Background
American Backflow & Fire Prevention employed plumbers who voted to unionize in June 2021. After the union charged the company with multiple unfair labor practices, including encouraging decertification, withholding requested information, and refusing to bargain at reasonable times, the company entered an April 2022 settlement agreement. It agreed to recognize the union, bargain in good faith, and accept specified default procedures if it breached the settlement and failed to cure.
In March 2023, after one bargaining session, American Backflow canceled the next session and withdrew recognition of the union, initially citing documentary evidence that the union had lost majority support. When the NLRB warned that this conduct breached the settlement, the company declined to cure. In the ensuing default proceeding, it disavowed reliance on the decertification documents but offered only a conclusory assertion that its withdrawal of recognition was lawful. The Board granted default judgment and ordered the company to bargain collectively and in good faith.
The Court’s Holding
The Seventh Circuit denied American Backflow’s petition for review and granted the NLRB’s cross-application to enforce its order. The court held that substantial evidence supported the Board’s finding that the company failed to raise a material factual dispute over whether it had breached the settlement agreement. Once the company abandoned the only stated basis for withdrawing recognition, its unexplained claim that the withdrawal was lawful amounted to a general denial insufficient to defeat default judgment or require a hearing.
The court also concluded that the Board’s decision had a reasonable basis in law, including Board precedent requiring a party opposing default judgment to specifically refute the asserted breach. American Backflow’s statutory and due-process arguments concerning a right to a hearing were unavailable on judicial review because the company had not presented them to the Board and showed no extraordinary circumstances excusing that failure.
Key Takeaways
- An employer bound by an NLRB settlement’s default provisions must specifically contest an alleged breach; a conclusory denial does not create a material factual dispute requiring a hearing.
- After a union’s certification year, an employer cannot lawfully withdraw recognition without sufficient objective evidence that the union has lost majority support.
- Under the National Labor Relations Act, objections not presented to the Board generally cannot be raised for the first time in the court of appeals absent extraordinary circumstances.
Why It Matters
The decision underscores that settling an unfair-labor-practice case can sharply limit an employer’s defenses if the settlement is later breached. Courts will enforce agreed default procedures when the employer does not provide concrete facts showing compliance or a lawful basis for its conduct.
It also reinforces the importance of preserving statutory and constitutional objections during NLRB proceedings. A party’s general request that the Board deny relief will not preserve distinct hearing-right or due-process arguments for appellate review.