proceeding directly contradicted—the Board’s finding of

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   common ownership is supported by substantial evidence. See Spurlino
   Materials, LLC v. NLRB, 805 F.3d 1131, 1142 (D.C. Cir. 2015) (noting that
   common ownership need not be absolute, just substantial, and that no
   particular corporate structure is required).

                                         B.
            The Board also found an interrelation of operations between all five
   petitioners, which substantial evidence supports. To determine whether
   there is an interrelation of operations, the Board considers, among other
   things, “whether the subject entities hold themselves out to the public and
   employees as a single business and whether the [entities] actually deal with
   one another at arm’s length.” Alcoa, 849 F.3d at 256 (citations omitted).

            In support of its determination that there is an interrelation of
   operations between petitioners, the Board found that:

        I.     Company buses from NYPS, DCPS, and even OBLV were
               transferred between companies during busy seasons;
       II.     A PST employee established a call center in Houston to ac-
               cept calls from NYPS, DCPS, and OBLV customers;
      III.     The same call center was used to monitor sales agents and
               provide training;
      IV.      The OnBoard website included information and promo-
               tions for NYPS, DCPS, OBLV, and NYCGT;
       V.      Less than arm’s length loans were routinely transacted be-
               tween petitioners;
      VI.      Policies, procedures, employee conduct guides, training,
               and even uniforms overlapped between NYPS, DCPS, and
               OBLV; and

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     VII.    All petitioners shared the same bookkeeping company,
             which was wholly owned by Schmidt.
   The record substantiates these findings.

         Petitioners disagree with the Board’s findings and argue that
   “multiple witnesses consistently testified that there was no interrelation of
   operations.” Petitioners’ arguments are unavailing. For one, petitioners
   themselves stipulated that they “engaged in consistent, significant transfers
   of funds of at least $50,000 per year.” And, though not discussed in the
   Board’s order, there is a litany of additional evidence that supports the
   Board’s conclusion. As general counsel argued, and the record confirms:
   “Employees have onboardtours.com email addresses”; “Buses in New York
   and Washington use the OnBoard Tours logo, as do documents setting out
   employee policies and concierge commissions”; and “NYPS, [DCPS], and
   [NYCGT] all use Schmidt’s Houston address as their business or mailing
   address.” Contrary to petitioners’ arguments, substantial evidence supports
   the Board’s finding.

                                        C.
         The Board similarly found that a common cast of characters, who
   operate on a “readily fungible” team, manage the companies. The Board
   made the following record-supported findings. Schmidt, the manager and
   designated CEO of PST, is also the CEO of OBLV, DCPS, NYCGT, and the
   former CEO of NYPS. Mengel, an investor in PST, worked in management
   positions for OBLV and DCPS. Lockhart worked for DCPS and holds a
   general power of attorney for NYCGT. Lockhart also served in a managerial

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   role at PST. June and White served as managing directors at NYPS, and both
   aided, or were formerly employed by, DCPS. White also aided in the
   development of training policies for all three cities. Abshire is the former vice
   president of sales and marketing at PST and held various training roles—
   along with Wilson—at NYPS, OBLV, and DCPS. And Moskowitz helped
   establish the OBLV office. He is also the former NYPS president, the sole
   manager and current president of NYCGT, and a frequent attendee of DCPS
   management meetings.

          Petitioners disagree with the Board’s findings and assert that
   “voluminous” witness testimony—from the likes of White, Moskowitz,
   Lockhart, Cook, and Schmidt—warrants a contrary finding. According to
   petitioners, the witnesses testified that they were each responsible for
   operations at their own companies; thus, there could not have been common
   management. Not so. As we have previously held, “day-to-day control of
   operations is not required to find that two entities are a single employer under
   the NLRA.” Alcoa, 849 F.3d at 257 (citing Oaktree Cap., 452 F. App’x at
   442). Thus, even if it is true that there is some unique day-to-day management
   for each entity, petitioners cannot escape the otherwise overwhelming
   evidence that there is a common team overseeing operations. See id. at 258
   (“[O]verwhelming control is not required.”) (first citing Spurlino Materials,
   357 NLRB at 1516 (holding that there were interrelated operations even
   though the involved entities were “created and licensed separately, [were]
   geographically removed and serv[ing] different markets in different states,
   and ha[d] their own personnel and equipment”); then citing Royal Typewriter

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   Co., 209 NLRB 1006, 1010 (1974) (holding that there were interrelated
   operations even though “day-to-day matters were of necessity left to the
   separate divisions”)).

                                          D.
          While the aforementioned factors are relevant to determining whether
   petitioners constitute a single employer, “centralized control of labor
   relations is of particular importance.” Alcoa, 849 F.3d at 258 (quoting
   Oaktree Cap., 452 F. App’x at 438). “The fundamental inquiry is whether
   there exists overall control of critical matters at the policy level, not whether
   there is control over day-to-day labor decisions.” Id. (citation and internal
   quotation marks omitted). Substantial evidence once again supports the
   Board’s findings that there is centralized control over critical policy matters.

          According to petitioners, “[e]ach company recruited, hired, trained,
   set salaries, disciplined, and fired its own employees with complete
   autonomy from the other companies.”         The record tells a different story.
   For example, the record evinces that Schmidt was involved in hiring,
   promoting, and reassigning managers at PST, DCPS, NYPS, OBLV, and
   NYCGT, including Cook, Lockhart, and White. To be sure, the Board noted
   that the local management teams generally hired tour guides and drivers. But
   the record reflects that Schmidt was still involved in disciplining and rehiring
   some of the same drivers and guides. Aside from Schmidt’s involvement, the
   record reveals a centralized process for hiring, customer service, behavioral
   policies and procedures, and even uniform requirements. The Board also
   cited the Houston call center as evidence of centralized control of labor

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   relations, as the call center trained sales representatives to take calls for
   NYPS, OBLV, and DCPS. Taken together, these findings support the
   Board’s conclusion that petitioners constitute a single employer.3

                                                IV.

           Petitioners next argue that the underlying 2013 merits order is void ab
   initio because of the Supreme Court’s holding in Noel Canning. We disagree.

           On January 4, 2012, then-President Obama appointed three
   individuals to the National Labor Relations Board, invoking the Recess
   Appointments Clause.             Noel Canning, 573 U.S. at 520.                  After the
   appointment, a three-member panel of the newly configured Board found
   that Noel Canning, a Pepsi-Cola distributor, committed an unfair labor
   practice. Id. Noel Canning appealed, arguing that the three Board members
   were unconstitutionally appointed because the Senate was convening every

           3
             Contrary to petitioners’ argument on appeal, the Board had jurisdiction over the
   non-NYPS petitioners. The jurisdictional standard for retail businesses is $500,000 in
   annual gross business volume. See Carolina Supplies & Cement Co., 122 NLRB 88, 89
   (1958). For a nonretail enterprise, the standard is $50,000 across state lines annually. See
   Siemons Mailing Serv., 122 NLRB 81, 85 (1958). Petitioners stipulated that they “engaged
   in consistent, significant transfers of funds of at least $50,000 per year,” which necessarily
   crossed state lines. Moreover, petitioners’ prospectus anticipated $10 million in collective
   revenue in 2017. Petitioners argue that the Board erred in relying on a “draft,” yet they
   never argued that the draft was incorrect. Because petitioners constitute a single employer,
   the Board was correct to find that it had jurisdiction over the non-NYPS petitioners. See
   373-381 S. Broadway Assocs., 304 NLRB 1108, 1108 (1991) (“[I]t is well established that the
   commerce data of joint or single employers may appropriately be combined for
   jurisdictional purposes.” (first citing Jacob Wirth Rest., 248 NLRB 191 (1980), enforced sub
   nom. NLRB v. Pizza Pizzaz, Inc., 646 F.2d 706 (1st Cir. 1981) (per curiam); then citing
   Normandy Square Food Basket, 163 NLRB 369 (1967); then citing Pac. Hosts, Inc., 156 NLRB
   1467 (1966)).

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   three days in pro forma sessions when they were appointed. Id. The D.C.
   Circuit agreed and held that the Board lacked the quorum necessary to act.
   Id.; see also 29 U.S.C. § 153(a) (providing for a 5–member Board); § 153(b)
   (providing for a 3–member quorum). The Solicitor General petitioned for
   certiorari, and the Court granted cert.

          After interpreting the scope of the phrases “the recess of the Senate”
   and “vacancies that may happen during the recess of the Senate,” and
   calculating the length of the Senate’s recess, the Court held that the
   President appointed the three Board members during pro forma sessions, not
   periods of recess. Id. at 550. The Court consequently concluded that the
   President violated the Recess Appointments Clause and that the Board
   lacked a quorum, nullifying its prior order. Id. at 557; see also New Process
   Steel, L.P. v. NLRB, 560 U.S. 674, 687–88 (2010) (holding that the Board
   cannot exercise its powers absent a lawfully appointed quorum).

          Petitioners claim that Noel Canning necessarily invalidates the 2013
   merits order because the same unconstitutionally appointed Board issued the
   order. The Board issued its 2013 merits order on May 2, 2013. The court
   granted default judgment against NYPS on November 19, 2013. See New
   York Party Shuttle, LLC v. NLRB, No. 13-60364 (5th Cir. Nov. 19, 2013) (per
   curiam). The Supreme Court handed down Noel Canning on June 26, 2014.
   Thus, as an initial matter, petitioners are correct that the Board acted without
   authority.    The Board undoubtedly lacked a quorum with only two
   constitutionally appointed members. See 29 U.S.C. § 153(a), (b). As such,

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   the Board could not validly exercise its power, just as the Supreme Court held
   in Noel Canning.

          Unlike the respondent in Noel Canning, however, petitioners did not
   immediately assert this constitutional defect. Rather, petitioners waited until
   the compliance phase of the bifurcated proceedings to challenge a procedural
   issue with the liability findings. Now, some seven years later, petitioners
   assert that this court acted without jurisdiction when entering default
   judgment, that they did not waive their Appointments Clause objection, and
   that they are not bound by res judicata. Thus, they (implicitly) argue that we
   should recall our 2013 mandate. We decline to do so. See 5th Cir. R. 41.2
   (stating that the court will only recall an issued mandate to “prevent
   injustice”); see also Calderon v. Thompson, 523 U.S. 538, 550 (1998) (stating
   that the power to recall a mandate is to be used only as a “last resort,” and
   should be “held in reserve against grave, unforeseen contingencies”).

          Petitioners’ arguments fly in the face of well-settled law. Take
   petitioners’ jurisdictional argument first. While Noel Canning was pending
   before the Supreme Court, we were tasked with determining whether we
   needed to consider the constitutionality of a Board member’s appointment
   for jurisdictional purposes. D.R. Horton, Inc. v. NLRB, 737 F.3d 344, 351 (5th
   Cir. 2013). We held that we did not. Id. Pursuant to 29 U.S.C. § 160(e), the
   Board is imbued with the power to petition any court of appeals to enforce its
   order. Section 160(e) goes on to say that, “[u]pon the filing of such petition,
   the court . . . shall have jurisdiction of the proceeding.” We read this
   provision to mean that our “jurisdiction is derived from the Board’s filing of

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   a petition, not from the validity of the Board’s underlying decision.” D.R.
   Horton, 737 F.3d at 351. Thus, irrespective of the constitutional validity of
   the Board members’ appointments, we held that we possessed appellate
   jurisdiction to review the underlying merits. Id.

          The same jurisdictional principle applies here, though for slightly
   different reasons. Here, the Board did not file a petition to enforce an order
   under § 160(e). Rather, NYPS filed a petition for review of the Board’s final
   order pursuant to § 160(f). Section 160(f), like § 160(e), provides that “the
   court shall proceed in the same manner as in the case of an application by the
   Board under subsection (e), and shall have the same jurisdiction . . . .” Thus,
   our jurisdiction was predicated on NYPS’ petition for review, not the validity
   of the Board’s underlying decision or the constitutionality of the Board
   members’ appointments. See D.R. Horton, 737 F.3d at 351.

          Similarly, petitioners’ argument that they could not have waived an
   Appointments Clause objection is without merit. In Freytag v. C.I.R., the
   Supreme Court was asked “whether the authority that Congress has granted
   the Chief Judge of the United States Tax Court to appoint special trial judges
   transgresses our structure of separated powers.” 501 U.S. 868, 870 (1991).
   Before holding that there was no separation of powers issue, the Court first
   addressed whether the petitioners waived their right to challenge the
   constitutional propriety of § 7443A—the relevant grant of appointment
   power—by, among other things, failing to timely object. Id. at 878.

          To answer this question, the Court began by considering the
   structural and political roots of the Appointments Clause.                The

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   Appointments Clause exists, the Court went on, to ensure that one branch
   does not encroach upon the power of another coordinate branch. Id. (citing
   Mistretta v. United States, 488 U.S. 361, 382 (1989)). The Court then
   considered the nature of an Appointments Clause challenge. Citing Glidden
   Co. v. Zdanok, 370 U.S. 530, 535–36 (1962), the Court held that
   Appointments      Clause    objections     are    nonjurisdictional   structural
   constitutional objections. Freytag, 501 U.S. at 878–79; see also D.R. Horton,
   737 F.3d at 351. Based on these conclusions, the Court determined that
   federal courts possess “discretion to consider nonjurisdictional claims that
   [were not] raised below.” Freytag, 501 U.S. at 878 (collecting cases).

           NYPS filed its petition for review on May 31, 2013. After it failed to
   file an opening brief, the court entered default judgment, affirming the
   Board’s 2013 merits order on November 19, 2013. NYPS never raised an
   Appointments Clause challenge before the court. In fact, in its December 20,
   2013 proposed brief—which NYPS filed with its subsequent motion for
   reconsideration—it made no mention of the Appointments Clause. There is
   no excuse for NYPS’ failure to raise a constitutional defect argument at that
   time.

           As of December 3, 2013, the Board’s constitutionality was widely
   disputed with multiple pending lawsuits alleging an Appointments Clause
   violation. See, e.g., D.R. Horton, 737 F.3d at 351 (Dec. 3, 2013); NLRB v.
   RELCO Locomotives, Inc., 734 F.3d 764, 793–96 (8th Cir. Aug. 20, 2013);
   NLRB v. Enter. Leasing Co. Se., LLC, 722 F.3d 609, 632 n.14 (4th Cir. Jul. 17,
   2013); GGNSC Springfield LLC v. NLRB, 721 F.3d 403, 406–07 (6th Cir. Jul.

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   2, 2013). What is more, the Supreme Court had already granted certiorari on
   the subject. See Noel Canning v. NLRB, 705 F.3d 490 (D.C. Cir. 2013), cert.
   granted, 570 U.S. 916 (U.S. Jun. 24, 2013). Notwithstanding multiple
   pending appeals, and a recent opinion from this court on the very subject, see
   D.R. Horton, 737 F.3d at 351, NYPS decided not to challenge the
   constitutionality of the recess appointments.

          And, if D.R. Horton and Freytag were not enough, res judicata also
   counsels us against entertaining petitioners’ Noel Canning challenge.
   “[U]nder the doctrine of res judicata, a judgment ‘on the merits’ in a prior
   suit involving the same parties or their privies bars a second suit based on the
   same cause of action.” Lawlor v. Nat’l Screen Serv. Corp., 349 U.S. 322, 326
   (1955); see also Nilsen v. City of Moss Point, 701 F.2d 556, 559 (5th Cir. 1983)
   (en banc) (discussing the same preclusive effect). “[A] default judgment is a
   judgment ‘on the merits’ for purposes of res judicata.” Jones v. U.S. ex rel.
   Farmers Home Admin., No. 94-60391, 1995 WL 29363, at *1 (5th Cir. Jan. 20,
   1995) (citing Moyer v. Mathas, 458 F.2d 431, 434 (5th Cir. 1972)). Four
   conditions must be established for res judicata to apply: (1) the parties in the
   present action must be the identical parties, or parties in privity with one
   another, from the prior action; (2) a competent court must have rendered a
   judgment in the prior action; (3) the prior action must have concluded with a
   final judgment on the merits; and (4) the same claim or cause of action must
   now be raised in the present action. Id.

          The court already affirmed the Board’s 2013 merits order; thus,
   petitioners are precluded from relitigating, even indirectly, the default

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   judgment and thereby the validity of the underlying order. First, petitioners
   are the identical parties, or privies, from the 2013 default judgment. The
   Board determined, and substantial evidence confirms, that petitioners are a
   single employer. Given this single employer finding, NYPS—which Schmidt
   owned—necessarily proffered arguments that would benefit and defend the
   non-NYPS petitioners—which Schmidt indirectly owns. The non-NYPS
   petitioners cannot now claim that they are “strangers to the cause.”
   Montana v. United States, 440 U.S. 147, 154 (1979) (quoting Souffront v. La
   Compagnie Des Sucreries De Porto Rico, 217 U.S. 475, 487 (1910)).

          Further, this court, which had appellate jurisdiction over the 2013
   merits order, rendered judgment. That judgment was final and on the merits.
   Finally, the same claim is being asserted on appeal: namely, the claim that the
   2013 merits order is unenforceable. This time, rather than attacking the
   merits, petitioners allege that because the constitutional process for
   appointing the Board members was disregarded, the order must be void. But
   that is just another issue that is directly subsumed within their main cause:
   nullifying the order. Petitioners cannot now litigate this issue when it could
   have been raised on the initial appeal. See Federated Dep’t Stores, Inc. v.
   Moitie, 452 U.S. 394, 398 (1981).

                                         V.

          Finally, we consider the validity of the backpay award itself. The
   Board ordered petitioners to pay Pflantzer $91,912 in backpay, plus interest
   compounded daily, accrued to the date of payment, and minus tax
   withholding required by law. We affirm the Board’s order, save the portion

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   of that order awarding backpay for the period of October 2014 to 2018. As to
   that part of the order, we reverse and remand.4

                                                A.

           Pursuant to 29 U.S.C. § 160(c), the NLRB is authorized to award
   backpay as a remedy for unfair labor practices. In awarding backpay, the
   Board should aim to “restor[e] . . . the situation, as nearly as possible, to that
   which would have [been] obtained but for the illegal discrimination.” Phelps
   Dodge Corp. v. NLRB, 313 U.S. 177, 194 (1941); see also Charley Toppino, 358
   F.2d at 97 (stating that the Board is tasked with arriving at “the closest
   approximation to the likely earnings” of the employee as possible). General
   counsel bears the burden of proving the gross amount of backpay due to each
   claimant. NLRB v. Pilot Freight Carriers, Inc., 604 F.2d 375, 377 (5th Cir.
   1979). The burden then shifts to the employer to put on affirmative defenses
   and to mitigate liability. Id. (citing NLRB v. Miami Coca-Cola Bottling Co.,
   360 F.2d 569, 575 (5th Cir. 1966)).

           4
             Petitioners offer multiple unsupported or inappropriate arguments on appeal.
   Petitioners claim, for instance, that NYPS lawfully discharged Pflantzer for operating a
   competing business. Similarly, petitioners assert that because Pflantzer was a 1099
   independent contractor, he is not entitled to excess taxes. Those arguments go to the
   merits of the liability phase, which the Board and this court already resolved. Petitioners
   may not turn their compliance proceeding appeal into another avenue to re-litigate the
   underlying 2013 merits order. See NLRB v. Laredo Packing Co., 730 F.2d 405, 407 (5th Cir.
   1984) (per curiam). Further, petitioners claim that because the compliance specification
   was amended multiple times, it was necessarily unreliable. Petitioners fail to cite a single
   authority supporting such a claim; thus, their argument is abandoned. See Dardar v.
   Lafourche Realty Co., Inc., 985 F.2d 824, 831 (5th Cir. 1993) (“Questions posed for appellate
   review but inadequately briefed are considered abandoned.” (citations omitted)).

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          The Board is entitled to broad discretion when settling on a backpay
   formula to reach its decision, such that the court should only reject the
   Board’s finding if it deems the finding arbitrary. Id.; see also Laredo Packing
   Co., 730 F.2d at 407 (“Indeed, when the Board orders restoration by way of
   back pay, the order will not be disturbed absent a showing that the order is an
   obvious attempt to further ends other than those which can be fairly said to
   effectuate the policies of the Act.” (citation omitted)).

                                         B.

          We turn first to petitioners’ argument that the Board abused its
   discretion by selecting the comparator method as its backpay formula.
   General counsel—through a compliance officer—consulted the Board’s
   Compliance Casehandling Manual (“Compliance Manual”) and selected the
   comparable-employee formula, or comparator method, to calculate gross
   backpay.   The officer chose this formula to account for the seasonal
   considerations and fluctuating hours that characterize the tour business.
   While the Board recognized that the comparator method produces an
   average, “not an exact science,” it nonetheless accepted the method—one
   of the three basic methods the Compliance Manual endorses—as a
   reasonable means of approximating what petitioners owed Pflantzer. The
   Board’s adoption of the comparator method was not arbitrary, and neither
   was its choice of comparator.

          When choosing a comparator, the compliance officer “looked at other
   tour guides at NYPS with similar hours during the same period as Pflantzer
   and concluded that Edwin Jorge [] had similar hours to Pflantzer in 2014.”

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   The Board accepted Jorge as a comparator given that he worked similar hours
   throughout most of the relevant period. Dissatisfied with the Board’s
   selection, petitioners claim that Jorge is not a proper comparator as he was a
   senior, “star” tour guide who always worked more hours than Pflantzer. But
   petitioners did not “offer [their] own set of comparable employees nor did
   they calculate the earnings for such a set of comparators.” Thus, the Board
   only considered the reasonability of the approach the compliance officer
   proffered.    After weighing competing testimony, rejecting speculation,
   reviewing the officer’s calculations, and considering the record before it, the
   Board agreed that Jorge was an adequate comparator. The Board’s selection
   of the comparator method, and its choice of comparator, was not arbitrary to
   the extent that the Board relied on Jorge for the hours that he actually worked.
   But see infra Section V.D.

                                         C.

          Petitioners’ next argument concerns Pflantzer’s mitigation of
   damages. Once general counsel proves a backpay calculation, the burden
   shifts to the employer to mitigate damages, including proving that the
   employee failed to make a good-faith effort to mitigate losses. See Miami
   Coca-Cola Bottling Co., 360 F.2d at 575. If an employer can prove that the
   employee incurred a willful loss of earnings, then the employee is not entitled
   to backpay. See Phelps Dodge Corp., 313 U.S. at 198. Citing this burden-
   shifting framework, the Board found that petitioners “failed to satisfy [their]
   ultimate burden of showing that Pflantzer failed to mitigate damages.”
   Petitioners appeal that finding, but we find no merit in their argument.

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           As the Board’s order and the record reflect, Pflantzer worked for
   multiple tour companies throughout the backpay period. He worked for Go
   NY Tours and his own company, New York See Tours, in 2014.5 He was
   then briefly reinstated at NYPS. From 2015 to 2017, Pflantzer worked for
   USA Guided Tours, High Quality, Uncle Sam’s, Open Loop/RSDL,
   Maxim, Wall Street Experience, One on One Tours, and his own company.
   The Board rejected petitioners’ claim that Pflantzer’s self-employment was
   inadequate, finding that general counsel properly adjusted the models to
   account for self-employment earnings. Based on these findings, the Board
   did not err in rejecting petitioners’ mitigation argument.

                                               D.

           Next, petitioners argue that the Board abused its discretion when it
   awarded Pflantzer backpay for the period of October 2014 through 2018.
   Because we agree with petitioners that the Board engaged in impermissible
   speculation when calculating backpay for this period, we reverse and remand
   on this issue.

           The facts here are straightforward. Faced with no tour guide hour
   data after October 20, 2014, general counsel calculated Jorge’s hours from
   October 2013 to September 2014 and then pasted those hours into the period

           5
              Go NY Tours fired Pflantzer in January 2015 for union activity. Pflantzer waived
   reinstatement as part of his settlement. Petitioners take issue with Pflantzer’s waiver, but,
   as the Board noted, Go NY Tours ceased operations shortly thereafter. So, even if
   Pflantzer had been reinstated, he would have been terminated again almost immediately
   after his reinstatement.

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   of October 2014 through 2018. The Board then entered its backpay award
   predicated on this calculation.

          While the Board is entitled to some discretion in calculating backpay,
   it is not permitted to arbitrarily calculate backpay. Charley Toppino, 358 F.2d
   at 97. But that is exactly what it did here. Consider the compliance officer’s
   testimony in this case. The compliance officer was explicitly asked why it
   was important to have comparator data that spanned the entirety of the
   backpay period. Citing the Board’s Compliance Manual, she stated:

          I reviewed the compliance manual first, regarding the specific
          calculation method and it said specifically that it’s important
          for the comparator employee to have data spanning the entire
          backpay period and the reason is that you don’t want to project.
          If your comparator stops working for some reason, part way
          through the backpay period, then you’re guessing as to what that
          comparator would have earned for the rest of the backpay period.
   ROA.148 (emphasis added). By extrapolating a one-year period across a
   four-year span, the Board openly disregarded its own Compliance Manual
   and engaged in impermissible speculation. The arbitrariness of the Board’s
   calculation is all the more apparent when the reasoning supporting the
   selection of the comparator method is considered: seasonality and fluctuating
   hours. The Board intentionally selected a formula that was meant to account
   for an industry rife with inconsistent hours; yet, the same Board used that
   formula to project across a four-year period.

          The Board’s decision is also an “obvious attempt to further ends
   other than those which can be fairly said to effectuate the policies of the Act.”

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   Laredo Packing Co., 730 F.2d at 407 (citation omitted). To defend its
   calculation, the Board, through the ALJ, reasoned:

          Second, while it seems unfair to Respondent NYPS that [the
          compliance officer] used Jorge’s work hours for the last
          complete year (October 2013-2014) and applied those earnings
          through 2018 when NYPS was closing its operations by 2014,
          it is reminded that it was Respondent NYPS that violated the
          Act when it twice discharged Pflantzer and it is grossly more
          unfair that Pflantzer has not been remedied for the unlawful
          discharges.
   ROA.4325. Congress authorized the NRLB to award backpay to restore the
   discriminatee’s situation to “that which would have [been] obtained but for
   the illegal discrimination.” Phelps Dodge, 313 U.S. at 194. Rather than aiming
   to make Pflantzer whole, however, the Board relied on the retributive effect
   of its “unfair” award as a defense. Such a rationale does not effectuate the
   purposes of the Act.

                                           E.

          Lastly, we turn to petitioners’ evidentiary arguments. Petitioners
   claim that the ALJ erred in his credibility determinations, his refusal to allow
   petitioners to recall the compliance officer to testify, and his backpay, tax, tip,
   and moonlighting calculations. The ALJ weighed Pflantzer’s testimony and
   explicitly addressed his faulty memory and the inaccuracies in his tax returns.
   After weighing these discrepancies against his demeanor, the fact that he was
   under oath and could be prosecuted for perjury, and the fact that there was a

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   “significant lapse in time [due to] the Respondent’s refusal to comply with
   Board orders,” the ALJ found Pflantzer to be a credible witness.

          Moreover, the Board did not rely solely on Pflantzer’s tax returns in
   calculating the backpay award as petitioners argue. Rather, the Board
   considered findings from investigative interviews along with Pflantzer’s
   testimony, 1099 forms, and tax returns. The Board made the same reasoned
   finding when it came to the inclusion of an average tip amount for the backpay
   calculation—a calculation based on testimony from Pflantzer that the ALJ
   found to be credible.     And it made the same reasoned findings when
   calculating Pflantzer’s moonlighting earnings.            The Board weighed
   Pflantzer’s testimony, reviewed the tax records it possessed, accounted for
   time he did not work, and then approximated his moonlighting earnings to
   account for fluctuations and, at times, a lack of self-reporting.

          Further, the ALJ did not abuse his discretion when he did not permit
   petitioners to recall the compliance officer on these subjects. See Miami
   Coca-Cola Bottling Co., 360 F.2d at 577. Petitioners were permitted to fully
   cross examine the officer on each issue, and they did exactly that.

                                   *        *         *
          IT IS ORDERED that the Board’s backpay award for the period of
   October 2014 to 2018 is REVERSED and the case is REMANDED for
   recalculation of the backpay damages in keeping with this opinion.

          IT IS FURTHER ORDERED that the remainder of Board’s
   backpay award is AFFIRMED.

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