International Longshore & Warehouse Union v. NLRB

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued January 25, 2019 Decided August 21, 2020

No. 18-1124

INTERNATIONAL LONGSHORE & WAREHOUSE UNION,

PETITIONER

v.

NATIONAL LABOR RELATIONS BOARD,

RESPONDENT

EAST BAY AUTOMOTIVE MACHINISTS LODGE NO. 1546,

ET AL.,

INTERVENORS

Consolidated with 18-1168

On Petition for Review and Cross-Application

for Enforcement of Orders of

the National Labor Relations Board

Lindsay R. Nicholas argued the cause for petitioner. With

her on the briefs were Eleanor Morton and Emily M. Maglio.

Gregoire Sauter, Attorney, National Labor Relations

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

were Peter B. Robb, General Counsel, John W. Kyle, Deputy

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General Counsel, Linda Dreeben, Deputy Associate General

Counsel, and Usha Dheenan, Supervisory Attorney.

David A. Rosenfeld was on the brief for intervenors East

Bay Automotive Machinists Lodge No. 1546, et al. in support

of respondent/cross-petitioner.

Before: GARLAND and KATSAS, Circuit Judges, and

WILLIAMS, Senior Circuit Judge.*

Opinion for the Court filed by Circuit Judge KATSAS.

KATSAS, Circuit Judge: Under NLRB v. Burns

International Security Services, Inc., 406 U.S. 272 (1972), a

successor employer inherits the collective-bargaining

obligations of its predecessor only if the previously recognized

bargaining unit remains appropriate under the successor. In

determining whether the unit remains appropriate, the National

Labor Relations Board ignores workplace changes caused by

unfair labor practices of the successor. Here, the NLRB

extended that rule to ignore changes caused by unfair labor

practices of the predecessor. We hold that the Board did not

adequately explain its decision.

I

This case arises from a longstanding dispute about which

of two competing unions represents a group of several dozen

*

The late Senior Circuit Judge Stephen F. Williams was a

member of the panel at the time the case was argued and participated

in its consideration before his death on August 7, 2020. Because he

died before this opinion’s issuance, his vote was not counted. See

Yovino v. Rizo, 139 S. Ct. 706, 710 (2019). Judges Garland and

Katsas have acted as a quorum with respect to this opinion and

judgment. See 28 U.S.C. § 46(d).

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mechanics who maintain and repair shipping equipment in the

Port of Oakland, California. The unions are the International

Association of Machinists and Aerospace Workers, AFL-

CIO/CLC (Machinists) and the International Longshore and

Warehouse Union (ILWU). As the mechanics came to work

for different companies, two related controversies developed.

One, centered around a change in employers that occurred in

2005, has been finally resolved by this Court. Another,

centered around a change in employers that occurred in 2013,

is directly at issue here.

A

Before 2005, the mechanics at issue worked for the Pacific

Marine Maintenance Company, a contractor providing

maintenance and repair services to the shipping company A.P.

Moller-Maersk. At that time, the Machinists represented the

mechanics under a collective-bargaining agreement covering

non-crane mechanics employed by Pacific Marine at the Ports

of Oakland and Tacoma, Washington.

In 2005, Maersk ended its contract with Pacific Marine

and engaged the Pacific Crane Maintenance Company to

provide maintenance and repair services for its Oakland and

Tacoma shipping operations. As a result, Pacific Marine shut

down and laid off the mechanics. Pacific Crane immediately

rehired most of them, but it refused to recognize the Machinists

as their bargaining representative. Instead, it recognized ILWU

under a collective-bargaining agreement encompassing a much

larger unit of some 15,000 employees performing various jobs

for various employers at various West Coast ports.

These 2005 changes spawned over a decade of litigation.

The Machinists charged that Pacific Crane had committed

unfair labor practices by refusing to bargain with it and by

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recognizing ILWU as the mechanics’ bargaining

representative. Likewise, the Machinists charged that ILWU

had committed unfair labor practices by accepting the

recognition and by applying its collective-bargaining

agreement to the mechanics. The NLRB agreed with the

Machinists on both points. PCMC/Pac. Crane Maint. Co., 359

N.L.R.B. 1206 (2013) (Pacific Crane I). The Board then

vacated its decision on procedural grounds, but later reached

the same conclusion. PCMC/Pac. Crane Maint. Co., 362

N.L.R.B. 988 (2015) (Pacific Crane II). After the Machinists

settled their claims against Pacific Crane, we upheld the

Board’s decision and enforced it against ILWU. Int’l

Longshore & Warehouse Union v. NLRB, 890 F.3d 1100 (D.C.

Cir. 2018) (Pacific Crane III). In doing so, we relied “heavily”

on a stipulation that Pacific Marine and Pacific Crane, which

were affiliated companies, should be treated as a single

employer. Id. at 1110.

B

This case involves a third employer—Ports America Outer

Harbor—which came into the picture as the Pacific Crane

litigation unfolded. In 2010, Ports America acquired control of

Oakland berths 20–24 from Maersk. As Maersk had done,

Ports America used Pacific Crane to provide maintenance and

repair services at those berths. Ports America then acquired

berths 25–26 from the Transbay Container Terminal. Ports

America expanded its service contract with Pacific Crane to

cover these berths as well.

In 2013, Ports America decided to bring its maintenance

and repair operations in-house. When its contract with Pacific

Crane expired, Ports America hired most of the mechanics who

previously had been working for Pacific Crane. In doing so,

Ports America refused to bargain with the Machinists and

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instead recognized ILWU, which continued to apply its

collective-bargaining agreement to the mechanics.

The Machinists charged Ports America and ILWU with

various unfair labor practices. They alleged that Ports America

committed unfair labor practices by failing to bargain with

them and by recognizing ILWU as the mechanics’ bargaining

representative. Further, they alleged that ILWU committed

unfair labor practices by accepting the recognition and by

applying its collective-bargaining agreement to the mechanics.

All these allegations rested on one central claim—that Ports

America had succeeded to Pacific Crane’s duty to bargain with

the Machinists.

An administrative law judge agreed with the Machinists.

She reasoned that from 2005 to 2013, Pacific Crane had a

continuing obligation to recognize and bargain with the

Machinists. Ports Am. Outer Harbor, LLC, 366 N.L.R.B. No.

76, at 10–12 (May 2, 2018) (Ports America) (reprinting ALJ

recommendation). She then concluded that Ports America

succeeded to that obligation under Burns, in part by refusing to

consider any counterarguments “built on unremedied unfair

labor practices” committed by Pacific Crane before 2013. Id.

at 14. In 2018, the Board substantially affirmed the ALJ’s

decision on similar reasoning. See id. at 3–4 & nn. 9–10.

While the proceeding was still pending before the ALJ,

Ports America filed for bankruptcy, so the Machinists added

new claims against MTC Holdings, another terminal services

company, which the Machinists alleged was a single employer

with Ports America. The Machinists then reached a partial

settlement covering all their claims against MTC Holdings and

their non-Burns claims against Ports America. Under the

settlement, Ports America and MTC Holdings agreed to pay the

Machinists $3 million for distribution to the mechanics. In

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August 2016, the ALJ approved the settlement and dismissed

MTC Holdings from the case. ILWU objected to the settlement

and sought reconsideration. In September 2016, the ALJ

affirmed her August order. In November 2016, the Board

denied ILWU’s appeal from the settlement approval.

ILWU now seeks our review of the NLRB’s merits order

and its order approving the partial settlement. The NLRB seeks

enforcement of the merits order. The Machinists have

intervened in support of the Board. Ports America, which has

ceased operations, did not appear before this Court.

II

We first consider the Board’s ruling that ILWU committed

unfair labor practices by accepting recognition as the

mechanics’ bargaining representative in 2013 and by applying

its collective-bargaining agreement to them. ILWU argues that

the Board arbitrarily refused to consider its arguments that the

past bargaining unit was no longer appropriate. We agree.

Our review of NLRB decisions is deferential but not

toothless. Among other things, we must consider whether the

Board’s findings of fact are supported by substantial evidence,

29 U.S.C. § 160(f), and whether its reasoning is arbitrary and

capricious, 5 U.S.C. § 706(2)(A). For the latter, the question is

whether the agency “examined the relevant considerations and

articulated a satisfactory explanation for its action, including a

rational connection between the facts found and the choice

made.” FERC v. Elec. Power Supply Ass’n, 136 S. Ct. 760,

782 (2016) (cleaned up). “[A]n agency’s unexplained

departure from precedent is arbitrary and capricious.” ABM

Onsite Servs.—West, Inc. v. NLRB, 849 F.3d 1137, 1142 (D.C.

Cir. 2017). So too is an order resting on “clearly

distinguishable precedent.” Exxel/Atmos, Inc. v. NLRB, 147

F.3d 972, 976 (D.C. Cir. 1998).

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Section 7 of the National Labor Relations Act guarantees

the right of employees “to bargain collectively through

representatives of their own choosing.” 29 U.S.C. § 157.

Section 8(a) prohibits employers from engaging in unfair labor

practices, which include interfering with collective bargaining,

id. § 158(a)(1); supporting a union, id. § 158(a)(2); and

refusing to bargain with a union that enjoys majority support,

id. § 158(a)(5). Section 8(b) prohibits unions from engaging in

unfair labor practices, which include restraining collective

bargaining by employees, id. § 158(b)(1)(A), and causing an

employer to discriminate against an employee, id. § 158(b)(2).

The unfair labor practices at issue follow from a premise

that Ports America had a duty to bargain with the Machinists

when it insourced the Oakland maintenance and repair work in

2013. If so, then its failure to bargain with the Machinists

violated sections 8(a)(1) and (5), and its recognizing ILWU

violated sections 8(a)(1) and (2). Likewise, ILWU violated

section 8(b)(1)(A) by accepting the recognition, and section

8(b)(2) by applying its collective-bargaining agreement to the

mechanics. ILWU does not dispute that these conclusions

follow from the premise.

In finding that Ports America had a duty to bargain with

the Machinists, the Board reasoned in two steps. First, Pacific

Crane had such a duty. We previously held that Pacific Crane

had this duty as of 2005, Pacific Crane III, 890 F.3d at 1107–

13, and the Board held that it continued through 2013, Ports

America, 366 N.L.R.B. No. 76, at 2–4. Second, Ports America

succeeded to Pacific Crane’s bargaining obligation when it

hired the mechanics. In reaching this conclusion, the Board

summarized the test for successorship as follows:

An employer is a successor employer obligated to

recognize and bargain with the union representing the

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predecessor’s employees when (1) the successor

acquires, and continues in substantially unchanged

form, the business of a unionized predecessor (the

“substantial continuity” requirement); (2) the

successor hires, as a majority of its workforce at the

acquired facility, union-represented former

employees of the predecessor (the “workforce

majority” requirement); and (3) the unit remains

appropriate for collective bargaining under the

successor’s operations.

Id. at 2; see Burns, 406 U.S. at 277–81. ILWU accepts this

formulation of the governing legal test.

Before the Board, ILWU sought to raise three arguments

why the historic bargaining unit was no longer appropriate

when Ports America hired the mechanics in 2013. First, the

historic bargaining unit had accreted into ILWU’s larger, coast-

wide bargaining unit—in other words, the historic unit had lost

its separate identity and acquired an “overwhelming

community of interest” with the ILWU unit, see Dean Transp.,

Inc. v. NLRB, 551 F.3d 1055, 1067 (D.C. Cir. 2009) (quotation

marks omitted). Second, a majority of mechanics in the

historic unit by then supported ILWU, not the Machinists.

Third, Ports America had at least a good-faith doubt whether a

majority of the unit still supported the Machinists.†

†

As of 2005, the recognized bargaining unit encompassed non-

crane mechanics employed by Pacific Marine in Oakland and

Tacoma. See Pacific Crane III, 890 F.3d at 1103–04 & n.2. In this

case, the Board expanded the historic unit to include mechanics at

Oakland berths 25 and 26, which Ports America took over in 2010,

and contracted it to exclude mechanics in Tacoma, who are not

employed by Ports America. See Ports America, 366 N.L.R.B. No.

9

The Board declined to consider ILWU’s arguments

because they invoked changes that were “a direct result of the

predecessor employers’ unlawful assistance to and recognition

of the ILWU.” 366 N.L.R.B. No. 76, at 3 (emphasis added);

see also id. at 3–4 nn. 9–10. In other words, if the historic

bargaining unit had become inappropriate by the time Ports

America took over, it was only because Pacific Crane had

improperly recognized ILWU, and had failed to recognize the

Machinists, during the eight prior years.

To justify its ruling, the Board invoked our decision in

Pacific Crane III. But that case does not address whether an

incoming employer may contest successorship obligations by

citing workplace changes caused by unfair labor practices of

the outgoing employer. Pacific Crane III involved no

successorship issue because the parties there had stipulated that

the outgoing Pacific Mutual and the incoming Pacific Crane,

which were affiliated companies, should be treated as a single

employer. See 890 F.3d at 1110. It was thus undisputed that

Pacific Crane, when it took over in 2005, succeeded to the

bargaining obligations of Pacific Mutual. Pacific Crane

separately argued that the historic Machinists unit had accreted

into the larger ILWU unit because of changes that occurred

after 2005. In response, the Board held that Pacific Crane

could not seek to benefit from its own unfair labor practices in

recognizing ILWU and failing to recognize the Machinists.

359 N.L.R.B. at 1211. Likewise, we explained that “the Board

should ignore any impermissible changes made unilaterally by

the employer,” because “to hold otherwise would allow the

76, at 3. ILWU contends that the historic unit was absorbed into its

unit, but does not otherwise challenge the Board’s adjustments to the

historic unit.

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employer to benefit from its own unlawful conduct.” 890 F.3d

at 1111 (cleaned up).‡

We can imagine reasonable arguments either way on the

question whether a successor employer should be barred from

citing changes caused by the unfair labor practices of a

predecessor. Perhaps current employee choices should be

given effect, regardless of whether a former employer

committed unfair labor practices. Or, perhaps the need to

remedy past unfair labor practices is paramount. The Board

simply did not engage these questions. Instead, it relied on

inapposite precedent, as it virtually conceded at oral argument.

Oral Arg. 22:50–56 (“there is no clear case on point”); id.

25:22–24 (“there are no cases governing”). That was arbitrary.

See Exxel/Atmos, 147 F.3d at 976.

Before this Court, the Board presses an alternative theory

that Ports America could not have claimed any good-faith

doubt that a majority of workers in the unit supported the

Machinists. According to the Board, this is so because Ports

America knew of Pacific Crane’s unremedied unfair labor

practices. See Proxy Commc’ns, 290 N.L.R.B. 540, 542

(1988), enforced, 873 F.2d 552 (2d Cir. 1989); Bay Diner, 279

N.L.R.B. 538, 546 (1986); Silver Spur Casino, 270 N.L.R.B.

1067, 1074 (1984). But neither the ALJ nor the Board

articulated this rationale below, and neither made findings on

whether Ports America knew of Pacific Crane’s unfair labor

‡

The Board in this case also cited Pacific Telephone &

Telegraph Co., 80 N.L.R.B. 107 (1948), but it too has nothing to do

with successorship. There, the Board held that a union could not

seek a unit determination reflecting assistance that the employer had

unlawfully provided to it. Id. at 111–12. The case involved no

question of when bargaining obligations flow from a predecessor to

a successor.

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practices in sufficient time. ILWU suggests no, because Ports

America had signed its contracts and made its hiring decisions

before the Board decided Pacific Crane I. The Board suggests

yes, because Pacific Crane I was decided before Ports America

took over the maintenance and repair work. Because the Board

did not address these issues below, much less make the findings

necessary to resolve them, we cannot uphold its rejection of the

good-faith defense on this ground. See SEC v. Chenery Corp.,

332 U.S. 194, 196 (1947).

At oral argument, we asked the Board about another

possible rationale for upholding its order: Even if Ports

America could seek to benefit from the unfair labor practices

of Pacific Crane, ILWU could not seek to benefit from its own

past unfair labor practices. The Board wisely declined to press

that rationale here. In the proceedings below, the Board pegged

ILWU’s liability entirely to the proposition that Ports America

was a Burns successor and had violated its bargaining

obligations as such. See Ports America, 366 N.L.R.B. No. 76,

at 2. Under Chenery, we thus cannot uphold the Board’s order

on the theory that ILWU committed unfair labor practices even

if Ports America did not.

As this analysis should make clear, our ruling is narrow.

We hold only that the Board did not engage in reasoned

decisionmaking in the order under review. On remand, the

Board remains free to consider the various open issues and

arguments in this case, unencumbered by its invocation of

inapposite precedent.§

§

The Board ordered Ports America to bargain with the

Machinists if it resumed operations, and it ordered ILWU to

reimburse fees and dues paid by the mechanics. Ports America, 366

N.L.R.B. No. 76, at 6. Because we have set aside the underlying

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III

ILWU also seeks review of the Board’s order refusing to

set aside the partial settlement among the Machinists, Ports

America, and MTC Holdings. The Machinists contend that we

lack jurisdiction to review that order for two reasons. First,

ILWU lacks Article III standing to challenge a settlement of

claims made against other parties, which in no way impaired

ILWU’s ability to defend the claims made against it. Second,

the intervening distribution of the settlement funds mooted

ILWU’s objections to the settlement. We must consider both

jurisdictional objections before reaching the merits, see Steel

Co. v. Citizens for a Better Env’t, 523 U.S. 83, 101 (1998), but

we may do so in either order, see Ruhrgas AG v. Marathon Oil

Co., 526 U.S. 574, 584 (1999). We begin—and end—with the

question of mootness.

ILWU does not respond to the Machinists’ contention that

disbursement of the settlement funds mooted ILWU’s

challenge. By this silence, ILWU has forfeited any objection

to mootness. “Although a party cannot forfeit a claim that we

lack jurisdiction, it can forfeit a claim that we possess

jurisdiction.” Scenic Am., Inc. v. DOT, 836 F.3d 42, 53 n.4

(D.C. Cir. 2016). “[T]he ordinary rules of forfeiture apply” to

a claim that we have jurisdiction, Manitoba v. Bernhardt, 923

F.3d 173, 179 (D.C. Cir. 2019), so ILWU’s “failing to respond”

to an argument that we lack jurisdiction forfeited any

counterargument that we have it, Perry Capital LLC v.

Mnuchin, 864 F.3d 591, 618 (D.C. Cir. 2017); see, e.g., Reid v.

Hurwitz, 920 F.3d 828, 833 n.4 (D.C. Cir. 2019). This is

consistent with how ordinary forfeiture rules work in other

liability determinations, we need not consider ILWU’s challenge to

these two remedies. See Erie Brush & Mfg. Corp. v. NLRB, 700 F.3d

17, 19 (D.C. Cir. 2012).

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contexts where one party has raised an argument and the other

has “offered nothing in opposition.” Tax Analysts v. IRS, 117

F.3d 607, 610 (D.C. Cir. 1997); see Clifton Power Corp. v.

FERC, 88 F.3d 1258, 1267 (D.C. Cir. 1996).

Because ILWU forfeited any argument that this case is not

moot, we dismiss its petition to review the Board’s order

accepting the partial settlement.

IV

We grant the petition for review of the Board’s final order,

set aside that order, deny the Board’s cross-application for

enforcement, and remand for further proceedings consistent

with this opinion. We dismiss as moot the petition for review

of the Board’s order refusing to set aside the partial settlement.

So ordered.