Sixth Circuit Strikes Down NLRB's Cemex Bargaining Order Framework as Unlawful

The Sixth Circuit's March 6 decision started with a bourbon distillery in Versailles, Kentucky, and ended with the first federal appellate ruling to strike down one of the NLRB's most aggressive organizing-era tools.

Brown-Forman Corporation's Woodford Reserve Distillery became the center of a unionization effort by the Teamsters union. 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 and merit policies, and increased flexibility around holiday vacation usage. After learning that the union had obtained authorization cards from a majority of employees, the company announced the wage increase and other benefits changes. The union lost decisively, 14 to 45.

The union challenged the result, and an NLRB administrative law judge found multiple unfair labor practices. The NLRB adopted the ALJ's findings but, crucially, based its bargaining order remedy solely on the new standard announced in Cemex Construction Materials Pacific, LLC, rather than the Supreme Court's Gissel Packing Co. standard. The Board ordered Brown-Forman to recognize and bargain with the union, despite its having lost the election.

Brown-Forman appealed. The Sixth Circuit issued a 2-1 decision in which it upheld the Board's findings of several pre-election unfair labor practices, but declined to enforce the bargaining order because it was based "solely" on the Cemex standard. The court's majority reasoning cut to the core of administrative authority: the Cemex standard represented a sweeping policy change that displaced more than 50 years of Supreme Court-approved precedent under Gissel, and the Board did not derive the Cemex standard from the specific facts of the case in which it was announced, nor was it necessary to resolve that dispute.

Because the Cemex standard is a new rule of general applicability and was not created to resolve any dispute in the Brown-Forman case, the court emphasized that the Board had improperly adopted the Cemex framework in an adjudication and not in a rulemaking. The court expressed concern that the standard was based on "decades of experience" across many cases, not the facts of the dispute before the Board.

The Sixth Circuit granted Brown-Forman's petition for review, denied the Board's cross-petition for enforcement, and remanded the case to the Board so that it can "start fresh with the proper standards in mind." That remand means the Board must now evaluate whether the Gissel standard, which treats bargaining orders as an extraordinary remedy reserved for the most severe employer misconduct, would support an order or whether a rerun election is the appropriate fix.

Sixth Circuit Judge Andre Mathis dissented, arguing that the Board has broad discretion to choose between rulemaking and adjudication and that the Cemex standard was properly created through case adjudication consistent with longstanding Supreme Court precedent and the NLRA.

The practical implications extend well beyond Kentucky bourbon country. The March 6 decision marks the first appellate rejection of the NLRB's Cemex framework, which upended 50 years of precedent by establishing a new framework for union recognition demands and lowering the bar for issuing remedial bargaining orders. The ruling binds employers and the Board within the Sixth Circuit's four states: Kentucky, Michigan, Ohio, and Tennessee. Outside those borders, because this is the first appellate decision directly addressing the validity of Cemex, if there are differing outcomes in other circuits, Supreme Court review may become necessary.

What the ruling does not do is give employers a free pass on pre-election conduct. The court's rejection of Cemex does not diminish the Board's ability to find unfair labor practices or to set aside elections; employers should remain cautious about wage increases, benefit changes, or other actions during organizing campaigns. The Woodford Reserve facts drive that point home concretely: mid-campaign pay raises, new benefits, and a bottle of bourbon handed to each employee days before a vote were all found to constitute unlawful interference, regardless of which remedial framework applied.

The Cemex standard could be reversed by the NLRB under the second Trump administration, either by a Board adjudicatory decision or by notice-and-comment rulemaking, though a formal reversal may not occur until another Republican Board member is seated, given the standard Board practice of not overturning precedential decisions without a three-member majority. The decision does not overturn Cemex entirely; the NLRB will continue to apply it until the Supreme Court or the Board reverses course. Still, the ruling represents the first appellate crack in the novel framework and may hasten its expected reconsideration.