Nova Plumbing, Inc. v. National Labor Relations Board

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued April 11, 2003 Decided June 10, 2003

No. 02-1085

NOVA PLUMBING, INC.,

PETITIONER

v.

NATIONAL LABOR RELATIONS BOARD,

RESPONDENT

SOUTHERN CALIFORNIA PIPE TRADES DISTRICT COUNCIL NO. 16,

UNITED ASSOCIATION OF JOURNEYMEN AND APPRENTICES OF THE

PLUMBING AND PIPE FITTING INDUSTRY OF THE

UNITED STATES AND CANADA, AFL-CIO,

INTERVENOR

On Petition for Review and Cross-Application

for Enforcement of an Order of the

National Labor Relations Board

–————

Bills of costs must be filed within 14 days after entry of judgment.

The court looks with disfavor upon motions to file bills of costs out

of time.

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Steven D. Atkinson argued the cause for petitioner. With

him on the briefs were Thomas A. Lenz and Vincent P.

Floyd.

William M. Bernstein, Attorney, National Labor Relations

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. Armstrong,

Deputy Associate General Counsel, and Charles Donnelly,

Senior Attorney.

Francis J. Martorana argued the cause for intervenor.

With him on the brief was Dinah S. Leventhal.

Before: EDWARDS, RANDOLPH and TATEL, Circuit Judges.

Opinion for the Court filed by Circuit Judge TATEL.

TATEL, Circuit Judge: In this case involving a construction

company’s refusal to extend its contract with a labor union,

the National Labor Relations Board found the contract gov-

erned not by section 8(f) of the National Labor Relations Act,

under which a construction-industry employer may refuse to

bargain with a union after the expiration of a ‘‘pre-hire’’

agreement, but rather by section 9(a), under which an em-

ployer must continue bargaining after a collective bargaining

agreement expires. Because the Board relied solely on a

contract provision suggesting that the company and the union

intended a 9(a) relationship despite strong record evidence

that the union may not have enjoyed majority support as

required by section 9(a), we hold that the Board failed to

protect the employees’ section 7 rights ‘‘to bargain collectively

through representatives of their own choosing.’’ 29 U.S.C.

§ 157.

I.

Under sections 9(a) and 8(a)(5) of the National Labor

Relations Act, employers are obligated to bargain only with

unions that have been ‘‘designated or selected for the pur-

poses of collective bargaining by the majority of the employ-

ees in a unit appropriate for such purposes.’’ 29 U.S.C.

§ 159(a); see also id. § 158(a)(5) (making it an unfair labor

practice to refuse to bargain with a union selected in accor-

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dance with section 9(a)). In fact, an employer that signs a

collective bargaining agreement recognizing a minority union

as the exclusive representative of its employees will generally

be deemed to have committed an unfair labor practice by

interfering with employee rights under NLRA section 7 ‘‘to

self-organization, to form, join, or assist labor organizations,

to bargain collectively through representatives of their own

choosing, TTT to engage in other concerted activities[,] TTT

and TTT [generally] to refrain from any or all such activities.’’

29 U.S.C. § 157; Int’l Ladies’ Garment Workers’ Union v.

NLRB, 366 U.S. 731, 737 (1961). Even if the employer and

union have both acted on a good faith belief of majority

status, such agreements are unenforceable because ‘‘[t]o

countenance such an excuse would place in permissibly care-

less employer and union hands the power to completely

frustrate employee realization of the premise of the Act—that

its prohibitions will go far to assure freedom of choice and

majority rule in employee selection of representatives.’’ Gar-

ment Workers, 366 U.S. at 738–39.

NLRA section 8(f) creates a limited exception to this

majority support requirement for the construction industry.

Under this exception, a contractor may sign a ‘‘pre-hire’’

agreement with a union regardless of how many employees

authorized the union’s representation. 29 U.S.C. § 158(f).

Pre-hire agreements respond to the unique nature of the

industry: Construction companies need to draw on a pool of

skilled workers and to know their labor costs up front in

order to generate accurate bids; union organizing campaigns

are complicated by the fact that employees frequently work

for multiple companies over short, sporadic periods. NLRB

v. Local Union No. 103, 434 U.S. 335, 348–49 (1978). To

protect employees, however, section 8(f) provides that em-

ployees and other parties, including rival unions, may file

election petitions to change or decertify a union representa-

tive at any time under a pre-hire agreement. 29 U.S.C.

§ 158(f); Local Union No. 103, 434 U.S. at 348–49. By

comparison, such petitions are generally barred during the

term of a section 9(a) agreement, up to a maximum of three

years, because the union is entitled to a conclusive presump-

4

tion of majority status during that period. Auciello Iron

Works, Inc. v. NLRB, 517 U.S. 781, 785–86 (1996). More-

over, an employer may refuse to bargain after a section 8(f)

agreement expires because the union enjoys no presumption

that it ever had majority support. John Deklewa & Sons, 282

N.L.R.B. 1375, 1386 (1987). By comparison, an employer

must continue bargaining with a section 9(a) union after the

expiration of an agreement unless the company can demon-

strate either that the union has in fact lost majority support

or that the employer has a ‘‘good faith uncertainty’’ as to the

union’s status. Allentown Mack Sales & Serv., Inc. v. NLRB,

522 U.S. 359, 367 (1998); Auciello Iron Works, 517 U.S. at

786–87. (Although the Board modified the section 9(a) rule

shortly before deciding this case, Levitz Furniture, 333

N.L.R.B. No. 105 (Mar. 29, 2001), it did not apply the new

standard here.)

In this case, Intervenor Southern California Pipe Trades

District Council No. 16 opened negotiations in 1994 with

Petitioner Nova Plumbing, Inc., a residential plumbing con-

tractor. Nova President Rodney Robbins had previously

worked for his father’s company, Calta Plumbing, Inc., and

took many of its employees with him to Nova when his father

retired and closed Calta. District Council No. 16, which had

a collective bargaining agreement with Calta, threatened

litigation if Nova refused to bargain with it as well. Nova

initially responded by petitioning for a Board election because

Robbins believed that many former Calta employees were

angry that District Council No. 16 had previously agreed to

terms under which they received lower wages and benefits

than commercial plumbers. After further negotiation, howev-

er, Nova withdrew its petition and agreed to sign a two-year

contract. In return, District Council No. 16 agreed to drop

its litigation threat, to provide skilled workers, and to attempt

to organize Nova’s nonunion competitors. The contract incor-

porated a recognition clause from District Council No. 16’s

Master Labor Agreement:

Based upon evidence presented to the Contractor by the

Union, which evidence demonstrates that the Union rep-

resents an uncoerced majority of the employees of the

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Contractor, and which has been independently verified

by a Certified Public Accounting Firm satisfactory to the

Contractor, the Contractor hereby recognizes the Unions

who are signatory hereto as the sole and exclusive collec-

tive bargaining representative of all employees of the

contractor performing Plumbing and Piping work as

defined in this Agreement.

Despite this language, the record contains no indication that

District Council No. 16 ever submitted evidence of employee

support to an accounting firm or to Nova directly.

In May 1997, Nova sent a letter to District Council No. 16

stating that the company would not extend the contract past

the agreement’s June 30 expiration date and that it had no

duty to bargain concerning a successor contract. In re-

sponse, District Council No. 16 claimed section 9(a) status.

Although the parties negotiated briefly, Nova eventually

stopped bargaining and ended its contributions to the union’s

pension funds.

District Council No. 16 filed unfair labor practice charges,

claiming that Nova had violated NLRA sections 8(a)(1) and

8(a)(5) by refusing to bargain and by making unilateral

changes to working conditions after the contract expired. At

a hearing before an administrative law judge, Robbins testi-

fied that he believed the agreement was a section 8(f) con-

tract which left him free to walk away upon expiration if the

arrangement proved disadvantageous. District Council No.

16 representatives had a very different view, testifying that

the agreement memorialized a section 9(a) relationship and

that Nova therefore had a duty to bargain after it expired.

The ALJ assumed arguendo that the expired agreement was

a section 9(a) contract, but ruled that Nova had acted lawfully

in refusing to bargain because it had a good faith uncertainty

as to District Council No. 16’s majority status in June 1997

and throughout the two-year contract period. See Allentown

Mack Sales & Serv., 522 U.S. at 367.

The Board rejected the ALJ’s reasoning. Applying stan-

dards recently announced in Staunton Fuel & Material, Inc.

d/b/a Central Illinois Construction, 335 N.L.R.B. No. 59

6

(Aug. 27, 2001), it concluded that the contract’s recognition

clause demonstrated that Nova had voluntarily recognized

District Council No. 16 as a section 9(a) representative. The

Board also rejected the ALJ’s finding that Nova had a good

faith uncertainty as to District Council No. 16’s majority

status, concluding that Robbins had acted on stale reports

from mid-level supervisors.

Nova now petitions for review, challenging the Board’s

determinations that the contract was a section 9(a) agreement

and that the company lacked good faith uncertainty as to

District Council No. 16’s majority status. The Board, sup-

ported by Intervenor District Council No. 16, cross-petitions

for enforcement. We will affirm the Board’s order unless its

factual findings are unsupported by substantial evidence in

the record as a whole or the Board acted arbitrarily or

otherwise erred in applying established law to the facts.

Beverly Health & Rehab. Servs., Inc. v. NLRB, 317 F.3d 316,

320 (D.C. Cir. 2003).

II.

The Board adopted its current interpretation of section 8(f)

in John Deklewa & Sons, ruling that in light of prevailing

practices in the construction industry as well as of the

statute’s legislative history, it would presume that all collec-

tive bargaining agreements in the industry are 8(f) contracts

and therefore require parties asserting the existence of a

section 9(a) relationship to prove affirmatively that such a

relationship exists. 282 N.L.R.B. at 1385 n.41. Absent a

Board-conducted election, the Board required proof of ‘‘a

union’s express demand for, and an employer’s voluntary

grant of, recognition to the union as bargaining representa-

tive based on a contemporaneous showing of union support

among a majority of the employees in an appropriate unit.’’

J&R Tile, Inc., 291 N.L.R.B. 1034, 1037 (1988).

In a string of more recent decisions, however, including

Central Illinois, the Board has ruled that written contract

language standing alone may establish the existence of a

section 9(a) relationship as long as the contract indicates that

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‘‘the employer’s recognition [of the union’s 9(a) status] was

based on the union’s showing, or offer to show, substantiation

of its majority support.’’ 335 N.L.R.B. No. 59, 2001 WL

1039904, at *4. Relying on Central Illinois in this case, the

Board concluded that Nova and the union had formed a

section 9(a) agreement because the contract’s recognition

clause ‘‘leaves no reasonable doubt that the parties intended a

9(a) relationship.’’ Nova Plumbing, Inc., 336 N.L.R.B. No.

61, 2001 WL 1216968, at *4 (Sept. 30, 2001).

Nova argues that the Board’s reliance on contract language

alone directly contradicts International Ladies’ Garment

Workers’ Union v. NLRB, 366 U.S. 731 (1961). In that case

the Supreme Court held that a section 9(a) collective bargain-

ing agreement recognizing the Garment Workers’ Union as

the employees’ exclusive bargaining representative ‘‘must fail

in its entirety’’ because at the time the agreement was signed,

only a minority of plant employees had actually authorized

the union to represent their interests. Id. at 737. The

contract language, the parties’ intent to form a binding sec-

tion 9(a) agreement, and their good faith belief of majority

status could not, the Court held, overcome the fact that the

union actually lacked majority support. Emphasizing that

‘‘[t]here could be no clearer abridgment’’ of employees’ sec-

tion 7 rights to choose their own representatives or to refrain

from collective activity, id., the Court explained:

We find nothing in the statutory language prescribing

scienter as an element of the unfair labor practices here

involved. The act made unlawful by § 8(a)(2) is employ-

er support of a minority union. Here that support is an

accomplished fact. More need not be shown, for, even if

mistakenly, the employees’ rights have been invaded. It

follows that prohibited conduct cannot be excused by a

showing of good faith.

Id. at 739.

Nova’s argument is well taken. The proposition that con-

tract language standing alone can establish the existence of a

section 9(a) relationship runs roughshod over the principles

established in Garment Workers, for it completely fails to

8

account for employee rights under sections 7 and 8(f). An

agreement between an employer and union is void and unen-

forceable, Garment Workers holds, if it purports to recognize

a union that actually lacks majority support as the employees’

exclusive representative. While section 8(f) creates a limited

exception to this rule for pre-hire agreements in the construc-

tion industry, the statute explicitly preserves employee rights

to petition for decertification or for a change in bargaining

representative under such contracts. 29 U.S.C. § 158(f).

The Board’s ruling that contract language alone can establish

the existence of a section 9(a) relationship—and thus trigger

the three-year ‘‘contract bar’’ against election petitions by

employees and other parties—creates an opportunity for con-

struction companies and unions to circumvent both section

8(f) protections and Garment Workers’ holding by colluding

at the expense of employees and rival unions. By focusing

exclusively on employer and union intent, the Board has

neglected its fundamental obligation to protect employee sec-

tion 7 rights, opening the door to even more egregious

violations than the good faith mistake at issue in Garment

Workers.

Section 8(f) represents a real benefit to both employers and

unions in the construction industry, allowing them to establish

bargaining relationships without regard to a union’s majority

status. But the Board cannot, as it did here and in Central

Illinois, allow this relatively easy-to-establish option to be

converted into a section 9(a) agreement that lacks support of

a majority of employees. Otherwise the Board would be

giving employers and unions ‘‘the power to completely frus-

trate employee realization of the premise of the Act—that its

prohibitions will go far to assure freedom of choice and

majority rule in employee selection of representatives.’’ Gar-

ment Workers, 366 U.S. at 738–39.

In reaching this conclusion, we do not mean to suggest that

contract language and intent are irrelevant. To the contrary,

they are perfectly legitimate factors that the Board may

consider in determining whether the Deklewa presumption

has been overcome. See J&R Tile, Inc., 291 N.L.R.B. at 1037

(holding that even where an employer has personal knowl-

9

edge of majority support, a construction-industry contract will

be presumed to be governed by section 8(f) unless the em-

ployer and union clearly intended to create a section 9(a)

agreement). Standing alone, however, contract language and

intent cannot be dispositive at least where, as here, the record

contains strong indications that the parties had only a section

8(f) relationship.

Although the administrative law judge did not permit a full

showing on actual majority support, uncontradicted testimony

indicates that even senior employees who had been longtime

union members at Calta opposed the union’s representation at

Nova. For example, when Robbins first announced to several

foremen and senior employees that he had reached an agree-

ment with District Council No. 16, they responded so nega-

tively that Robbins cancelled a meeting to announce the

agreement to the rest of the workforce. Robbins then orga-

nized a meeting with senior employees and union representa-

tives, but that meeting turned extremely hostile. Nova’s field

superintendent and other foremen also encountered resis-

tance during the next few months as they informed approxi-

mately thirty other employees that they would have to join

District Council No. 16.

Moreover, the record contains no evidence of independent

verification of employee support. In fact, at the time of the

hearing, District Council No. 16 was unable to produce any

authorization cards, and even the representative who ap-

proached Nova employees at work sites in 1995 testified that

he could only remember three people who had signed such

cards. Nova itself expressed repeated doubts about District

Council No. 16’s majority status, both by filing an election

petition and later in face-to-face negotiations, and Robbins

testified that he did not believe that a majority of employees

supported the union when he signed the agreement. Indeed,

despite its claim of section 9(a) status after Nova refused to

bargain in 1997 and cursory testimony by District Council No.

16’s business manager that union negotiators asserted majori-

ty status in 1995, neither the union nor the Board appear to

have clearly contended that the union had actual majority

support in 1995.

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This lack of evidence is fatal because the contract itself—

which is apparently the sole basis for District Council No. 16’s

claim to section 9(a) status—states that Nova’s recognition of

the union rests on ‘‘independently verified’’ proof that the

union represents a majority of unit employees. Thus, by

neither introducing such proof nor explaining its absence, the

Board and union have failed to demonstrate majority repre-

sentation under the very boilerplate language on which they

rely to overcome the Deklewa presumption. If the Board

considers contract language in determining section 9(a) sta-

tus, it must take such language seriously when a recognition

clause indicates that there is a concrete basis upon which to

assess employee support. Otherwise, unions and employers

would be free to agree to such self-serving language with no

threat of challenge.

The Board cites Third and Tenth Circuit cases upholding

Board rulings that contract language alone may establish the

existence of a section 9(a) relationship in the construction

industry. See NLRB v. Triple C Maint., Inc., 219 F.3d 1147,

1155 (10th Cir. 2000); Sheet Metal Workers’ Int’l Ass’n Local

19 v. Herre Bros., Inc., 201 F.3d 231, 242 (3d Cir. 1999).

Neither case, however, addresses Garment Workers, and

neither appears to involve a situation suggesting that the

union was not in fact supported by a majority of workers.

See Triple C Maint., 219 F.3d at 1155–56 & n.4 (noting that

because a majority of employees signed authorization cards

during the course of several successive agreements, the em-

ployer could not argue that there was no majority support);

Herre Bros., 201 F.3d at 242 (noting that the employer had

presented ‘‘no facts which TTT create a genuine issue of fact’’

as to the existence of a section 9(a) relationship); cf. NLRB v.

Okla. Installation Co., 219 F.3d 1160, 1164–66 (10th Cir. 2000)

(concluding that the contract language at issue did not clearly

express the parties’ intent, without addressing employee sup-

port). Moreover, although other circuits have considered

contract language in the course of determining whether a

particular agreement was governed by section 8(f) or 9(a),

they have treated such language as relevant to the parties’

intent and knowledge but not necessarily determinative of

11

actual majority status. See Am. Automated Sprinkler Sys.,

Inc. v. NLRB, 163 F.3d 209, 221–22 (4th Cir. 1998); NLRB v.

Triple A Fire Protection, Inc., 136 F.3d 727, 735 & n.12 (11th

Cir. 1998); NLRB v. Goodless Elec. Co., 124 F.3d 322, 330

(1st Cir. 1997).

Focusing on NLRA section 10(b), 29 U.S.C. § 160(b), which

functions as a six-month statute of limitations for unfair labor

practice challenges, District Council No. 16 argues that Nova

may not dispute that the contract created a section 9(a)

relationship because the company failed to raise the issue

within six months of the contract’s signing. Triple C Maint.,

219 F.3d at 1156–59; Triple A Fire Protection, Inc., 136 F.3d

at 737; Casale Indus., Inc., 311 N.L.R.B. 951, 953 (1993).

We think this argument begs the question, however. The

fundamental issue at the heart of this case is whether the

1995 contract was subject to section 8(f) or 9(a); only if the

parties formed a section 9(a) relationship in 1995 did Nova

commit an unfair labor practice in 1997 and thereby trigger

the six-month time limit. See Brannan Sand & Gravel Co.,

289 N.L.R.B. 977, 982 (1988) (‘‘Going back to the beginning of

the parties’ relationship here simply seeks to determine the

majority or nonmajority based nature of the current relation-

shipTTTT’’); see also Okla. Installation Co., 219 F.3d at 1166

(declining to address section 10(b) where the court concluded

that the parties’ relationship was governed by section 8(f)

rather than section 9(a)); Am. Automated Sprinkler Sys., 163

F.3d at 218 n.6 (concluding that section 10(b) cannot reason-

ably be interpreted as barring an employer from challenging

evidence forming the basis of the Board’s complaint). In any

event, we need not resolve this issue, for the Board did not

rely on section 10(b) and ‘‘[w]e cannot sustain agency action

on grounds other than those adopted by the agency in the

administrative proceedings.’’ MacMillan Pub. Co. v. NLRB,

194 F.3d 165, 168 (D.C. Cir. 1999).

We grant the petition for review and deny the cross-

petition for enforcement.

So ordered.