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Boch Imports, Inc. v. National Labor Relations Board

United States Court of Appeals, First Circuit

June 17, 2016

BOCH IMPORTS, INC., D/B/A BOCH HONDA, Petitioner, Cross-Respondent,
v.
NATIONAL LABOR RELATIONS BOARD, Respondent, Cross-Petitioner.

         PETITION FOR REVIEW AND CROSS-APPLICATION FOR ENFORCEMENT OF AN ORDER OF THE NATIONAL LABOR RELATIONS BOARD

          Anthony D. Rizzotti, with whom Gregory A. Brown and Littler Mendelson, P.C., were on brief, for petitioner.

          Jared Cantor, with whom Kira Dellinger Vol, Supervisory Attorney, Richard F. Griffin, Jr., General Counsel, Jennifer Abruzzo, Deputy General Counsel, John H. Ferguson, Associate General Counsel, and Linda Dreeben, Deputy Associate General Counsel, were on brief, for respondent.

          Before Barron and Stahl, Circuit Judges, and Sorokin, [*] District Judge.

          BARRON, Circuit Judge.

         This case concerns cross-petitions from an order that the National Labor Relations Board ("Board") issued in 2015. The Board ruled that a Massachusetts car dealership was liable for unfair labor practices in two respects. The Board concluded that the dealership was liable for certain unlawful workplace policies because the dealership failed to take the steps necessary to "repudiate" them, even though the dealership had revised the policies to make them compliant with federal labor law. The Board also concluded that the dealership's ban on employees' wearing pins, insignia, and "message clothing" in the workplace constituted an unfair labor practice even in the ban's revised form.

         In petitioning for review, the dealership principally argues that the Board's findings are not supported by substantial evidence and that the Board applied its precedents arbitrarily and capriciously. The Board responds that it reasonably applied its precedents to the facts that it supportably found, both with respect to the steps that an employer must take to repudiate a formerly unlawful workplace policy and with respect to the circumstances that may justify the imposition of a dress ban as sweeping as the one at issue here. The Board therefore requests that we grant its petition for enforcement of its order.

         We conclude that the Board's rulings are supported by substantial evidence and by reasoning that is not arbitrary and capricious. We thus deny the dealership's petition for review and grant the Board's petition for enforcement.

         I.

         This dispute concerns a Honda dealership located in Norwood, Massachusetts. That dealership is operated by Boch Imports, Inc., which does business as Boch Honda. For ease of reference, we will refer to the petitioner simply as "Boch."

         We start our review of the lengthy history of this case with the response provoked by Boch's issuance of an employee handbook in July 2010. Less than a year after the handbook's publication, in 2011, the Boch employees' collective bargaining representative -- the International Association of Machinists & Aerospace Workers, District Lodge 15, Local Lodge 447 (the "Union") -- asserted that some of the workplace policies contained in that handbook infringed upon employees' right to organize in violation of the National Labor Relations Act ("NLRA"). 29 U.S.C. § 151, et seq. [J.A. 1, 77-81]

         Discussions between Boch and the Union over the possible revision of those policies ensued. While those discussions continued, the Union filed a formal charge against Boch with the Board. That charge alleged that Boch maintained workplace rules in its 2010 employee handbook that "interfere[d] with, restrain[ed] or coerce[d] employees in the exercise of" their rights to organize under Section 7 of the NLRA, in violation of Section 8(a)(1) of the NLRA.[1] 29 U.S.C. § 158(a)(1).

         In September 2011, however, Boch's collective bargaining unit decertified the Union. The discussions between Boch and the Union thus came to an end. But Boch then began to discuss the possible revision of the policies contained in the 2010 handbook with the Board's regional office.

         Prior to Boch's making any revisions, the Board, on December 31, 2012, issued a formal complaint against Boch that stemmed from the Union's charge. See id. § 160(b); 29 C.F.R. § 102.15. The Board's complaint alleged that certain portions of the policies in Boch's 2010 employee handbook violated Section 8(a)(1) of the NLRA. For example, the complaint alleged that Boch's 2010 social media policy impermissibly threatened employees with disciplinary action if they engaged in conduct -- even when off Boch's property and off the clock -- that could potentially have a "negative effect on the Company." [J.A. 16, 209]

         The Board's complaint identified the following policies in the 2010 handbook as containing unlawful provisions: social media, confidential and proprietary information, discourtesy, inquiries concerning employees, solicitation and distribution, and dress code and personal hygiene (the "2010 Policies"). [J.A. 2-5] We note that the portion of the dress code and personal hygiene policy that restricts the wearing of pins, insignias, and message clothing figures particularly prominently in these cross-petitions. We refer to that portion of the policy throughout as, simply, the "dress ban."

         In March 2013, before the Board had made any ruling on the complaint, Boch issued a revised employee handbook that altered the workplace policies that were the subject of the Board's complaint. The 2013 handbook was certified as received by all of the employees affected by the 2010 Policies. [J.A. 82-83]

         Notwithstanding the publication of the revised handbook, the Board issued an amended complaint against Boch on June 17, 2013. The amended complaint stated that Boch was liable for violating Section 8(a)(1) of the NLRA by having "maintained, " from December 21, 2011 to about May 2013, specified portions of the 2010 Policies (the "2010 Policy Provisions"), and by maintaining, from about May 2013 to present, a revised version of the 2010 dress ban. [J.A. 15-16] The 2013 version of the dress ban provided: "Employees who have contact with the public may not wear pins, insignias, or other message clothing." [J.A. 251]

         The Administrative Law Judge ("ALJ") held a telephone conference call with the parties regarding the amended complaint. [Blue Br. 9] Boch argued on that call that the allegations in the complaint concerning the 2010 Policy Provisions were moot in light of the revisions Boch made to those provisions and Boch's publication of the revised handbook in 2013. The ALJ agreed with Boch that "it would not effectuate the policies of the [NLRA] to spend time on" those no longer operative policy provisions. See Boch Imports, Inc. v. NLRB ("Boch"), 362 NLRB No. 83, 2015 WL 1956199, at *8 (2015) (ALJ opinion appended to Board opinion). The ALJ thus indicated that the parties should focus on the lawfulness of the 2013 version of the dress ban.

         At the hearing on the complaint, the General Counsel for the Board stipulated that, with the exception of the 2013 dress ban, the policies contained in Boch's 2013 employee handbook did not violate Section 8(a)(1) of the NLRA. That is, the General Counsel stipulated that, save for the dress ban, each of the 2010 Policy Provisions had been revised in a manner that made them compliant with the NLRA.

         Following the hearing, and after receipt of the parties' briefs, in which the Board in its brief argued that Boch's revision of the 2010 Policy Provisions did not render moot the issue of Boch's liability for those provisions, the ALJ issued its ruling on January 13, 2014. The ALJ explained that a "careful examination" of Board precedent "convince[d] [the ALJ] that [his] initial impression [of the mootness of the 2010 Policy Provisions] was incorrect." Id. The ALJ held that certain of the 2010 Policy Provisions violated Section 8(a)(1) of the NLRA at the time they were set forth in the 2010 handbook, insofar as employees would "reasonably construe the language [in those provisions] to prohibit Section 7 activity." Id.

         The ALJ further held, on the basis of the Board's decision in Passavant Memorial Area Hospital ("Passavant"), 237 NLRB No. 21, 1978 WL 7798, (1978), that the publication of the revised handbook in 2013 did not suffice to relieve Boch of liability under the NLRA for the 2010 Policy Provisions because, although Boch had revised them, Boch had failed to "repudiate" them. Boch, 2015 WL 1956199, at *8. In particular, the ALJ found that "[w]hile there has been an adequate publication [of the revised provisions] to the affected employees, the dress code provision remains as is in the handbook, and there have been no assurances by [Boch] that, in the future, it will not interfere with employees' Section 7 rights." Id.

         The ALJ then addressed the 2013 dress ban. The ALJ held that Boch's interest in maintaining its public image did not justify the imposition of a "blanket" ban on the wearing of pins, insignias, and message clothing without regard to such factors as size and message. Id. The ALJ held, however, that Boch's interests in promoting workplace safety and preventing damage to vehicles did justify the imposition of a comprehensive ban on pins. Id. Thus, the ALJ held that Boch violated Section 8(a)(1) of the NLRA by maintaining, from about May 2013 onward, a ban on insignias and message clothing. Id.

         The ALJ ordered Boch to rescind the non-compliant parts of its 2013 dress ban. Id. The ALJ also ordered Boch to post a notice at every Boch dealership and related retail business. Id. Such notice was to advise employees that they had certain rights under Section 7 of the NLRA; that some of the policies in Boch's 2010 employee handbook interfered with those rights; that Boch had since rescinded the unlawful policy provisions; that Boch would rescind the portion of the 2013 dress code ban prohibiting the wearing of insignias and message clothing; and that Boch would not impinge on employees' Section 7 rights in any related manner in the future. Id.

         Boch appealed to the Board, challenging its rulings as to both repudiation and the 2013 dress ban. On April 30, 2015, the Board issued its decision. The Board held that the language of the 2010 Policy Provisions would be reasonably construed by employees as impinging on their Section 7 rights.[2] Id. at *1 & n.3. The Board also held that those provisions, though they had been revised in a manner that the Board's General Counsel had stipulated rendered them lawful (save for the dress ban), were not repudiated within the meaning of Passavant and other Board precedents. Id. The Board based that conclusion on, among other things, its findings that Boch "neither notified its employees of its unfair labor practices nor provided them assurances that it would not interfere with their Sec. 7 rights in the future." Id. The Board therefore held Boch liable for having maintained the 2010 Policy Provisions until their revision in 2013. Id.

         The Board next turned to the 2013 dress ban. The Board held that, for the reasons stated by the ALJ, Boch's interest in maintaining its public image did not justify the ban. Id. at *2 & n.6. But the Board disagreed with the ALJ's ruling that Boch's interests in promoting workplace safety and preventing damage to vehicles justified the imposition of a ban on pins. Id. at *3 & nn.7-8. The Board held that the ban on pins was not narrowly tailored to address those concerns. Id.

         The Board then ordered Boch to issue a much more detailed notice than the ALJ had required. See id. at *4-5. The Board required Boch to issue a notice that included specific descriptions of the policy provisions found to be unlawful, apprised employees of their Section 7 rights, and assured employees against future interference with such rights. Id. However, the Board required that Boch post notices only at the "facility or facility it owns or operates . . ., at which the rules found unlawful were or are in effect" (i.e., the Norwood dealership). Id. at *4.

         One Board member dissented. He concluded that Boch was not liable for the 2010 Policy Provisions because, on his view, Boch had done enough to repudiate those provisions. Id. at *6 (Johnson, dissenting). He reasoned that "where there has been no overt interference with Section 7 activity and an employer has taken pains to fully comply with the Act through a line-by-line revision of its handbook in cooperation with the Region and with its approval, Passavant need not be applied with hyper-technical precision." Id.

         The dissenting Board member also disagreed with the Board regarding its ruling on the 2013 dress ban. He agreed that the dress ban, save for the portion banning pins, was too broad to be justified by the dealership's interest in maintaining its public image. Id. But he concluded that Boch's ban on pins -- though also not justified by Boch's interest in maintaining its public image -- was justified by the dealership's interest in preventing damage to vehicles. Id.

         We first consider Boch's challenge to the Board's ruling as to repudiation. We then turn to Boch's challenge to the Board's ruling as to the 2013 dress ban.

         II.

         We review the Board's decision for "mistakes of law, lack of substantial evidence to support factual findings, and arbitrary or capricious reasoning." The Edward S. Quirk Co., Inc. v. NLRB, 241 F.3d 41, 42 (1st Cir. 2001); 29 U.S.C. § 160(e). We accord the Board considerable deference, as "[w]e may not substitute our judgment for the Board's when the choice is 'between two fairly conflicting views, even though the court would justifiably have made a different choice had the matter been before it de novo.'" Yesterday's Children, Inc. v. NLRB, 115 F.3d 36, 44 (1st Cir. 1997) (quoting Universal Camera Corp. v. NLRB, 340 U.S. 474, 488 (1951)). Where the Board adopts the conclusions and reasoning of the ALJ, we review the ALJ's reasoning as if it were that of the Board. See McGaw of P.R., Inc. v. NLRB, 135 F.3d 1, 3 n.3 (1st Cir. 1997). Where the Board adopts the conclusions of the ALJ but not the ALJ's reasoning, we review only the Board's reasoning.

         III.

         In petitioning for review of the Board's repudiation ruling, Boch does not challenge the Board's ruling that the 2010 Policy Provisions were unlawful when they were imposed. Boch contends instead that the Board erred in concluding that Boch took insufficient steps to repudiate those provisions. We first describe the legal framework for deciding what constitutes repudiation and how the Board applied that framework to these facts. We then explain why we conclude that, contrary to Boch's contentions, the Board did not err in concluding that Boch failed to repudiate.

         A.

         Longstanding Board precedent requires that in order for an employer to be relieved of liability for a workplace policy that constitutes an unfair labor practice, an employer must repudiate that policy, even if the employer has since discontinued that policy or revised it in a manner that makes it compliant with the NLRA. See Passavant, 1978 WL 7798, at *2; Sequoyah Spinning Mills, 194 NLRB No. 179, 1972 WL 4224, at *30 (1972); Pepsi-Cola Bottling Co. of Sioux City ("Pepsi"), 170 NLRB No. 58, 1968 WL 18830, at *5 n.4 (1968); see also Lily Transp. Corp. & Robert Suchar ("Lily"), 362 NLRB No. 54, 2015 WL 1439930, at *1, *3 (2015). The "fundamental remedial purpose" served by this repudiation requirement is to protect employees from the potential lingering effects of an unfair labor practice, even though that practice has been halted. Webco Industries, Inc., 327 NLRB No. 47, 1998 WL 866665, at *2 (1998).

         Consistent with the repudiation requirement's underlying purpose, the Board has made clear that the employer is obliged to "signal[] unambiguously" to employees that the employer "recognizes that it has acted wrongfully, that it respects their Section 7 rights, and that it will not interfere with those rights again." Id. Without these signals, "there is no assurance that the coercive effects of the initial wrongful conduct will not linger in the workplace." Id.

         The Board relied here on Passavant, in which the Board explained that, to be effective, the employer's notice of repudiation must be "adequate[ly] publi[shed]" to the affected employees, must not be accompanied by the "proscribed conduct on the employer's part after the publication, " and "should give assurances to employees that in the future their employer will not interfere with the exercise of their Section 7 rights." Passavant, 1978 WL 7798, at *2 (citation omitted). Passavant also explained that the notice of repudiation to employees "must be 'timely, ' 'unambiguous, ' 'specific in nature to the coercive conduct, ' and 'free from other proscribed illegal conduct.'" Id. (quoting Douglas Div., The Scott & Fetzer Co., 228 NLRB No. 124, 1977 WL 8482, at *15 (1977), enf. denied on other grounds by NLRB v. Douglas Div., The Scott & Fetzer Co., 570 F.2d 742 (8th Cir. 1978)); see also Sequoyah Spinning Mills, 1972 WL 4224, at *1, *30 (noting, in concluding that notice of repudiation was ineffective, that the notice "fail[ed] to repudiate or even make any reference to the coercive conduct" at issue); Pepsi, 1968 WL 18830, at *5 n.4 ("It is no defense to the 8(a)(1) violations that on April 25 [employer] posted a notice disavowing any unfair labor practices it may have committed. This disavowal was ineffective . . . because it was ambiguous in that it did not specify the conduct to which it had [sic] reference.").

         In this case, the Board concluded that Boch did not meet its burden to show that it had effectively repudiated the 2010 Policy Provisions. See Lily, 2015 WL 1439930, at *3 (noting that the employer bears the burden of demonstrating repudiation). The Board based that conclusion on its findings that Boch "neither notified its employees of its unfair labor practices nor provided them assurances that it would not interfere with their Sec. 7 rights in the future."[3] See Boch, 2015 WL 1956199, at *1 n.3.

         Boch contends that the Board's repudiation ruling cannot stand because its findings are not supported by substantial evidence; because its conclusions of law rely on an arbitrary and capricious application of the Board's repudiation precedents; and because the Board's ruling in this case cannot be squared with the Board's independently expressed policy in favor of remedying unfair labor practices through cooperative means. We disagree as to each contention.

         B.

         In challenging the evidentiary basis for the Board's repudiation ruling, Boch takes aim at the Board's findings as to Boch's failure to provide assurances to employees and as to Boch's failure to notify employees about the unlawful nature of the 2010 Policy Provisions. Both Board findings, however, are supported by substantial evidence.

         First, as to assurances, Boch notes that the 2013 employee handbook did set forth certain guarantees to employees as to how they would be treated. Those guarantees, however, do not speak specifically to the Section 7 rights to organize that the Board determined were infringed by the 2010 Policy Provisions. The guarantees Boch points to instead concern protection of employees from discrimination and harassment in the workplace and Boch's commitment to promoting ethical conduct. The guarantees make no reference to Section 7 or the rights guaranteed by the NLRA at all. [Blue Br. 23, J.A. 223-24, 255] And, indeed, the guarantees were not changed from the 2010 handbook to the 2013 handbook to reflect Boch's liability for the 2010 Policy Provisions. [J.A. 181, 186-88, 212] We thus do not see how Boch's retention of the 2010 guarantees in the 2013 handbook shows that the Board lacked substantial evidence for its finding that Boch failed to assure its employees that it would not interfere with the Section 7 rights implicated by the provisions set forth in the 2010 handbook that the Board found violated the NLRA.

         As to notice of unlawful conduct, Boch notes that the 2010 Policy Provisions (save for the dress ban) were, as the Board's General Counsel stipulated, revised to be compliant with the NLRA and that the revised provisions were contained in the 2013 handbook that was distributed to all affected employees. But the simple fact -- unchallenged by Boch -- is that Boch did nothing more in terms of notification than to provide copies of the revised handbook to employees. There is no evidence that Boch informed employees that some of the policies contained in the 2010 handbook were -- or even may have been -- unlawful, or even that parts of those policies could be construed as impinging on employees' Section 7 rights. Nor did the ALJ state otherwise in finding that there had been an "adequate publication" of the 2013 handbook. See id. at *8.

         Thus, the Board's finding that Boch did not "notif[y] its employees of its unfair labor practices" -- let alone provide the sort of "unambiguous" and "specific" notice that Passavant requires -- is supported by substantial evidence. And that is true even if we were to somehow construe the ALJ to have mistakenly found that in "adequate[ly] publi[shing]" the 2013 handbook, Boch actually did notify employees, albeit implicitly, of its unfair labor practices. See C.E.K. Indus. Mech. Contractors, Inc. v. NLRB, 921 F.2d 350, 355 (1st Cir. 1990) (noting that, where the Board's findings conflict with those of the ALJ, we are to defer to the Board's findings so long as they are supported by substantial evidence).

         Boch does also appear to argue that, notwithstanding the Board's findings as to assurances and notification, the Board lacked substantial evidence to support its conclusion that Boch needed to do more than it did to repudiate the 2010 Policy Provisions. But that argument is not a challenge to whether the evidence in the record supports the Board's findings about the limited nature of Boch's assurances and notification to employees. That argument is instead a challenge to the Board's application to these facts of prior Board precedents concerning what constitutes repudiation. And so we consider that challenge in connection with Boch's challenge to the Board's treatment of its own repudiation precedents, which is the issue to which we now turn.[4]

         C.

         We start with Boch's apparent contention that the repudiation requirement that generally applies to unfair labor practices does not apply -- or does not apply with the same vigor -- to the practices at issue here. But Boch provides us with no basis for reaching that conclusion.

         Board precedent is clear that an employer may violate Section 8(a)(1) of the NLRA through the promulgation of a workplace policy that either explicitly or implicitly restricts employees' Section 7 rights. See Guardsmark, LLC v. NLRB, 475 F.3d 369, 374 (D.C. Cir. 2007) (citing Martin Luther Memorial Home, 343 NLRB No. 75, 2004 WL 2678632, at *1-2 (2004)). Board precedent is equally clear that a workplace policy implicitly restricts employees' Section 7 rights if -- as the Board found here -- employees would reasonably construe the policy as restricting such rights, even if that policy need not be so construed and even if that policy was neither intended to be applied nor in fact applied in an impermissibly restrictive fashion. Id.[5] And, finally, Board precedent is clear that the requirement of repudiation applies to violations of just this implicit type. See Lily, 2015 WL 1439930, at *1, *3.

         Although Boch asserts that employees would derive no benefit from Boch's "notifying [them] that [they] could have construed defunct policies to restrict their Section 7 rights, " the Board's application of Passavant and related Board precedent to these facts was not arbitrary and capricious. Such application was instead perfectly in accord with these precedents. Nor does Boch contend that these precedents were founded on arbitrary and capricious reasoning -- that is to say, Boch makes no developed argument that the benefits employees derive from repudiation generally would not also apply here.[6] The Board's ruling thus certainly falls within the not inconsiderable realm of reasonable discretion that an agency possesses to determine how to apply its own past precedents. See Harrington v. Chao, 372 F.3d 52, 58 (1st Cir. 2004) (observing that only a "narrow band of administrative determinations . . . fail the deferential arbitrary and capricious test").

         Boch next contends, somewhat relatedly, that the Board acted unreasonably in relying on Lily and Lytton Rancheria of California d/b/a Casino San Pablo & Unite Here Local 2850 ("Casino San Pablo"), 361 NLRB No. 148, 2014 WL 7330998 (2014). In each case, the Board concluded that an employer's removal of unlawful policies from its employee handbook, without more, did not suffice to relieve the employer of liability for those policies. Lily, 2015 WL 1439930, at *1, *3; Casino San Pablo, 2014 WL 7330998, at *6.

         Boch contends neither case applies here given the history of cooperation between Boch and the Board. But the Board reasonably concluded otherwise. Lily and Casino San Pablo each drew on Passavant and focused on the steps the employer took (or did not take) to disavow its prior unlawful policies. See Lily, 2015 WL 1439930, at *1, *3; Casino San Pablo, 2014 WL 7330998, at *6. Neither case indicated that the employer's cooperation or non-cooperation with the Board in excising the unlawful workplace policies from the employee handbook mattered in determining whether the employer had done enough to repudiate those policies.

         We also find no merit in Boch's contention that the Board acted unreasonably in failing to give weight to two Board cases in which the Board found there was effective repudiation --Extendicare Health Services, Inc. d/b/a Rivers Bend Health & Rehab. Serv. & Amer. Fed'n of State, Cnty., and Mun. Emps., AFL-CIO, Local 913 ("Rivers Bend"), 350 NLRB No. 16, 2007 WL 1946628 (2007), and The Broyhill Co. & District No. 162, Int'l Ass'n of Machinists & Aerospace Workers, AFL-CIO ("Broyhill"), 260 NLRB No. 183, 1982 WL 24367 (1982). Instead, we conclude that the Board reasonably distinguished each of those cases on their facts. See Boch, 2015 WL 1956199, at *1 n.3.

         In Rivers Bend, the Board stated that "the Passavant decision indicates that what an employer must do to [repudiate] a violation may depend on the nature of the violation." 2007 WL 1946628, at *2, *18. The Board in that case concluded that the employer repudiated an unfair labor practice involving an unbargained-for increase in meal prices. Id. There, the employer notified employees that the price increase was "not legal, " that it was abandoning the increase, and that it would compensate employees for the increase. Id.

         The conclusion in Rivers Bend that such notice was sufficient to constitute effective repudiation in view of the "relatively minor importance" of the unfair labor practice, id., does not help Boch. As the Board supportably found, Boch did less than the employer did in Rivers Bend, as Boch provided no notice of its prior unlawful conduct to employees.

         Similarly, in Broyhill, the Board concluded that an employer "did all that it reasonably could do to disavow the unlawful conduct" by notifying employees that a supervisor of the company "may have acted in an improper manner" and by assuring employees that it would not again engage in the sort of restrictive activity engaged in by the supervisor. Broyhill, 1982 WL 24367, at *2, *8-9, *11. But, as the Board supportably found, Boch did less than the employer in that case, too, as Boch neither "notified its employees of its unfair labor practices nor provided them assurances that it would not interfere with their Sec. 7 rights in the future." See Boch, 2015 WL 1956199, at *1 n.3.

         In sum, the Board drew reasonable distinctions with past Board precedents finding repudiation, and the Board reasonably found Board precedents finding no repudiation to be on point. We thus conclude, contrary to Boch's contentions, that the Board acted well within its discretion in applying its repudiation precedents. See Jicarilla Apache Nation v. U.S. Dep't of Interior, 613 F.3d 1112, 1120 (D.C. Cir. 2010) (noting that agency actions may "stand without elaborate explanation where distinctions between the case under review and the asserted precedent are so plain that no inconsistency appears").

         D.

         That brings us to Boch's contention that the Board's repudiation ruling is arbitrary and capricious for the additional reason that it supposedly conflicts with the Board's previously stated policy in favor of encouraging the ...


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