A U.S. appeals court on Tuesday rejected Macy’s claims that the National Labor Relations Board lacked the power to order the retailer to reimburse workers who were locked out after a strike, creating a circuit split.

The San Francisco-based 9th U.S. Circuit Court of Appeals in a 2-1 ruling said that because monetary remedies in NLRB cases serve the broader public purpose of promoting industrial peace, the agency’s recent expansion of those remedies was within its powers.

The board first said it would begin ordering employers to reimburse workers for “direct and foreseeable” monetary harms stemming from their illegal conduct, such as credit card fees or out-of-pocket medical expenses, in the 2022 case Thryv Inc.

Macy’s is one of more than a dozen businesses that has challenged the expanded remedies, claiming that they are no different than the compensatory damages typically sought in private lawsuits, which the NLRB is barred from awarding.

But the 9th Circuit majority on Tuesday said the NLRB has discretion to award remedies that vindicate the public interest by restoring the status quo that existed before an employer broke the law.

“The fact that these proceedings may operate to confer an incidental benefit on private persons does not detract from this public purpose,” wrote Federal Circuit Judge Evan Wallach, who sat on the panel by designation.

Wallach was joined by Circuit Judge Jacqueline Nguyen. Both judges are appointees of Democratic former President Barack Obama.

Macy’s and lawyers for the union did not immediately respond to requests for comment. An NLRB spokesman declined to comment.

The ruling creates a split with the Philadelphia-based 3rd Circuit, which ruled last month in a case involving Starbucks that the expanded remedies exceeded the NLRB’s powers. The New Orleans-based 5th Circuit last May threw out the Thryv ruling, but it did so on the merits of the board’s decision in that case and did not address the broader issue of remedies.

And the 10th Circuit in Denver on Tuesday heard oral arguments in a movie producer’s challenge to the Thryv standard. It was not clear how the panel was leaning, but one judge suggested that the court lacked jurisdiction over the issue because the producer had not raised its arguments before the board.

President Donald Trump’s appointees to the NLRB are widely expected to overturn the Thryv ruling and a series of other Biden-era board decisions that favored workers and unions. The board currently has a 2-1 Democratic majority and two vacancies, meaning Trump could move quickly to cement Republican control.

Macy’s was appealing an NLRB decision that said it unlawfully locked out a group of building engineers in 2020 after they ended a strike over stalled union contract negotiations, and required the company to post notices informing workers of their rights.

The board also ordered Macy’s to reimburse workers for any monetary harms caused by the lockout, but said it would determine at a later time whether any further remedies were appropriate.

In dissent on Tuesday, Circuit Judge Patrick Bumatay criticized the board for what he called a “power grab,” and said the expanded remedies violated Macy’s constitutional right to a jury trial.

“Now everything is on the table under the Board’s newly claimed authority — the only limit is the Board’s imagination,” wrote Bumatay, who was appointed by Trump during his first term.

The case is Macy’s Inc v. NLRB, 9th U.S. Circuit Court of Appeals, No. 23-150.

For the NLRB: Usha Dheenan and Barbara Sheehy
For the union: David Rosenfeld of Weinberg, Roger & Rosenfeld
For Macy’s: Laura Pierson-Scheinberg of Jackson Lewis