M & M Backhoe Service, Inc. v. National Labor Relations Board

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued October 13, 2006 Decided December 1, 2006

No. 05-1378

M&M BACKHOE SERVICE, INC.,

PETITIONER

v.

NATIONAL LABOR RELATIONS BOARD,

RESPONDENT

INTERNATIONAL UNION OF OPERATING ENGINEERS, LOCAL

487, AFL-CIO,

INTERVENOR FOR RESPONDENT

Consolidated with

05-1412 and 05-1433

On Petitions for Review and Cross-Application for

Enforcement

of an Order of the National Labor Relations Board

Michael E. Avakian argued the cause and filed the briefs for

petitioner M&M Backhoe Service, Inc.

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Osnat K. Rind argued the cause and filed the briefs for

petitioner International Union of Operating Engineers, Local

487, AFL-CIO.

Gregory P. Lauro, Attorney, National Labor Relations

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

were Ronald E. Meisburg, General Counsel, John H. Ferguson,

Associate General Counsel, Aileen A. Armstrong, Deputy

Associate General Counsel, and Fred B. Jacob, Attorney.

Before: HENDERSON, RANDOLPH and GRIFFITH, Circuit

Judges.

RANDOLPH, Circuit Judge: The threshold issue in these

consolidated petitions for review of an order of the National

Labor Relations Board and the Board’s cross-application for

enforcement is whether M&M Backhoe Service, Inc.,

voluntarily recognized the union’s majority status and converted

the relationship between the company and the union from one

governed by section 8(f) of the National Labor Relations Act to

one governed by section 9(a).

The Act gives employees the right to select their own union

representation. See 29 U.S.C. § 159(a). Employers must

bargain in good faith with unions, see id. § 158(a)(5), but only

if the union has been “designated or selected . . . by the majority

of the employees in a unit appropriate for such purposes,” id.

§ 159(a). The Supreme Court underscored the importance of

worker self-determination decades ago in International Ladies’

Garment Workers’ Union v. NLRB, 366 U.S. 731 (1961), and we

reiterated the principle in Nova Plumbing, Inc. v. NLRB, 330

F.3d 531 (D.C. Cir. 2003).

An exception, specific to the construction industry, permits

employers to enter into pre-hire agreements with unions without

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any showing of majority support. See 29 U.S.C. § 158(f). As

we explained in Nova Plumbing, the exception adapts the law to

conform with “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.” 330 F.3d at 534 (citing NLRB v. Local

Union No. 103, 434 U.S. 335, 348-49 (1978)).

Pre-hire agreements differ from the typical collective

bargaining agreement. Under section 8(f), either party may

repudiate the terms of a pre-hire agreement when it expires. See

John Deklewa & Sons, 282 N.L.R.B. 1375, 1377-78, 1386

(1987), enforced sub nom Int’l Ass’n of Bridge, Structural &

Ornamental Iron Workers, Local 3 v. NLRB, 843 F.2d 770 (3d

Cir. 1988). The employer then has no obligation to bargain with

the union, “because the union enjoys no presumption that it ever

had majority support.” Nova Plumbing, 330 F.3d at 534. Under

section 9(a), by contrast, the union benefits from “a conclusive

presumption of majority status during the term of any collective-

bargaining agreement, up to three years.” Auciello Iron Works,

Inc. v. NLRB, 517 U.S. 781, 786 (1996) (footnote omitted).

A union may convert its relationship with the employer to

one governed by section 9(a) if it demonstrates support from a

majority of employees in the unit. Local 487’s attempt to do

just that raises the principal issue in the case.

M&M is a small, Florida-based construction contracting

company founded by president Robert Miley. Miley had been

a member of Local 487 for more than twenty-seven years before

starting M&M in 1991. From M&M’s inception, the company

operated under a series of pre-hire agreements with Local 487.

The last agreement permitted either party to terminate it by

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notifying the other party at least sixty days before June 30, 2002,

its expiration date.

On March 26, 2002, Miley notified the union by letter that

M&M would terminate the pre-hire agreement when it expired.

The union’s business manager, Gary Waters, promptly

instructed a member of his staff, James Allbritton, to visit

M&M’s worksite and to have the employees sign authorization

cards recognizing the union. Allbritton collected signed

authorization cards from all seventeen of M&M’s employees on

March 27 and 28.

On March 29, Waters faxed Miley a letter notifying him

that the union had support from the majority of M&M’s

employees and requesting “voluntary recognition from your firm

and 9(a) status under the National Labor Relations Act.” The

letter asked Miley to sign the attached Recognition Agreement,

which stated that M&M “acknowledges and agrees, based on a

showing of signed authorization cards, that a majority of its

employees have authorized the Union to represent them in

collective bargaining” and that M&M “hereby recognizes the

Union as the exclusive bargaining agent under Section 9(a) of

the National Labor Relations Act.” The letter stated that if

Miley did not sign the Recognition Agreement, the union would

petition the NLRB for a representation election.

Miley responded on April 2. He agreed to a collective

bargaining session with the union and invited Waters to contact

him about scheduling the session. Miley did not sign the

Recognition Agreement at that time. On April 3, Waters called

Miley and left a telephone message about the Recognition

Agreement. The next day, Waters sent Miley another letter.

The letter thanked Miley for agreeing to a collective bargaining

session, but noted that Miley’s previous letter alone was not

sufficient to achieve the union’s goals because “to change our

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bargaining relationship from 8(f) to 9(a) status under the

National Labor Relations Act, you must voluntarily recognize

that the union has majority status by signing the previously

provided agreement.” Miley signed and returned the

Recognition Agreement later that day. Before signing the

Recognition Agreement, Miley did not request proof that Local

487 in fact had authorization cards from the majority of M&M’s

employees.

In June 2002, Miley attended two meetings in which the

union negotiated with M&M and three other local contractors.

At these meetings, the union demanded an increase in employer

payments to the union’s health care fund. The other three

employers agreed to the increases the union requested. Miley

wrote Waters a letter refusing those terms, explaining that “any

increase at this time would be cost prohibitive.” In response,

Waters made a counterproposal and requested documents from

M&M to establish Miley’s claim of financial hardship.

On June 30, three days after Waters sent his

counterproposal, the pre-hire agreement between M&M and the

union expired of its own terms. The union believed that M&M

had voluntarily recognized it and had concomitant obligations

under section 9(a) to maintain the status quo while continuing to

bargain in good faith. M&M proceeded as if the section 8(f)

agreement had expired and it had no obligations to the union. In

the early part of July, M&M changed its overtime policies and

hired new employees without going through the union hiring

hall as required by the pre-hire agreement. In response, Waters

sent another letter, requesting information about the non-union

hires. Also in July, M&M stopped making payments to union

funds that the pre-hire agreement had required it to support.

On these facts the Board decided that Local 487 had

become M&M’s employees’ section 9(a) representative and that

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M&M had violated section 8(a)(5) of the Act by withdrawing

recognition of the union, refusing to provide information to it,

and unilaterally changing the terms and conditions of

employment. See M&M Backhoe Serv., Inc., 345 N.L.R.B. No.

29, 2005 NLRB LEXIS 452 (Aug. 27, 2005) (“NLRB

Decision”). M&M urges us not to enforce the Board’s order

because it conflicts with Nova Plumbing.

Generally, a union seeking to convert its section 8(f)

relationship to a section 9(a) relationship may either petition for

a representation election or demand recognition from the

employer by providing proof of majority support. See J&R Tile,

Inc., 291 N.L.R.B. 1034, 1036 (1988). Nova Plumbing

presented the question of what showing a union had to make to

establish majority support sufficient to transform its relationship

with an employer from one governed by section 8(f) to one

under section 9(a). The company there objected to the Board’s

position that the union’s offer to provide evidence of majority

support was alone sufficient, without regard to whether the

union in fact had a majority. See Nova Plumbing, 330 F.3d at

536-37. We held that when the Board relied solely on the

union’s offer “the Board failed to protect the employees’ section

7 rights” to determine their own representation. Id. at 533.

“[T]his relatively easy-to-establish option . . . giv[es] employers

and unions ‘the power to completely frustrate employee

realization of the promise of the Act – that its prohibitions will

go far to assure freedom of choice and majority rule in employee

selection of representatives.’” Id. (quoting Int’l Ladies’

Garment Workers’ Union, 366 U.S. at 738-39).

We held in Nova Plumbing that an offer of proof could not

substitute for actual proof. 330 F.3d at 537. Nor could language

in the collective bargaining agreement’s recognition clause

stating that evidence presented to the employer established the

union’s majority status. “If the Board considers contract

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language in determining section 9(a) status, it must take such

language seriously when a recognition clause indicates that there

is a concrete basis upon which to assess employee support.” Id.

at 538.

This case is like Nova Plumbing in the following respects:

the union offered to prove to the employer that it had majority

support; and the employer recognized the union without

examining the union’s proof. But there is a critical difference.

Unlike Nova Plumbing, in which there was no evidence that the

union actually had majority support, here the record shows – as

the Board found – that a majority of employees voluntarily

signed union authorization cards signifying their support of

Local 487. In fact, all seventeen of M&M’s eligible employees

signed authorization cards during the final week of March 2002.

An employer who recognizes a union after the union offers to

provide evidence of its majority status cannot revoke that

recognition solely because the employer never took the union up

on its offer – provided that the union actually had majority

support. To rule otherwise would be to allow the employer to

frustrate the employees’ section 7 rights by turning its back to

the union’s evidence. See NLRB v. Gissel Packing Co., Inc., 395

U.S. 575, 596-98 (1969). Under this standard, Local 487

properly converted its relationship with M&M to one governed

by section 9(a), and M&M cannot disclaim the conversion after

the fact.

M&M’s efforts to avoid this result deserve only a few

words. The company claims that its president did not know the

import of the Recognition Agreement when he signed it. The

Board and the Administrative Law Judge found otherwise, and

for good reason. Local 487 twice demanded recognition in

unmistakable terms. Cf. Western Pipeline, Inc., 328 N.L.R.B.

925, 926 (1999) (“The claim for recognition need not be made

in any particular form.”). And the Recognition Agreement is as

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clear as can be: “The Employer hereby recognizes the Union as

the exclusive bargaining agent under Section 9(a) of the [Act]

. . ..” M&M’s other contention – that some of the authorization

cards were invalid for one reason or another – fails. Even if

M&M were correct, the remaining cards gave the union a

majority.

Because the union achieved section 9(a) status, M&M

violated section 8(a)(5) when it breached its duty to bargain with

Local 487, failed to provide information necessary for the union

to act as the employee representative, and unilaterally changed

employment conditions. The Board also found that M&M

violated sections 8(a)(1) by threatening, coercing, discriminating

against, and conducting surveillance of its employees. No

useful purpose would be served by reciting M&M’s objections

to these findings, all of which turn on issues of credibility

resolved against the company. We have considered and rejected

each of M&M’s objections. As to the Board’s additional finding

that the company violated section 8(a)(3) by taking adverse

employment actions to discourage union membership and

activity, the Board evaluates employer motivation under the

Wright Line test. See Tasty Baking Co. v. NLRB, 254 F.3d 114,

125-26 (D.C. Cir. 2001). The Wright Line test considers

multiple factors, of which “the employer’s hostility toward the

union” is but one. Id. Other factors include the timing of the

employer’s activities and the employer’s knowledge of union

activities. Id. The union and M&M each point to evidence

supporting one interpretation or the other of the events leading

up to and following the disciplinary actions M&M took against

two employees. Even considered in the best possible light, the

company’s version does not rise to the threshold required to set

aside the Board’s factual determinations.

***

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Local 487’s petition for review claims that the Board should

have held M&M liable for ceasing its contributions to the

union’s pension, vacation, and apprenticeship trust funds. The

union maintains four trust funds: health and welfare, pension,

vacation, and apprenticeship. M&M cut off its contributions to

all four. The Board ruled in the union’s favor with respect to the

health and welfare fund but, over the dissent of one member,

refused to consider the other three funds because its General

Counsel had not raised them in the complaint. See NLRB

Decision, 2005 NLRB LEXIS 452 at *3-5.

The union’s charge did not mention the vacation and

apprenticeship funds. It alleged that M&M had “failed and

refused to make fringe benefit contributions to the pension,

welfare funds, thereby unilaterally changing terms and

conditions of employment.” The General Counsel’s complaint

removed the reference to the “pension” fund. The relevant

paragraph of the complaint reads: “Since on or about July 1,

2002, [M&M] has ceased remitting health and welfare fund

contributions, and on or about that same date and thereafter,

[M&M] changed other terms and conditions of employment of

employees in the Unit.” Given the alteration of the charge, the

Board had good reason to conclude that the company was not on

notice that its contributions to the other three funds were at

issue. As the Board recognized, it “may not make findings or

order remedies on violations not charged in the . . . complaint or

litigated in the subsequent hearing.” Chicago Local No. 458-3M

v. NLRB, 206 F.3d 22, 24 n.1 (D.C. Cir. 2000); see NLRB v.

Blake Constr. Co., 663 F.2d 272 (D.C. Cir. 1981). We cannot

say the Board acted arbitrarily in concluding that the

complaint’s additional allegation – that the company changed

other terms and conditions of employment – was “too vague” to

put the company on notice, particularly because the health and

welfare fund was specifically mentioned.

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The union also argues that M&M’s non-payments to the

pension, vacation, and apprenticeship trust funds were fully

litigated before the ALJ. The only mention of the three funds

during the hearing, or at least the only mention the union cites,

was in connection with an M&M stipulation during the

testimony of the union’s business manager. Counsel for the

company stipulated that balance sheets the General Counsel

sought to introduce reflected contributions the company made

into the funds and that after a particular date there were no

documents reflecting further contributions. The stipulation may

have assisted in making the case against the company for its

failure to contribute to the health and welfare funds. But we

cannot say the Board abused its discretion in determining that at

the time of the stipulation the company was not on notice that

the other three funds were at issue and that if the General

Counsel thought otherwise, the General Counsel should have

moved to amend the complaint pursuant to the NLRB’s

procedural rules. See 29 C.F.R. § 102.17.

For the foregoing reasons the petitions for judicial review

are denied and the cross-application for enforcement is granted.

So ordered.