Colo. Fire Sprinkler, Inc. v. Nat'l Labor Relations Bd.

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued September 7, 2017 Decided June 8, 2018

No. 16-1261

COLORADO FIRE SPRINKLER, INC.,

PETITIONER

v.

NATIONAL LABOR RELATIONS BOARD,

RESPONDENT

ROAD SPRINKLER FITTERS LOCAL UNION NO. 669, U.A.,

AFL-CIO,

INTERVENOR

Consolidated with 16-1319

On Petition for Review and Cross-Application for

Enforcement of

an Order of the National Labor Relations Board

Thomas A. Lenz argued the cause for petitioner. With him

on the briefs was L. Brent Garrett.

John N. Raudabaugh and Glenn M. Taubman were on the

brief for amicus curiae Robert Blackwell in support of

Colorado Fire Sprinkler, Inc.

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Jeffrey W. Burritt, Attorney, National Labor Relations

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

were Richard F. Griffin, Jr., General Counsel at the time the

brief was filed, Jennifer Abruzzo, Deputy General Counsel at

the time the brief was filed, John H. Ferguson, Associate

Deputy Counsel, Linda Dreeben, Deputy Associate General

Counsel, and Usha Dheenan, Supervisory Attorney.

William W. Osborne Jr. argued the cause and filed the

brief for intervenor, Road Sprinkler Fitters Local Union 669,

U.A., AFL-CIO.

Before: ROGERS and MILLETT, Circuit Judges, and

RANDOLPH, Senior Circuit Judge.

Opinion for the Court filed by MILLETT, Circuit Judge.

MILLETT, Circuit Judge: When the Colorado Fire

Sprinkler company’s labor agreement with the Road Sprinkler

Fitters Union expired, the Company announced that it would

no longer recognize or negotiate with the Union as a

representative of the Company’s employees. The Company

asserted a right under Section 8(f) of the National Labor

Relations Act, 29 U.S.C. § 158(f) (which applies to labor

agreements in the construction and building industries), to walk

away from the union relationship. The Union begged to differ,

contending that a different provision of the National Labor

Relations Act, Section 9(a), 29 U.S.C. § 159(a), obligated the

Company to continue negotiating in good faith with the Union.

The Union filed a grievance, and the National Labor Relations

Board sided with the Union. Because the Board’s decision

rested on insubstantial evidence and failed to address important

evidence supporting the Company, we grant the Company’s

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

enforcement, vacate the Board’s decision, and remand.

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I

A

This is a tale of two statutory provisions, and of a Union’s

effort to move between them.

Under the more commonly employed Section 9(a) of the

National Labor Relations Act, a union that obtains the support

of “the majority of the employees in a unit” will become the

recognized representative of those employees, and the

employer will be obligated to communicate and negotiate with

it on the terms and conditions of employment. 29 U.S.C.

§ 159(a). A union recognized under Section 9(a) “enjoys

numerous benefits, including a conclusive presumption of

majority status during the term of any collective-bargaining

agreement, up to three years.” Raymond F. Kravis Center for

the Performing Arts, Inc. v. NLRB, 550 F.3d 1183, 1188 (D.C.

Cir. 2008) (citation omitted). An employer’s refusal to bargain

with a union recognized as the employees’ Section 9(a)

representative is an unfair labor practice. See 29 U.S.C.

§ 158(a)(5).

A different rule operates in the building and construction

industries. For those businesses, labor costs need to be known

in advance so that companies can bid for work. In addition,

union organization is difficult because projects can be

relatively short-lived and employees migrate between jobs.

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

2003) (explaining that Section 8(f) addresses “the unique

nature” of industries that “need to draw on a pool of skilled

workers and to know their labor costs up front in order to

generate accurate bids,” and in which employees often “work

for multiple companies over short, sporadic periods”).

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To address those challenges, Section 8(f) of the National

Labor Relations Act allows employers and unions in the

building and construction industries to enter into what is known

as a “pre-hire agreement.” Nova Plumbing, 330 F.3d at 534

(citation omitted). Under such an agreement, the business and

union agree in advance that a particular union will represent

employees, and they may even negotiate the initial terms and

conditions of employment directly between themselves. That

can all occur without any vote by the employees, or even before

a single employee is hired. See 29 U.S.C. § 158(f).

A pre-hire agreement in the construction and building

industries is presumed to be governed by Section 8(f) rather

than Section 9(a). Allied Mechanical Services, Inc. v. NLRB,

668 F.3d 758, 766 (D.C. Cir. 2012). A Section 8(f) relationship

can convert into a Section 9(a) relationship only if the union

“either petition[s] for a representation election or demand[s]

recognition from the employer by providing proof of majority

support.” M & M Backhoe Service, Inc. v. NLRB, 469 F.3d

1047, 1050 (D.C. Cir. 2006).

Under the more commonplace Section 9(a) union

representation, when a collective bargaining agreement

expires, the employer generally must continue to negotiate with

the union in good faith and preserve the status quo in

employment terms and conditions. See, e.g., NLRB v. Katz,

369 U.S. 736, 743 (1962) (holding that “an employer’s

unilateral change in conditions of employment under

negotiation” is a violation of the National Labor Relations Act

because “it is a circumvention of the duty to negotiate”); Nova

Plumbing, 330 F.3d at 534 (noting that, under Section 9(a),

when a collective bargaining agreement expires, an employer

must “continue bargaining * * * unless the company can

demonstrate either that the union has in fact lost majority

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support or that the employer has a good faith uncertainty as to

the union’s status”).

Not so for Section 8(f) agreements. For them, the

employer (or the union) “may repudiate the terms of a pre-hire

agreement when it expires,” and the employer has “no

obligation to bargain with the union” upon expiration. M & M

Backhoe, 469 F.3d at 1048.

That is all a long way of saying that, when a labor

agreement expires, an employer’s rights and obligations under

Section 8(f) and Section 9(a) of the National Labor Relations

Act are substantially different. And therein lies the rub in this

case.

B

Colorado Fire Sprinkler, Inc., installs, services, and

inspects fire sprinkler systems across commercial properties in

Southern Colorado. Ken Stringer founded the Company in

1991 and still serves as its sole owner. At the time of the

Company’s founding, Stringer entered into a Section 8(f) pre-

hire agreement with the Road Sprinkler Fitters Local Union

No. 669, a national union. In that Agreement, the Company

agreed to recognize the Union as the representative of its

employees, to comply with the terms and conditions for

employees’ work set by the Union, and to make monthly

payments to the Union’s national Health and Welfare,

Education, and Pension Funds to cover its future employees’

health insurance, retirement, and ongoing training

requirements.

The Section 8(f) pre-hire agreement was actually a form

agreement the terms of which were predetermined by the

National Fire Sprinkler Association (an outside association of

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sprinkler installation companies of which the Company was

not a member) and the national Union. The Company did not

negotiate or have any input concerning the terms of the

agreement. Illustrating the cookie-cutter nature of the terms,

the first agreement that Stringer signed was in 1991, three

years before the Company hired a single sprinkler fitter. Yet

that 1991 Agreement included a provision labeled

“Acknowledgement of the Representative Status of Road

Sprinkler Fitters Local Union No. 669,” purportedly certifying

that “on the basis of objective and reliable information,” the

Company had “confirmed that a clear majority of the sprinkler

fitters in its employ”—of which it had none—“have

designated, are members of, and are represented by [the

Union] for purposes of collective bargaining.” J.A. 93. The

1991 Agreement went on to have the Company

“unconditionally acknowledge[] and confirm[]” that the

national Union “is the exclusive bargaining representative of

its sprinkler fitter employees pursuant to Section 9(a) of the

National Labor Relations Act.” J.A. 93.

In 1994, the Company hired its first employees. Over the

next two decades, the Company continued to hire employees

primarily through the Union’s apprenticeship program, and

entered into successive multi-year representation Agreements

with the Union. The next three Agreements—in 1994, 1997,

and 2000—likewise said that the Company acknowledged “the

Union’s status as the exclusive bargaining representative of its

employees pursuant to Section 9(a) of the National Labor

Relations Act.” J.A. 85; 87; 89.

In 2005, the Company signed its fifth Agreement with the

Union, which again was a nationwide form contract. The 2005

Agreement included a similar acknowledgement of

representative status, and then added the additional statement

“that the Union has offered to provide the Employer with

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confirmation of its support by a majority of such employees.”

J.A. 83. The subsequent two Agreements retained that same

language.

In 2010, Stringer told the Union that the Company was in

serious financial straits, and that he was concerned that he

would be unable to continue meeting the same contractual

obligations, especially the payments into the Union’s Health

and Welfare, Education, and Pension Funds. After some

convincing, Stringer chose to renew the Agreement. Stringer’s

predictions came true, however, and the Company became

delinquent on fund payments three months before the

contract’s expiration in March 2013. Stringer met with the

Union several times over the next few months, and eventually

reached a settlement agreement under which, in June 2013, the

Company paid back the three missed contributions.

At that same time, Stringer and the Union were also

attempting to hammer out a new collective bargaining

agreement. Stringer told the Union’s business agent that he

wanted to remain a Union contractor, but could not afford fund

payments because of increased competition from non-union

sprinkler installation companies. The Union responded that the

Company was obligated to honor the existing terms and to

negotiate a new contract. After several efforts to reach an

agreement failed, Stringer informed the Union in October 2013

that he had gone ahead and offered his employees a non-union

health insurance plan. The Union claimed that was a violation

of their Agreement because it was the employees’ exclusive

bargaining representative.

The Union then filed two unfair labor practice charges

with the National Labor Relations Board against the Company.

The charges alleged that the Company had violated the

National Labor Relations Act by (i) “discontinuing

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contributions to the [Union’s] benefit funds,” J.A. 55, and (ii)

unilaterally implementing a change in the employees’ terms of

employment in breach of its obligation to negotiate with the

Union in good faith and to preserve the existing employment

terms in the interim, all in violation of 29 U.S.C. § 158(a)(1)

and (a)(5). The Company in turn contended that the Union’s

charges were time-barred and that, in any event, it had lawfully

implemented its own healthcare plan because its contractual

relationship with the Union was governed by Section 8(f),

which imposed no duty to continue bargaining once the

contract expired.

An administrative law judge concluded that the Company

was at fault, reasoning that the 2005 Agreement had converted

the Section 8(f) Agreement into one governed by Section 9(a)

and its general prohibition against unilaterally altering

employment terms during collective bargaining negotiations.

The administrative law judge also concluded that the unfair

labor practice charges related to the cessation of payments to

the Union’s benefit funds were time-barred.

The National Labor Relations Board affirmed in part and

reversed in part. Pointing to the added language in the 2005

and subsequent Agreements about the Union’s offer of proof

of its representative status, the Board agreed that the

Company’s and Union’s relationship had become one

governed by Section 9(a) because “clear and unequivocal

contract language can establish a 9(a) relationship in the

construction industry.” Colorado Fire Sprinkler Inc. and Road

Sprinkler Fitters Local Union No. 669, U.A., AFL-CIO, 364

N.L.R.B. No. 55, at 1 (2016) (citing Staunton Fuel, 335

N.L.R.B. 717 (2001)). The Board then disagreed with the

administrative law judge’s timeliness finding, and ordered the

Company to bargain with the Union, to make up any

outstanding contributions to the benefit funds, and to reimburse

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its employees for any expenses they incurred as a result of the

missed contributions.

The Company filed a timely petition for review of the

Board’s decision, and the Board filed a cross-petition for

enforcement.

II

A

Recognizing the Board’s substantial expertise in

evaluating unfair labor practices, we will affirm the Board’s

order as long as its factual findings are supported by substantial

evidence. Nova Plumbing, 330 F.3d at 536. The Board’s

analysis, however, must be grounded in the complete record

and must grapple with evidence that “fairly detracts from the

weight of the evidence supporting [its] conclusion.” Reno

Hilton Resorts v. NLRB, 196 F.3d 1275, 1282 (D.C. Cir. 1999)

(citation omitted); see also Fred Meyer Stores, Inc. v. NLRB,

865 F.3d 630, 638 (D.C. Cir. 2017). We will also reverse a

Board decision if the Board “acted arbitrarily or otherwise

erred in applying established law to the facts.” Nova Plumbing,

330 F.3d at 536. Specifically, in reviewing the Board’s

determination whether a Section 8(f) or 9(a) relationship

existed between the parties, “our inquiry is whether the Board’s

conclusion was reasonable” under existing law. Allied

Mechanical Services, 668 F.3d at 772 (citation omitted).

All that means that, in reviewing the Board’s decision, we

will defer to the reasonable, but will not green light the

unreasoned.

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B

1

In deciding whether the relationship between the Union

and the Company was governed by Section 8(f), 29 U.S.C.

§ 158(f), or Section 9(a), 29 U.S.C. § 159(a), at the time their

agreement expired in 2010, we are guided by settled precedent

and labor-law principles.

To start, “a construction-industry contract will be

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

and union clearly intended to create a section 9(a) agreement.”

Nova Plumbing, 330 F.3d at 537 (citing J&R Tile, Inc., 291

N.L.R.B. 1034, 1037 (1988)) (emphasis added). That

presumption attached here. When the Union’s and Company’s

relationship first started, it was governed by Section 8(f), and

the 1991 Agreement was a pre-hire contract. It could not be

otherwise because, at the time the 1991 Agreement was

adopted, the Company had no employees at all—there was no

one to vote the Union in as labor’s representative under Section

9(a).

Given that Section 8(f) starting point, the General Counsel

bore the burden of proof to overcome the presumption of

continued Section 8(f) status with “clear[]” evidence that both

the Union and the Company intended to transition to a Section

9(a) relationship. Nova Plumbing, 330 F.3d at 537.

Those burdens of proof matter. The raison d’être of the

National Labor Relations Act’s protections for union

representation is to vindicate the employees’ right to engage in

collective activity and to empower employees to freely choose

their own labor representatives. See International Ladies’

Garment Workers’ Union v. NLRB, 366 U.S. 731, 738–739

11

(1961) (“[T]he premise of the [National Labor Relations] Act

* * * [is] to assure freedom of choice and majority rule in

employee selection of representatives.”); see also Skyline

Distributors v. NLRB, 99 F.3d 403, 411 (D.C. Cir. 1996) (“One

of the principal protections of the [National Labor Relations

Act] is the right of employees to bargain collectively through

representatives of their own choosing or to refrain from such

activity.”). So under Section 9(a), the rule is that the employees

pick the union; the union does not pick the employees.

The unusual Section 8(f) exception is meant not to cede all

employee choice to the employer or union, but to provide

employees in the inconstant and fluid construction and building

industries some opportunity for collective representation. See

Raymond Interior Systems, Inc. v. NLRB, 812 F.3d 168, 176–

177 (D.C. Cir. 2016). A pre-hire arrangement still is ultimately

meant to benefit the employees and to promote harmonious

labor relations in those industries; it is not meant to force the

employees’ choices any further than the statutory scheme

allows. See NLRB v. Local Union No. 103, 434 U.S. 335, 346

(1978) (stating that the “major purpose” of Section 8(f), in

conjunction with other statutory provisions, is “to implement

one of the [National Labor Relations] Act’s principal goals—

to ensure the employees were free to make an uncoerced choice

of bargaining agent”); see also Jim McNeff, Inc. v. Todd, 461

U.S. 260, 268–270 (1983).

Because the statutory objective is to ensure that only

unions chosen by a majority of employees enjoy Section 9(a)’s

enhanced protections, the Board must faithfully police the

presumption of Section 8(f) status and the strict burden of proof

to overcome it. Specifically, the Board must demand clear

evidence that the employees—not the union and not the

employer—have independently chosen to transition away from

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a Section 8(f) pre-hire arrangement by affirmatively choosing

a union as their Section 9(a) representative.

2

This court’s decisions in Nova Plumbing and Allied

Mechanical provide two goalposts guiding the analysis of what

evidence is required for a union to score a Section 9(a)

relationship.

In Nova Plumbing, a construction contractor and union

entered into a labor agreement. The contract included a

“recognition clause” stating that “independently verified”

evidence had been presented to the company “demonstrat[ing]

that the Union represents an uncoerced majority of the

employees * * *.” 330 F.3d at 535. Despite that language, the

record was devoid of any actual evidence of employee support

submitted by the union to Nova Plumbing or to anyone else.

Even more damning, “uncontradicted testimony” in the record

indicated that senior employees actually opposed union

representation. Id. at 537.

We held that “contract language” and the “intent” of the

union and company alone generally cannot overcome the

Section 8(f) presumption, and certainly not when “the record

contains strong indications that the parties had only a section

8(f) relationship.” Nova Plumbing, 330 F.3d at 537. While

such language could be a relevant factor, the “proposition that

contract language alone can establish the existence of a section

9(a) relationship runs roughshod over the principles” of

employee choice “established in” Supreme Court precedent.

Nova Plumbing, 330 F.3d at 536–537 (citing Garment

Workers’ Union, 366 U.S. at 738–739). In particular, language

crafted solely by the union and employer “completely fails to

account for employee rights,” and creates a risk of the union

13

and employer “colluding at the expense of employees and rival

unions.” Nova Plumbing, 330 F.3d at 537. For those reasons,

an “agreement between an employer and union is void and

unenforceable * * * if it purports to recognize a union that

actually lacks majority support as the employees’ exclusive

representative.” Id.

Conversely, Allied Mechanical established that, when

there is strong evidence of employee majority support in the

record, such as authorization cards signed by employees, then

a union’s offer to provide concrete evidence of its majority

status can convert a Section 8(f) relationship into a Section 9(a)

one. 668 F.3d at 768. Whether the employer viewed that

evidence is beside the point; what matters is that the affirmative

evidence of majority support exists in the record. Id.; see M&M

Backhoe Service, 469 F.3d at 1050–1051 (union had collected

authorization cards).

This case falls in the middle. The record is bereft of

evidence either confirming or controverting majority support.

In the Company’s twenty-year history, there were no petitions,

authorization cards, or votes confirming or denying the

Union’s majority status. No anecdotal evidence was offered

either. The only evidence the Union points to is the rote

language repeated in a series of contracts purporting to

acknowledge the Union’s status as “the exclusive bargaining

representative of its employees pursuant to Section 9(a) of the

National Labor Relations Act.” J.A. 89; 87; 85; 83; see also

J.A. 93.

The Board concluded that contract language was enough,

invoking past Board precedent holding that a written agreement

can “establish a 9(a) relationship if its language unequivocally

indicates that the union requested recognition as majority

representative, the employer recognized the union as majority

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representative, and the employer’s recognition was based on

the union’s having shown, or having offered to show, an

evidentiary basis of its majority support.” Staunton Fuel, 335

N.L.R.B. at 717; see Colorado Fire Sprinkler Inc., 364

N.L.R.B. at 1 n.3 (“Here, it is undisputed that the Staunton Fuel

requirements are met.”).

That approach by the Board will not do. The first two

prongs of the Staunton test do nothing more than document the

union’s and employer’s views on Section 9(a) status. They say

nothing about the pivotal question of employee support for the

union. It is the “employees[’] freedom of choice and majority

rule” that Section 9(a) “guarantees.” Garment Workers’

Union, 366 U.S. at 737. That choice cannot be arrogated by a

union or an employer.

As for the third prong, the Board’s reliance in this case on

a mere offer of evidence in a form contract—the language of

which has been proven demonstrably false in at least one prior

iteration—would reduce the requirement of affirmative

employee support to a word game controlled entirely by the

union and employer. Which is precisely what the law forbids.

For what Garment Workers’ Union, Nova Plumbing, and Allied

Mechanical collectively teach is that, while an employer and a

union can get together to create a Section 8(f) pre-hire

agreement, only the employees, through majority choice, can

confer Section 9(a) status on a union. So to rebut the

presumption of Section 8(f) status, actual evidence that a

majority of employees have thrown their support to the union

must exist and, in Board proceedings, that evidence must be

reflected in the administrative record.

The Board could point to no such evidence here. None of

the usual indicia of majority support—authorization cards or

votes—was introduced; it apparently does not exist. And the

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contract language on which the Board hung its hat defied

reality. The very first 1991 Agreement between the Union and

the Company recited that the Company had “confirmed that a

clear majority of the sprinkler fitters in its employ have

designated * * * [the Union] for purposes of collective

bargaining,” and that the Union was the “exclusive bargaining

representative * * * pursuant to Section 9(a) of the National

Labor Relations Act.” J.A. 93. That contract language was

objectively false. There is no dispute that the Company had

zero employees at the time it signed onto that contract

language.

Nor is there any dispute that every Agreement signed by

the Company was a carbon-copy contract proffered by the

Union without any input from the Company or its employees.

The 1991 Agreement, for example, was sent to Stringer, and

“all [he] had to do was sign the agreement.” J.A. 26:13. He

did not discuss with the Union what the Agreement contained,

and there was no negotiation over its terms. Instead, the union-

recognition clauses in the Agreements Stringer signed simply

bound him to the terms and conditions of the general agreement

between the National Fire Sprinkler Association and the

national Union. None of its terms were specific to the

Company or its employees.

That same pattern continued for each successive

Agreement. They were all just mailed to Stringer, who signed

them without any “back and forth on the contents.” J.A. 27:10–

11. The resulting union-recognition clauses were boilerplate.

Apparently, they were never fact-checked either.

The Board points to the addition of language in the 2005

Agreement stating that the Union “offered to provide the

Employer with confirmation of its support.” J.A. 83. But

nothing in the record provided the Board any reasonable basis

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for finding this cut-and-paste language from the national

contract any more accurate than the previous empty

representations. Tellingly, at no point in the administrative

record did the Union even explain, let alone proffer, what

evidence it claimed to have collected. Given the central

importance of honoring employees’ organizational rights and

the risks of employer-union collusion, the Board must identify

something more than truth-challenged form language before it

can confer exclusive bargaining rights on a union under Section

9(a).

*****

By blinking away record evidence undermining the

credibility or meaningfulness of the recognition clauses, the

Board “entirely failed to consider an important aspect of the

problem.” Motor Vehicle Mfrs. Ass’n of U.S. v. State Farm

Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983). Although actual

employee support for the Union was the dispositive issue in the

case, the record lacks any affirmative evidence—let alone

substantial evidence—of the employees’ views.

The Board’s decision was also arbitrary and capricious.

By making demonstrably untrustworthy contractual language

the be-all and end-all of Section 9(a) status, the Board adopted

a rule of law that would leave in potentially “careless employer

and union hands the power to completely frustrate employee

realization of * * * freedom of choice and majority rule in

employee selection of representatives.” Garment Workers’

Union, 366 U.S. at 738–739. *

* Because the record does not support the Board’s conclusion that

the Union was the employees’ Section 9(a) representative, we have

no need to address the Company’s remaining challenges to the

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Accordingly, we grant the Company’s petition for review,

deny the Board’s cross-application for enforcement, vacate the

Board’s decision, and remand.

So ordered.

timeliness of the Union’s unfair labor practice charges or to the

remedy imposed by the Board.