Court Opinion

ID: 3211986
Source: CourtListenerOpinion
Date Created: 2016-06-10 16:01:11.282056+00
Date Added: 2024-06-11T13:00:09.221504
License: Public Domain

United States Court of Appeals
         FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued February 9, 2016              Decided June 10, 2016

                       No. 12-1071

 CAMELOT TERRACE, INC. AND GALESBURG TERRACE, INC.,
                    PETITIONERS

                             v.

           NATIONAL LABOR RELATIONS BOARD,
                     RESPONDENT

      SERVICE EMPLOYEES INTERNATIONAL UNION,
HEALTHCARE ILLINOIS INDIANA (PREVIOUSLY SEIU LOCAL 4),
                     INTERVENOR

                Consolidated with 12-1218

       On Petition for Review and Cross-Application
                for Enforcement of an Order
          of the National Labor Relations Board

    Christopher Landau argued the cause for the petitioners.
John S. Irving, Jr. was with him on brief.

    Barbara A. Sheehy, Attorney, National Labor Relations
Board, argued the cause for the respondent. Richard F.
Griffin, Jr., General Counsel, John H. Ferguson, Associate
General Counsel, Linda Dreeben, Deputy Associate General
                              2
Counsel, and Usha Dheehan, Supervisory Attorney, were with
her on brief.

    Margaret Angelucci was on brief for the intervenor,
Service Employees International Union, Healthcare Illinois
Indiana (previously SEIU Local 4) in support of the
respondent.

   Before: HENDERSON and ROGERS, Circuit Judges, and
WILLIAMS, Senior Circuit Judge.

    Opinion for the Court filed by Circuit Judge HENDERSON.

     KAREN LECRAFT HENDERSON, Circuit Judge: Camelot
Terrace, Inc. (Camelot) and Galesburg Terrace, Inc.
(Galesburg) (collectively, Companies) petition for review of a
decision and order of the National Labor Relations Board
(Board) determining that the Companies violated the National
Labor Relations Act (Act), 29 U.S.C. §§ 151 et seq., by
engaging in bad-faith bargaining with the Service Employees
International Union (Union). The Companies do not contest
the Board’s conclusion that they violated the Act; rather, they
challenge two of the remedies the Board imposed: (1)
reimbursement of litigation costs incurred by both the Board
and the Union during Board proceedings and (2)
reimbursement of “all” of the negotiation expenses the Union
incurred during its bargaining sessions with the Companies.
See Camelot Terrace, 357 N.L.R.B. No. 161, 2011 WL
7121892, at *13, *15 (Dec. 30, 2011). The Companies assert
that the Board is without authority to impose either remedy.
Alternatively, they argue that the amount of the
bargaining-costs remedy—“all” of the Union’s bargaining
expenses—exceeds the amount necessary to remedy the harm
caused by the Companies’ conduct and is improperly punitive.
                                3
     We agree that the Board lacks authority to require the
reimbursement of litigation costs incurred during Board
proceedings, see HTH Corp. v. NLRB, No. 14-1222, 2016 WL
2941936, at *9–11 (D.C. Cir. May 20, 2016), but hold that the
Board may require an employer to reimburse a union’s
bargaining expenses pursuant to its remedial authority under
section 10(c) of the Act. We also conclude that we lack
jurisdiction to entertain the Companies’ alternative challenge
to the amount of the bargaining-costs award because they
failed to raise it before the Board. Accordingly, we grant the
Companies’ joint petition in part and grant the Board’s
cross-application for enforcement in part.

                                I.

     Camelot and Galesburg both operate nursing homes in
Illinois. In 2007, the Union was certified as the exclusive
representative of employees at both facilities. Over the course
of 2008 and 2009, the Companies—primarily through the
conduct of their common owner, Michael Lerner—repeatedly
bargained with the Union in bad faith. 1 The Board’s Office of
the General Counsel (OGC) got involved, leading to a
    1
         Because the Companies do not contest their underlying
violations of the Act, there is no need to describe their bad-faith
conduct in great detail. Their conduct included “restricting the
dates and length of bargaining sessions, repeatedly canceling and
shortening sessions, reneging on or withdrawing from tentative
agreements without good cause, refusing to bargain on economic
subjects, and refusing to make economic proposals.” Camelot
Terrace, 357 N.L.R.B. No. 161, 2011 WL 7121892, at *1. The
Companies violated the Act in other ways as well, including dealing
directly with Union-represented employees, unilaterally changing
the terms and conditions of employment without providing notice or
bargaining opportunity to the Union and firing an employee under a
unilaterally-implemented attendance policy.
                               4
settlement agreement detailing specific bargaining
requirements the Companies were to satisfy. When the
Companies failed to abide by the terms of the agreement and
continued to bargain in bad faith, the OGC issued a complaint
charging the Companies with numerous violations of the Act.
After holding a hearing and concluding that the Companies had
indeed violated the Act, an Administrative Law Judge (ALJ)
ordered, inter alia, that the Companies “[r]eimburse the
[Board] . . . and the Union for all costs and expenses incurred
in the investigation, preparation and conduct of [the case]
before the Board and the courts.” Camelot Terrace, 357
N.L.R.B. No. 161, 2011 WL 7121892, at *125. The ALJ also
ordered the Companies to “[r]eimburse the Union for all costs
and expenses incurred in collective-bargaining negotiations
from January 2008 to the [parties’] last bargaining session.”
Id.

     The Companies filed exceptions with the Board,
challenging the imposition of these two remedies. In a
two-to-one decision, the Board held that it was authorized to
impose both remedies and did so with one modification. 2 The
bargaining-costs remedy, the Board concluded, was a
necessary exercise of its general remedial power: “[o]nly by
ordering the reimbursement of the Union’s negotiating
expenses [could] the Board reasonably restore the Union’s
previous financial strength and consequent ability to carry out
effectively its responsibilities as the employees’
representative.” Id. at *6. As for the litigation-costs remedy,
the Board concluded that it “has inherent authority to control

    2
          The Board modified the litigation-costs remedy by
eliminating the award for costs incurred in court proceedings,
“leav[ing] that determination to the discretion of the court [of
appeals].” Camelot Terrace, 357 N.L.R.B. No. 161, 2011 WL
7121892, at *6 n.8.
                                 5
its own proceedings, including the authority to award litigation
expenses through the application of the ‘bad-faith’ exception to
the American Rule.” Id. The Board declared that its
“inherent authority” was sufficient to support the remedy and
therefore found it “unnecessary to pass on the [Companies’]
argument that the Board’s remedial authority under [section]
10(c) of the Act does not encompass the award of litigation
expenses.” Id. at *6 n.10. Member Hayes dissented from the
Board’s decision on the litigation-costs remedy, explaining
that the Board is “not free to invoke principles of ‘inherent
authority’ in order to unilaterally vest the Board with powers
beyond those contemplated by the legislature.” Id. at *17
(Member Hayes, dissenting). The Companies petitioned for
review, challenging the Board’s authority to impose the two
remedies. The Board cross-applied for enforcement.

                                II.

     At the outset, because “the Board is entitled to
enforcement of all unchallenged portions of its order,” we
summarily enforce all such provisions of the Board’s decision.
United Food & Commercial Workers Union Local 204 v.
NLRB, 447 F.3d 821, 824 (D.C. Cir. 2006) (per curiam). As
for the two reimbursement orders the Companies do challenge,
although we generally afford the Board deference in reviewing
its chosen remedies, see Great Lakes Chem. Corp. v. NLRB,
967 F.2d 624, 629 (D.C. Cir. 1992) (“The Board has broad
authority in devising remedies to effectuate the policies of the
Act, subject only to limited judicial review.” (citation and
internal quotation marks omitted)), deference is limited if a
party challenges the Board’s authority to order a particular
remedy under any circumstance. In that case, to the extent the
Board claims its remedial authority arises from the Act, we
defer to the Board “only so far as ‘[its] interpretation is rational
and consistent with the statute.’ ” Unbelievable, Inc. v.
                                 6
NLRB, 118 F.3d 795, 804 (D.C. Cir. 1997) (quoting NLRB v.
United Food & Commercial Workers, 484 U.S. 112, 123
(1987)). To the extent the Board relies on extra-statutory
authority, we afford no deference at all. See HTH Corp., 2016
WL 2941936, at *9–11 (evaluating Board’s “inherent
authority” to award litigation costs without deference); see also
Local 777, Democratic Union Org. Comm. v. NLRB, 603 F.2d
862, 869 n.17 (D.C. Cir. 1978) (“Ordinarily, we show
considerable deference to the judgment of the [Board] . . . [but]
where the issues involved are purely legal . . . , the Board’s
interpretation is entitled to no particular deference.”).

      Here, the Companies have abandoned (or forfeited, see
infra at 10–11) any claim that reimbursement of litigation or
bargaining expenses was inappropriate in their particular case;
rather, they attack the Board’s authority to award bargaining
and litigation costs in all cases. Accordingly, we defer to the
Board’s view of the matter only insofar as its interpretation of
its statutory power is “rational” and “consistent” with the Act.
See Unbelievable, Inc., 118 F.3d at 804.

                      A. Litigation Costs

     The Companies first claim that “the Board has neither
statutory nor inherent authority to award litigation expenses,
including attorney’s fees, as a remedy for an unfair labor
practice.” Pet’rs’ Br. 12. For the reasons discussed in HTH
Corp. v. NLRB, we agree. There, as here, the Board “claimed
that, like a federal court, it has inherent authority to control and
maintain the integrity of its own proceedings through an
application of the bad-faith exception to the American Rule”
and ordered an employer to pay the litigation expenses of a
union and of the OGC. HTH Corp., 2016 WL 2941936, at *9
(internal quotation marks omitted). We declined to enforce
the order. See id. at *11. Recognizing that “[a]s a creature of
                               7
statute the Board has only those powers conferred upon it by
Congress,” we held that “the Board may apply the bad-faith
exception to the American rule only if some provision or
provisions of the Act explicitly or implicitly grant it power to
do so.” Id. at *9. Although the Board “relied solely on its
inherent authority to control and maintain the integrity of its
own proceedings,” and the court recognized “that it is wrong to
speak of agencies as having any inherent authority,” the
majority—perhaps in an effort to give the Board the benefit of
the doubt—went on to consider whether the Act’s general
endowment of remedial authority under section 10(c)
“implicitly authorizes fee shifting based on bad faith.” See id.
at *9–10 (emphasis in original) (internal quotation marks
omitted). The majority ultimately concluded that section
10(c) did not do so, primarily because “the Supreme Court has
consistently classified application of the bad-faith exception to
the American rule as punitive,” id. at *10 (citing Hall v. Cole,
412 U.S. 1, 5 (1973)), and a “[section] 10(c) remedy . . . ‘must
be truly remedial and not punitive,’ ” id. (quoting Capital
Cleaning Contractors, Inc. v. NLRB, 147 F.3d 999, 1009 (D.C.
Cir. 1998)).

     Our decision in HTH controls. As in HTH, the Board in
this case claims the power to require the Companies to pay the
Board’s litigation costs and those of the Union solely on the
basis of its “inherent authority.” Camelot Terrace, 357
N.L.R.B. No. 161, 2011 WL 7121892, at *6 & n.10. But as
HTH makes plain, the Board possesses no extra-statutory
“inherent authority.” HTH Corp., 2016 WL 2941936, at *9.
Moreover, to the extent the Board meant “implicit in section
10(c)” when it said “inherent,” see id. at *10, it loses on that
score as well—section 10(c) neither explicitly nor by
implication authorizes the Board to award litigation costs, see
id. at *10–11. Accordingly, we deny enforcement of the
litigation-costs order. See id. at *11.
                                8
                    B. Bargaining Costs

     The Companies also challenge the Board’s general
authority to require one party to reimburse another’s
bargaining costs; in the alternative, the Companies claim that
the Board may not award the Union “all” of its bargaining costs
because the Union would have incurred at least some of those
costs had the Companies bargained in good faith.

                               1.

     As a threshold matter, the Board contends that we lack
jurisdiction to entertain these two claims because the
Companies failed to raise them with the Board. It is well
settled that, absent “extraordinary circumstances,” if a party
fails to “urge[]” an objection before the Board, we lack
jurisdiction to consider it for the first time on appeal. 29
U.S.C. § 160(e); see also Woelke & Romero Framing, Inc. v.
NLRB, 456 U.S. 645, 665–66 (1982); HTH Corp., 2016 WL
2941936, at *3. In assessing forfeiture under section 10(e) of
the Act, “the critical question” is “whether the Board received
adequate notice of the basis for the objection.” Alwin Mfg.
Co. v. NLRB, 192 F.3d 133, 143 (D.C. Cir. 1999); see also
DHL Express, Inc. v. NLRB, 813 F.3d 365, 372 (D.C. Cir.
2016) (considering whether “petitioner’s brief in support of its
exceptions adequately put the Board on notice of the grounds
on which the petitioner is objecting” (internal quotation marks
omitted)). “While we have not required that the ground for
the exception be stated explicitly in the written exceptions filed
with the Board, we have required, at a minimum, that the
ground for the exception be ‘evident by the context in which
[the exception] is raised.’ ” Parsippany Hotel Mgmt. Co. v.
NLRB, 99 F.3d 413, 417 (D.C. Cir. 1996) (alteration in
original) (quoting Consol. Freightways v. NLRB, 669 F.2d 790,
794 (D.C. Cir. 1981)).
                               9
     Here, the Companies’ written exceptions and supporting
briefs together preserved their argument that the Board
generally lacks authority to require reimbursement of
bargaining costs—but just barely. The Companies’ exception
to the bargaining-costs remedy was indeed “vague,” see DHL
Express, 813 F.3d at 372, but nonetheless charged that the
bargaining-costs remedy violated “established Board law and
policy,” Resp’ts’ Exceptions to the A.L.J.’s Decision 2 (Mar.
10, 2010). Similarly, although their supporting brief was “no
paragon of precision or detail,” it included several statements
“adequate to apprise the Board that the Compan[ies] intended
to press the question now presented”—that the Board lacked
the power to require reimbursement of bargaining costs. See
NLRB v. Blake Constr. Co., 663 F.2d 272, 284 (D.C. Cir.
1981).

      The best example is an express statement to that effect in
one of the brief’s headings, which read, “The Board Lacks
Authority to Award Litigation Expenses and Bargaining
Costs.” Resp’ts’ Br. in Supp. of Exceptions to the A.L.J.’s
Decision 4 (emphasis added). Other parts of the brief also
apprised the Board that its authority was being questioned.
The Companies averred that the ALJ “made erroneous legal
conclusions with regard to the [bargaining-costs] remedy,” id.
at 2, and in a different subheading stated, “The Board Lacks the
Inherent Authority to Award Costs,” id. at 6 (emphasis added).
And notwithstanding these sections of the brief primarily
addressed litigation costs, the brief transitioned into a new
section with the statement, “[e]ven if the Board has the
authority to order a respondent to pay litigation and bargaining
costs,” id. at 6 (emphasis added), indicating to the Board that
the brief’s discussion of the generic “costs,” see id., was meant
to cover bargaining costs as well as litigation costs. We
therefore conclude that “the Board received adequate notice of
                              10
the basis for the [Companies’] objection,” see Alwin, 192 F.3d
at 143, and we may consider the merits of the challenge.

     The same is not true of the Companies’ alternative
argument that even if the Board has the authority to award
bargaining costs generally, it may not award “all” of the
Union’s costs. The thrust of the claim is that the Board may
award bargaining costs only to the extent the Companies’
bad-faith conduct caused the Union to incur such costs
unnecessarily. Because “the Union undoubtedly would have
incurred some bargaining costs” even if the Companies had
properly discharged their duty to negotiate in good faith, the
Companies argue that, in awarding the Union “all” of its
bargaining costs, the Board “crossed the line separating
permissible remedial action from impermissible punitive
action.” Pet’rs’ Br. 28–29. The Companies never presented
this argument to the Board but they argue that we should
nonetheless consider it because the award is “patently in excess
of [the Board’s] authority,” see Alwin, 192 F.3d at 143 n.13
(alteration in original) (quoting Detroit Edison Co. v. NLRB,
440 U.S. 301, 311 n.10 (1979)), and therefore their failure to
raise the issue should be “excused because of extraordinary
circumstances,” 29 U.S.C. § 160(e).

     Although “a remedy that is patently ultra vires” generally
warrants review even if not challenged at the Board level, see
HTH Corp., 2016 WL 2941936, at *3 (citing Alwin, 192 F.3d
at 143 n.13), the bargaining-costs remedy at issue does not
patently run afoul of the limits on the Board’s power. If the
Board has the authority to award bargaining costs generally, it
is not inconceivable that requiring the reimbursement of all of
a party’s bargaining expenses might be necessary; for instance,
if an employer repeatedly schedules bargaining sessions with a
union but is a perpetual no-show, reimbursing all of the
expenses the union incurred in connection with those planned
                                11
sessions when no bargaining in fact took place would be
required to return the union to its financial position ex ante,
which is the Board’s justification for awarding bargaining
costs in the first place. See Fallbrook Hosp. Corp. v. NLRB,
785 F.3d 729, 732 (D.C. Cir. 2015) (bargaining-costs remedy
“warranted . . . to restore the economic strength that is
necessary to ensure a return to the status quo ante at the
bargaining table” (internal quotation marks omitted)). Thus,
such an award is not “obviously ultra vires” in all
circumstances. See Alwin, 192 F.3d at 143 n.13.

     Nor is it obvious that an award of all of the Union’s
expenses was not necessary to remedy the wrong here; indeed,
the Board may well have concluded as much. This fact
underscores why we lack jurisdiction to consider this claim on
the merits—the Board has the first crack at answering whether
and why awarding “all” of a union’s bargaining expenses is
necessary in the particular circumstances of the case before it.
See Local 900, Int’l Union of Elec., Radio & Mach. Workers v.
NLRB, 727 F.2d 1184, 1192 (D.C. Cir. 1984) (“Simple fairness
to those who are engaged in the tasks of administration, and to
litigants, requires as a general rule that courts should not topple
over administrative decisions unless the administrative body
not only has erred but has erred against objection made at the
time appropriate under its practice.” (quoting United States v.
L.A. Tucker Truck Lines, Inc., 344 U.S. 33, 37 (1952))). The
Board had no reason to do so when the Companies never raised
this question in an exception or in a motion for reconsideration;
we lack jurisdiction, then, to address the claim for the first time
on appeal. 3

    3
        This does not mean, however, that the Companies are
prohibited from raising this argument before the Board at the
compliance stage. At oral argument, in comparing the Board order
in HTH that noted the union bore the burden of establishing a causal
                                 12
                                 2.

     Because the Companies forfeited their extent-of-the-
bargaining-costs claim, only one question remains for
consideration on the merits—whether the Board ever has the
authority to require a party to reimburse another’s bargaining
costs. The Companies contend that the Board has no such
power. On their theory, the Board’s job is to enforce
substantive legal rights; it may not, however, require one party
to reimburse another for the costs incurred in vindicating those
rights. They view bargaining costs as “indistinguishable from
litigation costs” in that both “represent the price of attempting
to vindicate substantive legal rights.” Pet’rs’ Br. 24.
Therefore, just as awarding litigation costs is aliunde the
Board’s remedial authority, so is requiring one party to
reimburse another’s bargaining costs. The Board, in contrast,
contends that requiring a party that has engaged in particularly
egregious bad-faith bargaining to reimburse another party’s
bargaining costs is well within its remedial power under
section 10(c) of the Act.

     We agree with the Board. When the Board determines
that a party has committed an unfair labor practice, section
10(c) of the Act gives it “discretion to fashion appropriate
remedies.” Fallbrook, 785 F.3d at 734. Specifically, the
Board “shall issue . . . an order requiring [a violator] to cease

relationship between the costs awarded and the unfair labor practice,
see HTH Corp., 361 N.L.R.B. No. 65, at 5 (Oct. 24, 2014), to the
Board award of “all” bargaining costs here, the Board counsel
explained, “[I]t was a different sort of remedy [in HTH] than you’ve
seen, so [the Board] w[as] reminding the Union we’ve not imposed
something like this before, so FYI, here’s what you need to do in
compliance, but I don’t think it’s any different than in other typical
compliance proceeding[s].” Oral Arg. Tr. 50:1–5.
                               13
and desist from such unfair labor practice, and to take such
affirmative action . . . as will effectuate the policies of [the
Act].” 29 U.S.C. § 160(c). “[T]he thrust of affirmative
action redressing the wrong incurred by an unfair labor
practice,” according to the United States Supreme Court, “is to
. . . restor[e] the economic status quo that would have obtained
but for the company’s wrongful [act]. The task of the [Board]
in applying § 10(c) is to take measures designed to recreate the
conditions and relationships that would have been had there
been no unfair labor practice.” Franks v. Bowman Transp.
Co., 424 U.S. 747, 769 (1976) (some alterations in original)
(citations and internal quotation marks omitted).

     Although we have never directly held that reimbursement
of bargaining expenses is the type of “affirmative action” that
“effectuate[s] the policies” of the Act, 29 U.S.C. § 160(c), the
Board has repeatedly asserted as much, see, e.g., Unbelievable,
Inc., 318 N.L.R.B. 857, 859 (1995), enf’d in relevant part, 118
F.3d 795; Fallbrook Hosp. Corp., 360 N.L.R.B. No. 73, 2014
WL 1458265, at *2 (Apr. 14, 2014), enf’d, 785 F.3d 729, and
we have discussed the Board’s reasoning favorably. As we
explained in Fallbrook Hospital Corporation, “a
reimbursement remedy is appropriate ‘where it may fairly be
said that [an employer’s] substantial unfair labor practices have
infected the core of a bargaining process to such an extent that
their effects cannot be eliminated by the application of
traditional remedies.’ ” 785 F.3d at 732 (alteration in
original) (quoting Fallbrook Hosp. Corp., 360 N.L.R.B. No.
73, 2014 WL 1458265, at *2). “Such a remedy is warranted
both to make the charging party whole for the resources that
were wasted because of the unlawful conduct, and to restore
the economic strength that is necessary to ensure a return to the
status quo ante at the bargaining table.” Id. (internal quotation
marks omitted). Accordingly, we noted that “ ‘[i]n cases of
unusually aggravated misconduct,’ the Board may order an
                                14
offending party ‘to reimburse the charging party for
negotiation expenses.’ ” Id. at 734 (quoting Unbelievable,
Inc., 318 N.L.R.B. at 859). 4

     Confronted directly with the question for the first time, we
too find the Board’s reasoning persuasive. An award of
bargaining expenses remedies an unfair labor practice by
ensuring that, upon resolution of the unfair labor practice
charge, the injured party can return to negotiations on the same
footing it occupied before the violation of the Act occurred.
See Fallbrook, 785 F.3d at 732. A more traditional remedy,
such as a bargaining order, is of little value if one party can
drain another of its resources by bargaining in bad faith and
then extracting concessions as the money wanes. See
Unbelievable, Inc., 318 N.L.R.B. at 858 (“[A] bargaining order
alone will not ensure meaningful bargaining, because it cannot
restore the Union[] to [its] position[] prior to the futile
negotiations. In fact, limiting the remedy to the conventional
bargaining order would effectively permit the [employer] to
benefit from its violations of the Act by ensuring bargaining

    4
         In Fallbrook and Unbelievable, we were not confronted with
the question of the Board’s general authority to order reimbursement
of bargaining costs; rather, we considered only whether the Board
had misapplied its own precedent in deciding that the
bargaining-costs remedy was warranted on the factual records those
cases presented. See Fallbrook, 785 F.3d at 736–37 (employer
argued Board improperly determined it had engaged in “unusually
aggravated conduct”); Unbelievable, Inc., 118 F.3d at 799 (“The
[employer] does not question the Board’s authority to order a
respondent to reimburse the charging party for negotiation expenses
if the respondent’s misconduct has been unusually aggravated . . . .
The Company does argue, however, that there is not substantial
evidence in the record considered as a whole to support the Board’s
findings of fact.”). Here, in contrast, the Companies challenge the
Board’s authority to award bargaining costs generally.
                                15
with [a] Union[] that [has] been economically weakened by the
[employer’s] misconduct.”). By instead allowing the harmed
party to be returned to its financial position ex ante, the Board
“effectuate[s] the policies of the Act.” See id.; see also
Bowman Transp. Co., 424 U.S. at 769.

     The Companies do not dispute this rationale per se; in fact,
they acknowledge that “[a]n award of bargaining costs . . . can
be deemed ‘remedial’ in a broad sense.” Pet’rs’ Br. 27.
Rather, they hold fast to their contention that bargaining costs
and litigation costs are the same, and, if litigation costs cannot
be shifted under the American Rule, neither can bargaining
costs. The “harm” a bargaining-costs reimbursement order
“remedies,” they claim, is “not the sort of harm that is
generally cognizable in our legal system—the time and
expense necessary for a party to vindicate its substantive legal
rights.” Id.

     We reject this approach for several reasons. First,
although the Companies make broad appeals to “tradition,”
“our legal culture” and “our legal system,” see id. at 24, 27,
noticeably absent from their brief is any case suggesting the
American Rule extends beyond the context of litigation or
other quasi-judicial adversarial proceedings. That is to say,
although it is well-established that litigation costs are subject to
the longstanding, pay-your-own-way tradition the Companies
describe, see, e.g., Alyeska Pipeline Serv. Co. v. Wilderness
Soc’y, 421 U.S. 240, 247–63 (1975), the Companies have
offered no authority for the proposition that the same tradition
applies to costs incurred during private contractual
negotiations outside the litigation context. See Pet’rs’ Br. 24–
27.

    Second, even granting the Companies their premise, their
view of bargaining as a means of “vindicat[ing] substantive
                              16
legal rights,” id. at 24, misses the mark. The Act grants the
employer and the union alike the right to good-faith
bargaining, 29 U.S.C. § 158(d), and a violation of the
right—like any unfair labor practice—supports a remedy
making the wronged party whole, cf. Bill Johnson’s Rests., Inc.
v. NLRB, 461 U.S. 731, 747 (1983) (“[T]he Board may order
the employer to reimburse the employees whom he had
wrongfully sued for their attorneys’ fees and other expenses.”).
Thus, even assuming arguendo that “our legal culture”
prohibits a party from recovering the costs of “vindicat[ing]”
substantive rights as a general matter, see Pet’rs’ Br. at 24,
such a rule would not prohibit the Board from awarding
bargaining costs for bad-faith conduct during collective
bargaining.

     Third, and finally, the justifications for awarding
bargaining costs and for awarding litigation costs pursuant to
the bad-faith exception to the American Rule are not, contrary
to the Companies’ claim, “essentially the same,” see id. at 26;
indeed, there are critical differences. The U.S. Supreme Court
has explained that a litigation-cost award is, in the context of
the bad-faith exception, a punitive measure—it “vindicate[s] [a
court’s] authority over a recalcitrant litigant.” Chambers v.
NASCO, 501 U.S. 32, 53 (1991) (some alterations in original)
(internal quotation marks omitted). Moreover, “[t]hat the
award ha[s] a compensatory effect does not” deprive it of its
punitive purpose. See id. (some alterations in original)
(internal quotation marks omitted). In contrast, the Board’s
rationale for awarding bargaining costs is consistent with the
“thrust of affirmative action” effectuating the Act’s
purposes—“restor[ing] the economic status quo that would
have obtained but for the [Companies’] wrongful [acts].”
Bowman Transp. Co., 424 U.S. at 769 (internal quotation
marks omitted). And just as the incidental “compensatory
effect” of a litigation-costs award does not render that award
                               17
“remedial,” see Chambers, 501 U.S. at 53 (internal quotation
marks omitted), neither does the incidental deterrent effect of a
bargaining-costs award render it “punitive.” Indeed, awards
that our “legal culture,” see Pet’rs’ Br. 24, plainly treats as
remedial—such as compensatory damages in a tort suit—often
have (and are intended to have) a deterrent effect. See, e.g., 1
Dan B. Dobbs, Paul T. Hayden & Ellen M. Bublick, The Law
of Torts § 14 (2d ed. updated 2015) (West) (“Courts and
writers almost always recognize that another aim of tort law is
to deter certain kinds of conduct by imposing liability when
that conduct causes harm.”). The same is true of bargaining
expenses in the labor law context. Although an award of such
costs might make the Companies think twice before again
wasting the Union’s time, the primary justification for the
award is to make the Union whole and “to recreate the
conditions . . . that would have been had there been no unfair
labor practice.” Bowman Transp. Co., 424 U.S. at 769
(internal quotation marks omitted).

    Accordingly, we have little trouble concluding that
awarding bargaining costs in the appropriate case is within the
Board’s statutory remedial authority under section 10(c) of the
Act. Because the Companies do not challenge the Board’s
conclusion that they engaged in “unusually aggravated
misconduct” that “infected the core of a bargaining process,”
see Fallbrook, 785 F.3d at 732, 734 (internal quotation marks
omitted), we enforce the Board’s order requiring the
Companies to reimburse the Union for its bargaining costs.

     For the foregoing reasons, we grant the Companies’
petition for review with respect to the litigation-costs remedy
and enforce the remainder of the Board’s order.

                                                    So ordered.