Sixth Circuit Rejects Cemex Bargaining Orders as Improper Adjudicative Rulemaking

1. Introduction

Brown-Forman Corp. v. NLRB arises from a union organizing drive at Brown‑Forman’s Woodford Reserve facility in Versailles, Kentucky. After employees expressed dissatisfaction with wages and explored union representation through the International Brotherhood of Teamsters, Local Union No. 651, Brown‑Forman implemented a series of compensation-related changes: a new $4-per-hour across-the-board raise, expansions to pay progression/merit policies, and increased flexibility around holiday vacation usage. As the representation election neared, Brown‑Forman also provided employees bottles of bourbon.

The union lost the election decisively (14–45) and filed objections and unfair-labor-practice charges. An Administrative Law Judge found violations of Section 8(a)(1) and (3) of the National Labor Relations Act, and recommended a bargaining order under both Cemex Construction Materials Pacific, LLC, 372 NLRB No. 130 and NLRB v. Gissel Packing Co., 395 U.S. 575 (1969). The Board adopted the factual findings but—critically—issued the bargaining order relying only on Cemex, expressly disclaiming reliance on Gissel.

The Sixth Circuit thus confronted a threshold question of administrative law with major labor-law consequences: whether Cemex can validly function as precedential authority for imposing the “extraordinary remedy” of a bargaining order after an election has been set aside.

2. Summary of the Opinion

• Unfair labor practices: The court upheld the Board’s findings that Brown‑Forman violated Section 8(a)(1) and (3) by conferring well-timed economic benefits and gifts to discourage union support, applying NLRB v. Exch. Parts Co., 375 U.S. 405 (1964) (“fist inside the velvet glove”) and the substantial-evidence standard.
• Pre-petition conduct: The court held the Board could consider pre-petition conduct where it related to, or continued into, post-petition coercive activity, citing Randall, Burkart/Randall Div. of Textron, Inc. v. NLRB, 638 F.2d 957 (6th Cir. 1981).
• Remedy (bargaining order): The court denied enforcement and remanded because the Board’s bargaining order rested solely on Cemex, which the court held was created through an unlawful exercise of the Board’s adjudicatory authority. The court did not reach the substantive validity of Cemex as labor policy, focusing instead on the procedure used to create it.
• Disposition: Petition for review granted; cross-petition for enforcement denied; remanded for proceedings consistent with the opinion.

3. Analysis

3.1 Precedents Cited

A. Substantial evidence and coercive conferral of benefits

• NLRB v. Exch. Parts Co., 375 U.S. 405 (1964) supplied the governing principle that “well-timed increases in benefits” during an organizing campaign, especially by an anti-union employer, may reasonably coerce employees and interfere with free choice. The Sixth Circuit treated Brown‑Forman’s unprecedented mid-year second wage increase and other benefits as classic Exch. Parts conduct.
• The court framed review through the “substantial evidence” lens, quoting standards and sources including Biestek v. Berryhill, 587 U.S. 97 (2019) and Consolidated Edison Co. of N.Y. v. NLRB, 305 U.S. 197 (1938), and applying Sixth Circuit labor precedent such as Caterpillar Logistics, Inc. v. NLRB, 835 F.3d 536 (6th Cir. 2016).

B. Pre-petition conduct in election-related unfair labor practice analysis

• Randall, Burkart/Randall Div. of Textron, Inc. v. NLRB, 638 F.2d 957 (6th Cir. 1981) was the key citation: even if the Board often focuses on post-petition conduct “for administrative convenience,” it may consider pre-petition conduct when significantly related to, or continuing into, post-petition events. The court relied on the campaign’s continuity (including gifts close to the election) to uphold the Board’s inclusion of pre-petition wage/benefits decisions.
• The opinion also referenced out-of-circuit support for the general proposition that nothing in the Act limits the Board to post-petition conduct, citing NLRB v. Curwood Inc., 397 F.3d 548 (7th Cir. 2005).

C. The “preferred method” of determining majority support and the extraordinary nature of bargaining orders

• NLRB v. Gissel Packing Co., 395 U.S. 575 (1969) was treated as the canonical Supreme Court framework preserving the preference for secret-ballot elections while permitting bargaining orders as a last resort when misconduct makes a fair election (or rerun) unlikely. The Sixth Circuit emphasized that Gissel requires an assessment of whether a fair election can be held—an inquiry the Board deliberately bypassed by relying solely on Cemex.
• Sixth Circuit precedent underscoring bargaining orders as “extraordinary” and elections as preferred included NLRB v. Taylor Mach. Prods., Inc., 136 F.3d 507 (6th Cir. 1998), Henry Bierce Co. v. NLRB, 23 F.3d 1101 (6th Cir. 1994), and NLRB v. Gen. Fabrications Corp., 222 F.3d 218 (6th Cir. 2000).

D. Administrative law limits on adjudication vs. rulemaking

• SEC v. Chenery Corp., 332 U.S. 194 (1947) ("Chenery II") provided the central analytic template: agencies may develop policy via adjudication, but orders must be grounded in “due consideration of the particular facts” and standards relevant to resolving the dispute. The Sixth Circuit read Chenery II as requiring that adjudicatory policymaking be case-tethered—addressing problems arising “in a case,” rather than promulgating hard-and-fast generally applicable rules.
• NLRB v. Wyman-Gordon Co., 394 U.S. 759 (1969) was used as a cautionary example of “rules of general application” improperly issued through adjudication (the court likened Cemex to the Board’s approach in Excelsior Underwear Inc., 156 NLRB 1236 (1966)).
• NLRB v. Bell Aerospace Co. Div. of Textron, Inc., 416 U.S. 267 (1974) was treated as affirming that the Board may choose adjudication in the first instance, but that there remain situations where reliance on adjudication becomes an abuse of discretion or violates the Act.
• Allentown Mack Sale & Servs., Inc. v. NLRB, 522 U.S. 359 (1998) anchored the “reasoned decisionmaking” requirement for adjudication, which the court said the Board violated by applying Cemex mechanically as precedent without an independently reasoned, case-based justification.
• The court also cited major, modern administrative-law guideposts emphasizing judicial responsibility to police statutory boundaries, including Loper Bright Enters. v. Raimondo, 603 U.S. 369 (2024).

E. Chenery doctrine and remedial vacatur

• SEC v. Chenery Corp., 318 U.S. 80 (1943) ("Chenery I"), as reiterated in FDA v. Wages & White Lion Invs., 604 U.S. 542 (2025), supplied the decisive enforcement principle: a reviewing court cannot uphold agency action on grounds the agency did not invoke. Because the Board expressly refused to rely on Gissel and relied solely on Cemex, the bargaining order could not be salvaged on alternative reasoning.
• Calcutt v. Fed. Deposit Ins. Corp., 598 U.S. 623 (2023) supported remand once an error of law is exposed (“the function of the reviewing court ends”).

3.2 Legal Reasoning

A. The court’s split approach: liability affirmed, remedy rejected

The Sixth Circuit’s reasoning is deliberately bifurcated. It first affirms the unfair-labor-practice findings under a deferential factual standard, emphasizing timing, internal management communications, unprecedented wage changes, and employee reactions (“bribe”). It then pivots to a non-deferential question of agency power: whether the Board had a lawful basis to issue the extraordinary remedy of a bargaining order when it relied solely on Cemex.

B. Why Cemex was deemed procedurally invalid

The majority opinion does not primarily attack Cemex as “bad labor policy.” Instead, it frames Cemex as an administrative-law defect: the Board used an adjudication to announce a broadly applicable, rigid remedial rule that—by the Board’s own description—was motivated by general deterrence and decades of experience, not by the case-specific need to resolve the dispute before it.

• Lack of case tethering: The court stressed that in Cemex the Board first applied Gissel to justify the bargaining order in that very case, then—separately—announced a “New Standard” largely justified by general deterrence goals and accumulated experience, conceding that the “revised standard in this case results in neither finding any additional violation of the Act nor any additional remedial obligation.” This sequencing and rationale supported the court’s conclusion that the “new standard” was not necessary to decide Cemex.
• General deterrence as the tell: The court treated the Board’s emphasis on making bargaining orders “more readily available” to incentivize employer conduct in future campaigns as an indicator that the Board was acting legislatively. The opinion linked this to its view (including citation to Sixth Circuit authority) that the Board lacks authority to impose remedies “solely for the purpose of deterring future violations of the Act” (citing Nat'l Cash Register Co. v. NLRB, 466 F.2d 945 (6th Cir. 1972) and Republic Steel Corp. v. NLRB, 311 U.S. 7 (1940)).
• Hard-and-fast default remedy: By characterizing Cemex as making a bargaining order the default once an election is set aside, the court found the standard too “rigid” and broadly applicable to fit within adjudication’s “case-by-case evolution” role described in Chenery II.
• Rulemaking safeguards bypassed: The court underscored that APA notice-and-comment exists to ensure “fairness and mature consideration” of general rules, and held that the Board may not bypass those safeguards by embedding general prospective policy in an adjudication (drawing on Wyman-Gordon).

C. Why the Board’s order could not be enforced even if facts supported strong relief

The court’s enforcement analysis is strictly Chenery I-based: it refused to let a reviewing court “fix” the Board’s remedial reasoning by supplying a Gissel analysis the Board intentionally did not perform. It also criticized the Board for failing to supply a separate, case-specific justification for applying a new framework, invoking Allentown Mack Sale & Servs., Inc. v. NLRB and the “reasoned decisionmaking” requirement.

D. The dissent’s counter-theory (and the doctrinal fault line)

Judge Mathis’s dissent reads NLRB v. Bell Aerospace Co. as granting the Board wide berth to choose adjudication over rulemaking and views Cemex as a permissible policy shift (indeed, one in a line of Board oscillations). The majority’s response is that discretion over the “choice” does not erase procedural boundaries once adjudication is chosen: an adjudication must still be anchored in resolving the parties’ case, not promulgating general deterrence-based rules for the future.

3.3 Impact

A. Immediate operational impact in the Sixth Circuit

• Enforcement barrier for Cemex-only bargaining orders: Where the Board issues a bargaining order and expressly relies solely on Cemex—as it did here—parties can expect serious vulnerability on petition for review in the Sixth Circuit.
• Remand pressure toward Gissel (or formal rulemaking): The court’s remedy is not “no bargaining orders,” but rather “no Cemex-as-promulgated bargaining orders.” On remand, the Board must proceed under standards it can lawfully apply—most naturally, the case-specific Gissel framework (Category I/II analysis, including whether a fair rerun election is unlikely).
• Chenery discipline for the Board: The decision incentivizes the Board to build robust alternative holdings if it wishes to preserve orders on review (e.g., analyze Gissel even if announcing a new standard), because a reviewing court will not supply missing reasoning.

B. Broader administrative-law significance

• Procedural policing post-Loper Bright: The opinion is a conspicuous example of courts “exercise independent judgment” to “fix[] the boundaries of the delegated authority,” using administrative-law procedure (adjudication vs. rulemaking) to invalidate a high-profile labor policy.
• Adjudication/rulemaking line-drawing in remedial contexts: The court’s reasoning reaches beyond labor law. It articulates a general constraint: when an agency crafts a rigid, forward-looking policy motivated by macro-level deterrence rather than case resolution, the proper vehicle is rulemaking, not adjudication.

C. Likely litigation and agency responses

• Circuit divergence: Because the Sixth Circuit treated the question as one of procedural validity (not merely deference to labor expertise), the opinion sets up a strong possibility of divergent circuit treatment of Cemex and eventual Supreme Court review.
• Greater emphasis on NLRB rulemaking: If the Board wishes to reinstate a “default bargaining order” approach, the decision implicitly channels the Board toward APA notice-and-comment rulemaking under 29 U.S.C. § 156.

4. Complex Concepts Simplified

• Unfair labor practice (ULP): Conduct by an employer (or union) that the NLRA prohibits because it interferes with employees’ rights to organize and choose representation. Here, the court upheld findings that Brown‑Forman’s wage/benefits changes and gifts tended to coerce employees in the exercise of Section 7 rights.
• Section 8(a)(1) and 8(a)(3): Section 8(a)(1) forbids interference, restraint, or coercion regarding organizing rights; Section 8(a)(3) forbids discrimination in employment terms to encourage or discourage union membership.
• Authorization cards: Signed cards stating employees want a union to represent them. They can evidence majority support, but elections are typically the “preferred” measure of employee choice.
• Bargaining order: A remedial order compelling an employer to recognize and bargain with a union (even after an election loss) to remedy employer misconduct that undermined free choice. Courts call it “extraordinary” because it substitutes for the usual election-based determination.
• Gissel standard: The Supreme Court’s framework allowing bargaining orders when employer misconduct makes a fair election (or rerun) unlikely, particularly where the union previously had majority support.
• Rulemaking vs. adjudication (APA basics): Rulemaking creates generally applicable prospective rules through notice-and-comment procedures; adjudication resolves a specific dispute through an order. The court held Cemex crossed the line by using adjudication to do rulemaking without the required process.
• Chenery principle: A court may uphold an agency action only on the grounds the agency itself invoked. Because the Board disclaimed Gissel and relied only on Cemex, the Sixth Circuit would not “rewrite” the order to save it.

5. Conclusion

Brown-Forman Corp. v. NLRB is a consequential Sixth Circuit decision not because it loosens standards for finding employer interference—on the contrary, it affirms robust ULP findings under NLRB v. Exch. Parts Co.—but because it imposes a sharp administrative-law constraint on the Board’s remedial policymaking. The court held that the Board cannot rely on Cemex Construction Materials Pacific, LLC, 372 NLRB No. 130 as precedential authority for a bargaining order where Cemex was promulgated through an improper use of adjudication to announce a generally applicable policy not needed to resolve the underlying dispute. Enforcing Chenery discipline, the court denied enforcement and remanded, signaling that bargaining orders must rest on lawfully adopted standards and reasoned, case-specific remedial justification—most notably the framework of NLRB v. Gissel Packing Co. unless and until the Board adopts new rules through proper procedures.