March 06, 2026|Franchise Frontlines
March 6, 2026 | United States Court of Appeals for the Sixth Circuit | Published Opinion
Executive Summary
In a published decision, Judge McKeague of the Sixth Circuit granted Brown-Forman Corporation’s petition for review and denied enforcement of a National Labor Relations Board order requiring the company to recognize and bargain with a union. The case arose from a union organizing campaign at Brown-Forman’s Woodford Reserve facility, where the Board concluded that certain company actions during the campaign warranted setting aside the election. The Board issued a bargaining order under its newly announced Cemex framework, which expands the circumstances under which such orders may be imposed. Brown-Forman argued that the Board exceeded its authority by adopting Cemex through adjudication rather than rulemaking. The Sixth Circuit agreed, holding that the Board improperly created a broad, forward-looking policy through adjudication and remanding the matter for further proceedings.
Relevant Background
The dispute arose during a union organizing effort at Brown-Forman’s Woodford Reserve distillery in Kentucky. Employees began coordinating with a union and ultimately secured majority support through authorization cards. As the organizing campaign progressed, Brown-Forman implemented several compensation-related changes, including a $4-per-hour wage increase, adjustments to pay progression, and modifications to certain time-off practices. The company also held meetings addressing unionization and distributed bottles of bourbon to employees shortly before the election.
The union lost the election and filed unfair labor practice charges, asserting that the company’s conduct affected the integrity of the election process. An Administrative Law Judge agreed and recommended setting aside the election and issuing a bargaining order. The Board affirmed and relied exclusively on its 2023 decision in Cemex Construction Materials Pacific, LLC, which altered the framework for issuing bargaining orders by making them more readily available once an election is invalidated.
Brown-Forman petitioned for review, challenging both the Board’s findings and its reliance on Cemex.
Decision
The Sixth Circuit first addressed the Board’s underlying findings and concluded that, under the applicable substantial evidence standard, the record supported the Board’s determination that the timing and nature of the compensation-related changes could be viewed as affecting employee decision-making during the organizing period. In doing so, the court relied on established precedent recognizing that employer actions during organizing campaigns are evaluated in context, including timing, surrounding communications, and overall circumstances.
The court then turned to the central issue: whether the Board could rely on the Cemex framework to impose a bargaining order. Under longstanding Supreme Court precedent, particularly NLRB v. Gissel Packing Co., bargaining orders are considered an extraordinary remedy and are generally reserved for circumstances where traditional remedies are unlikely to ensure a fair election. The Board’s Cemex decision departed from that framework by shifting the analytical focus away from whether a fair rerun election is possible and toward whether the initial election was tainted.
The Sixth Circuit did not reach the question of whether that substantive shift is permissible. Instead, it focused on the method by which the Board adopted the new standard. The court held that the Board exceeded its statutory authority by creating a generally applicable, forward-looking policy through adjudication rather than through rulemaking or case-specific reasoning tied to the dispute before it. The opinion emphasized that adjudication must be directed at resolving the particular case, whereas the Cemex framework was designed to govern future cases and influence employer conduct more broadly. The court noted that the Board itself acknowledged that the new standard did not change the outcome of the underlying case, reinforcing that it was not necessary to resolve the dispute at hand.
Because the Board relied solely on this improperly promulgated standard, the Sixth Circuit denied enforcement of the bargaining order and remanded the case for reconsideration under lawful standards.
Looking Forward
This decision provides a meaningful procedural check on how the NLRB may attempt to expand employer obligations, particularly in ways that could impact multi-unit systems such as franchising. While the court did not address the substance of the Cemex framework, it made clear that the Board cannot implement broad, forward-looking standards untethered to the facts of a specific case through adjudication alone. That limitation has practical implications for franchisors, who have increasingly been the subject of expansive liability theories developed through agency action.
In particular, the reasoning in Brown-Forman may serve as a useful framework for challenging future efforts by the Board to extend doctrines—such as joint employer liability or bargaining obligations—through case-driven policymaking that functions as de facto rulemaking. Where the Board attempts to impose system-wide standards that resemble generally applicable rules, this decision provides support for the argument that such changes must be pursued through formal rulemaking or grounded in case-specific analysis. In that sense, the opinion offers a potential procedural defense tool, even where the underlying policy direction remains contested.
At the same time, the decision should not be read as reducing the importance of carefully managing conduct during organizing activity. The court affirmed the Board’s factual findings under the deferential standard of review, reinforcing that these cases remain highly fact-dependent and that timing, consistency, and communication surrounding operational decisions will continue to be scrutinized. For franchisors, the more durable takeaway is not a change in the governing standards, but a clearer boundary around how those standards may be expanded. Strategic compliance, coupled with an awareness of procedural defenses, will remain critical as the Board continues to test the limits of its authority.
This article is based solely on the opinion of the Court in this matter. The author has not conducted any independent investigation into the facts. For the avoidance of doubt, each statement related to the law and facts in this article is drawn from the Court’s opinion in this case.
Thomas O’Connell is a Partner at Buchalter LLP and Chair of the firm’s Franchise Practice Group. For questions about this article or media inquiries, you can contact Tom at toconnell@buchalter.com.
This communication is not intended to create, and does not create, an attorney-client relationship or any other legal relationship. No statement herein constitutes legal advice, nor should it be relied upon or interpreted as such. This communication is for general informational purposes only and is not a substitute for legal counsel. Readers should not act or refrain from acting based on any information provided without seeking appropriate legal advice specific to their situation. For more information, visit www.buchalter.com.
