Children's Hospital & Research Center of Oakland, Inc. v. National Labor Relations Board

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued December 9, 2014 Decided July 7, 2015

No. 14-1032

CHILDREN’S HOSPITAL AND RESEARCH CENTER OF OAKLAND,

INC.,

DOING BUSINESS AS CHILDREN’S HOSPITAL OF OAKLAND,

PETITIONER

v.

NATIONAL LABOR RELATIONS BOARD,

RESPONDENT

SERVICE EMPLOYEES INTERNATIONAL UNION,

UNITED HEALTHCARE WORKERS – WEST,

INTERVENOR

Consolidated with 14-1064

On Petition for Review and Cross-Application

for Enforcement of an Order

of the National Labor Relations Board

Matthew J. Frankel argued the cause for the petitioner.

Bonnie Glatzer was with him on brief. Kenneth J. Nichols

entered an appearance.

2

Joel A. Heller, Attorney, National Labor Relations Board,

argued the cause for the respondent. Richard F. Griffin, Jr.,

General Counsel, John H. Ferguson, Associate General

Counsel, Linda Dreeben, Deputy Associate General Counsel,

and Ruth E. Burdick, Deputy Assistant General Counsel, were

with him on brief.

David A. Rosenfeld and Bruce Harland were on brief for

the intervenor Service Employees International Union, United

Healthcare Workers – West in support of the respondent.

Before: HENDERSON, TATEL and GRIFFITH, Circuit

Judges.

Opinion for the Court filed by Circuit Judge HENDERSON.

KAREN LECRAFT HENDERSON, Circuit Judge: This case

presents an interesting and difficult question of statutory

interpretation regarding the interplay of two provisions of the

National Labor Relations Act (NLRA or Act), 29 U.S.C. §§

151 et seq. Unfortunately, the National Labor Relations

Board (NLRB or Board) does not see it that way. It has not

made a serious effort to grapple with the statutory text either in

its own order or on review before us. Because “[we] cannot

exercise [our] duty of review unless [we] are advised of the

considerations underlying [agency] action,” SEC v. Chenery

Corp., 318 U.S. 80, 94 (1943), we grant the petition for review

and deny the Board’s cross-petition for enforcement.

I.

A.

The NLRA has deep roots, dating back to 1935. See Act

of July 5, 1935, ch. 372, 49 Stat. 449. The Act regulates

collective bargaining to lessen “industrial strife” and to ensure

that labor disputes do not erect “substantial obstructions to the

3

free flow of commerce.” 29 U.S.C. § 151. Two provisions

of the NLRA are at the center of this dispute. The first is

section 8(a)(5), which makes it unlawful “for an employer . . .

to refuse to bargain collectively with the representatives of his

employees.” Id. § 158(a)(5). The right “to bargain

collectively” includes the right to arbitrate labor grievances

pursuant to a collective bargaining agreement. See United

Steelworkers of Am. v. Warrior & Gulf Navigation Co., 363

U.S. 574, 578 (1960) (“[A]rbitration of labor disputes under

collective bargaining agreements is part and parcel of the

collective bargaining process itself.”); Fournelle v. NLRB, 670

F.2d 331, 344 (D.C. Cir. 1982) (“[A]rbitration is an essential

part of the collective bargaining process.”). Correspondingly,

an employer’s “refusal to arbitrate” can be an unfair labor

practice. Exxon Chem. Co. v. NLRB, 386 F.3d 1160, 1165

(D.C. Cir. 2004).

As section 8(a)(5) states, an employer’s duty to bargain

collectively is “subject to the provisions of section [9(a)] of

th[e NLRA].” 29 U.S.C. § 158(a)(5). Section 9(a), in turn,

provides that:

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. . . .

Id. § 159(a) (emphasis added). According to the U.S.

Supreme Court, exclusive means exclusive: Once a majority

of employees in a bargaining unit chooses a union, section 9(a)

4

imposes on the employer a “negative duty to treat with no

other.” Medo Photo Supply Corp. v. NLRB, 321 U.S. 678, 684

(1944). This is a consequence of the fact that “[t]he

majority-rule concept is today unquestionably at the center of

our federal labor policy.” NLRB v. Allis-Chalmers Mfg. Co.,

388 U.S. 175, 180 (1967). Obligating an employer to bargain

only with the majority union prevents “strife and deadlock” by

eliminating rival factions that can make demands on the

employer. See Emporium Capwell Co. v. W. Addition Cmty.

Org., 420 U.S. 50, 68 (1975).

B.

The Children’s Hospital and Research Center of Oakland

(Hospital) is a pediatric hospital that employs more than 2,800

people. Until May 2012, the Service Employees International

Union (SEIU) was the bargaining representative for most of

the Hospital’s service, maintenance and technical employees.

In early 2009, the National Union of Healthcare Workers

(NUHW) sought to replace SEIU at the Hospital. The NLRB

subsequently held an election and a majority of the Hospital’s

employees selected the NUHW as their bargaining

representative. On May 24, 2012, the NUHW was certified as

the exclusive bargaining representative for the aforementioned

employees.

At the time of the switch in unions, SEIU and the Hospital

had three outstanding employee grievances based on incidents

that occurred under their prior collective bargaining

agreement. A SEIU official asked the Hospital to arbitrate the

disputes. The Hospital declined because SEIU no longer

represented the employees. The parties reached an impasse

and SEIU filed an unfair labor practice charge with the NLRB.

The NLRB General Counsel issued a complaint against the

5

Hospital some months later, charging it with violating sections

8(a)(5) and (1) of the NLRA. *

An Administrative Law Judge (ALJ) held that the Hospital

violated section 8(a)(5) because an employer has a duty to

arbitrate grievances even if the grievances “arose under an

expired contract.” Decision & Order (Order), 360 N.L.R.B.

No. 56, 2014 WL 808029, at *5 (2014). Arbitrating old

grievances, he mused, amounted to nothing more than

completing “unfinished business” and “sew[ing] up . . . loose

ends” and he cited three cases to this effect. Id. (citing Nolde

Bros. v. Bakery Workers Local 358, 430 U.S. 243 (1977), Mo.

Portland Cement Co., 291 N.L.R.B. 1043 (1988), and Ariz.

Portland Cement Co., 302 N.L.R.B. 36 (1991)). The ALJ

thought there was little risk that arbitrating past grievances

with SEIU would destabilize the Hospital’s new relationship

with the NUHW. See id.

The NLRB adopted the ALJ’s order in full. The Hospital

timely petitioned this Court for review and the NLRB

cross-petitioned for enforcement.

II.

The question presented is whether an employer has a duty

to arbitrate grievances with the old union under an expired

*

Section 8(a)(1) provides that it is an “unfair labor practice for an

employer to interfere with, restrain, or coerce employees in the

exercise of the rights guaranteed in section 157 of this title.” 29

U.S.C. § 158(a)(1). A violation of section 8(a)(5) automatically

violates section 8(a)(1) as well. See Exxon Chem. Co., 386 F.3d at

1164 (“[A]n employer who violates section 8(a)(5) also,

derivatively, violates section 8(a)(1).”). For simplicity’s sake, we

treat these violations as one and the same and refer only to section

8(a)(5).

6

collective bargaining agreement after a new union has been

certified. On the one hand, the Board is correct that section

8(a)(5) requires an employer to arbitrate unfinished business

with an old union even after their collective bargaining

agreement expires. See Nolde Bros., 430 U.S. at 255

(“Union’s claim for severance pay under the expired

collective-bargaining agreement is subject to resolution under

the arbitration provisions of that contract.”); see also Litton

Fin. Printing Div. v. NLRB, 501 U.S. 190, 205–06 (1991). On

the other hand, section 9(a) requires an employer to “treat with

no other” union once a new union is certified. Medo Photo

Supply Corp., 321 U.S. at 684.

The interplay of section 8(a)(5) and section 9(a) is a

question of statutory interpretation—one that the NLRA does

not unambiguously resolve. The NLRA does not identify

where the duty to resolve unfinished business with the old

union ends and the duty to bargain exclusively with the new

union begins. This presents a classic scenario for which the

two-step framework from Chevron USA, Inc. v. NRDC, 467

U.S. 837, 842–43 (1984), was designed. See Lechmere, Inc.

v. NLRB, 502 U.S. 527, 536 (1992) (“Like other administrative

agencies, the NLRB is entitled to judicial deference when it

interprets an ambiguous provision of a statute that it

administers.”). Curiously, however, the Board never cites

Chevron in its briefs. Worse still, its order discussed only

section 8(a) of the Act. None of the precedent it cited dealt

with the precise situation here: a decertified union that has been

replaced by a new union. See Order, 2014 WL 808029, at *5.

In other words, it relied on cases that did not implicate the

exclusivity principle of section 9(a).

The resolution of any statutory ambiguity latent in the

NLRA is a task that the Congress, in the first instance, has

entrusted to the Board, not this Court. See Lechmere, 502

7

U.S. at 536; see also NLRB v. Curtin Matheson Scientific, Inc.,

494 U.S. 775, 786 (1990) (“This Court has emphasized often

that the NLRB has the primary responsibility for developing

and applying national labor policy.”); Exxel/Atmos, Inc. v.

NLRB, 28 F.3d 1243, 1249 (D.C. Cir. 1994) (“It is up to the

Board, not the courts, to make labor policy.”). Granted, we

will set aside a Board order if the Board exercises its

interpretative authority in a manner that is “manifestly

contrary” to the NLRA or otherwise arbitrary and capricious.

Chevron, 467 U.S. at 844. But we cannot make that

determination yet because we are left wondering how the

Board in these circumstances interprets section 9(a). When an

agency fails to wrestle with the relevant statutory provisions,

we cannot do its work for it. “[T]he orderly functioning of the

process of review requires that the grounds upon which the

administrative agency acted be clearly disclosed and

adequately sustained.” Chenery, 318 U.S. at 94.

Accordingly, because the Board failed to address the

relevant statutory provisions, we grant the Hospital’s petition

for review, deny the Board’s cross-petition for enforcement

and remand to the Board for proceedings consistent herewith.

So ordered.