Chelsea Industries, Inc. v. National Labor Relations Board

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued November 1, 2001 Decided April 12, 2002

No. 00-1443

Chelsea Industries, Inc.,

Petitioner

v.

National Labor Relations Board,

Respondent

International Union, United Automobile, Aerospace and

Agricultural Implement Workers of America, UAW,

Intervenor for Respondent

Petition for Review and Cross-Application

for Enforcement of an Order of the

National Labor Relations Board

Donald H. Scharg argued the cause for petitioner. On the

briefs were Steven J. Fishman and Thomas A. Pinch.

Aileen A. Armstrong, Deputy Associate General Counsel,

National Labor Relations Board, argued the cause for respon-

dent. With her on the brief were Arthur F. Rosenfeld,

General Counsel, John H. Ferguson, Associate General Coun-

sel, and Joan E. Hoyte-Hayes, Attorney. Frederick Havard,

Supervisory Attorney, entered an appearance.

James B. Coppess argued the cause for intervenor. With

him on the brief was Laurence Gold.

Before: Ginsburg, Chief Judge, Sentelle and Randolph,

Circuit Judges.

Opinion for the court filed by Chief Judge Ginsburg.

Ginsburg, Chief Judge: Under longstanding precedent of

the National Labor Relations Board, an employer may not,

for a year after a union is certified as the bargaining repre-

sentative of its employees, withdraw recognition of the union

on the ground that it has lost its majority support among the

employees. Chelsea Industries, Inc. petitions for review of

the Board's decision extending this rule to prohibit an em-

ployer from withdrawing recognition after the certification

year based upon evidence of less than majority support for

the union that the employer acquired during the certification

year. We uphold the Board's new policy because it is both

rational and consistent with the National Labor Relations

Act.

I. Background

In April, 1993 the Board certified the United Auto Workers

as the exclusive collective bargaining representative of Chel-

sea's employees, and the two parties began to negotiate a

collective bargaining agreement in February, 1994, which

therefore marked the start of the Union's "certification year."

In November, with negotiations still on-going, Chelsea's man-

agement received a petition subscribed by 57 of the Compa-

ny's 89 employees declaring that the "UNDERSIGNED EM-

PLOYEES ... DO NOT WANT TO BE REPRESENTED

BY THE UAW." Neither Chelsea nor the employees in-

formed the UAW of the petition, and the Company continued

to negotiate with the Union--from all that appears, in good

faith--until February, 1995. The certification year then hav-

ing ended, Chelsea notified the Union that, based upon the

November petition, it would no longer recognize the UAW as

the bargaining representative of its employees.

At the time that Chelsea withdrew recognition from the

Union, 51 of the 57 signatories of the petition still worked

there and constituted a majority of Chelsea's employees. No

outstanding allegations of unfair labor practices tainted Chel-

sea's withdrawal of recognition.

Immediately after the withdrawal the UAW charged that

Chelsea had violated ss 8(a)(1) and (5) of the Act, 29 U.S.C.

s 158(a)(1) & (5). In March, 1995, when Chelsea increased

its employees' wages, the UAW filed another unfair labor

practice charge because the Company acted without first

having bargained with the Union. The General Counsel

issued a complaint encompassing both charges.

An Administrative Law Judge dismissed the complaint,

rejecting the General Counsel's and the Union's argument

that "an antiunion petition secured within the certification

year can never be utilized to withdraw recognition outside the

certification year." Chelsea Indus., Inc., 331 N.L.R.B. No.

184, slip op. at 7 (Aug. 31, 2001) (ALJ Decision). The ALJ

drew upon a line of cases in which the Board had suggested

that an employer with evidence the union no longer has the

support of a majority of the employees in the bargaining unit

lawfully may declare in advance its intention to withdraw

recognition from the union at the end of the certification year.

See, e.g., Rock-Tenn Co., 315 N.L.R.B. 670, 672 (1994). The

ALJ inferred that such cases also establish the lesser and

seemingly included right of an employer with such evidence

to withdraw recognition after the certification year without

having made an announcement during the year, and that

therefore Chelsea lawfully had withdrawn recognition of the

UAW. See Chelsea, slip op. at 7-8 (ALJ Decision).

The Board reversed the ALJ's ruling, holding that an

employer "may not withdraw recognition from a union outside

of the certification year based on evidence received within the

certification year." Chelsea, slip op. at 4. Accordingly, the

Board held that Chelsea unlawfully had refused to bargain

with the Union, from which it followed that its subsequent

unilateral wage increase was unlawful as well. Chelsea now

petitions for review of that decision, and the Board cross-

applies for enforcement.

II. Analysis

The Board has long held, with exceptions not applicable

here, that an employer may not withdraw recognition from a

union for at least a year following the union's certification.

See, e.g., Kimberly-Clark Corp., 61 N.L.R.B. 90, 92 (1945)

("Board election and certification must be treated as identify-

ing the statutory bargaining agent with certainty and finality

for a reasonable period of time--about a year, under ordinary

circumstances"). After bargaining for a year an employer

may withdraw recognition based upon actual evidence that a

majority of its employees no longer support the union; a

petition signed by a majority is such evidence. See Sullivan

Indus. v. NLRB, 957 F.2d 890, 898 (D.C. Cir. 1992). The

issue in this case, then, is whether the Board reasonably

could hold, consistent with the Act, that an employer may not

withdraw recognition based upon evidence secured during the

certification year.

We defer to the Board's interpretation of the Act if it is

reasonable, see Holly Farms Corp. v. NLRB, 517 U.S. 392,

401 (1996), and "if the Board's 'explication is not inadequate,

irrational, or arbitrary.' " Allentown Mack Sales & Serv. v.

NLRB, 522 U.S. 359, 364 (1998). The agency acts unreason-

ably if it departs from established policy without giving a

reasoned explanation for the change, see ConAgra, Inc. v.

NLRB, 117 F.3d 1435, 1443-44 (D.C. Cir. 1997), as Chelsea

claims the Board did in this case.

Fifteen years ago the Board ruled that an employer may

not withdraw recognition from a union based upon evidence

acquired during the certification year. See United Super-

markets, 287 N.L.R.B. 119, 120 (1987) (just as anti-union

petition could not "be acted upon by [employer] within the

certification year, [employer] cannot subsequently rely on it

to justify a more timely withdrawal of recognition"), aff'd,

United Supermarkets v. NLRB, 862 F.2d 549 (5th Cir. 1989).

The ALJ declined for two reasons to recognize United Super-

markets as controlling here. First, in that case the Board

had faulted the employer not only for having withdrawn

recognition from the union based upon evidence acquired

during the certification year, but also for having acted upon

an anti-union petition that was unreliable owing to the em-

ployer's outstanding unfair labor practices, see Chelsea, slip

op. at 8 (ALJ Decision); indeed, in United Supermarkets the

Board had described the unremedied unfair labor practices as

the "[m]ore significant" problem, 287 N.L.R.B. at 120. There

were no such allegations pending against Chelsea. See Chel-

sea, slip op. at 8 (ALJ Decision).

Second, the ALJ concluded that the Board's more recent

decision in Rock-Tenn had undermined United Supermarkets.

See id. at 7. After all, an employer's right to announce in

advance that it intended to withdraw recognition at the end of

the certification year would seem to imply that the employer

could simply withdraw recognition at the year's end without

having issued such an anticipatory announcement. The ALJ

recognized that to allow an employer to act upon evidence

acquired during the year "had the potential of rendering

further bargaining within the year meaningless," id. at 8, but

he was "not authorized" to depart from what he perceived to

be a binding precedent of the Board, id.

The Board labors under no such disability, of course, and it

resolved the tension between United Supermarkets and

Rock-Tenn by disavowing the later decision and ruling that

"an employer may not withdraw recognition from a union

outside of the certification year based on evidence received

within the certification year." Chelsea, slip op. at 4. The

Board justified its decision on the grounds that the rule

announced in United Supermarkets relieves a newly certified

union of "exigent pressures to produce hothouse results or be

turned out" and decreases an employer's incentive to engage

in surface bargaining, see id. at 3, the very grounds accepted

by the Supreme Court when it first reviewed the Board's

decision establishing the irrebuttable presumption that a un-

ion enjoys majority support during the certification year, see

Brooks v. NLRB, 348 U.S. 96, 100 (1954). These reasons are

equally applicable here: an employer that acquires evidence

its employees are dissatisfied with their union may well be

reluctant to negotiate, and tempted instead merely to run out

the certification year in the expectation that the employees

will then oust the union; and a union facing the threat of

derecognition based upon dissatisfaction among its members

during the certification year will again be under pressure to

generate "hothouse results." Therefore, we cannot conclude

that the Board's prophylactic rule is irrational.

Nor may we fault the Board for not following its own

precedent. The Board is at liberty to change its policies as

long as it justifies the change with a "reasoned explanation,"

Micro Pacific Dev., Inc. v. NLRB, 178 F.3d 1325, 1336 (D.C.

Cir. 1999), and, as we have seen, it has met that obligation

here. The Board recognized that a conflict had emerged in

its cases with regard to whether an employer may, after the

certification year, withdraw recognition from a union based

upon evidence the employer had acquired during the certifica-

tion year. Although not directly in conflict, Rock-Tenn--in

which the Board upheld an anticipatory withdrawal of recog-

nition--and United Supermarkets--in which the Board con-

demned a withdrawal of recognition deferred until the end of

the certification year--could not sensibly co-exist. The Board

took this opportunity to relieve the tension, and it did so in

favor of the Union rather than the Company. Because, as

described above, that resolution was itself reasonable, and the

Board gave a "reasoned explanation" for changing (or per-

haps merely clarifying) its policy, we reject Chelsea's conten-

tion that the Board impermissibly departed from precedent.

Equally unavailing is Chelsea's argument that the Board's

decision conflicts with s 7 of the Act because it limits the

employees' right "to bargain collectively through representa-

tives of their own choosing, and ... to refrain from any or all

of such activities." 29 U.S.C. s 157. (In this vein, Chelsea

asserts the decision forces its employees "to accept the UAW

as their bargaining representative simply because they did

not wait until February 3, 1995 to sign the petition.") But

that is the inevitable by-product of the Board's striking a

balance between stability and employee free choice in labor

relations, as it frequently must do. See, e.g., Terrace Gar-

dens Plaza, Inc. v. NLRB, 91 F.3d 222, 228 (D.C. Cir. 1996)

("contract bar rule"). Insofar as the decision makes it more

difficult for the employees to terminate their representation

by the Union, the burden is no greater than is entailed in the

Board's policy that an employer may not withdraw recogni-

tion during the certification year, which policy has been

recognized as valid under the Act for nearly fifty years. See

Brooks, 348 U.S. at 100.

Finally, we reject out of hand Chelsea's rather silly sugges-

tion that the Board's decision is unreasonable because it

conflicts with a memorandum issued by the General Counsel's

Division of Advice in response to an inquiry from a Regional

Director considering whether to pursue the complaint in a

similar case then pending. The General Counsel investigates

and prosecutes unfair labor practices before the Board, see 29

U.S.C. s 153(d); he must also defend the decisions of the

Board on review, regardless whether the Board adopted the

view he expressed as a party before it. See National Labor

Relations Bd., Organization & Functions s 202, 32 Fed Reg.

9588, 9588 (1967). It is of no moment, therefore, what was

the General Counsel's understanding of the case law before

the present decision issued, and the court will take no note of

it.

Because Chelsea's withdrawal of recognition was unlawful,

it necessarily follows that Chelsea violated the Act by unilat-

erally raising its employees' wages. As Chelsea implicitly

recognizes by its silence, an employer may not alter its

employees' wages without first having bargained with their

union and reached either an agreement or an impasse. See

29 U.S.C. s 158(d); Daily News of Los Angeles v. NLRB, 73

F.3d 406, 410 (D.C. Cir. 1996).

III. Conclusion

For the reasons stated above, we deny Chelsea's petition

for review and grant the Board's cross-application for en-

forcement.

So ordered.