Decision 2664M – City of Palo Alto

Where employer made predictably unacceptable offer and withdrew alternative proposal as part of an overall course of bad faith conduct, the Board clarified that the remedial order requiring the employer to bargain in good faith required the employer to reinstate the withdrawn offer. (Mead Corp. v. NLRB (11th Cir. 1983) 697 F.2d 1013, 1022-1023, enforcing The Mead Corp. (1981) 256 NLRB 686.) Such a Mead Corp. order was necessary to restore the situation as nearly as possible to that which would have existed but for the employer’s bad faith conduct and was integral to requiring the employer to cease and desist from its unlawful conduct. Employer therefore directed to put back on the table the proposal it withdrew in bad faith, upon the Union’s request.

Section 3505.1 allows a union to bring an unfair practice charge alleging that a governing body evidenced bad faith in rejecting a tentative agreement. Such a rejection, like a union membership vote to reject a tentative agreement, does not excuse either party from the duty to refrain from vesting negotiators with insufficient authority and/or engaging in regressive bargaining— indicia of bad faith that can co-occur. If an employer or union fails to obtain ratification, the requirements of good faith bargaining remain the same: A party’s subsequent less favorable offer generally evidences regressive bargaining and/or a failure to vest negotiators with sufficient authority, unless accompanied by a credible, rationally supported explanation of changed economic circumstances sufficient to support the change in position. Alternatively, a party may withdraw concessions on some subjects, while offering more favorable terms on others, if done as part of a genuine attempt to reach an overall compromise.

Section 3505.1 allows a union to bring an unfair practice charge alleging that a governing body evidenced bad faith in rejecting a tentative agreement. Such a rejection, like a union membership vote to reject a tentative agreement, does not excuse either party from the duty to refrain from vesting negotiators with insufficient authority and/or engaging in regressive bargaining— indicia of bad faith that can co-occur. If an employer or union fails to obtain ratification, the requirements of good faith bargaining remain the same: A party’s subsequent less favorable offer generally evidences regressive bargaining and/or a failure to vest negotiators with sufficient authority, unless accompanied by a credible, rationally supported explanation of changed economic circumstances sufficient to support the change in position. Alternatively, a party may withdraw concessions on some subjects, while offering more favorable terms on others, if done as part of a genuine attempt to reach an overall compromise.

Where employer withdrew a contact proposal as part of an overall course of bad faith conduct, the Board clarified that the remedial order requiring the employer to bargain in good faith required the employer to reinstate the withdrawn offer. (Mead Corp. v. NLRB (11th Cir. 1983) 697 F.2d 1013, 1022-1023, enforcing The Mead Corp. (1981) 256 NLRB 686.) Such a Mead Corp. order was necessary to restore the situation as nearly as possible to that which would have existed but for the employer’s bad faith conduct and was integral to requiring the employer to cease and desist from its unlawful conduct. Employer therefore directed to put back on the table the proposal it withdrew in bad faith, upon the Union’s request.

Litigation sanctions: To obtain reimbursement of attorney’s fees or other litigation expenses incurred while litigating a matter in front of PERB, the moving party must demonstrate that the claim, defense, motion, or other action or tactic was “without arguable merit” and pursued in “bad faith.” To determine whether a claim, defense, motion, or other action is frivolous, the Board examines whether it is so manifestly erroneous that no prudent representative would have filed or maintained it. Even if a party requesting attorney’s fees can meet the “without arguable merit” prong, it must also show that the opposing party acted in bad faith. For the purposes of this test, the term “bad faith” includes conduct that is dilatory, vexatious, or otherwise an abuse of process. Showing that an action or tactic was undertaken in “bad faith,” does not require showing that the party and/or representative necessarily acted with an evil motive. Prosecution of a frivolous action or defense may itself be evidence supporting a finding of subjective bad faith, as might other conduct which a party or representative knows or reasonably should know will unreasonably or unnecessarily cause delay or harass or injure an opposing party or representative, or impede the tribunal’s own process. However, PERB follows California Code of Civil Procedure section 128.5 in requiring some showing of subjective bad faith, even if it must be inferred from circumstantial evidence.

Reimbursement of costs as make-whole remedy: PERB analyzes request for reimbursement of costs incurred as a result of a respondent’s underlying conduct under traditional make-whole principles. (See Omnitrans (2009) PERB Decision No. 2030-M, p. 30 (Omnitrans) [awarding attorney fees in ancillary case made necessary because of respondent’s violation]; Camelot Terrace, Inc. v. NLRB (D.C. Cir. 2016) 824 F.3d 1085, 1092-1093 (Camelot Terrace, Inc.) [upholding NLRB’s order that employer reimburse union for bargaining costs as a remedy for having engaged in bad faith bargaining, and reasoning that “[a]n award of bargaining expenses remedies an unfair labor practice by ensuring that, upon resolution of the [charge], the injured party can return to negotiations on the same footing it occupied before the violation.”].) While a make-whole remedial order under Omnitrans and Camelot Terrace, Inc. may include, among other items, staff costs or attorney’s fees reasonably incurred as a result of a respondent’s unlawful conduct, any attorney’s fees awarded pursuant to such make-whole principles normally may not include attorney’s fees expended simply to litigate the unfair practice charge at issue—under the American Rule, such an attorney fee award is appropriate only as a litigation sanction, if the charging party demonstrates that the claim, defense, motion, or other action or tactic was “without arguable merit” and pursued in “bad faith.”

Where employer withdrew a contact proposal as part of an overall course of bad faith conduct, the Board clarified that the remedial order requiring the employer to bargain in good faith required the employer to reinstate the withdrawn offer. (Mead Corp. v. NLRB (11th Cir. 1983) 697 F.2d 1013, 1022-1023, enforcing The Mead Corp. (1981) 256 NLRB 686.) Such a Mead Corp. order was necessary to restore the situation as nearly as possible to that which would have existed but for the employer’s bad faith conduct and was integral to requiring the employer to cease and desist from its unlawful conduct. Employer therefore directed to put back on the table the proposal it withdrew in bad faith, upon the Union’s request.

Reimbursement of costs as make-whole remedy: PERB analyzes request for reimbursement of costs incurred as a result of a respondent’s underlying conduct under traditional make-whole principles. (See Omnitrans (2009) PERB Decision No. 2030-M, p. 30 (Omnitrans) [awarding attorney fees in ancillary case made necessary because of respondent’s violation]; Camelot Terrace, Inc. v. NLRB (D.C. Cir. 2016) 824 F.3d 1085, 1092-1093 (Camelot Terrace, Inc.) [upholding NLRB’s order that employer reimburse union for bargaining costs as a remedy for having engaged in bad faith bargaining, and reasoning that “[a]n award of bargaining expenses remedies an unfair labor practice by ensuring that, upon resolution of the [charge], the injured party can return to negotiations on the same footing it occupied before the violation.”].) While a make-whole remedial order under Omnitrans and Camelot Terrace, Inc. may include, among other items, staff costs or attorney’s fees reasonably incurred as a result of a respondent’s unlawful conduct, any attorney’s fees awarded pursuant to such make-whole principles normally may not include attorney’s fees expended simply to litigate the unfair practice charge at issue—under the American Rule, such an attorney fee award is appropriate only as a litigation sanction, if the charging party demonstrates that the claim, defense, motion, or other action or tactic was “without arguable merit” and pursued in “bad faith.”

Absent good cause, the Board will not entertain initial exceptions by a prevailing party that would not change the outcome of the proposed decision. Prevailing party’s exceptions which would impact the remedial order qualifies as a change in outcome.