1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 NATIONAL LABOR RELATIONS Case No. 24-cv-07978-HSG BOARD REGION #32, 8 ORDER GRANTING IN PART AND Plaintiff, DENYING IN PART PETITION FOR 9 TEMPORARY INJUNCTION UNDER v. SECTION 10(j) 10 AMERICAN AUTOMOBILE Re: Dkt. No. 1 11 ASSOCIATION OF NORTHERN CALIFORNIA, NEVADA & UTAH, 12 Defendant. 13 14 Before the Court is a petition brought by Christy J. Kwon, Regional Director of Region 32 15 of the National Labor Relations Board, for and on behalf of the National Labor Relations Board 16 (“Petitioner”), against American Automobile Association of Northern California, Nevada, & Utah 17 (“Respondent”) under Section 10(j) of the National Labor Relations Act (“NLRA”), as amended, 18 29 U.S.C. § 160(j). Dkt. No. 1. The Court GRANTS IN PART and DENIES IN PART the 19 petition. 20 I. BACKGROUND 21 This petition seeks temporary injunctive relief pending the final disposition of two 22 administrative matters currently before the National Labor Relations Board (“the Board”) alleging 23 that Respondent is engaging in unfair labor practices. Dkt. No. 1 (“Pet.”) at 1. 24 In June 2021, Respondent’s insurance sales agents in Northern California organized a 25 union and selected Teamsters Local 665 (“the Union”) as their collective-bargaining 26 representative. Dkt. No. 16 (“Mot.”) at 9. The Union filed several unfair labor practice charges 27 against Respondent beginning in June 2021. Pet. at 5–6. Petitioner then brought an initial 1 sections of the NLRA. The relevant allegations include: 2 • Investigating and terminating employee Priscilla Gaines-Holladay, a strong supporter 3 of the Union, in retaliation for her union activism; 4 • Eliminating bargaining unit positions in retaliation for employees organizing a union; 5 • Diverting work away from the bargaining unit in retaliation for organizing; and 6 • Changing policies for unit employees regarding time and attendance, work from home, 7 and paid time off in retaliation for organizing and without giving the Union notice and 8 opportunity to bargain. 9 Pet. at 12–13. AAA I was tried before an Administrative Law Judge (ALJ) between May 2023 10 and October 2024, and post-trial briefing is due on March 25, 2025. Id. at 7. 11 Petitioner filed a second complaint against Respondent (“AAA II”) in August 2023 based 12 on additional unfair labor practice charges. Pet. at 9. AAA II alleges that Respondent engaged in 13 unfair labor practices by: 14 • Unilaterally changing employee’s working conditions without reaching an overall 15 good-faith impasse in bargaining for a first contract; 16 • Implementing its last, best, and final contract offer without first reaching a good-faith 17 impasse; 18 • Bargaining in bad faith; and 19 • Threatening employees and disparaging the union in response to organizing. 20 Id. at 12–13. Trial in AAA II began in January 2025. See id. at 11. 21 In November 2024, Petitioner sought a temporary injunction in this Court under Section 22 10(j). Pet. at 1. The petition seeks various forms of injunctive relief on the basis that Petitioner is 23 likely to succeed in establishing that Respondent committed the violations alleged in AAA I and 24 AAA II. Id. at 11. 25 Respondent opposes the petition. Dkt. No. 36 (“Opp.”) at 36. The Court held a hearing on 26 the petition on January 9, 2025, and ordered the parties to identify in the record Respondent’s and 27 the Union’s communications related to the declaration of impasse. Dkt. No. 48. The parties 1 Dkt. No. 50. 2 II. LEGAL STANDARD 3 Section 10(j) allows the Board to petition the district court for temporary relief or 4 restraining order after issuing an unfair labor complaint. 29 U.S.C. § 160(j). The court may grant 5 such relief “as it deems just and proper.” Id. “In granting an injunction under § 10(j), district 6 courts should consider traditional equitable criteria.” Hooks ex rel. N.L.R.B. v. Nexstar 7 Broadcasting, Inc., 54 F.4th 1101, 1107 (9th Cir. 2022) (citation and internal quotation marks 8 omitted). “This consideration is viewed through the prism of the underlying purpose of § 10(j), 9 which is to protect the integrity of the collective bargaining process and to preserve the Board’s 10 remedial power while it processes the charge.” Id. The traditional equitable factors the district 11 court considers are “(1) the likelihood of the moving party’s success on the merits; (2) the 12 likelihood that the moving party will suffer irreparable injury if injunctive relief is not granted; (3) 13 the extent to which the balance of equities favors the respective parties; and (4) [whether] an 14 injunction is in the public interest.” Id. (citing Winter v. Nat. Res. Def. Council, 555 U.S. 7, 20 15 (2008)); see also Starbucks Corp. v. McKinney, 602 U.S. 339, 351 (2024) (holding that “district 16 courts must apply the traditional four factors articulated in Winter when considering the Board’s 17 requests for a preliminary injunction under § 10(j)”). Alternatively, “serious questions going to 18 the merits and a balance of hardships that tips sharply towards [Petitioner] can support issuance of 19 a preliminary injunction, so long as [Petitioner] also shows that there is a likelihood of irreparable 20 harm and that the injunction is in the public interest.” Frankl v. HTH Corp. (Frankl), 650 F.3d 21 1334, 1356 (9th Cir. 2011) (citing Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1135 22 (9th Cir. 2011)).1 23 1 Some post-Winter Ninth Circuit decisions appear to have defined likelihood of success on the 24 merits in a way that could suggest that a district court should defer to the Board’s factual or legal 25 determinations. See Frankl ex rel. N.L.R.B. v. HTH Corp., 693 F.3d 1051, 1062 (9th Cir. 2012) (“In cases like this, moreover, we owe the Regional Director special deference because the Board 26 took the rare step of endorsing the Director’s Section 10(j) petition.”); Frankl, 650 F.3d 1356 (holding that petitioner “can make a threshold showing of likelihood of success by producing 27 some evidence to support the unfair labor practice charge, together with an arguable legal 1 III. DISCUSSION 2 The Court next addresses the sufficiency of the Board’s petition as to each set of 3 allegations asserted in AAA I and AAA II. 4 A. AAA I 5 AAA I alleges that Respondent violated the NLRA by taking various actions in 2021 and 6 2022 to retaliate against employees for organizing a union. Pet. at 12–13. The complaint asserts 7 that Respondent investigated and terminated employee Priscilla Gaines-Holladay in July 2021 in 8 retaliation for her union leadership. Mot. at 12–15. In addition, Respondent allegedly stopped 9 hiring unit insurance agents in February 2021 to retaliate against the Union. Id. at 17. Respondent 10 also purportedly began diverting work opportunities from unit agents during the July, August, and 11 September of 2021, and making unilateral changes to agents’ working conditions during that time 12 and in April 2022, such as eliminating work from home and flexible work hours and changing 13 paid-time off policies. Id. at 18, 20. Based on these allegations, Petitioner asks the Court to 14 enjoin Respondent from investigating employees or retaliating against them for union activities; 15 enforcing any policies unilaterally implemented “since the time the Union won election” in June 16 2021; and diverting work away from unit employees. Pet. at 21, 23. Petitioner also asks the Court 17 to affirmatively order Respondent to reinstate Gaines-Holladay and to restore all bargaining unit 18 work “as it existed prior to January 1, 2021.” Id. at 22–23. 19 i. Irreparable Harm 20 The Court may not order preliminary relief unless Petitioner can show that irreparable 21
22 things, the Board did not have to “convince the court of the validity of its theory of liability, as long as the theory is substantial and not frivolous,” because that standard “lower[ed] the bar for 23 securing a preliminary injunction by requiring courts to yield to the Board’s preliminary view of the facts, law, and equities”); see also Hooks, 54 F.4th at 1114 (reiterating that “[t]he propriety of 24 injunctive relief must be evaluated on a case-by-case basis in accord with traditional equitable 25 principles and without the aid of presumptions or a ‘thumb on the scale” in favor of issuing such relief”) (cleaned up). Starbucks held that “deference to what is nothing more than an agency’s 26 convenient litigating position is entirely inappropriate.” 602 U.S. at 351 (citation and internal quotation marks omitted). In applying Winter, the Court endeavors to follow the Supreme Court’s 27 recent direction, while noting that any arguable tension stemming from older Ninth Circuit cases 1 harm is likely to occur in the absence of such relief. The Court finds that Petitioner has not met 2 this threshold as to the violations alleged in AAA I. 3 Petitioner argues that the unfair labor practices alleged in AAA I have caused irreparable 4 harm by eroding support for the Union among employees, and such harm is ongoing because 5 support for the union is “likely to continue diminishing as bargaining unit employees see that 6 Respondent can act with impunity . . . thus rendering the Union ineffective against Respondent’s 7 unlawful conduct in the eyes of employees.” Pet. at 18. Similarly, Petitioner argues that the 8 termination of union activist Gaines-Holladay has had a chilling effect on other employees’ 9 exercise of their collective bargaining rights, which “will intensify as time lapses.” Id. at 19. 10 According to Petitioner, “[w]ith the passage of time, this lost support for the Union cannot be 11 restored by a final Board order,” and therefore can only be averted by injunctive relief. Dkt. No. 12 44 (“Reply”) at 18. 13 Respondent counters that the alleged violations are based on events that happened more 14 than three years ago, such that any alleged resulting harm “has already occurred and an injunction 15 would, therefore, be an ‘empty formality.’” Opp. at 26 (citing Hardy-Mahoney for & on behalf of 16 Nat’l Lab. Rels. Bd. v. Prime Healthcare Servs., No. 317CV00216MMDVPC, 2017 WL 2192970, 17 at *5 (D. Nev. May 18, 2017)). 18 In the 10(j) context, the purpose of an interim injunctive order is to prevent an unfair labor 19 practice from “reach[ing] fruition” while Board proceedings are pending. Frankl, 650 F.3d at 20 1362 (citation and internal quotation marks omitted). Accordingly, “irreparable injury is 21 established if a likely unfair labor practice is shown along with a present or impending deleterious 22 effect of the likely unfair labor practice that would likely not be cured by later relief.” Id. Courts 23 have recognized that the continuation of an employer’s failure to bargain in good faith causes 24 irreparable harm by diminishing the benefits of unionization, such that a court order may be 25 necessary to prevent union support from weakening over time to the point where an ultimate 26 Board decision may not be effective. See id. at 1363. 27 But here, so much time has passed since the conduct at issue in AAA I is alleged to have 1 order in AAA I. On reply, Petitioner maintains that “the mere passage of time does not prevent 2 issuance of injunctive relief,” citing cases in which courts granted 10(j) injunctions that the Board 3 sought more than a year after bringing its initial complaint. Reply at 18. While the Court agrees 4 that “delay by itself is not a determinative factor in whether the grant of interim relief is just and 5 proper,” delay is significant “if the harm has occurred and the parties cannot be returned to the 6 status quo or if the Board’s final order is likely to be as effective as an order for interim relief.” 7 McDermott v. Ampersand Pub., LLC, 593 F.3d 950, 965 (9th Cir. 2010) (citation and internal 8 quotation marks omitted). And under the circumstances here, the 28-month delay between the 9 AAA I complaint and the related 10(j) petition is significant because Petitioner has failed to show 10 that an injunction would be more effective to remedy the harm allegedly caused by the AAA I 11 violations than an order by the ALJ or the Board. 12 For one, Ms. Gaines-Holladay was terminated almost three and a half years ago in July 13 2021, and nothing in the record suggest that she has not obtained other employment since her 14 termination. See Mot. at 14. And beyond that, as Respondent points out, the argument that the 15 termination of this single employee threatens to continue to chill union activity is undercut by the 16 fact that the parties bargained for almost two years after her termination. See Opp. at 27, fn. 2. 17 Similarly, given that the other allegations at issue in AAA I occurred well over two years ago, see 18 Mot. at 20 (latest AAA I allegation occurred in April 2022), the evidence Petitioner cites to 19 demonstrate the threat of further diminishing support for the Union is also dated. Petitioner relies 20 on a decertification petition circulated among employees in July 2023 and affidavits taken in July 21 and August 2023 stating that former members of the bargaining committee no longer support the 22 Union. Id. at 30. This evidence does not show that the claimed harm of diminished union support 23 stemming from the alleged AAA I unfair labor practices is likely to “substantially increase[e]” 24 absent a court order. Hardy-Mahoney v. Everport Terminal Servs., Inc., No. 17-CV-00804-RS, 25 2017 WL 1092325, at *4 (N.D. Cal. Mar. 23, 2017). In sum, “[t]he record here does not clarify 26 how interim relief now would be more effective than it would be after the ALJ reaches a decision 27 and recommends relief, or after the Board renders a final adjudication.” Cowen v. Mason-Dixon 1 Moreover, many courts that have issued 10(j) injunctions despite significant delay between 2 the alleged violations and the filing of the petition have “had the benefit . . . of an ALJ’s legal 3 analysis and conclusions” upholding the Board’s allegations. See Frankl, 650 F.3d at 1363; see 4 also Muffley ex rel. N.L.R.B. v. Spartan Mining Co., 570 F.3d 534, 545 (4th Cir. 2009) (delay 5 outweighed by strong showing of likelihood on the merits given that ALJ had already determined 6 violations were committed); Overstreet v. El Paso Disposal, L.P., 625 F.3d 844, 856 (5th Cir. 7 2010) (“Because the ALJ’s fact finding here aided the district court’s adjudication of Overstreet’s 8 petition, delay alone is not dispositive.”). By contrast, in this case, the ALJ’s decision in AAA I is 9 forthcoming after the parties submit their post-trial briefs in about two months (on a schedule 10 Petitioner presumably agreed to). Pet. at 7. 11 Accordingly, the Court finds that, because “a preliminary injunction would not actually 12 make a practical difference here,” the relief sought as to the AAA I allegations is more 13 appropriately granted in the administrative proceedings if justified by a fully-developed record, 14 rather than by this Court on a hastily-assembled one. See McDermott, 593 F.3d at 965; see also 15 Cowen, 2021 WL 3852184, at *6 (in the context of a significant delay, “the forthcoming 16 conclusion of the administrative proceedings before the ALJ signals that interim relief is 17 unwarranted”). Because Petitioner has failed to show that the unfair labor practices alleged in 18 AAA I are likely to cause irreparable harm in the absence of preliminary relief, the portion of the 19 petition seeking relief on the basis of AAA I is DENIED. 20 B. AAA II 21 The violations alleged in AAA II are more recent. The complaint’s core allegation is that 22 Respondent unlawfully declared a bargaining impasse in June 2023, and on that basis was not 23 permitted to implement its Last, Best, and Final Offer (“LBFO”) in August 2023. The LBFO 24 enacted certain policy changes, most notably the policy that agents’ commissions earned on 25 renewed insurance policies (“renewals”) would be eliminated starting February 1, 2025. Pet. at 26 12–13, 17. The portion of the petition relevant to AAA II seeks to enjoin Respondent from 27 implementing the LBFO policies and to require Respondent to re-engage in good faith bargaining 1 faith impasse is reached. Id. at 22, 23. 2 ii. Likelihood of Success on the Merits 3 To establish a likelihood of success on the merits, Petitioner must show a “probability that 4 the Board will issue an order determining that the unfair labor practices alleged by the Regional 5 Director occurred and that [the Court of Appeals] would grant a petition enforcing that order, if 6 such enforcement were sought.” Frankl, 693 F.3d at 1062. 7 Petitioner advances two arguments that it is likely to succeed on the merits of its claim that 8 Respondent unlawfully declared impasse. First, Petitioner argues that the Board is likely to find 9 that Respondent bargained in bad faith, making the impasse it declared unlawful because “impasse 10 can never exist in the presence of bad faith bargaining.” Mot. at 25. Second, Petitioner argues 11 that “impasse cannot be reached in the presence of a serious unremedied unfair labor practices that 12 affect the negotiations.” Id. 13 “When parties are engaged in negotiations for a new CBA, in general, ‘an employer’s 14 obligation to refrain from unilateral changes extends beyond the mere duty to give notice and an 15 opportunity to bargain; it encompasses a duty to refrain from implementation at all, unless and 16 until an overall impasse has been reached on bargaining for the agreement as a whole.’” Hooks v. 17 Hood River Distillers, Inc., No. 3:21-CV-268-SI, 2021 WL 2142609, at *8 (D. Or. May 26, 2021) 18 (quoting Bottom Line Enters., 302 NLRB 358, 374 (1991), enf’d, 15 F.3d 1087 (9th Cir. 1994)). 19 To determine whether an impasse is lawful, the Board considers “[t]he bargaining history, the 20 good faith of the parties in negotiations, the length of the negotiations, the importance of the issue 21 or issues as to which there is disagreement, [and] the contemporaneous understanding of the 22 parties as to the state of negotiations.” Taft Broad. Co., 163 NLRB 475, 478 (1967), enf’d 395 23 F.2d 622 (D.C. Cir. 1968). 24 First, the Court rejects Petitioner’s contention that the mere existence of unfair labor 25 practices (ULP) charges against Respondent precludes a finding of good faith impasse. At oral 26 argument and in her papers, Petitioner cited Richfield Hosp., Inc., 369 NLRB No. 111 (June 26, 27 2020), for this proposition. See Mot. at 25; Reply at 15. But importantly, in Richfield, the Board 1 bargaining because the employer had failed to cure them after the violations had been sustained by 2 an ALJ and reaffirmed by the Board. See Richfield, 369 NLRB at *3. The other case Petitioner 3 cited, Alwin Mfg. Co. v. N.L.R.B., 192 F.3d 133 (D.C. Cir. 1999), also involved unremedied ULPs 4 that previously had been found by an ALJ and sustained by the Board. See id. at 138–39. 5 Moreover, the D.C. Circuit noted that the Board had denied the existence of a per se rule “that the 6 existence of the ULPs necessarily meant that good-faith bargaining could not occur.” See id. 7 These cases thus do not support Petitioner’s argument that the existence of alleged ULP violations, 8 as opposed to factually-sustained violations that an employer has failed to remedy in response to a 9 court order, necessarily foreclosed Respondent’s declaration of impasse here. As such, the Court’s 10 analysis focuses on the parties’ course of dealing in bargaining to determine whether Respondent 11 bargained in good faith, so as to make the impasse lawful. 12 Petitioner first argues that Respondent’s bad faith bargaining tactics are evidenced by its 13 conduct over several years, from the very start of negotiations. Mot. at 23. This includes its 14 unilateral determination that it would bargain only on a monthly basis; its wasting of time in the 15 first bargaining meeting; and its refusal to explain its positions or provide counterproposals. Id. 16 Petitioner further argues that Respondent’s proposal to eliminate renewal commissions itself 17 demonstrates Respondent’s bad faith approach to bargaining because the proposal is so extreme 18 that no rational party would be willing to accept it. Id. at 24. Finally, Petitioner argues that in the 19 weeks prior to the declaration of impasse, the Union made additional concessions and 20 counterproposals that Respondent failed to consider, and contends that the Union clearly 21 communicated to Respondent that it disputed the existence of the impasse. Reply at 16. 22 Respondent’s version of events is that after at least 29 bargaining sessions and mediation, 23 the parties were close to finalizing an agreement, with the only open term being the renewal 24 commissions issue. Opp. at 19. During negotiations, Respondent proposed to eliminate renewal 25 commissions 18 months after the first contract was enacted, and offered that any agent could elect 26 to leave AAA and still receive severance when those commissions were eventually eliminated. Id. 27 According to Respondent, the issue was ultimately a “dealbreaker” for both parties, since the 1 included the elimination of renewal commissions at all. Id. at 20. Respondent thus informed the 2 Union that it would not move any further on the issue. Id. The Union then voted on, and 3 eventually rejected, an agreement that included Respondent’s last proposal on renewal 4 commissions. Id. The parties engaged in further bargaining in April and May 2023 but were still 5 at a “deadlock” on the “single remaining issue” of the commissions. Id. In June 2023, 6 Respondent then declared that the parties were at an impasse and informed the Union that on 7 August 1, 2023, it would implement its last, best, and final offer, including the policy that renewal 8 commissions would be eliminated in 18 months. Id. 9 The Court finds that Petitioner has not established that Respondent likely negotiated in bad 10 faith throughout the entire bargaining period. The claim that Respondent “refused” to bargain 11 more than once per month is belied by the Union’s admission that bargaining occurred more 12 frequently than that on a number of occasions. See Dkt. No. 16-5 at 16 (stating that the parties 13 met 12 times between June and December of 2022). Further, the record shows that the parties 14 were able to reach tentative agreements on several provisions over the years. See Dkt. No. 44-3 at 15 15–42 (Union’s documentation of tentative agreements); Dkt. No. 16-5 at 16 (parties were 16 “making modest progress on language of 14 proposals and the parties reached tentative 17 agreements on various non-economic provisions” during this period). Finally, the evidence shows 18 that Respondent presented the Union with economic counterproposals during negotiations, 19 including moving from eliminating renewal commissions all at once, to a 12-month extension 20 period, then to an 18-month period, while providing a rationale for each proposal. See id. at 21 13–16. 22 The Court also finds that Petitioner has not shown that the Board is likely to deem 23 Respondent’s proposal to eliminate renewal commissions so irrational as to evidence bad faith 24 bargaining. Specific proposals may be considered evidence of bad faith tactics if the proposed 25 term was “clearly designed to frustrate agreement on a collective-bargaining agreement.” In Re 26 Liquor Indus. Bargaining Grp., 333 NLRB 1219, 1220 (2001). Courts have thus found that 27 proposals that vest employers with exclusive and unilateral control in the setting of wages or other 1 265 NLRB 850, 859 (1982) (terms employer proposed giving itself “total control over virtually 2 every significant aspect of the employment relationship,” including wages, evidenced bad faith). 3 Here, while the proposal to eliminate renewal commissions affects an important but limited aspect 4 of agents’ income, Petitioner does not argue that Respondent proposed other terms that would give 5 it exclusive and unilateral control over wages or working conditions more generally.2 And as 6 mentioned, Respondent adjusted the proposal twice in an effort to reach agreement with the 7 Union. See Dkt. No. 16-5 at 17. Finally, Petitioner’s assertion that eliminating renewal 8 commissions is an “extreme” proposal that no rational party could ever accept is belied by the fact 9 that the Union eventually took the position that it might be open to the elimination of those 10 commissions if the agents’ base salaries increased, as will be discussed. See Dkt. No. 50-1 at 3. 11 However, the Court does find that Petitioner has established at least serious questions 12 going to the merits of its claim that Respondent’s declaration of impasse was unlawful based on 13 the parties’ communications in the negotiations preceding impasse. “The Board has defined 14 impasse as the point in time of negotiations when the parties are warranted in assuming that 15 further bargaining would be futile.” Southcoast Hosps. Grp., Inc. & Massachusetts Nurses Ass’n, 16 365 NLRB 973, 998 (2017). “[I]t is not sufficient for a finding of impasse to simply show that the 17 employer had lost patience with the Union. Impasse requires a deadlock. In order to find an 18 impasse, both parties must believe they are at the end of their rope.” Id. (citation and internal 19 quotation marks omitted). Respondent maintains that its declaration of impasse was lawful 20 because both sides were at “irreconcilable odds” on the central issue of renewal commissions. 21 Opp. at 20; Dkt. No. 50-1 at 17. But the evidence, largely based on Respondent’s own 22 contemporaneous notes of the bargaining sessions leading up to the impasse, undermines the 23 credibility of this characterization. 24 In April 2023, the Union rejected Respondent’s proposal to eliminate renewal 25 commissions 18 months after the contract was enacted. Dkt. No. 38 at 3. Before the vote, 26
27 2 Petitioner briefly suggests that Respondent’s proposed management rights clause also 1 Respondent had characterized this offer as “the best that it could do.” Dkt. No. 16-5 at 17. 2 Still, the Union invited Respondent back to the table, and bargaining continued on May 19, 2023. 3 Id. at 18. 4 In the bargaining session, the Union presented six demands, including keeping renewal 5 commissions. Dkt. No. 50-1 at 2.3 Another demand was a cost-of-living increase to the salaries of 6 Group B agents (those who do not receive renewal commissions). Id.; Dkt. No. 44-3 at 44. The 7 Union initially stated that it would not agree to any proposal that ended renewal commissions 8 before the CBA expired. Dkt. No. 50-1 at 2. Respondent replied that the commissions issue 9 seemed to be a “dealbreaker,” and asked if there was any chance the Union would move on the 10 issue. Id. The Union negotiator responded, “Well that is what I am hearing, but we are always 11 willing to hear your proposal.” Id. at 3. The Union then did offer a counterproposal, stating that if 12 the base salary for Group B agents was large enough, the Union might be willing to “get rid of 13 renewals.” Id.4 The Union appears to have offered $500,000 as an illustrative base salary number 14 (and Respondent’s later notes reflect that it understood this to be a “facetious” example). Id. at 4. 15 In response, Respondent stated that “talking realistic numbers we do not see your position 16 changing.” Id. at 3. The Union suggested that the parties go through the other items on the table 17 and then circle back to the commissions issue, but Respondent again stated, “there is no situation 18 we can see where we change our position” on that issue. Id. 19 The parties then reconvened a few days later on May 23. Dkt. No. 50-1 at 4. According to 20 Respondent’s negotiator’s notes, the brief exchange that follows is the final official bargaining 21 communication between the parties before Respondent declared impasse: 22 Respondent: “If you are not moving on [renewals] which is a dealbreaker, [other issues] 23 don’t matter. So [until] you have a counter that does not include [renewals] 24 3 The following summary of the parties’ statements in the final bargaining sessions is based on 25 Respondent’s lead negotiator’s bargaining notes, found at Dkt. No. 50-1, Exh. 1, at 2–6. This account is also corroborated by the contemporaneous notes of Petitioner’s negotiator and assigned 26 notetaker. See id., Exh. 2, at 10–15; Dkt. No. 44-3 at 45.
27 4 Under Respondent’s proposal, after renewal commissions were to be eliminated, Group A agents 1 we do not see where else there is to go here.” 2 Union: “We told you last time that if [base salary] is big enough we could 3 potentially get rid of [renewals].” 4 Respondent: “No, you said if $500k went into [base salary] you could. We know that 5 was facetious, but there is no amount we see that you would take and we 6 would offer on [base salary] that gets rid of [renewals].” 7 Union: “So you have no counter today?” 8 Respondent: “Unless you have a counter offer to our Feb offer that you voted on that does 9 not include renewals, then you have already seen the last and best offer we 10 are going to make.” 11 Union: “We both know our options going forward. If you decide you are ready to 12 negotiate more, let us know.” 13 Respondent: “If you are prepared to make a counter that does not include renewals, let us 14 know.” 15 Dkt. No. 50-1 at 4, 6. Then, a few weeks later, on June 15, 2023, Respondent sent a letter 16 to the Union declaring the parties had reached impasse. Dkt. No. 16-5 at 32. The letter stated that 17 the parties “were not able to reach agreement on a central and fundamental issue for both parties, 18 namely, the treatment of renewal commissions for the Group A agents,” and that “both parties 19 have indicated that they consider their respective positions on renewals as a ‘deal breaker’ and one 20 that they are not willing to move on.” Id. The letter concluded that because the parties were “at 21 irreconcilable odds on this central issue,” they had “reached an impasse in the negotiations.” Id. 22 Further, Respondent would implement the terms of its final offer on August 1,“[g]iven that further 23 negotiations would be futile in light of the parties’ entrenched positions on renewals.” Id. 24 The Union responded six days later declaring that it “reject[ed] the Company’s 25 characterization that the parties [were] at an impasse.” Dkt. No. 50-1 at 17. The letter noted that 26 Respondent was obligated to immediately advise the Union what terms Respondent would be 27 1 implementing on August 1. Id.5 2 The Court finds that these communications raise at least serious questions going to the 3 merits of Petitioner’s claim that the impasse was not declared in good faith. For a legitimate 4 impasse to occur, “both parties must be unwilling to compromise,” and impasse does not occur 5 “merely because [a union] is unwilling to capitulate immediately and settle on [an employer’s] 6 unchanged terms.” Grinnell Fire Prot. Sys. Co. v. N.L.R.B., 236 F.3d 187, 199 (4th Cir. 2000) 7 (citations and internal quotation marks omitted). This is because “futility, rather than mere 8 frustration, discouragement, or apparent gamesmanship, is necessary to establish impasse.” Id. 9 Accordingly, an assertion of impasse may not be premised on an employer’s “own 10 unwillingness—rather than that of the Union—to compromise.” Id. 11 The parties’ final pre-impasse communications suggest that Respondent may have been the 12 only party that was unwilling to compromise at the time it declared impasse. Respondent’s final 13 communication to the Union was that it would entertain “a counter that [did] not include 14 renewals.” But the Union had already presented such an offer by stating that it would forego 15 renewal commissions if agents’ base salaries were raised. Respondent could argue that the 16 Union’s offer was not “real,” on the ground that $500,000 is, objectively, an extremely large 17 amount for an agent’s base salary. See Saunders House v. N.L.R.B., 719 F.2d 683, 688–89 (3d 18 Cir. 1983) (proposal that does not constitute “real movement” between the parties does not 19 preclude good faith impasse). However, as mentioned, Respondent’s own notes indicate that it 20 viewed that number as “facetious.” See Dkt. No. 50-1 at 4.6 In light of the Union’s proposal, the 21 parties’ negotiations appear to contradict Respondent’s argument in its opposition to the petition 22 that Respondent declared the impasse only after the Union had expressed “in no uncertain terms” 23 that it would not agree to a contract that included the elimination of renewal commissions. Opp. at 24 5 The Union’s letter also stated that it would respond to Respondent’s assertion of impasse “by 25 separate cover.” Dkt. No. 50-1 at 17. But if there was any follow-up communication, no party has identified it in the record. 26
6 The Union negotiator’s pre-call preparation notes indicate that the Union considered $55,000 as 27 a potential “cost of living adjustment to [the] base” salaries of Group B agents (which presumably 1 20. And similarly, the reference in Respondent’s declaration of impasse to both parties’ positions 2 on the commissions issue as “entrenched” appears inconsistent with the fact that the Union had 3 just moved its position. See Dkt. No. 16-5 at 32. 4 Further, the record suggests that Respondent failed to respond in good faith to the Union’s 5 proposal. The good faith bargaining requirement did not require Respondent to “make 6 concessions or yield any position fairly maintained.” Frankl, 650 F.3d at 1358 (citation and 7 internal quotation marks omitted). But an employer still must “make some reasonable effort in 8 some direction to compose [its] differences with the union.” See id. at 1359. As such, a “take it or 9 leave it” approach may be found to evidence bad faith where “there was no substantial 10 justification offered for refusing to discuss” a proposal. See N. L. R. B. v. Gen. Elec. Co., 418 F.2d 11 736, 757 (2d Cir. 1969). 12 Here, it would be reasonable for the Board to conclude that Respondent’s answer to the 13 Union’s proposal was not sufficient to constitute good faith consideration of the proposal. After 14 the Union proposed that it might agree to an elimination of renewal commissions if Respondent 15 agreed to increase agents’ base salaries by an acceptable amount, Respondent declared that 16 “talking realistic numbers we do not see [the Union’s] position changing”—without actually 17 putting a number it considered realistic on the table and allowing the Union to respond to it. See 18 Dkt. No. 50-1 at 2. And in the final bargaining session, Respondent declared that “there is no 19 amount we could see that [the Union] would take and we would offer.” See id. at 6 (emphasis 20 added). But that assertion was necessarily speculative: Respondent essentially predicted a 21 deadlock on the commissions issue based on its own assumptions about the terms it believed the 22 Union would accept, rather than the Union’s actual response to a counteroffer from Respondent. 23 This approach was likely insufficient to constitute a good faith justification for outright rejecting 24 the Union’s proposal. See Nat’l Ass’n of Broad. Emps. & Technicians-Commc’ns Workers of Am., 25 Loc. 51, AFL-CIO v. Nat’l Lab. Rels. Bd., No. 22-1782, 2024 WL 3439582, at *2 (9th Cir. July 26 17, 2024) (affirming Board’s finding of failure to bargain in good faith based in part on evidence 27 1 that employer “summarily rejected Union proposals”).7 Because the Union offered an at least 2 facially legitimate counterproposal that Respondent did not meaningfully consider or answer, it 3 would be reasonable for the Board to conclude that Respondent was not warranted in assuming 4 that further bargaining would be futile. See Saunders House, 719 F.2d at 688 (“A concession by 5 one party on a significant issue in dispute precludes a finding of impasse even if a wide gap 6 between the parties remains because under such circumstances there is reason to believe that 7 further bargaining might produce additional movement.”). 8 Respondent ultimately has the burden of proving that impasse actually existed. See 9 Grinnell, 236 F.3d at 196. The record presented on this motion does not support Respondent’s 10 characterization that both parties were at a deadlock when Respondent declared impasse, and 11 suggests that Respondent failed to bargain in good faith during the final pre-impasse negotiations. 12 Accordingly, the Court concludes that Petitioner has established at least serious questions going to 13 the merits of its argument that the Board is likely to find that impasse was not declared in good 14 faith and that Respondent’s unilateral implementation of the LBFO was unlawful on that basis. 15 iii. Irreparable Harm 16 a. Elimination of Renewal Commissions 17 The Court finds that Petitioner has also sufficiently established that irreparable harm is 18 likely to occur if the term of the LBFO eliminating renewal commissions is allowed to take effect 19 as planned on February 1. Petitioner argues that eliminating renewal commissions will severely 20 reduce the income of a majority of the agents in the bargaining unit, based on the affidavits of 21 three agents stating that renewal commissions account for 40 to 70% of their yearly compensation. 22 Mot. at 24, 30. Further, it argues that the policy will likely diminish the bargaining unit because 23 many agents will take Respondent’s buy-out offer rather than absorb such significant wage cuts. 24 Id. at 29. 25 Respondent characterizes Petitioner’s argument as “baseless” because it relies on the 26 “speculative statements of three self-interested” employees. Opp. at 22. After the briefing on the 27 1 petition was complete, Respondent submitted an affidavit of AAA’s CFO that contained 2 calculations purporting to show that the actual change in compensation would be closer to a 20% 3 reduction based on the agents’ actual earnings. Dkt. No. 45 at 3. The Court then allowed 4 Petitioner to respond, and she submitted an affidavit attaching the agents’ paystubs, which showed 5 that renewal commissions averaged between 51 and 65% of the agents’ total gross compensation 6 per year between 2019 and 2023. Dkt. No. 46 at 2. 7 Weighing this evidence, the Court finds that Petitioner has sufficiently established that 8 elimination of renewal commissions is likely to cause imminent, irreparable harm by significantly 9 reducing agents’ pay and potentially driving agents to leave AAA. In deciding a preliminary 10 injunction motion, the Court may consider Petitioner’s affidavits, see Houdini Inc. v. Goody 11 Baskets LLC, 166 F.App’x 946, 947 (9th Cir. 2006), and they are no more “self-serving” than any 12 of the other evidence presented by one side or the other in this adversary proceeding. Moreover, 13 even if the elimination of renewal commissions reduced agents’ yearly compensation by an 14 amount somewhere between Respondent’s and Petitioner’s estimates, that amount would be 35%, 15 or approximately a third of their annual income. It is reasonable to conclude that such a 16 substantial reduction in income is likely to harm employees. At oral argument, Respondent 17 maintained that Petitioner’s fears that the policy change would force many agents to leave AAA 18 were overblown, as only a relatively small number of bargaining unit employees had elected to 19 take the severance package in the 18 months since it was offered. But it is possible that many 20 agents may be waiting to decide whether to take a buy-out offer until this petition is decided. In 21 contrast to the ongoing harm allegedly stemming from the AAA I violations that occurred in the 22 past, these imminent harms likely to flow from the elimination of renewal commissions are the 23 kinds of “impending deleterious effect[s] of [a] likely unfair labor practice” that a 10(j) injunction 24 is designed to avoid. See Frankl, 650 F.3d at 1362. 25 Respondent nonetheless argues that an administrative order could alleviate this harm just 26 as effectively. Opp. at 26. However, “the Board generally does not order retroactive relief, such 27 as back pay or damages, to rank-and-file employees for the loss of economic benefits that might 1 addition, the Board views unilateral action with respect to wages, as opposed to other working 2 conditions, as particularly detrimental because “each paycheck reminds [employees] of the likely 3 irrelevance of the union.” E. Bay Auto. Council v. N.L.R.B., 483 F.3d 628, 634 (9th Cir. 2007). 4 The elimination of renewal commissions appears to be the most substantial economic proposal 5 impacting employee wages that Respondent will have implemented since the Union was certified. 6 If support for the Union has already diminished, allowing this major disadvantageous shift in the 7 status quo may irremediably harm it. 8 b. Failure to Bargain in Good Faith and Other Unilateral Changes 9 Petitioner seeks relief beyond enjoining the policy eliminating renewal commissions from 10 taking effect. She also asks the Court to prevent Respondent from enforcing any of the other 11 changes it unilaterally implemented as part of the LBFO, and to order Respondent back to the 12 bargaining table. Pet. at 23. However, the Court finds that Petitioner has not sufficiently shown a 13 likelihood of irreparable harm absent this relief. 14 Like the AAA I violations, the other LBFO policies were all enacted some time ago, in 15 August 2023. According to the Union, the parties had tentatively agreed on 16 of the 22 articles 16 contained in the LBFO. Dkt. No. 44-3 at 3. Still, Petitioner argues that allowing these allegedly 17 unlawful policies to remain in place will cause irreparable harm by further eroding support for the 18 Union. Mot. at 30. This argument is not persuasive for the same reasons that the Court declined 19 to order injunctive relief as to the AAA I violations. Given that a significant amount of time has 20 passed, any weakening of Union support based on these changes is likely to have already occurred 21 some time ago, such that it may “be difficult to recreate the original status quo with the same 22 relative position of the bargaining parties.” See Frankl, 650 F.3d at 1363. Several of the 23 affidavits Petitioner cites in which employees expressed doubt about the Union’s ability to 24 represent them are dated before or soon after the LBFO was first implemented, indicating that 25 support for the Union may already have been low then. See Mot. at 29–30. Petitioner fails to 26 clarify how, under these circumstances, an interim order is likely to be more effective at reviving 27 union support than an ALJ or Board order. Similarly, an employer’s unlawful refusal to bargain 1 as now.” Frankl, 650 F.3d at 1363. And based on the record here, the Court finds that Petitioner 2 has failed to establish that resuming bargaining now under an interim order, a year and a half after 3 the last bargaining session, will be more effective than resuming (if found to be warranted) after 4 an ALJ or Board decision in AAA II. 5 iv. Balance of the Equities 6 If Petitioner has established serious questions going to the merits and a likelihood of 7 irreparable harm, a preliminary injunction may issue if the balance of hardships tips sharply in her 8 favor. Alliance for the Wild Rockies, 632 F.3d at 1135. As detailed above, the Court has 9 determined that there are serious questions going to the merits of Petitioner’s claim that 10 Respondent violated the NLRA by unlawfully declaring a bargaining impasse and impermissibly 11 implementing unilateral changes to employees’ working conditions. Further, Petitioner has 12 sufficiently shown that eliminating renewal commissions is likely to cause irreparable harm to 13 employees and the Union. Respondent argues that it will be disadvantaged by an injunctive order 14 as it would allow Petitioner to obtain relief prior to an “anticipated loss” in AAA I and 15 “circumvent the hearing in AAA II on the eve of trial.” Opp. at 28. However, an injunction to 16 enjoin the elimination of renewal commissions is much more limited than the sweeping relief 17 Petitioner seeks in AAA I and AAA II, and is narrowly targeted to maintain the status quo so as to 18 avoid a legitimate threat of irreparable harm. As such, the Court finds that the balance of harms 19 tips sharply in Petitioner’s favor. 20 v. Public Interest 21 The public interest in a Section 10(j) case “is to ensure that an unfair labor practice will not 22 succeed because the Board takes too long to investigate and adjudicate the charge.” Frankl, 650 23 F.3d at 1365 (citation and internal quotation marks omitted). As detailed above, the record casts 24 substantial doubt on the validity of Respondent’s declaration of impasse and its subsequent 25 imposition of unilateral changes. And one of those changes, the elimination of renewal 26 commissions, is likely to cause irreparable harm to the Union and employees. An order enjoining 27 Respondent from implementing this change serves the public interest in preventing a potential 1 IV. CONCLUSION 2 The Court GRANTS IN PART AND DENIES IN PART the petition, Dkt. No. 1. The 3 Court ORDERS that, pending the final disposition of the matters now pending before the Board, 4 Respondent, its officers, representatives, supervisors, agents, servants, employees, attorneys and 5 all persons acting on its behalf or in participation with it, are enjoined and restrained from 6 implementing the policy eliminating renewal commissions for Group A agents set to take effect 7 February 1, 2025. 8 IT IS FURTHER ORDERED that, pending the final disposition of the matters now 9 pending before the Board, Respondent, its officers, representatives, supervisors, agents, servants, 10 employees, attorneys and all persons acting on its behalf or in participation with it, shall take the 11 following affirmative steps: 12 1. Immediately rescind the policy requiring Group A agents to select a severance 13 package by January 31, 2025; 14 2. By 5:00 p.m. on Friday, January 24, 2025, distribute electronic copies of the Order 15 specifying the relief granted to all bargaining unit employees employed by 16 Respondent at its Northern/Central California branch facilities, via email and all 17 intranet or internet sites or apps that Respondent uses to communicate with 18 employees; 19 3. By 5:00 p.m. on Monday, January 27, 2025, post physical copies of the Order 20 setting forth the relief granted at each of Respondent’s Northern/Central California 21 branch facilities, as well as translations in other languages as necessary to ensure 22 effective communication to Respondent’s employees as determined by the Board’s 23 Regional Director of Region 32, said translations to be provided by Respondent at 24 Respondent’s expense and approved by the Regional Director, on the bulletin 25 board, in all breakrooms, and in all other places where Respondent typically posts 26 notices to its employees, maintain these postings during the pendency of the 27 Board’s administrative proceedings free from all obstructions and defacements, and 1 agents of the Board reasonable access to each worksite to monitor compliance with 2 this posting requirement; 3 4. By 5:00 p.m. on Tuesday, January 28, 2025, convene one or more mandatory 4 meetings, on working time and at times when Respondent customarily holds 5 employee meetings and scheduled to ensure the widest possible attendance, at each 6 of Respondent’s Northern/Central California branch facilities, during which the 7 Injunction Order specifying the relief granted will be read to the employees by a 8 responsible Respondent official in the presence of a Board agent, or at 9 Respondent’s option, by a Board agent in the presence of a responsible Respondent 10 official. Respondent shall also afford the Union, through the Regional Director, 11 reasonable notice and opportunity to have a representative present when the 12 Injunction Order is read to employees. Interpreters shall be made available for any 13 individual whose language of fluency is other than English at Respondent’s 14 expense. Respondent shall announce the meeting(s) for this Order reading in the 15 same manner it would customarily announce a meeting to employees; the 16 meeting(s) shall be for the above-stated purpose only. Individuals unable to attend 17 the meeting to which they have been assigned will be able to attend a subsequent 18 meeting during which the same reading shall take place under the same conditions. 19 Respondent shall allow all employees to attend these meetings without penalty or 20 adverse employment consequences, either financial or otherwise; and, 21 5. Within twenty-eight (28) days of the issuance of this Order, file with this Court and 22 submit a copy to the Regional Director of Region 20 of the Board, a sworn affidavit 23 from a responsible official of Respondent setting forth, with specificity, the manner 24 in which Respondent has complied with the terms of this Order, including how it 25 has posted the documents required, how and where the documents have been 26 posted, and the date(s), time(s), and location(s) that the portions of the Order 27 specifying the relief granted was read to employees and by whom. 1 IT IS FURTHER ORDERED that this case shall remain on the docket of this Court and 2 || on compliance by Respondent with its obligations described in this Order, and upon disposition of 3 the matters pending before the Board, Petitioner shall cause this proceeding to be dismissed. This 4 || order terminates Dkt. No. 16. 5 IT IS SO ORDERED. 6 || Dated: 1/23/2025
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