Tradesmen International, Inc. v. National Labor Relations Board

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued December 6, 2001 Decided January 15, 2002

No. 00-1523

Tradesmen International, Inc.,

Petitioner

v.

National Labor Relations Board,

Respondent

Sheet Metal Workers' International Association,

Local Union No. 33 of Northern Ohio, AFL-CIO,

Intervenor

On Petition for Review and Cross-Application

for Enforcement of an Order of the

National Labor Relations Board

Maurice Baskin argued the cause and filed the briefs for

petitioner.

Michael E. Avakian was on the brief for amici curiae

Associated Builders and Contractors, Inc. and the Center on

National Labor Policy, Inc.

Richard A. Cohen, Senior Attorney, National Labor Rela-

tions Board, argued the cause for respondent. With him on

the brief were Arthur F. Rosenfeld, General Counsel, John

H. Ferguson, Associate General Counsel, Aileen A. Arm-

strong, Deputy Associate General Counsel, and Fred L. Corn-

nell, Attorney.

Craig Becker argued the cause for intervenor. With him

on the brief was Richard P. James.

Before: Sentelle and Rogers, Circuit Judges, and

Williams, Senior Circuit Judge.

Opinion for the Court filed by Circuit Judge Sentelle.

Sentelle, Circuit Judge: Tradesmen International, Inc.

("Tradesmen"), a labor leasing company, petitions this Court

for review of a National Labor Relations Board ("NLRB" or

"the Board") decision in which the NLRB found that Trades-

men violated sections 8(a)(1) and (3) of the National Labor

Relations Act ("the Act"), 29 U.S.C. ss 158(a)(1), (a)(3), by

refusing to hire Matthew Oakes, a union organizer, after he

unsuccessfully lobbied the city of Lorain, Ohio to require

Tradesmen to pay a surety bond for work performed in the

city. Tradesmen argues in part that its refusal to hire Oakes

did not violate the Act because Oakes's activity before the

Lorain Board of Building Standards and Appeals was not

protected activity. Because we find that the NLRB failed to

establish a nexus between Oakes's activity and the employ-

ment conditions of Tradesmen or union workers, we grant the

petition for review and vacate the decision and order of the

NLRB.

I. Background

In July 1996, the city of Lorain, Ohio adopted Ordinance

118-96 ("Lorain Ordinance"), which requires general and

subcontractors to post a $5000 surety bond when performing

construction work in the city. Of particular significance to

this case is the ordinance's definition of "Sub-Contractor,"

which means "any person who performs a special skill, trade,

craft, or profession as a business for profit in the City, and as

part of a construction contract, whether on behalf of the

general contractor, building owner, or agent of an owner."

Lorain, Ohio, Ordinance 118-96 s III(b)(2) (July 25, 1996).

Petitioner Tradesmen is a construction labor leasing compa-

ny. It does not bid on, nor does it become a party to,

construction contracts. Rather, it "leases" skilled workers to

construction companies that bid on, and enter into, construc-

tion contracts.

On January 15, 1997, Tradesmen contracted with Bay

Mechanical and Electrical, Inc. ("Bay Mechanical") to supply

it with employees who could work on a large construction

project in Lorain. Bay Mechanical, as a subcontractor on the

project, posted a bond. Tradesmen, as a leasing company,

did not. In late March 1997, Matthew Oakes, a union orga-

nizer for the Sheet Metal Workers International Association,

Local Union No. 33 of Northern Ohio, AFL-CIO ("the Un-

ion"), contacted Tradesmen and inquired about openings for

Heating, Ventilation and Air Conditioning ("HVAC") posi-

tions. Although Oakes was qualified for HVAC positions,

there were no such positions available through Tradesmen at

that time. A few months later, Oakes met with Lorain City

Building Inspector Jack Murphy and provided him with a list

of three companies, including Tradesmen, that Oakes believed

were violating the Lorain Ordinance by operating as subcon-

tractors but not posting bonds. As a result, Murphy ordered

all Tradesmen employees to vacate the Bay Mechanical con-

struction site. However, at Tradesmen's request, Murphy

allowed Tradesmen employees to return to the job site pend-

ing a ruling by the Lorain Board of Building Standards and

Appeals ("Lorain Board") as to whether Tradesmen was to be

considered a "subcontractor" for purposes of the Lorain

Ordinance.

The Lorain Board held a hearing on May 28, 1997. Oakes

attended the hearing accompanied by union counsel and, after

identifying himself as a Local 33 member, testified that

Tradesmen should be subject to the Lorain Ordinance be-

cause it operated as a subcontractor. Tradesmen responded

that it was an employee leasing agency that merely provided

other companies with skilled workers. The Lorain Board

adjourned without immediately rendering an opinion. Two

days later, Oakes contacted Tradesmen to inquire once again

about available HVAC work. He was informed by Trades-

men's Vice President that because he intentionally tried to

hurt Tradesmen's business at the Lorain Board hearing,

Tradesmen would not hire Oakes for any open positions. In

response to that conversation, the NLRB's General Counsel

filed a complaint alleging that Tradesmen violated sections

8(a)(1) and (3) of the Act. Specifically, the complaint alleged

that Tradesmen refused to hire Oakes because he tried to

lobby the city of Lorain to require Tradesmen to pay a surety

bond, thus increasing Tradesmen's cost of doing business in

Lorain. In June 1997, the Lorain Board issued its ruling:

Tradesmen was not a subcontractor for purposes of the

Lorain Ordinance and was therefore not required to post a

bond.

II. Proceedings Below

The General Counsel's complaint was heard before an

Administrative Law Judge ("ALJ"), who dismissed the com-

plaint after finding that Oakes's "solo effort to increase

Tradesmen's cost of doing business in Lorain was not 'con-

certed activity' as defined by Section 7 of the Act." Trades-

men International, Inc., 332 NLRB No. 107, 2000 WL

1679479, at *13 (Oct. 31, 2000) (hereinafter Tradesmen). The

ALJ also held that even if Oakes's activity was concerted, it

was not otherwise protected under section 7 because "Oakes's

lobbying efforts ... had absolutely nothing to do with the

specific terms and conditions of employment." Id. That is,

Oakes's effort to apply the Lorain Ordinance to Tradesmen

did not involve employee-employer relations, nor was it even

generally related to employees' interests. Instead, the pur-

pose of the Lorain Ordinance was to fund the city's building

department, "as opposed to having anything to do with the

employees of various contractors or subcontractors working

in the city." Id. Finally, the ALJ held that Oakes's activity

was unprotected under section 7 because "it was designed to

injure Tradesmen's business" and "posed a threat of immedi-

ate harm to Tradesmen's business operation in Lorain,"

which, if effective, would have harmed Tradesmen employees

as well. Id. at *14.

The General Counsel filed exceptions to the ALJ's findings

and the case was heard before the Board. The Board

reversed the decision of the ALJ, finding that Oakes's May 28

testimony before the Lorain Board was concerted, protected

activity. Id. at *3. In particular, the Board found "a nexus

between Oakes's activity and employees' legitimate concern

over their continued employment." Id. at *4. The Board

explained that Oakes's efforts were intended to protect local

unionized companies and the job opportunities of their em-

ployees, and was similar in that respect to area-standards

picketing, a protected activity under the Act. Id. Board

Member (now Chairman) Hurtgen dissented from the deci-

sion, finding instead that Oakes's activity, while concerted,

was nonetheless unprotected because Oakes failed to estab-

lish any relationship between the bonding ordinance and

employees' terms and conditions of employment. Id. at *8.

Tradesmen petitions for review, challenging the Board's

findings that Oakes's activity before the Lorain Board was

concerted activity for mutual aid or protection protected

under section 7 of the Act. The Board, supported by Interve-

nor Sheet Metal Workers' International Association, Local

No. 33 of Northern Ohio, AFL-CIO, cross-petitions for en-

forcement.

III. Analysis

Our review of NLRB decisions is limited. See, e.g., Pio-

neer Hotel, Inc. v. NLRB, 182 F.3d 939, 942 (D.C. Cir. 1999).

We will affirm the judgment of the Board unless, "upon

reviewing the record as a whole, [this Court] conclude[s] that

the Board's findings are not supported by substantial evi-

dence, or that the Board acted arbitrarily or otherwise erred

in applying established law to the facts of the case." Interna-

tional Union of Electronic, Elec., Salaried, Mach. & Furni-

ture Workers v. NLRB, 41 F.3d 1532, 1536 (D.C. Cir. 1994)

(internal quotations and citations omitted). We will not,

however, " 'merely rubber-stamp NLRB decisions.' " Doug-

las Foods Corp. v. NLRB, 251 F.3d 1056, 1062 (D.C. Cir.

2001) (quoting Avecor, Inc. v. NLRB, 931 F.2d 924, 928 (D.C.

Cir. 1991)). As we have said before,

this court is a reviewing court and does not function

simply as the Board's enforcement arm. It is our respon-

sibility to examine carefully both the Board's findings

and its reasoning, to assure that the Board has consid-

ered the factors which are relevant to its choice of

remedy, selected a course which is remedial rather than

punitive, and chosen a remedy which can fairly be said to

effectuate the purposes of the Act.

Peoples Gas Sys., Inc. v. NLRB, 629 F.2d 35, 42 (D.C. Cir.

1980). In that light, we review the Board's conclusion that

Oakes's testimony before the Lorain Board was protected

activity under section 7 of the Act and that Tradesmen

committed an unfair labor practice by refusing to hire him

following his testimony.

In relevant part, section 7 states: "Employees shall have

the right to self-organization, to form, join, or assist labor

organizations, to bargain collectively through representatives

of their own choosing, and to engage in other concerted

activities for the purpose of collective bargaining or other

mutual aid or protection." 29 U.S.C. s 157 (emphasis add-

ed). Defining the scope of section 7's protections "is for the

Board to perform in the first instance as it considers the wide

variety of cases that come before it." NLRB v. City Disposal

Systems, Inc., 465 U.S. 822, 829 (1984). Thus, if an issue

arises that implicates the Board's expertise in labor relations,

"a reasonable construction by the Board is entitled to consid-

erable deference." Id.

The Board concedes that Tradesmen's refusal to hire Oakes

only constitutes an unfair labor practice if Oakes's testimony

before the Lorain Board was protected by section 7. Trades-

men, 2000 WL 1679479, at *2. Our analysis of whether

Oakes's activity enjoys section 7's protections is guided by

Supreme Court precedent, which clearly provides that the

"mutual aid or protection" clause in section 7 includes em-

ployees' efforts "to improve terms and conditions of employ-

ment or otherwise improve their lot as employees through

channels outside the immediate employee-employer relation-

ship." Eastex, Inc. v. NLRB, 437 U.S. 556, 565 (1978). This

includes employees' "resort to administrative and judicial

forums" to improve their working conditions. Id. at 566 &

n.15 (collecting cases). But the "mutual aid or protection"

clause is not without bound. That is, an employee's activity

will fall outside section 7's protective reach if it fails in some

manner to relate to "legitimate employee concerns about

employment-related matters." Kysor/Cadillac, 309 NLRB

237, 237 n. 3 (1992); see Eastex, 437 U.S. at 567-68. Thus an

essential element before section 7's protections attach is a

nexus between one's allegedly protected activity and "employ-

ees' interests as employees." Eastex, 437 U.S. at 567. With

the limits of section 7's protections in mind, we turn to the

Board's decision.

We assume without deciding that Oakes's activity as a

union representative constituted concerted activity, see City

Disposal Systems, 465 U.S. at 832-33, but reject the Board's

finding that his activity was protected under section 7. Our

deferential review of Board decisions notwithstanding, the

record before us provides no evidence to support a nexus

between Oakes's efforts to impose a bond on Tradesmen and

any employee-related matters. The relationship between

Oakes's lobbying efforts and "employees' interests as employ-

ees" was "so attenuated that [it] cannot fairly be deemed to

come within the 'mutual aid or protection' clause" of section 7.

Eastex, 437 U.S. at 568. The Board's attempt to characterize

Oakes's activity as "similar to area-standards picketing" is

unsupported and unsupportable.

The Board justified its decision by claiming a nexus be-

tween Oakes's activity and union employee concerns over

continued employment. Tradesmen, 2000 WL 1679479, at *4.

The Board found that "Oakes's attempt to secure [Trades-

men's] compliance with the Lorain bonding ordinance was

designed to protect local unionized companies and, in turn,

the job opportunities of their employees, by ensuring that

[Tradesmen] did not have an undue bidding advantage in the

Lorain construction market." Id. Tradesmen argued at

length that because Oakes's activity hurt rather than benefit-

ted Tradesmen employees, it cannot be considered protected

under the Act. Protected behavior is not limited to just those

concerted activities that benefit the actor's fellow employees.

The Supreme Court has made clear that an employee may

engage in otherwise proper concerted activities to support

employees of employers other than his own. See Eastex, 437

U.S. at 564. Thus, even if he was an employee of Tradesmen

(a point on which the parties disagree and which we decline to

address), Oakes was free to engage in behavior that sup-

ported union employers and employees. Indeed, Oakes

openly admitted to the ALJ that his purpose before the

Lorain Board, "as a representative of the union and as an

organizer, [was] to level [the] playing field as much as possi-

ble" between union and non-union companies. The Board

agreed that "if the Lorain Board had found that [Tradesmen]

was subject to the bonding ordinance, then [Tradesmen's]

cost of doing business in Lorain would have increased."

Tradesmen, 2000 WL 1679479, at *5.

Despite Eastex's recognition that non-union employers may

be acceptable targets of union employees' concerted activities,

we fail to see in the first instance how a bonding ordinance

that applies equally to union and non-union entities can be

said to be a means of leveling the playing field between the

two, and we further fail to see how invoking the application of

a requirement that is wholly unrelated to employment issues

relates in any sense to "employees' interests as employees."

Eastex, 437 U.S. at 567. The Board has simply failed to

provide an adequate or persuasive explanation to us. The

explanation it does provide, that Oakes's activity was similar

to area-standards picketing and that forcing Tradesmen to

pay a bond would "protect local unionized companies," is

wholly invalid. Tradesmen, 2000 WL 1679479, at *4.

Area-standards picketing is a protected activity under the

Act. See, e.g., O'Neil's Markets v. NLRB, 95 F.3d 733, 737

(8th Cir. 1996) (area-standards hand billing by non-employees

protected); NLRB v. Browning-Ferris Industries, 700 F.2d

385, 387-88 (7th Cir. 1983) (employees' refusal to cross picket

line at customer's property protected); Yellow Cab, Inc., 210

NLRB 568, 569 (1974) (employee's distribution of handbills

supporting other employer's employees protected). It is an

effective means "by which unions attempt to protect their

constituents' jobs by generating public and economic pressure

on nonunion employers to pay higher wages and benefits to

their employees, thereby ending unfair competitive advan-

tage." Tradesmen, 2000 WL 1679479, at *4. That is, union

employees may effectively protect their job security by seek-

ing to raise non-union employment wages and benefits (or

"standards") to the levels of union standards, thereby increas-

ing non-union employers' costs and succeeding, albeit indi-

rectly, in "leveling the playing field." Here, however, the

bonding requirement is not a "union standard." It applied to

all subcontractors, whether they employed union workers,

non-union workers, or both. Moreover, in the traditional

area-standards picketing scenario, benefits flow to both union

and non-union employees. When effective, union employees

receive increased job security and non-union employees re-

ceive, for example, increased employee benefits, or at least

that is the theory, and a plausible outcome in many cases. In

the present case, Oakes's activity was not an effort to improve

any employees' (union or non-union) working conditions. So

far as the record shows, it was solely an effort to raise

Tradesmen's costs. Paying the bond would not place Trades-

men on a more level playing field with union companies, it

would instead subject leasing companies to one discreet ele-

ment of construction costs required of contractors and sub-

contractors, regardless of whether either the leasing compa-

nies or contractors employed union or non-union employees.

Moreover, neither the Board nor the intervening union has

suggested any meaningful sense in which the bond related to

employees' interests as employees. The half-hearted sugges-

tion at oral argument that because the proceeds of the bond

funded city inspection departments the bond related to em-

ployees' interest in the safety of working conditions is uncon-

vincing. There is no showing, nor is it likely that there could

be any, that there would have been more or better inspections

if the bonds paid by contractors and subcontractors had been

supplemented by other entities supplying them labor, or by

any other suppliers with whom they might deal.

The Board's decision suggests a new standard that any

activity that raises a non-union employer's costs "levels the

playing field" between union and non-union employers, even if

unrelated to working conditions or union/non-union status,

and is therefore protected under the Act. This standard, it

seems, would apply whether the activity resulted in a benefit

to non-union employees, as in area-standards picketing, or

resulted in harm to non-union employees, as was the case

here. But such a standard effectively erases any line be-

tween acceptable and unacceptable activity directed toward

an employer's economic health. We reject this sweeping and

unprecedented expansion of "concerted activity for mutual aid

or protection." As the Supreme Court has stated, and as the

Board has previously agreed, for an employee's concerted

activities to be protected under the Act, the activity must

bear an identifiable relationship or nexus to legitimate em-

ployee concerns about employment-related matters. See

Eastex, 437 U.S. at 565-68; Kysor/Cadillac, 309 NLRB, at

238 n.3. Because Oakes's lobbying efforts did not, we reject

the Board's conclusion that they were protected under the

Act.

We need not and do not decide whether the Act requires

that an employee's concerted activities result in an actual,

measurable benefit to a targeted employer's employees. We

note, however, that our research has failed to produce any

case where, if the targeted employer had acquiesced to the

demands of the picketing employees, the targeted employees

would directly suffer, rather than benefit.1 At oral argument,

the Union urged us to recognize that, because only licensed

applicants are approved for the bond, Tradesmen employees'

benefit would be to operate under a state license that guaran-

__________

1 An arguable exception, NLRB v. Circle Bindery, 536 F.2d 447

(1st Cir. 1976), is distinguishable from the present case for reasons

set forth later in this opinion.

teed their qualifications, experience, and training. See Lo-

rain, Ohio, Ordinance 118-96, s III(d) (July 25, 1996). This

argument is a difficult one to follow. By definition, employ-

ees who are leased from a labor leasing company will always

be operating under the license of the subcontractor or con-

tractor leasing them, regardless of whether their leasing

company held a license independently. In any event, we do

not address whatever merit this argument might (or might

not) have, as the Board did not rely on the benefits of

licensing as the basis for its opinion. We cannot consider

such justification now, because "[a]gency decisions must gen-

erally be affirmed on the grounds stated in them." Associa-

tion of Civilian Technicians v. FLRA, 269 F.3d 1112, 1117

(D.C. Cir. 2001); see also, Burlington Truck Lines, Inc. v.

United States, 371 U.S. 156, 168 (1962) ("The courts may not

accept appellate counsel's post hoc rationalizations for agency

action....").

At oral argument, the Board's counsel asserted that Petro-

chem Insulation, Inc. v. NLRB, 240 F.3d 26 (D.C. Cir. 2001),

supports its decision in this case. We disagree. In that case,

we upheld the Board's finding that unions who filed environ-

mental objections to zoning and construction permits sought

by non-union contractors were protected activities. The

Board, we noted, relied on the unions' statement that they

sought to "force construction companies to pay their employ-

ees a living wage, including health and other benefits." Id.

at 30 (emphasis added) (citation omitted). If the unions were

successful, the Board reasoned, they would expand union

members' job opportunities while improving their bargaining

power for higher wages. See id. Thus it is clear that even

though union members were actively opposing the hiring of

non-union contractors, the union's stated purpose was to force

non-union employers to conform to area wage and benefit

standards--a goal that, if accepted by the non-union employ-

ers, would benefit non-union employees. Such activity, unlike

a bond requirement, relates to "employees' interests as em-

ployees." Eastex, 437 U.S. at 567.

The Board also relied on the Ninth Circuit's decision in

Kaiser Engineers v. NLRB, 538 F.2d 1379, 1385 (9th Cir.

1976), holding that lobbying members of Congress in an effort

to change the national immigration policy was action taken

for "mutual aid or protection" under section 7 because the

policy could affect the engineers' job security. The facts of

that case, though, are distinguishable from ours. The Kaiser

court was considering whether protected activity could occur

"outside the strict confines of the employment relationship."

Id. No one argues before us that employees may not peti-

tion, lobby, picket or otherwise direct their concerted activi-

ties toward entities other than their employers or other

employees' employers. Specifically, the Ninth Circuit held

that "lobbying legislators" for policy changes affecting em-

ployee "job security" was protected activity. Id. The policy

at issue involved easing restrictions on the importation of

foreign engineers who would compete directly with American

engineers for jobs. In our case, we are not concerned with a

policy that would flood the labor market and affect workers'

job security. We are concerned with whether the application

of a bonding ordinance that applies equally to union and non-

union subcontractors affects the job security of union employ-

ees. It does not.

While unable to identify a case supporting its position at

oral argument, the Board came closer to success in its brief,

although not close enough, in citing NLRB v. Circle Bindery,

536 F.2d 447 (1st Cir. 1976). The question before the First

Circuit in Circle Bindery was whether a union employee's

"policing" of a non-union employer's adherence to specific

contract terms was protected under section 7. In that case, a

union employee notified the union that his employer was

labeling books with a union "bug" (a mark indicating that the

book was bound by union employees) in violation of its

customer's contract. See id. at 449. The union then sought

and caused the non-union company to lose the binding con-

tract. As here, the employer argued that because the em-

ployee's actions were detrimental to the company and did not

benefit its own employees, the actions were unprotected

under section 7. The Board, however, ruled that the employ-

ee's actions, although harmful to the employer's business,

were nonetheless protected because they were "directed sole-

ly to protect[ ] himself and his fellow members of the Union

by preventing misuse of the union label which could undercut

the Union's standards." Id. at 451. The court, in upholding

the Board's decision, found that the non-union employer's

obtaining of the work "was a direct violation of its customer's

union contract," so any harm the employer sustained "was

merely to lose work which ... it should not have received in

the first place." Id. at 452-53.

The Board cites Circle Bindery for the proposition that

"promoting the employment of union members under union

conditions" is protected by the Act. Id. at 452. We do not

disagree. That proposition simply has nothing to do with the

alleged unfair labor practice by Tradesmen found by the

Board. Oakes's activity did not involve union conditions. It

did not involve non-union conditions. Indeed it did not

involve any employee-related conditions at all. It involved a

bond. Rather than raise the level of employee terms or

conditions of employment, the bond raises funds for the city.

Such city fund raising, however, bears too attenuated a

relationship to employees' interests as employees. As such,

Oakes's actions to enforce the bond against Tradesmen can-

not enjoy section 7's protections.

IV. Conclusion

For the reasons stated, we grant the petition for review,

vacate the decision and order of the Board, and deny the

Board's cross-petition for enforcement.