National Labor Relations Board v. Bell Aerospace
416 U.S. 267 (1974)

  • Some of Bell Aerospace’s employees were trying to form a union. Bell was not happy about this and brought the matter to the NLRB for adjudication.
    • Bell argued that the employees had managerial duties and therefore shouldn’t be allowed to unionize.
  • NLRB approved the unionization.
    • They made the approval even though it went against decisions in previous NLRB adjudications.
  • Bell Aerospace sued to block the unionization.
  • The Appellate Court reversed the NLRB. NLRB appealed.
    • The Appellate Court reasoned that this decision was a sudden change of position for NLRB, and such drastic changes should only be announced by the rulemaking process.
      • The unstated reason for the Court’s decision was that for years NLRB never made a single rule and the courts were annoyed with the way NLRB was doing business.
  • The US Supreme Court reversed and found for NLRB.
    • The US Supreme Court looked to SEC v. Chenery (332 U.S. 194 (1947)), which said that that while an Agency might be encouraged to use the rulemaking process to promulgate a new policy, they can come up with a policy and immediately and without warning start finding against people/companies in adjudications.
    • The Court took the occasion to limit the discretion they gave to the Agencies in Chenery. The Court suggested that there were some factors that could require an Agency to announce a new position as a rule. These include:
      • Does the diversity and complexity of the problem justifying proceeding on a case-by-case basis?
      • Did the company place a great reliance on the previous policy?
      • Does the change in policy involve any new liability that would be suffered because of a good faith reliance on the previous policy?
      • Does the company face any damages or fined because of reliance on the previous policy?
  • Although the Court suggested the factors and possible reasons for denying an Agency the ability to change a position via an adjudication as oppose to a rule, they have never reversed an Agency action for abuse of discretion in choosing an order rather than a rule.