Federal Appeals Court Strikes Down NLRB Bargaining Order Power, Limiting Union Reach

The first federal appeals court to take on the NLRB's 2023 Cemex framework has struck it down as an unlawful exercise of agency power, handing a significant procedural win to employers while leaving intact the board's authority to punish misconduct during organizing campaigns.

The U.S. Court of Appeals for the Sixth Circuit ruled March 6 in Brown-Forman Corp. v. NLRB that the board's Cemex standard was unlawfully created through case-by-case adjudication rather than formal rulemaking, and therefore could not serve as the basis for ordering Brown-Forman Corporation, the Louisville-based spirits company that operates Woodford Reserve Distillery, to recognize and bargain with a union. The court vacated the bargaining order and sent the case back to the board for reconsideration under pre-Cemex legal standards.

The ruling does not wipe out Cemex nationally. It is binding only within the Sixth Circuit's four states: Kentucky, Michigan, Ohio, and Tennessee. Outside those states, the NLRB may still assert Cemex unless other courts reject it or the board formally rescinds it.

The Cemex framework had been controversial since the board adopted it in 2023 through its decision in Cemex Construction Materials Pacific, LLC. Under that standard, the board expanded the circumstances in which it could require an employer to bargain with a union even after workers voted against representation, moving well beyond the narrow "hallmark violations" threshold that had governed bargaining orders since the Supreme Court's 1969 decision in NLRB v. Gissel Packing Co. Cemex significantly strengthened unions' ability to overcome election losses by securing bargaining orders based on pre-election unfair labor practices.

The Sixth Circuit did not rule on whether Cemex represents a valid interpretation of the National Labor Relations Act. Instead, the court held on narrower administrative law grounds: the board exceeded its adjudicatory authority by effectively creating new national labor policy through adjudication rather than notice-and-comment rulemaking. The court described a bargaining order as an "extraordinary remedy" and concluded the NLRB had no lawful basis to impose one under the Cemex standard it had created for itself.

Critically, the court agreed with the board's underlying factual findings. Brown-Forman's pre-election conduct violated federal labor law and, the court found, reasonably tended to coerce employees during the election. The company's unfair labor practice findings stand; only the remedy was vacated.

That distinction carries real weight for large multi-location employers. The decision does not reduce scrutiny of pre-election conduct. Pre-election changes to wages, benefits, or workplace policies remain closely examined, and the board retains authority to remedy serious misconduct under Gissel and other longstanding precedent.

For employers in the Sixth Circuit, the ruling provides controlling authority to challenge any bargaining order grounded in Cemex. Nationally, it offers a framework to raise the same adjudicatory-authority argument in other circuits, though those courts are not bound by it and may reach different conclusions. Multi-state employers in particular are advised to seek legal guidance before responding to union recognition demands, since Cemex enforcement remains possible in jurisdictions outside the Sixth Circuit.

There is also a separate track to watch at the board level. The NLRB's current composition, majority Republican-appointed after the board was reconstituted, had already been moving toward reversing Cemex through its own processes before the Sixth Circuit acted. The court's decision now independently forecloses Cemex enforcement within the four-state circuit regardless of what the board ultimately decides, and could accelerate pressure on the board to formally abandon the standard altogether.

The case now returns to the NLRB for reconsideration of what remedy, if any, is appropriate for Brown-Forman's confirmed pre-election violations under the older, narrower framework the Sixth Circuit directed it to apply.