Nov 4 (Reuters) - A U.S. appeals court panel on Monday

seemed likely to uphold the National Labor Relations Board's

decision to revisit a Trump-era ruling that favored ExxonMobil ( XOM )

because of a Republican board member's alleged financial

conflict of interest.

A three-judge 5th U.S. Circuit Court of Appeals panel in New

Orleans heard oral arguments in Exxon's appeal of a board ruling

that said the company failed to bargain in good faith with a

union and unilaterally changed working conditions at a New

Jersey research facility.

The NLRB had ruled in favor of Exxon in 2020, when it had a

Republican majority, and dismissed the case. But a newly

composed, Democratic-led panel in 2022 said that former NLRB

Member William Emanuel should have recused himself from the case

because he owned more than $50,000 in shares of a mutual fund

that invested in Exxon. The board then ruled against Exxon last

year, and the company appealed both decisions.

Circuit Judge James Graves on Monday seemed to agree with

the board's decision to vacate its earlier ruling, saying the

agency had an interest in avoiding even the appearance of

impropriety.

"You want a pristine panel to reconsider. Doesn't that make

sense?" Graves, an appointee of Democratic former President

Barack Obama, said to Exxon's lawyer, Daniel Schudroff.

Schudroff maintained that there was no evidence that

Emanuel's alleged conflict had any impact on the outcome of the

case or on the other board members who also ruled in favor of

Exxon, Republicans John Ring and Marvin Kaplan.

He also argued that even if it was proper to revisit the

ruling, Ring and Kaplan both should have been on the panel

because there was no allegation that they were conflicted or

compromised when they issued the 2020 decision. The panel that

vacated the ruling included Democratic Members Lauren McFerran

and Gwynne Wilcox and Ring, who said in dissent that there was

no evidence that Emanuel's involvement caused prejudice to the

union.

"In this particular case, both Ring and Kaplan remained on

the board," so there was no reason to leave Kaplan off the panel

that re-heard the case, Schudroff said. The NLRB has five

members, and three-member panels are selected at random to hear

individual cases.

Circuit Judge Priscilla Richman pushed back on Schudroff's

claim.

"Well, I remain on the court," said Richman, an appointee of

Republican former President George W. Bush. "Does that mean

parties are entitled to have me on the second panel if one of my

colleagues is disqualified?"

Emanuel, a former Littler Mendelson shareholder who joined

Constangy Brooks Smith & Prophete after his NLRB term expired in

2021, was accused of having conflicts in several other Trump-era

NLRB cases.

In 2018, the board vacated a major ruling involving

employers' liability in cases involving contract or franchise

workers because the decision affected a separate case involving

Littler, Emanuel's former law firm. Emanuel had said agency

officials cleared him to participate in the case.

The board also vacated and revisited decisions involving CVS

Health, Marathon Petroleum, and George Washington University

Hospital.

Concerns about Emanuel's involvement in the cases also

spurred the NLRB to undertake a review of its ethics policies.

In a 2019 report the board said its existing procedures for

identifying potential conflicts of interest were adequate, but

also announced new steps it would take to make the process more

transparent.

The 5th Circuit panel also includes Circuit Judge Irma

Ramirez, an appointee of Democratic President Joe Biden, who did

not speak during the arguments.

The case is ExxonMobil Research & Engineering Company v.

NLRB, 5th U.S. Circuit Court of Appeals, No. 23-60495.

For Exxon: Daniel Schudroff of Jackson Lewis

For the NLRB: Eric Weitz

Read more:

U.S. labor board says Trump-era member had conflict in Exxon

case

NLRB says Trump appointee's conflicts warrant review of

rulings

US labor board says Trump-era member's conflict tainted

hospital case

U.S. labor agency overturns major ruling, citing Trump

appointee's conflict

NLRB's Emanuel violated ethics pledge in joint employer case

- inspector general

NLRB in report says ethics safeguards are strong, unveils

new protocols

(Reporting by Daniel Wiessner in Albany, New York)