Fifth Circuit Limits NLRB Remedies to Equitable Relief Under NLRA §10(c), Rejecting Thryv’s “Foreseeable Harms” Damages

Introduction

In Hiran Management v. NLRB, the U.S. Court of Appeals for the Fifth Circuit confronted a consequential question about the National Labor Relations Board’s remedial powers: whether NLRA §10(c) permits the Board to award full compensatory damages for all “direct or foreseeable pecuniary harms” flowing from unfair labor practices, as announced in the Board’s 2022 decision Thryv, Inc., 372 NLRB No. 22. The case arose from a small Houston karaoke restaurant, Hungry Like the Wolf, where eight front-of-house employees engaged in a post-meeting walkout and strike after disputes with their manager over duties and promised compensation. Following their discharge, an ALJ and then the Board found an unfair labor practice under §8(a)(1) and ordered reinstatement and “make-whole” relief including all direct or foreseeable pecuniary harms.

On review, Hiran did not contest the unfair labor practice finding. Instead, it argued (1) four discharged individuals were supervisors not protected by the NLRA and (2) the Board lacked statutory authority to award compensatory damages beyond equitable backpay-type remedies. It also preserved a suite of constitutional and structural objections. Writing for the panel, Judge Edith H. Jones held that the Board may not award full compensatory damages under §10(c), aligning the Fifth Circuit with the Third Circuit and deepening a split with the Ninth Circuit. The court also held that Hiran waived its supervisory-status defense by raising it too late and, in any event, failed to substantiate supervisory status on the merits. The panel granted in part the employer’s petition, denied in part the Board’s enforcement application, and remanded for recalculation of remedies consistent with the opinion.

Summary of the Opinion

• Unfair labor practice liability: Undisputed on appeal; the Board’s finding stands.
• Supervisory-status defense: Waived because not timely raised before or during the ALJ hearing; moreover, the record did not show independent judgment necessary to establish supervisory status under §2(11) for the named employees.
• Remedial authority: NLRA §10(c) authorizes equitable relief—cease-and-desist orders and “affirmative action including reinstatement of employees with or without back pay”—but not legal damages. The Board’s Thryv “foreseeable pecuniary harms” remedy is compensatory/consequential damages and exceeds the statute.
• Comparative statutory context: Title VII’s remedial evolution underscores the point. Congress expressly added “other equitable relief” (1972) and later compensatory/punitive damages (1991) to Title VII, but has never enlarged §10(c). If compensatory damages required express authorization in Title VII, the same logic limits §10(c) absent amendment.
• Outcome: Employer’s petition granted in part; NLRB’s cross-application denied in part; remand to craft equitable remedies consistent with §10(c)—reinstatement, backpay, and backpay-like make-whole relief—not full compensatory damages for all foreseeable harms.
• Unreached issues: Article III, Seventh Amendment, due process, major questions, and nondelegation arguments were unnecessary to resolve.

Detailed Analysis

Precedents and Authorities Driving the Decision

The Fifth Circuit’s holding is built on a bedrock distinction between legal and equitable remedies and on textual and structural readings of §10(c), reinforced by Supreme Court guidance and parallel statutes.

• Divided bench history; legal versus equitable remedies:
  • Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204 (2002): Recalls the historical separation between courts of law and equity; equitable remedies include injunctions and certain forms of restitution.
  • Mertens v. Hewitt Associates, 508 U.S. 248 (1993): “Compensatory damages” are the “classic form of legal relief,” not equitable relief.
  • Ex parte Lennon, 166 U.S. 548 (1897): Equitable relief “compel[s] action or inaction,” i.e., injunctions and mandatory orders.
• NLRB’s remedial scope under §10(c):
  • UAW-CIO v. Russell, 356 U.S. 634 (1958): The Board’s “power to order affirmative relief” does not include a “general scheme authorizing the Board to award full compensatory damages.” The Fifth Circuit reads this as a categorical bar to the kind of global consequential-damages model announced in Thryv.
  • Sure-Tan, Inc. v. NLRB, 467 U.S. 883 (1984), and Curtis v. Loether, 415 U.S. 189 (1974): Backpay as equitable restitution integral to restoring the status quo ante; not a signal that all monetary relief is equitable.
  • Fifth Circuit historical practice: Agwilines, Inc. v. NLRB, 87 F.2d 146 (5th Cir. 1936) (NLRB proceedings “equitable in their nature”); NLRB v. Big Three Welding Equip. Co., 359 F.2d 77 (5th Cir. 1966) (enforcing restitutionary backpay).
• Title VII as a comparative template expressly modeled on §10(c):
  • Albemarle Paper Co. v. Moody, 422 U.S. 405 (1975), and Pollard v. E.I. du Pont de Nemours & Co., 532 U.S. 843 (2001): Congress explicitly expanded Title VII’s remedies to add “other equitable relief” (1972) and later compensatory/punitive damages (1991). The Fifth Circuit reasons that if compensatory damages were implicit in §10(c)-like language, these amendments would have been needless.
• What counts as equitable “make-whole” versus compensatory damages:
  • Va. Electric & Power Co. v. NLRB, 319 U.S. 533 (1943): Ordering refunds of unlawfully deducted dues resembles restitution/backpay, not tort-like damages.
  • NLRB v. Louton, Inc., 822 F.2d 412 (3d Cir. 1987), and Lou’s Transportation, Inc. v. NLRB, 945 F.3d 1012 (6th Cir. 2019): Adding discrete employment benefits (health insurance, retirement) as part of backpay stays within the restitutionary orbit. The Fifth Circuit emphasizes these are “closely tied” to wages and benefits unlawfully withheld—not a blank check for consequential losses.
  • Bill Johnson’s Restaurants, Inc. v. NLRB, 461 U.S. 731 (1983), and NLRB v. Laborers’ Int’l Union, 748 F.2d 1001 (5th Cir. 1984): Attorneys’ fees and medical costs may be permitted in narrow circumstances directly tethered to undoing the ULP’s immediate effects, not to indemnify all downstream life-event expenses.
• Circuit split on Thryv:
  • Third Circuit: NLRB v. Starbucks Corp., 125 F.4th 78 (3d Cir. 2024) disapproved the Board’s expansion of remedies to “all foreseeable harms.” The Fifth Circuit “side[s] with the Third Circuit.”
  • Ninth Circuit: Int’l Union of Operating Engineers, Local 39 v. NLRB, 127 F.4th 58 (9th Cir. 2025) upheld Thryv; Judge Bumatay dissented. The Fifth Circuit critiques the Ninth Circuit for eliding the premise that the Board may only use authorized remedial forms to effectuate statutory policy.
  • Tenth Circuit: 3484, Inc. v. NLRB, 137 F.4th 1093 (10th Cir. 2025). The majority resolved on forfeiture grounds, but Judge Eid’s separate opinion underscored that the Board lacks power to award compensatory/consequential damages.
• Statutory constraint on “penalty” and overbreadth:
  • Consolidated Edison Co. v. NLRB, 305 U.S. 197 (1938): §10(c)’s “affirmative action” power does not authorize penalties, even in the name of effectuating the Act’s policies.

Legal Reasoning: Why Thryv’s “Foreseeable Harms” Exceeds §10(c)

The court begins with §10(c)’s text: the Board may order an employer “to cease and desist from [an] unfair labor practice, and to take such affirmative action including reinstatement of employees with or without back pay, as will effectuate the policies of this subchapter.” These verbs—“cease and desist” and “take affirmative action”—are classic equitable commands. The statute’s exemplars—reinstatement and backpay—are traditionally equitable remedies designed to restore the employment status quo. While the Board can tailor equitable relief to effectuate the Act, the Fifth Circuit reads the statute as cabined to equitable forms, not open-ended legal damages.

Under Thryv, however, the Board pledged to order compensation for all “direct or foreseeable pecuniary harms” resulting from the ULP, listing such items as credit-card late fees, mortgage penalties, childcare and transportation costs, early withdrawal penalties from retirement accounts, eviction-defense legal costs, moving expenses, and more. The Fifth Circuit characterizes these items as classic compensatory and consequential damages—squarely legal, not equitable—because they indemnify employees for a spectrum of downstream financial injuries that do not simply restore unlawfully withheld wages or benefits. The opinion’s reliance on Mertens, the Restatements, and even a Board chair’s past acknowledgment that credit-card late fees and early withdrawal penalties are consequential damages reinforces that point.

The Board argued its approach is still equitable “make-whole” relief since it aims to restore the status quo ante. The Fifth Circuit rejects that conflation. Both legal and equitable remedies can be restorative; the question is not the aim but the form and historical lineage of the relief. Monetary awards untethered to restitution of wages/benefits and that instead compensate for downstream harms sound in legal damages, not equity. Russell is decisive: whatever “affirmative action” covers, it is not a general damages scheme.

The court’s comparative statutory analysis of Title VII is particularly forceful. Congress used §10(c) as a model for Title VII’s initial remedial clause. Only later did Congress explicitly append “any other equitable relief” (suggesting expansion beyond the original template) and, much later, authorize compensatory and punitive damages. This legislative path supports the inference that §10(c) itself remains limited to equitable relief and does not smuggle in legal damages by implication. A contrary reading would render those Title VII amendments superfluous.

Applying the Law to the Record: Supervisory Status and Waiver

The NLRA excludes “supervisors” from the definition of covered “employees.” Under §2(11) and Ky. River Community Care, a supervisor must (1) hold authority over one of twelve enumerated functions (e.g., hiring, assigning, disciplining), (2) exercise independent judgment, and (3) wield that authority in the employer’s interest. The Board treats supervisory status as an affirmative defense that must be timely pleaded so opposing counsel can develop a record.

Hiran raised the supervisory-status argument for four front-of-house workers only in a post-hearing brief. Citing Strand Theatre and the D.C. Circuit’s Trident Seafoods, the Fifth Circuit endorsed the Board’s conclusion that the defense was waived because the General Counsel lacked a fair chance to litigate it at the hearing. The court added that the merits were unpersuasive anyway: occasional “shift supervisor” labels, opening/closing duties, and assisting the manager with drafts of schedules—where the manager corrected/finalized the schedules—did not establish the requisite independent judgment. Job titles alone do not carry the day (ADCO Electric), and the record fell short of showing supervisory authority in fact.

Drawing the Line: Backpay-Like Restitution Versus Tort-Like Damages

The court acknowledges that the Board has long ordered monetary relief beyond the paycheck where those items are integrally tied to the employment contract or wage/benefit stream—e.g., restoring lost medical insurance benefits or pension contributions as part of backpay. But it separates those items from Thryv’s “foreseeable harms,” which extend into broader consequential losses not part of the employment bargain. That bright line preserves equitable make-whole relief—restitutionary backpay and directly associated benefits—while barring open-ended compensatory damages commonly recovered in tort.

Standards of Review and Deference

The court reviews legal conclusions de novo and factual findings for substantial evidence. The scope-of-remedy question is purely legal: does §10(c) authorize compensatory damages? The Fifth Circuit answers no, without deferring to the agency’s view, and treats the Board’s attempt to reclassify legal damages as “equitable” as incompatible with established doctrine and statutory text.

Remedy and Remand: What Happens Next

The Board’s ULP finding and cease-and-desist order stand. On remand, the Board must fashion equitable relief. Permissible categories include:

• Reinstatement or instatement, as appropriate.
• Backpay calculated to restore wages lost due to the unlawful discharge, with interest.
• Backpay-adjacent benefits directly tied to employment (e.g., employer-paid health insurance benefits, retirement contributions), where supported by the record and consistent with the decisions recognizing such items as part of backpay.

Impermissible categories include Thryv-style “foreseeable” expenses divorced from the wage/benefit stream—e.g., consumer late fees, mortgage penalties, childcare and transportation costs unrelated to backpay computation, early withdrawal penalties from retirement accounts incurred to make ends meet, moving expenses, eviction-defense attorney fees, or costs stemming from immigration status changes. The recalculated award must adhere to §10(c)’s equitable lane.

Implications and Likely Future Developments

• Geographic reach: Within the Fifth Circuit (Texas, Louisiana, Mississippi), Thryv’s “foreseeable harms” model is unenforceable. The Board may still announce such relief, but it cannot obtain judicial enforcement there.
• Forum asymmetry: The decision deepens a circuit split (Third and Fifth versus Ninth), increasing incentives for strategic venue selection and accelerating the odds of Supreme Court review to harmonize remedies under a nationally uniform labor statute.
• Negotiation dynamics: Without the leverage of broad consequential damages, settlement valuations in ULP discharge cases will likely contract in the Fifth Circuit toward traditional backpay-and-reinstatement parameters.
• General Counsel initiatives: The Fifth Circuit’s ruling undercuts GC 24-04’s expansive remedial categories. Expect the NLRB to cabin make-whole requests in Fifth Circuit cases to backpay-adjacent items or to press for national resolution of the split.
• Constitutional questions reserved: The court did not reach the Article III, Seventh Amendment, due process, major questions, or nondelegation arguments. Should another circuit uphold Thryv on statutory grounds, those constitutional issues could become decisive in future cases.
• Evidentiary practice: Employers should timely raise and develop any §2(11) supervisory-status defense in pleadings and at hearing. Failure to do so risks waiver, as in Strand Theatre and this case.

Complex Concepts Simplified

• Legal vs. equitable remedies:
  • Equitable remedies compel or restrain conduct (e.g., reinstatement, injunction) or restore specific property or funds unjustly withheld (restitution/backpay).
  • Legal remedies chiefly involve money damages to compensate for loss, including downstream consequential losses (e.g., late fees, penalties, moving costs).
• Backpay as equitable restitution:
  • Backpay restores the wages and employment benefits an employee would have earned “but for” the unlawful act; courts routinely treat backpay as equitable in labor and some civil rights contexts.
• Compensatory versus consequential damages:
  • Compensatory damages cover direct losses; consequential damages cover indirect downstream losses caused by the wrongful act (e.g., credit-card late fees after a discharge). Thryv’s “foreseeable harms” sit in this consequential category.
• “Affirmative defense” and waiver:
  • An affirmative defense (e.g., supervisory status) must be raised in a timely answer and litigated in the evidentiary hearing. Raising it only in post-hearing briefing deprives the opposing party of a fair chance to build a record and typically results in waiver.
• “Concerted activity” under §7:
  • Employees’ rights to act together for mutual aid or protection—such as striking—are generally protected; discharging employees for engaging in such activity violates §8(a)(1) unless an exception applies.

Conclusion

Hiran Management clarifies and constrains the NLRB’s remedial arsenal within the Fifth Circuit. The court reaffirms that §10(c) authorizes equitable relief—cease-and-desist orders, reinstatement, and backpay (including closely tied benefits)—but not a tort-style regime of full compensatory and consequential damages for all “foreseeable” harms flowing from a ULP. By siding with the Third Circuit and declining to follow the Ninth Circuit’s expansive view, the Fifth Circuit entrenches a significant circuit split over the scope of Board remedies that will influence enforcement strategy, settlement dynamics, and forum selection in labor cases. The decision also offers a procedural cautionary tale: employers must timely raise and litigate supervisory-status defenses or risk waiver.

In the broader legal landscape, the opinion adheres to longstanding Supreme Court teachings distinguishing equity from law and reads §10(c) in harmony with Title VII’s expressly staged expansion of remedies. Until Congress amends the NLRA or the Supreme Court resolves the split, NLRB “make-whole” orders in the Fifth Circuit must remain tethered to equitable, backpay-related relief—and cannot reach the broad consequential damages contemplated by Thryv and GC 24-04.

Key Takeaways

• New rule (Fifth Circuit): NLRA §10(c) does not authorize the NLRB to award full compensatory damages for “direct or foreseeable” harms; remedies are limited to equitable relief such as reinstatement and backpay (with backpay-adjacent benefits).
• Practical effect: In TX, LA, and MS, the Board cannot enforce Thryv’s foreseeable-harms orders; expect remedial recalculations confined to backpay-like items.
• Procedure matters: Supervisory-status defenses must be timely and fully litigated; late assertion is typically waived.
• Unresolved constitutional issues remain in the background, poised to surface if other circuits uphold Thryv on statutory grounds.
• Supreme Court review is now more likely given the entrenched split between the Third/Fifth and Ninth Circuits on the core question of Board remedial authority.