Could Jarkesy Help Resolve Circuit Split on NLRB’s Authority to Impose Monetary Remedies?

Judge Bumatay’s dissent in Int’l Union of Operating Eng’rs, Stationary Eng’rs, Loc. 39 v. NLRB, 127 F.4th 58, 79 (9th Cir. 2025), suggests that SEC v. Jarkesy, 603 U.S. 109 (2024)—which held that the SEC’s in-house adjudication of civil-penalty claims violated the accused’s right to a jury trial in an Article III court—may be key in resolving an emerging circuit split regarding the National Labor Relations Board’s (NLRB) recent claim of authority to award compensatory monetary relief.

Section 10(c) of the National Labor Relations Act authorizes the Board to investigate and adjudicate alleged violations of the Act in in-house tribunals and to order employers to “cease and desist from” unfair labor practices and to “take such affirmative action[,] including reinstatement of employees with or without back pay, as will effectuate the policies of [the Act].” For decades, the Board interpreted this section to authorize only equitable relief, limiting monetary relief to restitution of what the employer unlawfully withheld. However, in 2022, the Board shifted its position, ruling that Section 10(c) also authorizes monetary relief to “compensate affected employees for all direct or foreseeable pecuniary harms.” Thryv, Inc., 372 NLRB No. 22 (Dec. 13, 2022), vacated on other grounds in Thryv, Inc. v. NLRB, 102 F.4th 727 (5th Cir. 2024). This transformed restitution—a traditional equitable remedy—into compensatory damages, a form of legal remedy.

In December 2024, the Third Circuit rejected the Board’s new approach, holding that the Act’s text “limits the Board’s remedial authority to equitable, not legal, relief.” NLRB v. Starbucks Corp., 125 F.4th 78, 95 (3d Cir. 2024). “While the Board can certainly award some monetary relief to the employees, that relief cannot exceed what the employer unlawfully withheld.” Id. at 97. One month later, in January 2025, the Ninth Circuit reached the opposite conclusion, affirming the Board’s authority to impose compensatory damages for foreseeable harms. Int’l Union of Operating Eng’rs, Stationary Eng’rs, Loc. 39, 127 F.4th at 79. According to the panel majority, damages for foreseeable harms “further the policy of the NLRA because [they are] directly targeted at the Company’s unlawful [conduct] and aimed at restoring the economic strength that is necessary to ensure a return to the status quo ante at the bargaining table.” Id. (cleaned up).

Judge Bumatay dissented, agreeing with the Third Circuit’s interpretation of Section 10(c) and emphasizing that Jarkesy further supports invalidating the Board’s assertion of authority to impose compensatory remedies. He distilled Jarkesy into a three-step analysis and argued that the Board’s interpretation violates employers’ Seventh Amendment right to a jury trial in an Article III court. Int’l Union of Operating Eng’rs, 127 F.4th at 95-99.

1. Nature of the Remedy: The first Jarkesy factor considers whether the remedy sought is legal or equitable in nature. Judge Bumatay explained that the Board’s shift toward awarding compensatory damages implicates the Seventh Amendment because compensatory damages are a legal remedy, not an equitable one. Traditional equitable relief in labor disputes asks what the employer has unjustly gained, while the Board’s new approach asks what the employee has lost—placing it firmly in the category of legal damages. Moreover, because the Board’s view of foreseeable damages encompasses indirect harms and lacks a proximate causation limitation, Judge Bumatay argued that such damages exceed pure compensation and become punitive in nature, further confirming their legal character.
2. Analogy to Common-Law Claims: Jarkesy’s second step considers whether the claim resembles a common-law cause of action. Judge Bumatay noted that unfair labor practices—such as locking out employees—closely parallel the common-law tort of wrongful termination.
3. The Public Rights Exception: The final step examines whether the public rights exception applies. Judge Bumatay underscored the Supreme Court’s warning that public rights is “only an exception” and “has no textual basis in the Constitution.” Id. at 98 (quoting Jarkesy, 603 U.S. at 131). The exception is narrow, based on century-old legal principles, and has only been recognized in limited categories—such as immigration and public benefits—that “have little resemblance to traditional legal claims.” Id. at 99. The public-rights question is essentially answered by the first inquiry into the nature of the remedy: “The Board’s new make-whole remedy is identical to traditional legal-claim remedies vindicating private rights and doesn’t fit within the public-rights exception.” Id.

Judge Bumatay’s three-step analysis importantly follows Jarkesy’s instruction that “the remedy is all but dispositive.” 603 U.S. at 111. If the agency seeks a legal remedy—such as compensatory or punitive damages—then the public rights exception could not apply unless the case falls into one of the narrow preexisting public-rights categories. Lower courts should not invent new public-rights categories, lest what Jarkesy identified as a “narrow” exception swallow the rule of trial by jury in Article III courts. Given the clear split between the Third and Ninth Circuits on NLRB’s remedial authority, the Supreme Court may soon have an opportunity to clarify the Jarkesy framework and the public-rights exception outside of the securities fraud context.

March 20, 2025