NY NY v. NLRB, No. 01-1351 (D.C. Cir. 2002)

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued October 17, 2002 Decided December 24, 2002

No. 01-1351

New York New York, LLC, d/b/a

New York New York Hotel and Casino,

Petitioner

v.

National Labor Relations Board,

Respondent

Local Joint Executive Board of Las Vegas,

Culinary Workers Union, Local 226 and

Bartenders Union, Local 165,

Intervenor

Consolidated with

No. 01-1352

On Petitions for Review and Cross-Applications

for Enforcement of Orders of the

National Labor Relations Board

---------

 Gary C. Moss argued the cause for petitioner. With him

on the briefs was Celeste M. Wasielewski.

Steven B. Goldstein, Attorney, National Labor Relations

Board, argued the cause for respondent. With him on the

brief were Arthur F. Rosenfeld, General Counsel, John H.

Ferguson, Associate General Counsel, Aileen A. Armstrong,

Deputy Associate General Counsel, and Margaret A. Gaines,

Supervisory Attorney.

Michael T. Anderson and Richard G. McCracken were on

the brief for intervenor.

Before: Edwards, Randolph, and Tatel, Circuit Judges.

Opinion for the Court filed by Circuit Judge Randolph.

Randolph, Circuit Judge: The issue in these consolidated

petitions for review of orders of the National Labor Relations

Board is whether employees of contractors working on a

casino's property have labor organizing rights equivalent to

those possessed by the casino's employees. The Board seeks

enforcement of its orders, and the union--Local Joint Execu-

tive Board of Las Vegas, Culinary Workers Union, Local 226

and Bartenders Union, Local 165--has intervened in support

of the Board. Our decision in ITT Industries, Inc. v. NLRB,

251 F.3d 995 (D.C. Cir. 2001), controls the outcome.

New York New York Hotel and Casino is located on the

Strip in Las Vegas, Nevada. NYNY has leased space in its

hotel and casino complex to independent restaurant manage-

ment companies to run food service facilities. One of the

companies, Ark Las Vegas Restaurant Corporation, operates

two restaurants and several fast food outlets in a food court

on NYNY's premises.

NYNY permits Ark employees, when they are off-duty, to

visit and patronize the casino and restaurants, and to enter

the complex through NYNY's public entrances, but they may

not wear their uniforms, and the bars are off limits at all

times. NYNY presented evidence that it had a policy against

solicitation of any sort on its premises.

 Although NYNY has a collective bargaining agreement

with the union, the agreement does not include Ark or its

employees. In February 1997, the union launched a cam-

paign to organize the Ark employees working on NYNY's

property. The following events were part of that campaign.

On July 9, 1997, three off-duty Ark employees stood on

NYNY property outside the main entrance, distributing union

handbills to customers entering and exiting the casino and

hotel. The handbills stated that Ark paid its employees less

than comparable unionized workers and urged the customers

to tell Ark to sign a union contract. Shortly after the

handbilling began, a NYNY security supervisor, joined by a

member of NYNY's management, told the Ark employees

that they were trespassing and that they were not allowed to

distribute literature on NYNY's property. After the Ark

employees protested that they had a right to be on the

property and refused to leave, NYNY's security guards sum-

moned local law enforcement officers, who issued trespass

citations to the handbillers. The union then filed an unfair

labor practice charge with the Board, alleging that NYNY

had violated s 8(a)(1) of the National Labor Relations Act, in

response to which the Board's regional director issued a

complaint.

On April 7, 1998, four off-duty Ark employees entered

NYNY and distributed handbills to customers inside the

complex. Two of the handbillers stood outside America, one

of the Ark-operated restaurants; the other two stood in front

of Gonzales y Gonzales, another of Ark's restaurants. After

they refused a request to stop handbilling, NYNY summoned

the authorities, who issued trespass citations to three of the

employees. Another incident occurred two days later, on

April 9, 1998, when two off-duty Ark employees (one of whom

had received a trespass citation for the handbilling on April 7)

stood outside NYNY's main entrance again, distributing

handbills to passing customers. After a sequence of events

similar to those of July 9, 1997, these Ark employees also

received trespass citations. (All of the trespass citations

issued to the Ark employees in 1998 were dropped.) On

April 20, 1998, the union filed unfair labor practice charges,

alleging that NYNY had violated s 8(a)(1) of the Act; the

regional director issued another complaint.

The Board's General Counsel argued in each case that

under s 7 of the Act, 29 U.S.C. s 157, the Ark employees had

a right to handbill at NYNY in non-work areas during

nonwork times and that NYNY therefore violated s 8(a)(1) of

the Act, 29 U.S.C. s 158(a)(1), when it prevented them from

engaging in protected activity. NYNY countered that be-

cause the employees worked for Ark, not NYNY, they had no

s 7 rights against NYNY and that NYNY validly applied its

restriction on activities on its premises.

In separate proceedings Administrative Law Judges found

in favor of the Ark employees, holding that when employees

of a contractor work regularly and exclusively on the owner's

property, their s 7 rights are equivalent to those of the

employer's own employees. New York New York Hotel LLC

d/b/a New York New York Hotel & Casino, 28-CA-14519,

1998 WL 1985077 (June 29, 1998); New York New York Hotel

LLC d/b/a New York New York Hotel & Casino, 28-CA-

15148, 1999 WL 33452907 (Apr. 9, 1999). The Board affirmed

in both cases, agreeing that the s 7 rights of the Ark

employees were equivalent to those of NYNY's employees,

and that in both cases the Ark employees were engaging in

organization activities in non-work areas of NYNY's property.

New York New York Hotel LLC d/b/a New York New York

Hotel & Casino, 334 N.L.R.B. No. 87 (July 25, 2001); New

York New York Hotel LLC d/b/a New York New York Hotel

& Casino, 334 N.L.R.B. No. 89 (July 25, 2001).

Section 7 of the National Labor Relations Act guarantees

employees "the right to self-organize, to form, to join, or

assist labor organizations." 29 U.S.C. s 157. Section 8(a)(1)

enforces s 7, making it an "unfair labor practice" for an

employer "to interfere with, restrain, or coerce employees in

the exercise of the rights guaranteed in" s 7. 29 U.S.C.

s 158(a)(1). In recognition of the property rights of employ-

ers and the s 7 rights of employees to organize, the Supreme

Court has drawn a distinction between employees and nonem-

ployees. In Republic Aviation Corp. v. NLRB, 324 U.S. 793

(1945), the Court sustained the Board's rulings that off-duty

employees have s 7 rights to engage in organizing activities

on their employer's premises in non-work areas--rights the

employer may not infringe absent a showing that the ban is

necessary to maintain workplace order and discipline. Id. at

803. On the other hand, the Court held in NLRB v. Babcock

& Wilcox Co., 351 U.S. 105, 112 (1956), that "an employer

may validly post his property against nonemployee distribu-

tion of union literature" to employees, at least if the nonem-

ployee union organizers may reach the employees through

other means. Id. at 112. Highlighting the difference be-

tween the rights of employees and nonemployees, the Court

explained in a later case that a "wholly different balance [is]

struck when the organizational activity [is] carried on by

employees already rightfully on the employer's property,

since the employer's management interests rather than his

property interests [are] there involved." Hudgens v. NLRB,

424 U.S. 507, 521-22 n.10 (1976).

This court's opinion in ITT Industries, Inc. v. NLRB, 251 F.3d 995, 1000-03 (D.C. Cir. 2001), thoroughly analyzed these

Supreme Court decisions and others. There, we explained

that although there were suggestions in Supreme Court

opinions that the controlling distinction for s 7 purposes was

between invitees and trespassers, see Eastex, Inc. v. NLRB,

437 U.S. 556, 571 (1978); Hudgens, 424 U.S. at 521-22, the

Court's most recent pronouncement in Lechmere, Inc. v.

NLRB, 502 U.S. 527 (1992), reaffirmed the principle an-

nounced in Babcock & Wilcox that the National Labor Rela-

tions Act confers rights upon employees, not nonemployees,

and that employers may restrict nonemployees' organizing

activities on employer property. See ITT, 251 F.3d at 1002-

03; see also United Food & Commercial Workers v. NLRB,

74 F.3d 292, 295 (D.C. Cir. 1996).

The Supreme Court has never addressed the s 7 rights of

employees of a contractor working on property under another

employer's control, and the Board's New York New York

decisions shed little light on the important issues this factual

pattern raises. The Board provided no rationale to explain

why, in areas within the NYNY complex but outside of Ark's

leasehold, Ark's employees should enjoy the same s 7 rights

as NYNY's employees. Instead, the Board relied upon two of

its previous decisions, Southern Services, 300 N.L.R.B. 1154

(1990), and MBI Acquisition Corp. d/b/a Gayfers Dep't Store,

324 N.L.R.B. 1246 (1997). New York New York, 334

N.L.R.B. No. 87 at 1; New York New York, 334 N.L.R.B. No.

89 at 1 n.3. While the Board is certainly entitled to invoke its

precedents to justify a given result, the court's responsibility

is to examine those precedents to make sure they supply the

reasoning lacking in the Board's opinion under review. See

ITT, 251 F.3d at 1004. Here, neither Southern nor Gayfers

fills the gap, a point on which we are in agreement with the

Fifth Circuit in NLRB v. Pneu Elec., Inc., 309 F.3d 843, 850-

55 (5th Cir. 2002), handed down after oral argument in this

case. The Board decided Southern before the Supreme

Court issued Lechmere; Gayfers came after the Court's

opinion. Neither Board decision takes account of the princi-

ple reaffirmed in Lechmere that the scope of s 7 rights

depends on one's status as an employee or nonemployee.

In Southern, the Board ruled that an employee of a janito-

rial subcontractor that serviced Coca-Cola's manufacturing

site had the same s 7 rights as Coca-Cola's employees.

Therefore, despite the company's no solicitation rule, the

subcontractor's employee had a s 7 right to distribute leaflets

to fellow janitorial employees in non-work areas of Coca-

Cola's property after reporting to work but while she was off-

duty. The Board interpreted the Supreme Court's opinions

in Republic Aviation and Babcock & Wilcox as resting on a

distinction between situations in which the union organizers

were "properly on company property pursuant to the employ-

ment relationship" (Republic Aviation) and those in which

they were "strangers to the employer's property" and "tres-

pass[ed] to facilitate activity covered by" s 7 (Babcock &

Wilcox). 300 N.L.R.B. at 1155. Because the subcontractor's

employee "did not seek to 'trespass' on Coke's property" and

"was 'already rightfully on [Coke's] property' " when she

distributed union literature, the Board ruled that the case fell

under Republic Aviation and that Coca-Cola thus violated

her s 7 rights by preventing her from engaging in protected

activity on company property. Southern, 300 N.L.R.B. at

1155.

The Eleventh Circuit enforced the Board's order. South-

ern Services, Inc. v. NLRB, 954 F.2d 700, 704 & n.5 (11th Cir.

1992). In ITT Services we took note of the Eleventh Circuit's

decision but viewed it as unpersuasive. Although the opinion

issued a month after Lechmere, it did not mention the Su-

preme Court's decision, and it therefore did "not account for

Lechmere's express reaffirmation of the employee/nonemploy-

ee distinction." ITT Services, 251 F.3d at 1003.

The opinion of the court of appeals in Southern was con-

trary to Lechmere in other respects. The Eleventh Circuit

stated:

Nor does the conduct of distributing union literature

transform the status of a subcontract employee ...

from that of a business invitee to that of a mere

trespasser. Coca-Cola ... urge[s] this theory, but

suggest[s] no principled barrier against the argu-

ment that a similar transformation occurs when the

regular employee of an employer such as Coca-Cola

engages in distribution activity.



Southern, 954 F.2d at 704. At this point the court dropped a

footnote citing Montgomery Ward & Co. v. NLRB, 692 F.2d 1115, 1126 & n.12 (7th Cir. 1982). The quoted passage

appears to bare some confusion about trespass. While the

actions of the subcontractor's employee may not have fit

within the ancient tort of trespass quare clausum fregit, her

violation of the company's no solicitation rule nonetheless

made her a trespasser. As the Restatement puts it, a

"conditional or restricted consent to enter land creates a

privilege to do so only in so far as the condition or restriction

is complied with." Restatement (Second) of Torts s 168

(1965). The union organizers in Lechmere were in a similar

position. They were handing out leaflets in a shopping center

parking lot jointly owned by Lechmere, which had a store in

the center. No one doubted that the organizers were tres-

passers because they violated Lechmere's no solicitation poli-

cy. See 502 U.S. at 530, 540. The Southern court could find

no principled reason why, if the subcontractor's employee

were a trespasser, employees of Coca-Cola would not also be

trespassers when they handed out union literature on compa-

ny property. But that is the very point of Lechmere, as we

explained in ITT Industries: the s 7 rights of employees

entitle them to engage in organization activities on company

premises. See 502 U.S. at 537. Nonemployees do not have

comparable rights. Id. The Seventh Circuit case Southern

cited--Montgomery Ward--is no longer good law. On its

facts it was nearly identical to Lechmere, yet it held that

nonemployees could enter a store and distribute union litera-

ture to employees in violation of the employer's rule against

it-just the opposite of what the Supreme Court later held in

Lechmere. See Montgomery Ward, 692 F.2d at 1126-27.

The other opinion cited by the Board in these cases--

Gayfers--is also lacking. There, the Board considered the

s 7 rights of employees of an electrical subcontractor tempo-

rarily hired by Gayfers to perform remodeling work at its

shopping mall. Addressing the argument raised by Gayfers

that the subcontractor's "employees were not employees of

Gayfers and therefore [were] nonemployees within the mean-

ing of Babcock & Wilcox and Lechmere," the Board once

again equated "nonemployee" with "trespasser," and "em-

ployee" with "invitee," relying upon the Supreme Court's pre-

Lechmere statement that " 'the nonemployees in Babcock &

Wilcox sought to trespass on the employer's property, where-

as the employees in Republic Aviation did not.' " Gayfers,

324 N.L.R.B. at 1249 (quoting Eastex, 437 U.S. at 571). The

Board found that the subcontractor's employees "were not

'strangers' to the Respondent's property, but rightfully on it

pursuant to their employment relationship," and concluded

that, as in Southern, the subcontractor's employees enjoyed

s 7 rights "established by the standard of Republic Aviation

and not ... Babcock & Wilcox and Lechmere." Gayfers, 324

N.L.R.B. at 1250.

The Board's decisions in Southern and Gayfers, and thus

its decisions in these consolidated cases, purport to rest on

the Board's interpretation of Supreme Court opinions. As

such, the Board's judgment is not entitled to judicial defer-

ence. "We are not obligated to defer to an agency's interpre-

tation of Supreme Court precedent under Chevron or any

other principle." Univ. of Great Falls v. NLRB, 278 F.3d 1335, 1341 (D.C. Cir. 2002) (quoting Akins v. Fed. Election

Comm'n, 101 F.3d 731, 740 (D.C. Cir. 1996) (en banc), vacated

on other grounds, 524 U.S. 11 (1998)). As our opinion in ITT

Industries foreshadowed in its discussion of Southern, the

critical question in a case of this sort is whether individuals

working for a contractor on another's premises should be

considered employees or nonemployees of the property own-

er. Our analysis of the Supreme Court's opinions, unlike the

Board's in Southern and Gayfers, yields no definitive answer.

No Supreme Court case decides whether the term "employ-

ee" extends to the relationship between an employer and the

employees of a contractor working on its property. No

Supreme Court case decides whether a contractor's employ-

ees have rights equivalent to the property owner's employ-

ees--that is, Republic Aviation rights to engage in organiza-

tional activities in non-work areas during non-working time so

long as they do not unduly disrupt the business of the

property owner--because their work site, although on the

premises of another employer, is their sole place of employ-

ment.

This leaves a number of questions in this case unanswered.

Without more, does the fact that the Ark employees work on

NYNY's premises give them Republic Aviation rights

throughout all of the non-work areas of the hotel and casino?

Or are the Ark employees invitees of some sort but with

rights inferior to those of NYNY's employees? Or should

they be considered the same as nonemployees when they

distribute literature on NYNY's premises outside of Ark's

leasehold? Does it matter that the Ark employees here had

returned to NYNY after their shifts had ended and thus

might be considered guests, as NYNY argues? Is it of any

consequence that the Ark employees were communicating,

not to other Ark employees, but to guests and customers of

NYNY (and possibly customers of Ark)? Compare United

Food & Commercial Workers, 74 F.3d at 298. (Derivative

access rights, the Supreme Court has held, stem "entirely

from on-site employees' s 7 organizational right to receive

union-related information." ITT Industries, 251 F.3d at 997.)

It is up to the Board to answer these questions and others,

not only by applying whatever principles it can derive from

the Supreme Court's decisions, but also by considering the

policy implications of any accommodation between the s 7

rights of Ark's employees and the rights of NYNY to control

the use of its premises, and to manage its business and

property. The Board did not perform that function in these

cases. We will therefore grant the petitions for judicial

review without reaching the other issues NYNY has present-

ed, deny enforcement of the Board's orders, and remand to

the Board for further proceedings.

So ordered.