Univ. of S. Cal. v. Nat'l Labor Relations Bd.
Opinion of the Court
*127Almost four decades ago, in N.L.R.B. v. Yeshiva University ,
I.
Designed by Congress to quell "industrial strife" and its harmful effects on the "channels of commerce," the National Labor Relations Act aimed to stabilize industry by vesting industrial workforces with new labor rights. See Pub. L. No. 74-198, § 1,
A.
Years after Congress passed the NLRA, the Supreme Court issued two opinions central to the question before us in this case. First, in *128N.L.R.B. v. Bell Aerospace Co. Division of Textron Inc. , the Court held that although the NLRA, by its terms, covers all employees (except for supervisors and other exemptions immaterial to this case, see
Second, in N.L.R.B. v. Yeshiva University , the Court clarified for the first time that the NLRA covers university employees and provided guidance about when university faculties constitute managerial employees exempt from the NLRA's coverage. See
The facts of Yeshiva are straightforward. A union seeking to represent most of the university's full-time faculty filed a representation petition, requesting that the Board certify it as the faculty's bargaining agent.
The Supreme Court disagreed. It pointed out that "professionals, like other employees, may be exempted from coverage ... under the judicially implied exclusion for 'managerial employees.' "
Instead, the Court looked to the principles underlying the managerial exception-namely, that managers fall outside the NLRA's protections because "an employer is entitled to the undivided loyalty of its representatives."
[The faculty's] authority in academic matters is absolute. They decide what courses will be offered, when they will be scheduled, and to whom they will be taught. They debate and determine teaching methods, grading policies, and matriculation standards. They effectively decide which students will be admitted, retained, and graduated. On occasion their views have determined the size of the student body, the tuition to be charged, and the location of a school. When one considers the function of a university, it is difficult to imagine decisions more managerial than these. To the extent the industrial analogy applies, the faculty determines within each school the product to be produced, the terms upon which it will be offered, and the customers who will be served.
With the Yeshiva faculty's "absolute" academic authority as a backdrop, the Court explained to the Board-in language important to the issue before us today-how to identify managerial faculty in future university cases. Faculty qualify as managerial when they exercise "effective recommendation or control" over central employer policies.
That said, the Court took care to avoid "sweep[ing] all professionals outside the [NLRA] in derogation of Congress' expressed intent to protect them."
B.
For several decades following Yeshiva , the Board, when determining a given faculty's managerial status, applied a totality-of-the-circumstances approach informed by the contours of that case. See, e.g. , American International College ,
The Board endeavored to satisfy LeMoyne-Owen in Pacific Lutheran University . Unlike Yeshiva , which involved full-time faculty, Pacific Lutheran concerned a faculty subgroup-specifically, full-time "contingent" (non-tenure eligible) faculty.
Under the Pacific Lutheran framework for determining whether faculty qualify as managerial, the Board "organize[s] [its] review of faculty decision-making into five general areas": academic programs, enrollment management policies, finances, academic policies, and personnel policies and decisions. Id . The Board classifies the first three as "primary" and the last two as "secondary." Id . at 1420. Although faculty participation in these areas takes various forms, under the Pacific Lutheran framework the Board trains its focus on participation through service on university committees, which specialize in a given field and then propose policies to the full faculty or to the university's administration. See
Again echoing Yeshiva , the Board then considers whether the faculty exercise "actual control or effective recommendation" authority over each of these five areas.
*131Relevant distinctions include "tenured vs. tenure eligible vs. nontenure eligible" and "regular vs. contingent" faculty members.
Beyond these context-specific inquiries, and central to this case, Pacific Lutheran sets a bright-line "majority status rule" under which a committee's actual control or effective recommendation authority over a particular decision-making area may be ascribed to faculty only if they constitute a majority of that committee: "[i]f faculty members do not exert majority control, we will not attribute the committee's conduct to the faculty."
Applying this framework to the situation at Pacific Lutheran, the Board determined that the contingent faculty were non-managerial. Although the university had recently allowed contingent faculty to sit on committees, no such faculty members had yet joined a committee and, in any event, it appeared that they would have had no "right to vote within their respective divisions, schools, or constituent departments."
In considering whether faculty held a majority of committee seats, the Board left uncertain whether the majority status rule applied to the contingent faculty only or to the faculty as a whole. Even if contingent faculty members sat on committees, the Board observed, "they would be a minority on the ... committee[s] as their membership is currently structured."
Two Board members-Phillip Miscimarra and Harry Johnson-separately dissented in part. They "generally agree[d]" with the Board's "admirable effort" to craft distinct, workable decision-making areas.
*132The dissenters focused primarily on Pacific Lutheran 's"treatment of authority, control, and effective recommendation" authority, which they considered "too onerous and inflexible."
C.
The University of Southern California, a large private university in Los Angeles, has twenty-two schools, some 6,600 faculty, and between 30,000 and 40,000 students. One of these schools, the Gayle Garner Roski School of Art and Design ("Roski")-the venue for the dispute before us-offers undergraduate and graduate degrees in fine arts and critical studies, among others. See University of Southern California ("USC "), 365 N.L.R.B. No. 11, at *7 (Dec. 30, 2016). In 2015, the Service Employees International Union, Local 721 ("Union") petitioned to represent Roski's full- and part-time non-tenure-track faculty. Id. at *5.
Reprising the battle lines drawn in Yeshiva , USC contended that the Roski non-tenure-track faculty were managerial, and the Union disagreed. In a decision adopted by the Board without opinion, the Regional Director, applying the Pacific Lutheran framework, found the Roski non-tenure-track faculty non-managerial. See id. at *1, *18.
The Regional Director began by addressing several issues left unresolved in Pacific Lutheran . She first confirmed what the Board had hinted in that case: to exercise effective control over a committee, the faculty subgroup seeking recognition-not just the faculty as a whole-must hold a majority of committee seats. "[E]ven if the faculty on [either committee] could be said to actually or effectively control decisionmaking ..., I would not attribute that control to the nontenure track faculty at issue here, as they do not constitute a majority of either committee." Id. at *16. Second, although Pacific Lutheran left ambiguous whether, for a committee to exercise effective control, the administration must "almost always" accept a committee's recommendations and those recommendations must "routinely become operative without independent review," Pacific Lutheran ,
Applying this interpretation of Pacific Lutheran , the Regional Director classified the Roski non-tenure-track faculty as non-managerial. For purposes of determining effective control, the Regional Director centered her discussion around a dozen or so university-wide committees and other USC faculty bodies, including the Roski school-level faculty council, that USC contends provide faculty with opportunities to weigh in on university governance. Id. at *15-18. The committees conduct studies, write reports, and make recommendations to either the Academic Senate or the provost. Id. at *8. The University Committee on Curriculum, for instance, approves, rejects, or modifies every proposed USC course, program, major, minor, and degree offering. Id. at *9, *15. Although the Committee on Finance and Enrollment has made only a few recommendations, those recommendations have involved significant issues, including the creation of a university-wide plan to address graduate student enrollment, whether to maintain a holistic review process for undergraduate student admissions, and the payout rate of USC's endowment. Id. at *10, *16-17. Other committees make recommendations on academic programs, teaching guidelines, software upgrades, grading policies, appointments, promotions, and tenure decisions. Id. at *8-13.
Most USC university-wide and school-specific committees are open to all faculty members, including nontenure track, though non-tenure-track faculty are excluded from decisions concerning tenure. Id. at *11. Committees are almost 100 percent faculty, although some faculty also have administrative appointments. Administrators occasionally sit "ex officio " on committees where they have no vote. See id. at *8-13.
Looking at all committees relevant to each of the five decision-making areas, the Regional Director determined that USC had failed to show that the faculty serving on these committees exercised effective control over any decisionmaking area. Id. at *18 ; see also Pacific Lutheran ,
In further support of her conclusion that the Roski nontenure-track faculty exercised no effective control, the Regional Director found that the nature of their "tenuous employment" relationship "limit[s]" their role at the university. Id. at *18. Though non-tenure-track faculty are eligible to join any committee and make up about three-fourths of the USC faculty, they represent a minority on almost every committee. Id. at *7-9. They receive little to no institutional support in the form of funding, evaluations, or other career guidance; "[i]n fact, [non-tenure-track faculty witnesses] testified that administrators in their departments or schools have never met with them to discuss expectations about their teaching, their scholarship or *134artistic work, or their service to the University." Id. at *8.
Following her discussion of most every committee (including all committees in the three primary areas), the Regional Director also found that, even if the relevant committees exercised effective control, "nontenure track faculty do not constitute a majority of [those] committee[s]." Id. at *17. Therefore, "they cannot be found to possess any managerial control." Id.
Upon finding both that no committee exercised effective control and that the Roski non-tenure-track faculty held a minority of seats on the key committees, the Regional Director concluded that USC had "failed to establish that the full-time and/or part-time nontenure track faculty at ... the Roski School actually or effectively exercise control over decision making pertaining to central policies of the university." Id. at *18. As noted, on a request for review, the Board adopted the Regional Director's opinion in full. Id. at *1 & n.1.
Member Miscimarra, one of the Pacific Lutheran dissenters, again disagreed. Asserting that the Board holds managers in other industries to a lower standard, Miscimarra faulted the Board for ascribing managerial status to only those faculty with "unreviewable authority." Id. at *2 (Miscimarra, Member, dissenting). He also believed that the Court in Yeshiva had rejected the idea that possessing a majority of committee seats was a prerequisite for exercising effective control over a committee. He put it this way:
[ Yeshiva ] held that a faculty member may possess managerial authority even though he or she cannot individually establish policy separate from the committees on which he or she serves. Similarly, faculty members in an individual department or program may be managerial, even if as a group they are a minority of the total faculty and are outnumbered and outvoted on every issue.
Id. at *3-4. In Miscimarra's view, extension of the majority status rule to determine the managerial status of a faculty subgroup conflicts with "the principle of collegial managerial authority that the Supreme Court recognized in Yeshiva ." Id. at *3.
Following the Regional Director's decision and the Board's adoption of it, the Roski non-tenure-track faculty voted to form a bargaining unit represented by the Union. When USC refused to bargain-an unfair labor practice under the NLRA, see
In its petition for review, USC makes three basic arguments. First, it argues that several elements of the Pacific Lutheran framework, as applied in this case, conflict with Yeshiva : its requirement that a faculty subgroup must hold a majority of committee seats in order to exercise effective control through a committee, its standard for "effective" control, and its classification of the five decision-making areas as primary or secondary. Whether the Pacific Lutheran framework comports with Yeshiva is an issue of first impression given that the university in Pacific Lutheran never petitioned for review and that no other circuit has yet considered the question. Second, USC argues that, contrary to LeMoyne-Owen , the Pacific Lutheran framework fails to provide a workable standard to determine the managerial status of faculty.
*135And third, even assuming the validity of the Pacific Lutheran framework, USC argues that the Regional Director lacked substantial evidence to classify the Roski non-tenure-track faculty as non-managerial.
In considering USC's challenges, we defer to the Board's judgment, born of its expertise, so long as its decision is "consistent with controlling precedent," based on "substantial evidence," and neither "arbitrary" nor "capricious." International Union of Operating Engineers, Local 147 v. N.L.R.B. ,
II.
We begin with USC's argument that the Pacific Lutheran framework-and consequently, the decision at issue here-is "[in]consistent with controlling precedent," i.e., that it conflicts with the Supreme Court's decision in Yeshiva . But as even its dissenters acknowledge, Pacific Lutheran represents an "admirable effort" by the Board to tame a thicket of case law that touches on numerous interrelated features of the faculty experience at universities. Pacific Lutheran ,
Under Pacific Lutheran , as interpreted by the Board in this case, a faculty subgroup seeking recognition exercises effective control over a decision-making area through its participation on a committee only when that subgroup constitutes a majority of the committee. See Pacific Lutheran ,
USC first claims that the subgroup majority status rule resurrects the theory, foreclosed by Yeshiva , that faculty can attain managerial status based only on authority wielded individually, as opposed to authority shared collectively with others. See Yeshiva ,
Assuming that understanding of the Board's subgroup majority status rule, USC next argues that the rule "simply disregard[s]" the contributions that minority subgroups can make to university governance. Petitioner's Br. 34. Under the *136majority status theory, USC continues, even when a university draws "no distinction" between faculty subgroups "in their roles in faculty governance," including situations where the subgroups "all participate in the effective management of the University," the Board will "arbitrarily say that one category must be in the majority[,] ... necessarily ... render[ing] the other category non-managerial-when in fact, all are managerial." Id. at 38 (emphases omitted). Because a subgroup's "ability to invoke the rights or protections of the [NLRA] should not hinge on whether some other group of faculty control or effectively recommend university policy," the Board's response goes, it would be inappropriate to deny a subgroup the NLRA's protections when an entirely different group of faculty, concerned about advancing its own priorities rather than the subgroup's, runs the show. Respondent's Br. 35 (emphasis in original).
In our view, the Board's subgroup majority status rule rests on a fundamental misunderstanding of Yeshiva . To explain why, we return to the Court's opinion and specifically to three key themes.
First, as noted above, the Court drew a sharp distinction between the "pyramidal" hierarchies characteristic of private industry and the faculty "bodies" at universities. Yeshiva ,
These repeated references to the "faculty" as a body are not linguistic accidents; they are central to the Court's reasoning. Take the Court's discussion of the bedrock principle underlying the managerial exception: that employers deserve the loyalty of employees who exercise discretionary authority over central employer policies.
Reinforcing this idea-and this is Yeshiva 's second theme-the Court repeatedly stressed the importance of collegiality. "[A]uthority in the typical 'mature' private university," the Court explained, is split between the administration and "one or more collegial bodies."
The Board's subgroup majority status rule is unfaithful to this critical aspect of Yeshiva . It ignores the possibility that faculty subgroups, despite holding different status within the university, may share common interests and therefore effectively participate together as a body on some or all of the issues relevant to managerial status. It is entirely plausible that, for example, non-tenure-track faculty, especially full-time nontenure-track faculty, would agree with tenure-track faculty on questions of course offerings, academic integrity, and grading policies. Yet the Board's subgroup majority status rule presupposes that non-tenure-track faculty have no authority over such matters unless they constitute a majority of the relevant committee. Of course, the interests of some minority faculty subgroups may differ from the majority on certain issues, such as with respect to promotion and salary. That, however, is precisely where the concept of collegiality comes into play. Disregarding this fundamental characteristic of university governance, the Board's subgroup majority status rule assumes that minority subgroups can never work out their differences with the majority.
Taken together, these two themes of Yeshiva -a focus on the faculty as a body and an emphasis on collegiality-demonstrate that the question the Board must ask is not whether a particular subgroup can force policies through based on crude headcounts, but rather whether that subgroup is structurally included within a collegial faculty body to which the university has delegated managerial authority. This reading finds support in Yeshiva 's third theme: the Court's guidance on how the Board should approach situations where the faculty members seeking recognition constitute a subgroup, such as in this case (non-tenure-track) and in Pacific Lutheran (contingent). Employees, the Court explained, may not be considered management and thus excluded from the NLRA's coverage if their "decisionmaking is limited to the routine discharge of professional duties in projects to which they have been assigned." Yeshiva ,
Two additional considerations support this understanding of Yeshiva .
First, the Court relied on a line of Board decisions from the private sector holding that it is possible for minority employee shareholders "who owned enough stock to give them, as a group, a substantial voice in the employer's affairs" to exercise effective control, even absent majority control. Yeshiva ,
Second, and quite apart from Yeshiva , we just cannot see how the subgroup majority status rule will work. As USC notes, "the make-up of a particular committee will necessarily change from year to year. If only the majority category is managerial, then from one year to the next, different categories of perfectly managerial faculty could be deemed non-managerial for no other reason than a one- or two-person swing on a committee roster." Petitioner's Br. 38. In his dissent, Member Miscimarra pointed out that, under the subgroup majority status rule, slicing and dicing the faculty in different ways-by tenure status, school, seniority, etc.-may allow "even faculty who indisputably exercise managerial authority" to qualify as non-managerial. USC , 365 N.L.R.B. at *4 & n.7 (Miscimarra, Member, dissenting). In its amicus brief, the American Council on Education likewise warns that "any group of faculty can be sub-divided until it no longer commands a majority." ACE Br. 27. The subgroup majority status rule contributes to this strategic division of faculties; Yeshiva 's structural approach avoids it.
That said, whether an individual subgroup possesses a majority of committee seats is not always irrelevant. Quite to the contrary, determining whether a subgroup holds a decisive bloc of committee seats may be necessary where a subgroup's interests fundamentally diverge from those of the majority. Although the Court in Yeshiva emphasized the value of faculty collegiality, there may well be issues on which the interests of the subgroup and the faculty as a whole differ so significantly that they cannot be reconciled even through collegial compromise. Under such circumstances, which the Board can identify only through a careful analysis of how the faculty seeking recognition actually functions, the Board might appropriately conclude that the subgroup cannot exercise effective control unless it constitutes a majority of the relevant committees. Likewise, if a subgroup that the university expects to participate in a committee nonetheless fails to do so, this may signal the presence of structural barriers to that group's participation. In this case, for example, the Board may well be correct that there is something about the status of non-tenure-track *139faculty, especially part-time non-tenure-track, that effectively silences any managerial "voice," Pacific Lutheran ,
To be sure, the Pacific Lutheran framework accounts for these factors (diverging interests and the nature of non-tenure-track employment). See
Of course, the Board has flexibility over how to organize its analysis in any given case. In some situations, it might make sense to address these two inquiries sequentially: is there a managerial faculty body and, if so, is the petitioning subgroup a part of it? But in other situations, it may be unnecessary for the Board to consider whether a managerial faculty body exists because, even assuming one did, the petitioning subgroup is so clearly not included in it-because, for example, university rules prohibit its participation in committees. The critical point is this: however the Board proceeds, it must treat these two inquiries separately and may not conflate them by asking whether the petitioning subgroup alone exercises effective control.
A final observation: in Pacific Lutheran , the Board emphasized that since the Court decided Yeshiva some four decades ago, universities "are increasingly run by administrators" and rely more and more on non-tenure-track faculty "who, unlike traditional faculty, have been appointed with no prospect of tenure and often no guarantee of employment." Pacific Lutheran ,
Having thus concluded that the Board's subgroup majority status rule runs afoul of Yeshiva , we turn to USC's challenge to Pacific Lutheran 's standard for "effective" control.
III.
Recall that Pacific Lutheran announced the following standard for determining when faculty exercise effective control over decision making: "[T]o be 'effective,' recommendations must almost always be followed by the administration. Further, faculty recommendations are 'effective' if they routinely become operative without independent review by the administration."
In Yeshiva , the Court held that, in order to qualify as managerial, faculty must exercise "effective recommendation or control" over central university policies. Yeshiva ,
We see nothing in the Board's two-part standard for "effective" control that runs afoul of Yeshiva . Although USC argues otherwise, the Board's standard does not require "ultimate authority." Quite to the contrary, its use of the phrase "almost always" allows for occasional, or as the Court put it, "rarely exercised," vetoes. The word "routine" likewise leaves room for some administrative review. True, the standard is demanding, but it comports with Yeshiva , and we agree with the Board that setting a high bar for effective control is necessary to avoid interpreting the managerial exception so broadly that it chips away at the NLRA's protections. See Pacific Lutheran ,
USC complains about a stray sentence in the Regional Director's opinion: "I am not convinced by the conclusory evidence in the record that the Board of Trustees, for example, would sign off without second thought on a tuition amount or endowment payout based solely on the recommendation of a newly-formed faculty committee that had never before considered such issues." USC , 365 N.L.R.B. at *17 (emphasis added). According to USC, requiring that the administration accept committee recommendations "without second thought" sets an even higher bar for effective control than the one we understand the Board to have established. Petitioner's Br. 22. Were this characterization of the Regional Director's decision accurate, we would share USC's concerns. The Regional Director, however, never suggested that her "without second thought" statement amounted to a new requirement for establishing effective control. Instead, she made the statement in response to USC's contention that the administration had in fact accepted the newly formed Committee on Finance and Enrollment's recommendations on important financial matters "without second thought."
IV.
We can quickly dispose of USC's remaining arguments.
First, regarding Pacific Lutheran 's classification of the five decision-making areas as primary and secondary, USC acknowledges that Yeshiva affords the Board leeway to design these categories, but nonetheless argues that the Pacific Lutheran framework inappropriately relegates academic and personnel policies to secondary status while elevating finances to primary status. Justifying the classification, the Board explained that the primary areas, more so than the secondary ones, touch the university as a whole, align faculty with management, and affect the "product" the university offers-all considerations taken from the Court's discussion in Yeshiva . Pacific Lutheran ,
USC next argues that, by leaving open exactly how many of the five decision-making areas over which faculty must exercise control in order to qualify as managerial, Pacific Lutheran fails to satisfy this court's instruction in LeMoyne-Owen that it identify "which factors are significant and which less so, and why."
Finally, USC argues that, even if the Pacific Lutheran framework complies with Yeshiva , the Board's classification of the Roski non-tenure-track faculty as non-managerial was unsupported by substantial evidence. Relatedly, USC argues that the Regional Director erred in denying its motion to reopen the record concerning allegedly contradictory testimony from a Union witness. But given our conclusion that the Board's subgroup majority status rule runs afoul of Yeshiva , and because we are uncertain whether the Board would have reached the same conclusion absent that rule, we think it best to leave these arguments unaddressed and to instead give the Board an opportunity to reconsider the case afresh under the proper legal standard. See Braniff Airways, Inc. v. Civil Aeronautics Board ,
V.
For the foregoing reasons, the petition for review is granted in part, the Board's cross-application for enforcement is denied, and the case is remanded to the Board for further proceedings consistent with this opinion. We, of course, express no opinion as to whether the application of the differing standard on remand would lead to the same or a different result.
So ordered.
Reference
- Full Case Name
- UNIVERSITY OF SOUTHERN CALIFORNIA v. NATIONAL LABOR RELATIONS BOARD, Service Employees International Union, Local 721, CTW, CLC, Intervenor
- Cited By
- 3 cases
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- Published