Jacoby v. National Labor Relations Board

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued September 7, 2000 Decided December 12, 2000

No. 99-1450

Joe Jacoby,

Petitioner

v.

National Labor Relations Board,

Respondent

Steamfitters Local Union No. 342 of the

United Journeymen and Apprentices of the Plumbing and

Pipefitting Industry of the United States

and Canada, AFL-CIO

Intervenor

On Petition for Review of an Order of the

National Labor Relations Board

Dylan B. Carp argued the cause for petitioner. With him

on the briefs were Jeffrey L. Rhodes and Glenn M. Taubman.

Meredith L. Jason, Attorney, National Labor Relations

Board, argued the cause for respondent. With her on the

brief were Leonard R. Page, General Counsel, Linda Sher,

Associate General Counsel, Aileen A. Armstrong, Deputy

Associate General Counsel and Fred L. Cornnell, Supervisory

Attorney.

James B. Coppess argued the cause for intervenor. With

him on the brief were John L. Anderson and Laurence Gold.

Before: Williams, Sentelle and Rogers, Circuit Judges.

Opinion for the Court filed by Circuit Judge Williams.

Williams, Circuit Judge: Under a labor agreement govern-

ing construction work at a refinery jobsite in California,

Steamfitters Local Union No. 342 held an exclusive right to

dispatch workers to subcontractor Contra Costa Electric.

Petitioner Joe Jacoby, a member of the union for 27 years,

registered for employment through the union's hiring hall;

due to his skills and experience, his name was placed on the

highest priority "A" list. For a period the union mistakenly

dispatched several lower-priority individuals ahead of Jacoby.

On discovery of the error, it dispatched Jacoby. All parties

agree, for current purposes at least, that the priority mix-up

was merely negligent, and reflected no intentional wrongdo-

ing.

Jacoby filed an unfair labor practice charge with the Na-

tional Labor Relations Board, and the Board's General Coun-

sel issued a complaint. After a hearing an administrative law

judge found that the union's negligent deviation from estab-

lished hiring hall rules breached its duty of fair representa-

tion and thereby violated ss 8(b)(1)(A) & (2) of the National

Labor Relations Act as amended (the "NLRA"), 29 U.S.C.

s 158(b)(1)(A) & (2). Steamfitters Local No. 342 (Contra

Costa Electric), 329 N.L.R.B. No. 65, slip op. at 10-12 (Dec. 5,

1995). The Board reversed, ruling that the union's negli-

gence violated neither the duty of fair representation nor the

Act. Steamfitters Local No. 342 (Contra Costa Electric), 329

N.L.R.B. No. 65 (Sept. 30, 1999) ("Board Decision"). Al-

though the Board agreed that the ALJ had correctly applied

the Board's previous decision in Iron Workers Local 118

(California Erectors), 309 N.L.R.B. 808 (1992), it reasoned

that that decision, as well as the ALJ's findings, were incon-

sistent with the Supreme Court's pronouncements about the

duty of fair representation in United Steelworkers of America

v. Rawson, 495 U.S. 362 (1990), and Air Line Pilots Ass'n,

Int'l v. O'Neill, 499 U.S. 65 (1991). Board Decision, 329

N.L.R.B. No. 65, slip op. at 2-4. In addition, the Board found

that the union's negligent conduct did not, apart from the fair

representation issue, independently violate the Act. Id. at 4.

We have held that the Board's interpretation of the duty of

fair representation is entitled to deference under Chevron,

U.S.A., Inc. v. NRDC, 467 U.S. 837 (1984), when the Board

enforces that duty as part of its jurisdiction to identify and

remedy unfair labor practices. Ferriso v. NLRB, 125 F.3d

865, 869 (D.C. Cir. 1997); Finerty v. NLRB, 113 F.3d 1288,

1291 (D.C. Cir. 1997). We shall explain why this is so despite

the fact that the duty also exists as a judge-made, court-

enforced duty. But Chevron does not help an agency that

rests its decision on a misinterpretation of Supreme Court

precedent, as the Board did here. Accordingly, we reverse

and remand the case to the Board for it to address the duty

of fair representation anew.

In addition, the Board's conclusion that the union's negli-

gence did not independently violate the Act is, as we explain

below, intertwined with the issue of the duty of fair represen-

tation. Accordingly, we find that it would be premature to

rule on it before the Board has had an opportunity to revisit

the question on remand.

* * *

The duty of fair representation originated in the context of

the Railway Labor Act, judicially inferred from that statute

and enforceable in the courts. See Steele v. Louisville &

Nashville R.R. Co., 323 U.S. 192 (1944). The Supreme Court

extended the Steele principle to the NLRA in Ford Motor Co.

v. Huffman, 345 U.S. 330 (1952), finding that the statutory

authority of unions as exclusive bargaining representatives

under Sec. 9(a) of the NLRA, 29 U.S.C. s 159(a), also gave

rise to a duty of fair representation, requiring unions to

"make an honest effort to serve the interests of all [bargain-

ing unit] members, without hostility to any." Id. at 337. A

union breaches this duty when its actions are "arbitrary,

discriminatory, or in bad faith." Vaca v. Sipes, 386 U.S. 171,

190 (1967).

Originally, the duty was the exclusive province of the

courts, falling within the federal courts' general federal ques-

tion jurisdiction. See Syres v. Oil, Chemical and Atomic

Workers Local 23, 350 U.S. 892 (1955)(mem.), rev'g 223 F.2d

739 (5th Cir. 1955). Beginning with its decision in Miranda

Fuel Co., 140 N.L.R.B. 181 (1962), however, the NLRB has

enforced the duty of fair representation itself as part of its

authority to identify and remedy unfair labor practices. We

have upheld this branch of the Board's unfair labor practice

jurisdiction. See Plumbers & Pipe Fitters Local Union No.

32 v. NLRB, 50 F.3d 29, 31-32 (D.C. Cir. 1995); Truck

Drivers and Helpers, Local Union 568 v. NLRB, 379 F.2d

137, 141-42 (D.C. Cir. 1967).

At the same time, the Supreme Court refused to find that

the Board's enforcement of the duty of fair representation

preempted judicial jurisdiction over the duty of fair represen-

tation inferred from the NLRA. Vaca v. Sipes, 386 U.S. 171,

183, 188 (1967). See also Marquez v. Screen Actors Guild,

Inc., 525 U.S. 33, 49 (1998); Breininger v. Sheet Metal

Workers Int'l Ass'n Local No. 6, 493 U.S. 67, 74-75 (1989).

As a result the duty is subject to a kind of dyarchy. The

Board is entitled to Chevron deference when it interprets the

duty as part of its unfair labor practice jurisdiction, yet many

cases involving the duty continue to originate in the courts.

See, e.g., Air Line Pilots Ass'n, Int'l v. O'Neill, 499 U.S. 65

(1991); United Steelworkers of America v. Rawson, 495 U.S.

362 (1990).

And it is important to emphasize that for these court-

adjudicated cases the Board's definition of the duty of fair

representation for purposes of adjudicating unfair labor prac-

tices appears only marginally relevant. The Supreme Court

in Breininger explicitly "reject[ed] the proposition that the

duty of fair representation should be defined in terms of what

is an unfair labor practice." 493 U.S. at 86. "[T]here is no

reason to equate breaches of the duty of fair representation

with unfair labor practices." Id. Thus, for cases arising in

the courts, NLRB interpretations are relevant for what they

may contribute on their intellectual merits, enjoying defer-

ence to the extent of their "power to persuade." Skidmore v.

Swift & Co., 323 U.S. 134, 140 (1944). Nonetheless, as we

explained, the Board's decision here is reviewable under the

Chevron doctrine.

The duty of fair representation clearly extends to a union's

operation of an exclusive hiring hall. See Breininger, 493

U.S. at 87-88 (1989). Prior decisions of the Board described

the duty, in the hiring hall context, in rather demanding

terms. Ruling in favor of the Board in such a case, we said:

[A]ny departure from established exclusive hiring hall

procedures which results in a denial of employment to an

applicant falls within that class of discrimination which

inherently encourages union membership, breaches the

duty of fair representation owed to all hiring hall users,

and violates Section 8(b)(1)(A) and (2) [of the NLRA],

unless the union demonstrates that its interference with

employment was pursuant to a valid union-security

clause or was necessary to the effective performance of

its representative function.

Boilermakers Local No. 374 v. NLRB, 852 F.2d 1353, 1358

(D.C. Cir. 1988) (quoting Teamsters Local 519 (Rust Engi-

neering), 276 N.L.R.B. 898, 908 (1985)). And we also said

that breach of the duty required no evidence of intent to

discriminate:

No specific intent to discriminate on the basis of union

membership or activity is required; a union commits an

unfair labor practice if it administers the exclusive hall

arbitrarily or without reference to objective criteria and

thereby affects the employment status of those it is

expected to represent. "By wielding its power arbitrari-

ly, the Union gives notice that its favor must be curried,

thereby encouraging membership and unquestioned

adherence to its policies."

Id. (quoting NLRB v. International Ass'n of Bridge, Struc-

tural & Ornamental Iron Workers, Local 433, 600 F.2d 770,

777 (9th Cir. 1979)).

The Board itself, applying the standard that we upheld in

Boilermakers, found a breach of the duty (and an unfair labor

practice) in circumstances virtually identical to the present

ones. In Iron Workers Local 118 (California Erectors), 309

N.L.R.B. 808 (1992), it ruled that union officials breached

their duty of representation when, "through mistake and

inadvertence," they failed to dispatch a worker to a job to

which he should have been referred under exclusive hiring

hall procedures. Id. at 812. Unsurprisingly, the ALJ applied

California Erectors in its decision below.

In reversing the ALJ, the Board here acknowledged that

her reading of that case was "correct," but found that contin-

ued application of California Erectors would be inconsistent

with the Supreme Court decisions in United Steelworkers of

America v. Rawson, 495 U.S. 362 (1990), and Air Line Pilots

Ass'n, Int'l v. O'Neill, 499 U.S. 65 (1991). Board Decision,

329 N.L.R.B. No. 65, slip op. at 2.

There is undoubtedly language in these Supreme Court

decisions supporting the Board's view. Both explicate the

standard earlier laid down by the Court in Vaca v. Sipes, 386

U.S. 171 (1967), which said that a union breached the duty of

fair representation when its actions were "arbitrary, discrimi-

natory, or in bad faith." Id. at 190. In Rawson, the Court

rejected a claim that a union breached the duty when it

negligently performed mine-safety related duties pursuant to

a collective bargaining agreement. The Court observed that

"[t]he courts have in general assumed that mere negligence,

even in the enforcement of a collective-bargaining agreement,

would not state a claim for breach of the duty of fair

representation, and we endorse that view today." 495 U.S. at

372-73.

O'Neill involved a claim that the Air Line Pilots Association

breached its duty of fair representation in its negotiation and

acceptance of a strike settlement. The Court held that the

Vaca standard "applies to all union activity, including contract

negotiation." 499 U.S. at 67. Moreover, it explained that "a

union's actions are arbitrary only if, in light of the factual and

legal landscape at the time of the union's actions, the union's

behavior is so far outside a 'wide range of reasonableness' as

to be irrational." Id. (quoting Ford Motor Co. v. Huffman,

345 U.S. 330, 338 (1953)) (internal citation omitted).

Neither Rawson nor O'Neill specifically concerned the duty

owed by a union when it operates an exclusive hiring hall. In

its decision here, however, the Board reasons that the two

cases, read together, mandate that merely negligent conduct

can never breach the duty of representation in any context,

including that of the hiring hall. See Board Decision, 329

N.L.R.B. No. 65, slip op. at 2.

But as Jacoby points out, the Board's reading of Rawson

and O'Neill cannot be reconciled with our decision in Plumb-

ers & Pipe Fitters. There we considered and rejected the

argument that O'Neill undermined the standard governing a

union's operation of an exclusive hiring hall--specifically the

principle that a union operate a hiring hall by "reference to

objective criteria." 50 F.3d at 32-33. We acknowledged that

fragments from O'Neill such as the passage quoted above

might, if read in isolation, support the contention that a

"highly deferential" standard must be applied to the evalua-

tion of union's actions operating a hiring hall. 50 F.3d at 33.

But we concluded that the "Court did not intend to weaken

the standard of review applied to a union's operation of a

hiring hall." Id.

In support of this conclusion we relied on the drastic

difference in context. In O'Neill the Court's focus was on

"protecting the content of negotiated agreements from judi-

cial second-guessing." Id. The operation of a hiring hall, by

contrast, was one "where the union has assumed the role of

employer, as well as representative, and where the risk of

judicial second-guessing of a negotiated agreement that was

of such concern to the Court in O'Neill is simply not present."

Id. We also relied on the Supreme Court's decision in

Breininger, issued only one year before Rawson and two

years before O'Neill, where the Court said that the imbalance

of power and possibilities for abuse created by union opera-

tion of a hiring hall were such that "if a union does wield

additional power in a hiring hall by assuming the employer's

role, its responsibility to exercise that power fairly increases

rather than decreases." Breininger, 493 U.S. at 89 (quoted in

Plumbers & Pipe Fitters, 50 F.3d at 34). Thus, we wound

up, "[w]e remain confident that unions that operate hiring

halls without objective criteria violate their duty of fair

representation. This was the standard we approved in Boil-

ermakers and that the ALJ properly applied in this case.

Absent clear instructions from the Supreme Court, we decline

to weaken this principle." 50 F.3d at 34.

In its decision here, the Board sought to reconcile Brein-

inger's statement that "additional power" entailed increased

responsibility with its interpretation of Rawson and O'Neill.

It reasoned that in Breininger the Court was merely reject-

ing the argument that the duty of fair representation did not

apply at all in the hiring hall context and had meant the

language about a union's increased responsibility not to refer

to any heightened degree of duty, but merely to the fact that

a union "takes on additional responsibilities" when it operates

a hiring hall. Board Decision, 329 N.L.R.B. No. 65, slip op.

at 2. Nothing in the surrounding language in Breininger

lends support to this theory.

The question before us today differs from that in Plumbers

& Pipe Fitters primarily with regard to two details, both

ultimately insignificant. First, this case turns on a different

aspect of the legal standard defined in Boilermakers.

Whereas Plumbers & Pipe Fitters involved the operation of a

hiring hall "without reference to objective criteria," see Boil-

ermakers, 852 F.2d at 1358, the facts here implicate the rule

precluding departures "from established exclusive hiring hall

procedures," id. But this distinction does nothing to help the

Board's position. That position is premised on the conclusion

that O'Neill generally precludes heightened scrutiny in the

hiring hall context, but in Plumbers & Pipe Fitters we

concluded that the "Court did not intend to weaken the

standard of review applied to a union's operation of a hiring

hall." 50 F.3d at 33. See also Radio-Electronics Officers

Union (Radio Officers Union) v. NLRB, 16 F.3d 1280, 1284-

85 (D.C. Cir 1994) (applying Boilermakers's "departure" stan-

dard).

In addition, one might argue that in the present context the

Boilermakers standard is more vulnerable to the claim of

erasure by O'Neill and Rawson, as this case involves a claim

of negligence, thus encountering Rawson's conclusion that

"mere negligence" did not violate the duty of fair representa-

tion in the contract administration context. But the Board's

application of Rawson relies exclusively on the type of "one-

size-fits-all" theory that Plumbers & Pipe Fitters rejected.

And, once again, Rawson is not a hiring hall case. It

concerned the specific question of whether a union violates

the duty of fair representation through negligent enforcement

of a collective bargaining agreement. Although the Court

endorsed what courts had "in general assumed," namely, that

negligence does not "state a claim for breach of the duty of

fair representation," 495 U.S. at 372-73, it never considered

the applicability of this principle to the hiring hall. Thus we

see no reason why Rawson's general statements on negli-

gence should be regarded as any less subject to qualification

than O'Neill's statements about "behavior so far outside a

range of reasonableness as to be irrational." 499 U.S. at 67.

The Board's decision here seems in effect to recognize its

contradiction of Plumbers & Pipe Fitters. Rather than try to

distinguish the case, the Board simply observed that "the

circuit court's assertion that the standard for operation of a

hiring hall can and should be different from the standard for

contract administration seems to us to be unsupportable."

Board Decision, 329 N.L.R.B. No. 65, slip op. at 3 n.19.

Intervenor's brief relies on two additional decisions issued

after Plumbers & Pipe Fitters, one from the Supreme Court,

Marquez v. Screen Actors Guild, Inc., 525 U.S. 33 (1998), and

one from this circuit, Thomas v. NLRB, 213 F.3d 651 (D.C.

Cir. 2000). As neither case concerned nor even mentioned

the hiring hall context, neither affects our analysis in Plumb-

ers & Pipe Fitters.

The Board's reliance on its mistaken analysis of O'Neill and

Rawson compels a remand. "An agency action, however

permissible as an exercise of discretion, cannot be sustained

'where it is based not on the agency's own judgment but on

an erroneous view of the law.' " Sea-Land Service, Inc. v.

Department of Transportation, 137 F.3d 640, 646 (D.C. Cir.

1998) (quoting Prill v. NLRB, 755 F.2d 941, 947 (D.C. Cir.

1985)). On remand, the Board must consider whether, given

the union's heightened duty of fair dealing in the context of a

hiring hall, the union's negligent failure to adhere to its

referral standards was an unfair labor practice. In remand-

ing, of course, we express no opinion on the validity of any

alternate grounds that the Board might use to overrule

California Erectors.

We now turn to the Board's second holding--that the

union's conduct did not, quite apart from any breach of the

duty of fair representation, violate ss 8(b)(1)(A) & 8(b)(2) of

the Act. The latter bars a union from causing an employer to

discriminate against an employee in violation of s 8(a)(3),

which in turn bars an employer's discrimination against an

employee "to encourage or discourage union membership."

A violation of s 8(b)(2) would derivatively violate

s 8(b)(1)(A)'s ban on union restraint of employees in the

exercise of their rights under s 7 of the Act. Board Deci-

sion, 329 N.L.R.B. No. 65, slip op. at 4; see also id. at 8

(Member Brame, dissenting); Radio Officers' Union of Com-

mercial Telegraphers Union v. NLRB, 347 U.S. 17, 42 (1954).

The Board in effect has said that its rationale in Boiler-

makers is inapplicable to this context. There we upheld its

finding that "[a]ny departure from established exclusive hir-

ing hall procedures which results in a denial of employment to

an applicant falls within that class of discrimination which

inherently encourages union membership," and thereby vio-

lates ss 8(b)(1)(A) and (2) of the Act. 852 F.2d at 1358. And

we endorsed its underlying rationale: "By wielding its power

arbitrarily, the Union gives notice that its favor must be

curried, thereby encouraging membership and unquestioned

adherence to its policies." Id. Here the Board reasoned:

While this reasoning makes sense when applied to the

volitional actions of union officials, it is unpersuasive

when applied to simple mistakes. When as in this case, a

union officer in charge of referrals intends to follow the

prescribed procedures and thinks he has done so, his

inadvertent failure to do so, even to the detriment of an

applicant, simply does not carry the message that appli-

cants had better stay in the good graces of the union if

they want to ensure fair treatment in referrals.

Board Decision, 329 N.L.R.B. No. 65, slip op. at 4.

Given the focus of s 8(b)(2) on discrimination, we cannot

fault the Board's view that a purely negligent breach of the

rules would lack the signaling effect that the provision, and

the Board, sought to avoid. But the Board's analysis is

complicated by its additional holding that this approach does

not contradict any of its earlier decisions--a statement that, if

true, renders inapplicable the Board's duty to give a "rea-

soned justification for any departure from its prior policies or

practices." Pittsburgh Press Co. v. NLRB, 977 F.2d 652, 655

(D.C. Cir. 1992) (citing Motor Vehicles Mfrs. Ass'n v. State

Farm Mut. Ins. Co., 463 U.S. 29, 57 (1983)). Given that the

underlying theory in California Erectors (which the Board

does explicitly overrule) and other duty of fair representation

cases is that breaches of the duty are themselves violations of

ss 8(b)(1)(A) & (2), see, e.g., California Erectors, 309

N.L.R.B. at 811, 812 (treating duty of fair representation

breach as a violation of ss 8(b)(1)(A) and (2)), the Board in

essence argues that the standard for judging violations of the

same statutory provisions may depend upon whether or not a

complaint or ruling specifically invokes the magic words "duty

of fair representation." The Board does not cite, and we have

been unable to find, any evidence that in hiring hall cases the

Board has ever applied different standards depending on

whether the complaint invoked the duty of fair representation

or not. See, e.g., Laborers Local No. 135 (Bechtel Corp.), 271

N.L.R.B. 777, 780 (1984) (cited by the Board in the non-duty

of fair representation context, see Board Decision, 329

N.L.R.B. No. 65, slip op. at 4 & n.26, and holding that "[a]

departure from established exclusive hiring hall procedures

that results in a denial of employment to any applicant

inherently encourages union membership and therefore vio-

lates Section 8(b)(1)(A) and (2) without regard to the presence

of unlawful motivation.") Rather, the Board appears merely

to argue that in cases in which it has found a violation of

ss 8(b)(1)(A) & (2) without explicitly invoking the duty of fair

representation, the facts have never involved purely negligent

departures from exclusive hiring hall rules. See id.

At the time of the Board's decision, of course, the effect of

its holding regarding these "independent" violations of

ss 8(b)(1)(A) & (2) was to ensure that, in the relevant con-

text, the statute imposed no broader liability independent of

the duty of fair representation than as construed with that

duty. Our reversal on the duty of fair representation theory

now puts the question in a different light. If, on remand, the

Board again decides to overrule California Erectors, it will

need to provide a reasoned justification beyond its current

theory of compulsion by the Supreme Court--and any suc-

cessful justification is likely to support the Board's more

general interpretation of the relevant statutory provisions,

assuming that that interpretation does in fact depart from

prior Board precedent. So our remand on the Board's first

holding makes it, as a practical matter, premature to rule on

the sufficiency of its second one.

Similarly, we do not pass judgment on the theory proposed

by Member Brane in his dissent, to the effect that if Blevins's

individual negligence did not itself constitute an unfair labor

practice, then the union's subsequent failure to make Jacoby

whole did. Board Decision, 329 N.L.R.B. No. 65, slip op. at 7

(Member Brame, dissenting). The Board refused to consider

this theory on the grounds that it was raised neither in the

General Counsel's complaint nor during oral argument, see

Board Decision, 329 N.L.R.B. No. 65, slip op. at 4 n.27, and

Jacoby has not properly appealed this ruling.

For the reasons given we reverse and remand the case to

the Board.

So ordered.