04.10.18

By: Ian Kullgren and Andrew Hanna
Source: Politico

War at the NLRB

An obscure federal agency is coming apart at the seams as political appointees, career bureaucrats and its inspector general engage in something close to civil war.

The agency is the National Labor Relations Board, created in 1935 to promote collective bargaining and adjudicate disputes between businesses and workers. An independent agency insulated — in theory — from partisan politics, the NLRB under President Donald Trump is consumed to the point of paralysis by fights over personnel policies, ethics rules and legal decisions that stem from ancient political disagreements over the proper balance of power between employers and workers.

“This is like when Yugoslavia broke up,” said one employment lobbyist who spoke on the condition of anonymity. “You’re fighting over things that happened 10,000 years ago — you killed my ancestor so I’m going to kill you.”

At the center of the controversy, which has pitted conservatives against liberals and, on occasion, conservatives against other conservatives, are Peter Robb, the NLRB’s bare-knuckled general counsel, and board member William Emanuel, a controversial Trump appointee with deep ties to business.

Robb outraged the NLRB’s career staff in January by proposing a restructuringthat would demote regional directors, whom the business lobby considers too pro-union. That prompted revolt from the NLRB’s employee unions. “Peter Robb is considering measures to ‘streamline’ the NLRB that will only make it harder to remedy federal labor law violations,” read a flyer that three New York union locals distributed at an event Robb attended in February.

Nearly 400 NLRB employees followed up March 15 in a letter sent to members of Congress that said Robb’s changes “strike us as unlikely to generate cost savings for the agency. What they do seem likely to achieve is the frustration of our efforts to provide members of the public with high quality, thorough investigation.”

The second and more rococo NLRB controversy concerns Emanuel's decision not to recuse himself in December from Hy-Brand Industrial Contractors, a pro-business ruling in which the NLRB’s inspector general later concluded Emanuel had a conflict of interest. After the inspector general issued his report, the NLRB vacated the ruling.

The two story lines crossed Friday when Robb issued a legal opinion that said he “does not agree with the conclusions reached in the IG report,” and accused three NLRB members of breaking the law. Robb faulted the members — including the Republican chairman — for vacating Hy-Brand without consulting Emanuel, and urged the board to reinstate Hy-Brand. It’s highly unusual for an NLRB general counsel to criticize the board’s judgment so harshly.

Meanwhile, the NLRB’s inspector general, David Berry, is investigating a secondNLRB member, Mark Pearce, who is one of the board’s two Democrats. (By law, two of the NLRB’s five board members are chosen by whichever party does not occupy the White House.) Berry is following on a complaint filed by the Competitive Enterprise Institute, a conservative nonprofit, based on a Wall Street Journal editorial that accused Pearce of alerting in advance attendees at an American Bar Association meeting in Puerto Rico that Hy-Brand would be vacated. Pearce did not answer a request for comment.

Berry, in turn, stands accused by the National Right To Work Legal Defense Foundation, the legal arm of the anti-union National Right To Work Committee, of disclosing confidential board deliberations improperly in his report on Emanuel, and in a follow-up report issued one month later. The right-to-work group asked an umbrella group, the Council of the Inspectors General on Integrity and Efficiency, to investigate. Berry did not answer a request for comment.

“It’s sort of like 'Game of Thrones,'” said Roger King, a friend of Emanuel’s and senior labor and employment counsel for the Association of Chief Human Resource Officers.

Or maybe three-dimensional chess. The National Right To Work Committee is a natural ally to Emanuel, but, remarkably, it’s come to regard Emanuel as a problem that must not be replicated in future NLRB nominations, lest pro-labor Democrats gain an upper hand through additional recusals.

In its March newsletter, the group revealed that the Trump administration ignored its advice “not to choose … another management attorney who would have to recuse himself or herself potentially from vast numbers of cases involving clients of the attorney’s former employer.” That advice, the newsletter complained, “went unheeded” when Trump nominated John Ring, a partner at the management-side law firm Morgan, Lewis and Bockius, “whose client list is even longer than Littler Mendelson’s.” The Senate is scheduled to vote Wednesday on Ring's nomination.

“If John Ring’s nomination is soon confirmed, as expected,” National Right To Work Committee vice president Matthew Leen said in the newsletter, “then for the next year and a half two of the three NLRB members who aren’t profoundly biased in favor of forced unionism may have to recuse themselves from multiple cases.”

In effect, Leen was saying that the Trump administration was so blatantly anti-labor that it would be unable to fulfill its anti-labor objectives.

It’s hardly new for politicians to wrangle over the NLRB. In 2012, the board made headlines when President Barack Obama tested the limits of his executive power by bypassing Congress and granting three recess appointments to the NLRB even though the Senate was technically in session. Obama ended up losing in the Supreme Court.

This time, though, partisan warfare has penetrated the agency itself.

General counsel Robb sent senior agency staffers reeling after he announced in a Jan. 11 conference call that he wanted to consolidate the agency’s 26 field offices into larger “districts” overseen by officials hand-picked by him. Under Robb’s plan, regional directors would lose their classification as members of the Senior Executive Service — the civil service’s highest rank — and be replaced by a new layer of officials who'd be answerable to Robb.

The title “general counsel” makes Robb sound like a lawyer for NLRB management, but in fact it’s arguably the agency’s most powerful position. The NLRB general counsel is the agency’s gatekeeper, a sort of prosecutor who brings cases before the board. The vast majority of NLRB cases are processed at the NLRB’s 26 field offices and never reach the board. The field offices are staffed by career officials who don’t typically agree with the pro-management outlook of Robb, to whom they report.

In a letter to Robb shortly after the January conference call, the regional directors called his proposed changes “very major” and complained that they hadn’t “heard an explanation of the benefits to be gained.” They also warned that enacting such changes might prompt senior directors and managers to retire en masse — a clear shot across the bow.

In reply, another official from the general counsel’s office proposed by emailadditional restrictions on the decision-making power of regional officials, such as requiring all cases go through headquarters for initial review.

Robb declined to comment for this story and, according to a source familiar with his thinking, is upset that the controversy spilled into public view.

Marshall Babson, a former Democrat appointee to the NLRB, said that Robb’s proposed changes risk making the NLRB less efficient. “If you’re talking about injecting another level of review, that could slow things down,” he said.

Jennifer Abruzzo, who was acting general counsel before Robb, agreed. “I think that’s a mistake,” she said. “I think the regional directors know what they’re doing.”

Shifting rationales for the changes have intensified the career staff’s suspicions about Robb’s motives. At the March ABA meeting in Puerto Rico, Robb’s deputy John Kyle said they were intended to bring the agency in line with the White House’s proposed 9 percent budget cut for the agency. But the $1.3 trillion spending bill signed into law last month by President Donald Trump, H.R. 1625 (115), rejected that cut and maintained funding at current levels.

“It certainly undercuts the general counsel’s rationale for restructuring,” said Karen Cook, president of the NLRB Professional Association. “He will try to move forward with his plan, though, on the basis that he expects a severe cut to the 2019 budget.“

Fevered though the Robb Revolt is, it hasn’t yet engulfed members of the board itself. The same can’t be said about the controversy surrounding Emanuel and his participation in the December Hy-Brand decision.

Hy-Brand narrowed the circumstances under which a business could be classified a so-called joint employer, jointly liable for labor violations committed by its contractors or franchisees. It reversed an earlier ruling in Browning-Ferris Industries, a 2016 decision by the Obama NLRB that broadened the circumstances under which a business could be classified a joint employer. Fast-food chains like McDonald’s were outraged because the decision put them on the hook for maltreatment of employees over whom they didn’t necessarily maintain direct control.

Hy-Brand was rushed out along with several other pro-management decisions shortly before a Republican NLRB member’s term was about to end in December, leaving the board deadlocked, 2-2. The overturning of Browning-Ferris took many by surprise, because Hy-Brand wasn’t a case that had much to do with the joint-employer issue.

“It was a rush to judgment,” said Wilma Liebman, a Democratic board member under Presidents Bill Clinton, George W. Bush and Obama.

One week after the Hy-Brand ruling, congressional Democrats accused the NLRB of loading the dice by allowing Emanuel to participate. Emanuel’s former law firm, Littler Mendelson, had represented a party in Browning-Ferris, noted a Dec. 21 letter to Emanuel from Senate HELP Committee ranking member Patty Murray(D-Wash.), House Education and the Workforce Committee ranking member Bobby Scott (D-Va.) and others. In the letter, the six Democrats posed several questions to Emanuel about his participation in Hy-Brand.

In his response, first reported by ProPublica, Emanuel said he wasn’t aware at the time of the ruling that his firm had been involved in Browning-Ferris, noting Littler’s very long client list. Unfortunately for Emanuel, he’d already noted his firm’s participation in Browning-Ferris on a questionnaire submitted during his confirmation hearing. Emanuel scrambled to revise his response, but the damage was done, and inspector general Berry opened an investigation. The first report, issued Feb. 9, was scathing, finding “a serious and flagrant problem and/or deficiency in the board's administration of its deliberative process.” Emanuel, Berry concluded, should have recused himself from the decision to overturn the Obama-era standard.

The NLRB’s other three board members, including Trump-nominated chairman Marvin Kaplan, were persuaded by Berry’s reasoning and vacated Hy-Brand, waiting to act until after Emanuel departed for the ABA conference in Puerto Rico. Emanuel was stunned when a fellow attendee pulled up the ruling on a cellphone, according to a source who was present at the conference.

“You should have seen the look on his face,” this person said. “He had no knowledge of it in advance. He was totally floored.”

Emanuel, who declined to comment for this story, hired Zuckerman Spaeder, a prominent white-collar law firm that previously represented former International Monetary Fund Managing Director Dominique Strauss-Kahn.

Emanuel’s defenders insist he did nothing wrong because his firm wasn’t directly involved in Hy-Brand. Zuckerman Spaeder Chairman Dwight Bostwick argued in a letter to Berry that he'd evaluated Emanuel under an unusually strict standard that “has the potential to bedevil and frustrate this agency for years to come” and “‘weaponize’ the ethics rules for purposes of improperly excluding presidential appointees from doing the jobs they were sworn to do.”

Bostwick also wrote that one month after the Hy-Brand decision, the NLRB’s designated ethics official told Emanuel that she didn’t believe Emanuel should have been required to recuse himself in that case. According to the letter, Emanuel asked for that opinion in writing, but the request was denied at the OIG’s request.

Emanuel’s allies have cried foul, noting that former Democratic NLRB member Craig Becker participated in cases involving local chapters of the Service Employees International Union despite having previously been counsel to SEIU. In that instance, Berry raised no red flags. Becker declined to comment on the record.

The conflict-of-interest charge is “based on a house of cards and not a very strong one at that,” said King, the attorney with the HR Policy Association. “We see a long-term game plan to destabilize and undermine the NLRB.”

In his second inspector general report on Emanuel, issued March 20, Berry concluded that Emanuel violated the Trump administration’s ethics pledge, which states: “I will not for a period for two years from the date of my appointment participate in any particular matter involving specific parties that is directly and substantially related to my former employer or former clients.” But in his letter to Berry, Bostwick said he “respectfully disagree[d] … with the determination the member Emanuel violated his presidential ethics pledge.”

Berry acquitted Emanuel of the most serious charge: lying to Congress about whether he was aware of a possible conflict of interest. But that did little to cool Congress' fury. After Berry issued the report, Sen. Elizabeth Warren (D-Mass.) and Rep. Keith Ellison (D-Minn.) called on Emanuel to resign, saying he “no longer has the credibility” to serve.