Raymond F. Kravis Center for the Performing Arts, Inc. v. National Labor Relations Board

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued October 24, 2008 Decided December 30, 2008

No. 07-1419

THE RAYMOND F. KRAVIS CENTER FOR THE PERFORMING

ARTS, INC.,

PETITIONER

v.

NATIONAL LABOR RELATIONS BOARD,

RESPONDENT

Consolidated with 07-1459

On Petition for Review

and Cross-Application for Enforcement

of an Order of the National Labor Relations Board

Charles P. Roberts III argued the cause for petitioner.

With him on the briefs were Robert J. Janowitz and Kimberly

Seten.

David A. Seid, Attorney, National Labor Relations Board,

argued the cause for respondent. With him on the brief were

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

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Associate General Counsel, Linda Dreeben, Deputy Associate

General Counsel, and Jill A. Griffin, Attorney.

Before: ROGERS, GARLAND, and KAVANAUGH, Circuit

Judges.

Opinion for the Court filed by Circuit Judge

KAVANAUGH.

KAVANAUGH, Circuit Judge: This case arises out of a

labor dispute between the Raymond F. Kravis Center for the

Performing Arts in West Palm Beach, Florida, and Local 623

of the International Alliance of Theatrical Stage Employees

and Moving Picture Technicians and Allied Crafts. Kravis

and the union entered into collective bargaining agreements

that established an exclusive hiring hall arrangement: Kravis

would use only employees referred by Local 623 to perform

all stagehand work at Kravis’s Dreyfoos Hall. After the

agreements expired, Kravis declared impasse during contract

renegotiations, withdrew recognition from the union, and did

not request further referrals from it.

The National Labor Relations Board ruled that Kravis

violated §§ 8(a)(5) and (1) of the National Labor Relations

Act by, among other things, unilaterally changing the scope of

the bargaining unit and withdrawing recognition from Local

623. The Board also determined that, as a result of a union

merger, Local 500 was the successor union to Local 623. It

ordered Kravis to recognize and bargain with Local 500 as the

exclusive representative of Kravis’s stagehand employees.

Kravis filed a petition for review in this Court. We deny the

petition for review and grant the Board’s cross-application for

enforcement.

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I

The Kravis Center for the Performing Arts is a concert

hall and theater complex in West Palm Beach, Florida. In

1992, Kravis and Local 623 of the International Alliance of

Theatrical Stage Employees and Moving Picture Technicians

and Allied Crafts entered into a five-year collective

bargaining agreement. The agreement provided for an

exclusive hiring hall arrangement under which Local 623

would provide the stagehand employees at Kravis’s concert

venue, Dreyfoos Hall, as the need arose – specifically,

carpenters, electricians, flymen and riggers, props, and

wardrobe employees. In 1998, the parties renewed the

contract for two more years, effective until June 2000.

In April 2000, Kravis notified Local 623 of its intent to

terminate the 1998 agreement upon its expiration. The parties

negotiated from May to September 2000. After various

proposals were bandied back and forth, Kravis submitted its

final bargaining proposal on September 9, 2000. The

proposal included discretionary use of Local 623 referrals, an

unfettered right to subcontract stagehand work, and contract

terms that would apply only to Local 623-referred workers,

not to other stagehand workers at Dreyfoos Hall.

On September 11, 2000, Kravis declared impasse and

unilaterally implemented its final proposal. On September 24,

2000, Kravis withdrew recognition from Local 623, and

thereafter requested no further referrals from Local 623 for

stagehand employees at Dreyfoos Hall.

In March 2001, Local 623 filed unfair labor practice

charges. After an investigation, the NLRB’s General Counsel

filed a complaint.

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Meanwhile, in February 2002, Local 623 merged with

five other local theater-employee unions in south Florida to

form a new Local 500. Local 623 members did not vote on

the union merger.

After a hearing on the General Counsel’s complaint, an

administrative law judge found that Kravis violated §§ 8(a)(5)

and 8(a)(1) of the National Labor Relations Act by, among

other things, unilaterally changing the scope of the bargaining

unit to exclude non-referred stagehands and by withdrawing

recognition from Local 623. However, the ALJ concluded

that Local 623 ceased to exist as a result of the 2002 merger

that formed Local 500 and that Kravis’s bargaining obligation

had ended on that date. All parties filed exceptions.

The Board affirmed the finding that Kravis violated

§§ 8(a)(5) and 8(a)(1). It reasoned that the parties’

relationship, based on the agreements in effect since 1992,

constituted a § 9(a) collective bargaining relationship,

rendering unlawful Kravis’s unilateral change to the

bargaining unit and withdrawal of recognition from the union.

The Board also rejected the ALJ’s determination that the 2002

union merger terminated Kravis’s bargaining obligation.

Overruling its traditional due process requirement for union

mergers in response to the Supreme Court’s decision in NLRB

v. Financial Institution Employees of America, Local 1182

(Seattle-First), 475 U.S. 192 (1986), the Board concluded that

Local 500 was the successor to Local 623 notwithstanding the

absence of a vote by Local 623 members. Accordingly, the

Board ordered Kravis to recognize and bargain with Local

500 as the representative of its stagehand employees.

Kravis has petitioned for review, and the Board has filed

a cross-application for enforcement. We review the Board’s

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decision to determine whether its factual findings are

supported by substantial evidence and whether the Board

otherwise acted arbitrarily and capriciously. See Beverly

Health & Rehab. Servs., Inc. v. NLRB, 317 F.3d 316, 320

(D.C. Cir. 2003).

II

Kravis has raised a variety of arguments to justify its

decision to stop using referrals from Local 623 after

termination of the collective bargaining agreement in 2000.

To analyze Kravis’s arguments, we first review the

statutory background. Section 8(a)(5) of the National Labor

Relations Act makes it “an unfair labor practice for an

employer . . . to refuse to bargain collectively with the

representatives of his employees.” 29 U.S.C. § 158(a)(5).

Section 9(a) defines the term “representatives”:

“Representatives designated or selected for the purposes of

collective bargaining by the majority of the employees in a

unit appropriate for such purposes, shall be the exclusive

representatives of all the employees in such unit for the

purposes of collective bargaining in respect to rates of pay,

wages, hours of employment, or other conditions of

employment.” 29 U.S.C. § 159(a).

A union can achieve the status of a majority collective

bargaining representative through either Board certification or

voluntary recognition by the employer – in a contract, for

example. See Exxel/Atmos, Inc. v. NLRB, 28 F.3d 1243, 1247

(D.C. Cir. 1994). Under Board precedent, a union with § 9(a)

status enjoys numerous benefits, including “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). This

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conclusive presumption is “based not so much on an absolute

certainty that the union’s majority status will not erode,” as on

the need to achieve “stability in collective-bargaining

relationships” and allow the union to focus on obtaining and

administering an agreement. Fall River Dyeing & Finishing

Corp. v. NLRB, 482 U.S. 27, 38 (1987) (quoting Terrell

Machine Co., 173 NLRB 1480, 1480 (1969)). After the

agreement expires or after three years (if the agreement is for

more than three years), a union with § 9(a) status enjoys a

rebuttable presumption of continuing majority support. The

employer can rebut the presumption by presenting evidence

that the union no longer possesses majority support. See

Levitz Furniture Co., 333 NLRB 717, 723 (2001); cf.

Allentown Mack Sales & Serv., Inc. v. NLRB, 522 U.S. 359,

361 (1998).

When a collective bargaining agreement expires, an

employer is ordinarily obligated to continue bargaining with

the union, absent a showing that the union no longer has

majority support. See Auciello, 517 U.S. at 786-87. Even if

negotiations reach impasse, moreover, an employer cannot

unilaterally change the scope of the bargaining unit. See

Boise Cascade Corp. v. NLRB, 860 F.2d 471, 474-75 (D.C.

Cir. 1988).

A

In this Court, Kravis argues that Local 623 was not a

§ 9(a) union because it was not the exclusive representative of

stagehand employees at Kravis’s Dreyfoos Hall. If this were

correct, Kravis would have had no obligation after 2000 to

bargain with Local 623 regarding employment at Dreyfoos

Hall. But Kravis’s contention flouts the plain language of the

1992 and 1998 collective bargaining agreements. In both

contracts, Article I’s jurisdiction clause and Article II clearly

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provided that Kravis would exclusively use Local 623

referrals as stagehand workers at Dreyfoos Hall. Article I

defined the union’s work jurisdiction as “All carpentry,

electrical, sewing, fitting, and related work performed on or in

connection with the sets and props, costumes and wardrobe

used in the Theater.” Article II provided that the Kravis

Center “agrees that the work described in ARTICLE I above

shall be performed by qualified workers referred by the

Union.” Both contracts thus explicitly stipulated that all

Dreyfoos Hall stagehands within the prescribed categories

were to be referred by Local 623 – and would be subject to

the terms and conditions negotiated by Kravis and Local 623

in the collective bargaining agreement. See Strand Theatre of

Shreveport Corp. v. NLRB, 493 F.3d 515, 519-20 (5th Cir.

2007) (finding a § 9(a) collective bargaining agreement based

on exclusive language in the contract). To be sure, this case

involves a hiring hall referral arrangement, not the typical

situation where an employer hires its employees directly. But

for Dreyfoos Hall stagehand workers, the hiring hall was

exclusive, and the Board reasonably equated Local 623 to a

traditional union representing a bargaining unit of employees.

Kravis also cites NLRA § 8(f), which provides an

exception for employers in the construction industry to the

usual rule requiring continued bargaining at the end of a

contract. 29 U.S.C. § 158(f). But § 8(f) is a narrow statutory

exception carved out for employers in the construction

industry only. See M & M Backhoe Serv., Inc. v. NLRB, 469

F.3d 1047, 1048 (D.C. Cir. 2006) (describing the § 8(f)

exception as “specific to the construction industry”); Nova

Plumbing, Inc. v. NLRB, 330 F.3d 531, 534 (D.C. Cir. 2003)

(describing § 8(f) as “a limited exception” due to “the unique

nature of the [construction] industry”); Strand Theatre, 493

F.3d at 520 (“[E]xcept in the construction industry, a Union is

entitled to a presumption of majority support . . . and the

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agreement need not expressly reflect the Union’s majority

status.”). Kravis may have a good policy argument for

equating itself with a construction employer given that it hired

stagehand employees through a hiring hall arrangement. But

the statutory text simply does not extend to non-construction

employers. Kravis’s attempts to nudge its contracts into the

§ 8(f) paradigm are thus unavailing.

For those reasons, the Board reasonably concluded that

Local 623 was a § 9(a) union and was the exclusive

representative of stagehand employees at Dreyfoos Hall.

B

Having upheld the Board’s conclusion that Local 623

was a valid § 9(a) union and that Local 623’s presumption of

majority support therefore continued to apply as of 2000, we

next consider Kravis’s argument that it rebutted the

presumption of majority support. Kravis contends, in

particular, that it demonstrated a good-faith reasonable doubt

about Local 623’s continued majority support, consistent with

Allentown Mack Sales & Serv. v. NLRB, 522 U.S. 359, 361

(1998).1 But Kravis provides no evidence to support its

alleged doubt about Local 623’s continued majority support.

Cf. BPH & Co. v. NLRB, 333 F.3d 213, 217 (D.C. Cir. 2003)

(finding good-faith doubt where employer showed

decertification petition signed by majority of bargaining unit);

1

The Board has since modified the Allentown Mack standard

so that reasonable doubt of a union’s majority status is no longer

sufficient to justify an employer’s unilateral withdrawal of

recognition. Now, the Board requires an actual showing that the

union no longer has majority support. See Levitz Furniture Co.,

333 NLRB 717, 723 (2001). The Board declined, however, to

apply the new standard to cases pending prior to the Levitz decision

and thus did not apply it here. Id. at 729.

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see also NLRB v. Curtin Matheson Scientific, Inc., 494 U.S.

775, 778 (1990) (requiring “sufficient objective evidence of a

good-faith doubt”).

To sustain its good-faith doubt argument despite the lack

of evidence, Kravis creatively contends that the union never

had majority support at the time of the 1992 or 1998

agreements. To the extent Kravis is questioning the union’s

original majority status, that argument is time-barred by

NLRA § 10(b). 29 U.S.C. § 160(b). The case law

interpreting Section 10(b) requires that any challenge to the

initial majority status of a union be made within six months of

recognition by the Board or the employer. See Local Lodge

No. 1424 v. NLRB, 362 U.S. 411, 423 (1960). The six-month

time period for challenging Local 623’s alleged lack of

majority support in 1992 and 1998 passed long before Kravis

first raised this challenge.

To the extent Kravis is raising this point in a circuitous

effort to prop up its claim of good-faith doubt about the

union’s majority support in 2000, it is entirely unavailing.

Kravis had the burden to show good-faith doubt as to the

union’s continued majority support in 2000. Raising a time-

barred argument about an alleged lack of majority support in

1992 or 1998 does not alone suffice to meet Kravis’s burden

to show its doubt about Local 623’s lack of majority support

in 2000.

In short, the Board reasonably concluded that Kravis

“was not privileged to withdraw recognition from Local 623

without demonstrating a good-faith reasonable doubt or

uncertainty as to the Union’s support among employees.

Because [Kravis] failed to meet this burden, the withdrawal of

recognition was unlawful.” 351 NLRB No. 19, at 2-3 (2007).

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C

Kravis argues that, even if it had an obligation to

recognize and bargain with Local 623, it did not violate

NLRA §§ 8(a)(5) and 8(a)(1) because it did not unilaterally

change the scope of the bargaining unit at impasse. Changes

in the scope of the bargaining unit may not be implemented

unilaterally. Boise Cascade, 860 F.2d at 474. In Boise

Cascade, we defined unit scope as referring to “what

employees the unit represents.” Id. (emphasis omitted). We

explained that this was distinct from jurisdiction, which

referred to the “type of work.” Id (emphasis omitted). The

parties’ dispute over coverage of non-referred stagehands at

Dreyfoos Hall plainly related to what employees Local 623

represents. Under our precedent, therefore, the Board

reasonably concluded that Kravis acted unlawfully in

unilaterally changing the scope of the bargaining unit.

III

Kravis contends that, contrary to the Board’s

determination, any obligation it otherwise had to bargain with

Local 623 ceased upon Local 623’s merger with other unions

to form Local 500.

In cases involving union mergers or affiliations, the

Board traditionally had required an employer to continue

bargaining with a union (i) if the union merger or affiliation

was conducted by a vote with adequate due process

safeguards, and (ii) if the organizational changes were not so

dramatic that the post-merger entity lacked substantial

continuity with the preexisting entity. See Sullivan Bros.

Printers Inc., 317 NLRB 561, 562 (1995).

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In the decision in this case, however, the Board expressly

overruled its precedent and jettisoned the first factor in light

of the Supreme Court’s decision in NLRB v. Financial

Institution Employees Local 1182 (Seattle-First), 475 U.S.

192 (1986). In Seattle-First, the Supreme Court rejected a

Board rule requiring that all bargaining unit members be

allowed to vote on affiliation. Id. at 201-04. The Court

reasoned that an employer’s obligation to recognize a union

may not be discontinued unless the affiliation raises a

question concerning representation. Id. at 202-03. “In many

cases, a majority of employees will continue to support the

union despite any changes precipitated by affiliation” and

therefore no such question will be raised. Id. at 203.

In this case, the Board reasonably concluded that Seattle-

First’s rationale applied to a merger. As the Board

reasonably determined, when there is “substantial continuity”

between the pre-merger and post-merger union, the lack of a

membership vote on the merger does not cast doubt on

employee support for the union because the union is “largely

unchanged.” 351 NLRB No. 19, at 5 (2007).

Kravis, “as the party seeking . . . displacement, has the

burden of proving its claim of discontinuity.” News/Sun

Sentinel Co. v. NLRB, 890 F.2d 430, 432 (D.C. Cir. 1989).

Kravis emphasizes various factors – including size

differences, reduced participation, different levels of

organization, and different numbers of hiring halls – which, in

its view, highlight the distinctions between Locals 623 and

500. The Board, however, acknowledged such changes but

reasonably explained that countervailing considerations

outweighed any differences: There was no substantial change

in fee structure. There was no change in the hiring hall

system in terms of where the employees would be

geographically placed. Employers continued their benefit

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contributions to the union’s vacation and pension funds.

Local 623 officials continued to have leadership roles in

Local 500. And representation and resources for the union

members were arguably enhanced, rather than diminished,

given the former financial straits of Local 623.

Substantial evidence supports the Board’s finding that the

changes were not “so great that a new organization” came into

being. 351 NLRB No. 19, at 6 (quoting Western Commercial

Transp., Inc., 288 NLRB 241, 217 (1988)). We therefore

uphold the Board’s order that Kravis recognize and continue

to bargain with Local 500 as the successor to Local 623.

***

We deny the petition for review and grant the Board’s

cross-application for enforcement.

So ordered.