Everport Terminal Services Inc v. NLRB

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued November 17, 2021 Decided August 26, 2022

No. 20-1411

EVERPORT TERMINAL SERVICES, INC.,

PETITIONER

v.

NATIONAL LABOR RELATIONS BOARD,

RESPONDENT

INTERNATIONAL ASSOCIATION OF MACHINISTS AND

AEROSPACE WORKERS, DISTRICT LODGE 190, LOCAL LODGE

1546, AFL-CIO AND INTERNATIONAL ASSOCIATION OF

MACHINISTS AND AEROSPACE WORKERS, DISTRICT LODGE

190, LOCAL LODGE 1414, AFL-CIO,

INTERVENORS

Consolidated with 20-1412, 20-1432

On Petitions for Review and Cross Application

for Enforcement of an Order of

the National Labor Relations Board

Ashley C. Parrish argued the cause for petitioner Everport

Terminal Services, Inc. On the briefs were Jeffrey S. Bucholtz

and Brigham M. Cheney.

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Emily M. Maglio argued the cause for petitioner

International Longshore and Warehouse Union. With her on

the briefs was Eleanor Morton.

Gregoire Sauter, Attorney, National Labor Relations

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

were Ruth E. Burdick, Deputy Associate General Counsel,

David Habenstreit, Assistant General Counsel, and Julie

Broido, Supervisory Attorney.

David A. Rosenfeld argued the cause and filed the brief for

intervenors in support of respondent.

Before: SRINIVASAN, Chief Judge, RAO, Circuit Judge,

and EDWARDS, Senior Circuit Judge.

Opinion for the Court filed by Circuit Judge RAO.

RAO, Circuit Judge: This case arises from a dispute over

which union—the International Association of Machinists

(“IAM”) or the International Longshore and Warehouse Union

(“ILWU”)—is entitled to represent the mechanic workforce at

the Ben Nutter Terminal in Oakland, California. For many

years, the Terminal’s mechanics were represented by the IAM.

In 2015, Everport Terminal Services, Inc., took over the

Terminal’s operation and decided to hire a new workforce. As

a member of the multi-employer Pacific Maritime Association

(“PMA”), Everport was party to a collective bargaining

agreement negotiated between the PMA and the ILWU. As

Everport read that agreement, it required Everport to prioritize

ILWU applicants in hiring its new mechanics and to recognize

the ILWU as their representative. Everport therefore gave

qualified ILWU applicants first choice of the available

mechanic positions, filling the remaining vacancies with

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applicants from the Terminal’s existing, IAM-represented

workforce.

After the IAM cried foul, the National Labor Relations

Board (“Board”) found that Everport had unlawfully

discriminated against the Terminal’s incumbent mechanics on

the basis of their IAM affiliation; that it had violated its

statutory obligation to recognize and bargain with the

incumbent mechanics’ chosen union, the IAM; and that it had

prematurely recognized the ILWU as the representative of the

Terminal’s mechanics. The Board also found the ILWU had

unlawfully demanded and accepted recognition from Everport.

In its order, the Board did not dispute—or even engage with—

Everport’s reading of the PMA-ILWU agreement, instead

dismissing it as a “red herring.” Because that was arbitrary, we

grant the petitions for review and vacate the Board’s order.

I.

A.

Workers at West Coast ports have historically bargained

with their employers on a coastwide basis. In 1938, the Board

certified the ILWU as the bargaining representative for “all the

workers employed at longshore labor in the Pacific Coast ports

of the United States.” Shipowners’ Ass’n of the Pac. Coast, 7

NLRB 1002, 1022 (1938). Coastwide representation was

necessary, the Board found, because employers were

coordinating workers’ terms of employment on a coastwide

basis. See id. at 1023–24; see also Cal. Cartage Co. v. NLRB,

822 F.2d 1203, 1206 (D.C. Cir. 1987) (explaining the Board’s

decision in Shipowners). Since 1949, West Coast port operators

have bargained with the ILWU through the Pacific Maritime

Association, a “multi-employer bargaining representative …

with the primary purpose of negotiating, executing, and

administering collective bargaining agreements.” PMA v.

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NLRB, 967 F.3d 878, 881 (D.C. Cir. 2020). ILWU members

will work only for port operators that are in the PMA, and

because of the Board’s decision to certify a coastwide

bargaining unit, the ILWU represents virtually all skilled

longshoremen on the West Coast.

All PMA employers are bound by the terms of a collective

bargaining agreement negotiated between the PMA and the

ILWU, the Pacific Coast Longshore Contract Document

(“Longshore Contract”). The Longshore Contract specifies the

longshore jobs PMA employers must give to ILWU members.

It also sets the terms of employment for those workers—the

wages and benefits they receive, the process through which

they are hired, and the reasons for which they may be fired.

The Longshore Contract’s scope is broad, reaching

“[v]irtually all longshore work at West Coast ports,” ILWU v.

NLRB (“Kinder Morgan”), 978 F.3d 625, 630 (9th Cir. 2020),

and the Board has upheld many of its jurisdiction setting

provisions as consistent with the National Labor Relations Act,

see PMA, 256 NLRB 769, 770 (1981); cf. IAM, Loc. Lodge No.

1484 v. ILWU, Loc. 13, 781 F.2d 685, 688 n.2 (9th Cir. 1986).

In its earliest iterations, it covered stevedore work—i.e.,

loading and unloading ships. Later, the PMA and the ILWU

expanded the Longshore Contract to cover mechanics—the

workers who maintain and repair the equipment used to load

and unload ships—but agreed that PMA members who had

employed non-ILWU mechanics before 1978 could continue

doing so. PMA, 256 NLRB at 769–70. The parties again

modified the Longshore Contract in 2008, making clear that

mechanic work at “all new marine terminal facilities that

commence operations after July 1, 2008, shall be assigned to

the ILWU.” As before, however, they made an exception for

terminals where non-ILWU mechanics were employed before

2008—sites the parties designated as “red-circled.” Thus, if

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non-ILWU mechanics had been employed at a terminal since

before 1978, the Longshore Contract’s amendments permit

PMA members to continue employing them.

For all work that falls within its scope, the Longshore

Contract sets out a hiring process that PMA members must

follow. At each port on the West Coast, the ILWU maintains

dispatch halls where ILWU jobseekers may submit

applications. PMA members may hire only from these dispatch

halls and must allocate work based on applicants’

qualifications, skills, and seniority. The PMA and the ILWU,

however, have historically made a limited exception for

mechanics. If there are too few ILWU members seeking

mechanic work at the relevant dispatch hall, then after offering

jobs to all of the hall’s qualified mechanics, a PMA member

may fill any remaining vacancies “off the street.” These non-

ILWU hires are onboarded through the so-called “Herman-

Flynn process.” Off-the-street hires are subjected to a ninety-

day probationary period, after which they become “registered”

employees that are entitled to the same benefits as ILWU

members and are required to pay ILWU dues.

B.

This case centers on twenty-seven mechanic positions at

the Ben Nutter Terminal. The Terminal was “red-circled” in

2008 because non-ILWU mechanics had been working there

since before 1978.

For many decades, the Terminal was operated by two

PMA members—Marine Terminals Corporation (“Marine”)

and its subsidiary, Miles Motor Transport System (“Miles”)—

whose stevedores were represented by the ILWU and whose

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mechanics were represented by the IAM.1 In 2002, Evergreen

Marine Corporation acquired the right to operate the Terminal

and then subcontracted the Terminal’s operation to Marine and

Miles. In 2012, Evergreen entrusted the Terminal’s operation

to its subsidiary, Everport, which again rehired Marine and

Miles to run the Terminal. The same workforce remained at the

Terminal—Marine and Miles continued using ILWU-

represented stevedores and IAM-represented mechanics—and

Everport had no direct relationship with these workers.

In 2015, dissatisfied with the state of the Terminal’s

operations, Everport resolved to operate the Terminal itself and

informed Marine and Miles that their contract would end on

December 4, 2015. Everport needed to hire stevedores from the

ILWU to run the Terminal, so it joined the PMA in June 2015.

Everport explored subcontracting the Terminal’s mechanic

work, but ultimately decided to employ the Terminal’s

mechanics directly.

The ILWU informed Everport that if it chose to employ its

own mechanics, it would need to hire them from the local

dispatch hall. “[T]he ‘red-circle’ waiver at the [Terminal] is

fully based on the direct bargaining relationship between

[Marine and Miles] and IAM,” the ILWU explained. “Upon

termination of the subcontracting relationship with [Marine

and Miles ], the ‘red circle’ waiver no longer applies.” After

Marine and Miles ceased operations, the Terminal would

become a “new marine terminal”—which the Longshore

Contract defined to include “vacated facilities.” As such, its

red-circle status would lapse and the Terminal’s mechanic jobs

would come within the ILWU’s jurisdiction. Therefore,

1

The mechanics employed by Marine and Miles were divided into

two separate IAM-affiliated bargaining units, but for the purposes of

this opinion we refer to them as a single bargaining “unit.”

7

according to the ILWU, Everport was obligated to hire its

mechanics from the ILWU dispatch hall and, if necessary,

through the Herman-Flynn process. The ILWU was clear that

“failure to comply with the full terms of the [Longshore

Contract] will result in the Union pursuing all available

remedies.”

Unsure of its obligations, Everport consulted the PMA,

which corroborated the ILWU’s reading of the Longshore

Contract. According to the PMA, after Marine and Miles

ceased operations at the Terminal, it would “no longer [be] a

red-circle facility because Everport had no prior agreement

with any union at the Terminal and the Terminal was [being]

vacated.” Based on the PMA and the ILWU’s mutual

understanding of their contract, Everport told the ILWU that

“qualified [ILWU] workers will receive first consideration for

steady mechanic jobs.” Everport indicated that if vacancies

remained after exhausting the pool of qualified ILWU

applicants, it would try to rehire the mechanics currently

working for Marine and Miles.

After learning of Everport’s job postings at the ILWU

dispatch hall, the IAM demanded that Everport recognize it as

the rightful bargaining representative of the Terminal’s

mechanics. In response, Everport explained its interpretation of

the Longshore Contract and why it had to prioritize ILWU

applicants for the Terminal’s mechanic positions after the

Terminal’s red-circle designation lapsed.

Everport began hiring mechanics in late November. It first

interviewed candidates who had submitted applications

through the ILWU hiring hall; afterwards, it considered Marine

and Miles’ employees, treating them as off-the-street, potential

Herman-Flynn hires. Everport’s interviewers kept notes about

which applicants were ILWU-represented and which were not.

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Everport ultimately hired fifteen ILWU applicants and twelve

applicants from Marine and Miles’ mechanic workforce.

The Terminal reopened under Everport’s operation in

December 2015. Pursuant to the Herman-Flynn process,

Everport treated Marine and Miles’ former mechanics as new

hires, which meant they lost the seniority-based benefits they

had formerly received from Marine and Miles as IAM

members. With minor exceptions, Everport’s mechanics did

the same work, in the same conditions, as their predecessors.

C.

Soon after Everport reopened the Terminal, the IAM filed

charges, arguing that Everport and the ILWU had colluded to

discriminate against Marine and Miles’ mechanics—depriving

some of them of their jobs, unilaterally changing their terms

and conditions of employment, and violating their right to be

represented by the union of their choice. After investigating,

the Board’s General Counsel filed a complaint against Everport

and the ILWU.

The administrative law judge (“ALJ”) sided with the IAM.

See Everport Terminal Servs., Inc., 370 NLRB No. 28, slip op.

at 45–46 (Sept. 30, 2020). Specifically, she found that Everport

had unlawfully discriminated against IAM-represented

mechanics on the basis of their union affiliation, see 29 U.S.C.

§ 158(a)(1), (3), and had prematurely recognized and bargained

with the ILWU before it was clear that Everport’s mechanics

would choose to be ILWU-represented, see id. § 158(a)(1)–(2).

The ALJ also found that Everport was a “successor employer”

of Marine and Miles under NLRB v. Burns International

Security Services, 406 U.S. 272 (1972). Everport therefore had

a duty to bargain with the incumbent mechanics’ chosen union,

a duty it breached by refusing to recognize the IAM. See 29

U.S.C. § 158(a)(1), (5). Further, the ALJ found that because

9

Everport’s hiring process was infused by a general “animus”

towards the IAM, it was also a “perfectly clear” successor

under Burns, and therefore lost the right to set its mechanics’

terms and conditions of employment. Everport, slip op. at 33;

see also Karl Kallmann (“Love’s Barbeque”), 245 NLRB 78,

82 (1979), enf’d in relevant part, 640 F.2d 1094 (9th Cir.

1981). Everport’s unilateral imposition of the Longshore

Contract’s terms onto the Terminal’s existing workforce was

therefore unlawful. See 29 U.S.C. § 158(a)(1), (5). Finally, the

ALJ found that the ILWU had demanded recognition “before

Everport began operations and when it did not represent an

uncoerced majority of the [Terminal’s mechanics],” and had

unlawfully induced Everport to discriminate against the

incumbent mechanics based on their IAM affiliation. Everport,

slip op. at 46 (finding violations of 29 U.S.C. § 158(b)(1)(A),

(b)(2)).

After Everport and the ILWU appealed, a three-member

panel of the Board adopted the ALJ’s findings and conclusions.

See id. at 1–2. With respect to the conclusion that Everport had

unlawfully imposed the Longshore Contract on the Terminal’s

mechanics, the panel split as to the ALJ’s reasoning. Two of

the Board members agreed with the ALJ that because Everport

had “used a general discriminatory hiring plan applicable to all

applicants from the predecessor workforce,” it was not only a

Burns successor, but had also forfeited the right to set its

mechanics’ initial terms and conditions of employment.2 Id. at

1 n.4. In the alternative, however, all three Board members

agreed that even if Everport had retained the right to set its

mechanics’ initial terms of employment, its recognition of the

2

Member Emanuel would have found that Everport retained the right

to set its mechanics’ terms of employment. In his view, it was not

clear that but for Everport’s discrimination, all or substantially all of

the Terminal’s incumbent mechanics would have retained their jobs.

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ILWU as its mechanics’ representative was still premature, and

so its imposition of the Longshore Contract onto those

mechanics was unlawful.

The Board ordered Everport to revoke its recognition of

the ILWU, cease applying the Longshore Contract to its

mechanics, recognize and bargain with the IAM, and offer to

rehire any IAM mechanics who had lost their jobs. It also

ordered Everport and the ILWU to make whole any workers

who were financially harmed by the unfair labor practices.

Everport and the ILWU each timely petitioned for review,

challenging the Board’s conclusions as arbitrary and capricious

in violation of the Administrative Procedure Act. 5 U.S.C.

§ 706(2)(A). The Board filed a cross application, asking this

court to enforce its order, and the IAM intervened on the

Board’s behalf. We have jurisdiction under 29 U.S.C. § 160(e),

(f).

II.

We begin with the Board’s finding that Everport was a

successor employer to Marine and Miles’ mechanics and that

it unlawfully refused to recognize their chosen union, the IAM.

It is an “unfair labor practice for an employer … to refuse

to bargain collectively with the representatives of his

employees.” Id. § 158(a)(5). When a business with unionized

employees changes hands, the new owner ordinarily has no

duty to recognize the union that represented the predecessors’

employees: unless rehired, they are not “his employees.” Id.

(emphasis added); see Burns, 406 U.S. at 280 n.5; cf. Howard

Johnson Co. v. Detroit Loc. Joint Exec. Bd., 417 U.S. 249, 261

(1974) (“[N]othing in the federal labor laws requires that an

employer who purchases the assets of a business … hire all of

the employees of the predecessor.”) (cleaned up). But “[i]f the

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new employer makes a conscious decision to maintain

generally the same business and to hire a majority of its

employees from the predecessor,” the employer also inherits

his predecessor’s duty to bargain with the incumbent union.

Fall River Dyeing & Finishing Corp. v. NLRB, 482 U.S. 27, 41

(1987).

A new business owner inherits its predecessor’s duty to

bargain, in other words, if (1) its employees continue to

perform substantially the same work after the handover; (2) the

existing bargaining unit remains appropriate; and (3) “the

majority of its employees were employed by its predecessor.”

Id.; see also Trident Seafoods, Inc. v. NLRB, 101 F.3d 111, 114

(D.C. Cir. 1996). The third requirement can also be satisfied

even where the predecessor’s employees do not constitute a

majority of the successor’s employees. If the Board finds that

antiunion animus distorted its hiring process, “the Board

presumes that but for such discrimination, the successor would

have hired a majority of incumbent employees.” NLRB v. CNN

Am., Inc., 865 F.3d 740, 752 (D.C. Cir. 2017) (cleaned up). By

contrast, if the employer relies on “valid business reason[s]” in

hiring its new workforce, it does not inherit any bargaining

obligation. Love’s Barbeque, 245 NLRB at 81.

Here, the Board found that (1) the Terminal’s mechanics

continued to do substantially the same work after Everport

began directing the Terminal’s operations; (2) a mechanic-

specific bargaining unit remained appropriate; and (3)

Everport’s hiring process was marred by animus towards the

IAM. Everport therefore had a duty to bargain with the

incumbent union, and its refusal to do so was unlawful.

Everport and the ILWU do not contest the Board’s first finding,

but argue that the second and third were arbitrary and

capricious. We agree.

12

A.

In holding that a mechanic-specific bargaining unit

remained appropriate after Everport took over the Terminal’s

operation, the Board arbitrarily ignored its precedents and the

language of the Longshore Contract.

Before any unionization vote can take place, the Board

must determine “the unit appropriate for the purposes of

collective bargaining.” 29 U.S.C. § 159(b). Unit-

appropriateness determinations are fact specific, so we

generally defer to the “broad discretion” of the Board. United

Food & Com. Workers v. NLRB, 519 F.3d 490, 494 (D.C. Cir.

2008). But a “bargaining unit determination will not stand if

arbitrary.” Cleveland Constr., Inc. v. NLRB, 44 F.3d 1010,

1014 (D.C. Cir. 1995).

In successorship cases, the Board presumes that a “change

in ownership should not uproot bargaining units that have

enjoyed a history of collective bargaining unless the units no

longer conform reasonably well to other standards of

appropriateness.” Cadillac Asphalt Paving Co., 349 NLRB 6,

9 (2007) (cleaned up). To rebut that presumption, the new

owner must identify “compelling circumstances sufficient to

overcome the significance of bargaining history,” Cmty. Hosps.

of Cent. Cal. v. NLRB, 335 F.3d 1079, 1085 (D.C. Cir. 2003)

(cleaned up)—for instance, that the existing unit has become

“repugnant to Board policy,” Trident Seafoods, 101 F.3d at 118

(cleaned up).

In this case, Everport told the Board that, as a PMA

member, it was bound by the Longshore Contract’s terms, and

that because the Terminal’s red-circle status had lapsed, it was

obligated to recognize the ILWU as the bargaining

representative of all its employees at the Terminal, mechanics

included. Under Everport’s reading of the Longshore Contract,

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in other words, a mechanic-specific bargaining unit was

“inappropriate as a matter of law.”

If Everport’s interpretation of the Longshore Contract

were correct, the only unit appropriate for the Terminal’s

mechanic workforce was the coastwide one created in

Shipowners and reinforced in subsequent Board decisions. In

Shipowners, the Board determined that a coastwide unit was

appropriate for all longshoremen on the West Coast. See 7

NLRB at 1022–25. As a result of that decision, all PMA

members’ employees who come within the Longshore

Contract’s scope can be represented only by the ILWU.

Furthermore, in PMA, the Board found that, subject to narrow

exceptions, the Longshore Contract’s “clear” terms assign all

mechanic work at PMA-operated terminals to the ILWU. 256

NLRB at 770; cf. Kinder Morgan, 978 F.3d at 642 (concluding

that “the plain language of the [Longshore Contract]

unambiguously assigns to the [ILWU] all [mechanic] work, on

all present and future stevedore cargo handling equipment …

for all PMA members, at all West Coast ports,” subject to the

exceptions inserted in 1978 and 2008). On Everport’s

understanding that the Terminal’s red-circle status had lapsed,

if Everport had recognized a mechanic-specific unit and

continued to bargain with the IAM, it would have violated its

duty under the Longshore Contract to bargain only with the

ILWU’s coastwide unit.

Nevertheless, the Board found that a mechanic-specific

bargaining unit remained appropriate after Everport took over

Terminal operations. To explain this decision, it was necessary

for the Board to answer the objections of Everport and the

ILWU on the merits, particularly as the Board gives

“controlling weight” to the parties’ interpretation of their

collective bargaining agreement. Mining Specialists, Inc., 314

NLRB 268, 268 (1994). The Board, however, refused to

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engage Everport’s reading of the Longshore Contract,

dismissing the question of whether the Terminal remained red-

circled as a “red herring.” Everport, slip op. at 43. Before this

court, the Board again represented that Everport’s obligations

as a PMA member were “irrelevant” to the successorship

question. The Board gave two reasons for this position, but

neither is persuasive.

First, the Board argued that Everport’s PMA membership

was irrelevant because the IAM was “not a party to the PMA-

ILWU Agreement, so it did not agree to [the red-circle]

provisions.” Id. But while the Board ordinarily seeks to keep

intact long-established bargaining units, its precedents require

it to ensure that any established unit “remains appropriate for

the successor employer.” Walden Sec., Inc., 366 NLRB No. 44,

slip op. at 11 (Mar. 23, 2018) (emphasis added). To determine

whether a mechanic-specific unit was appropriate for Everport,

the Board had to analyze whether bargaining with such a unit

would have been consistent with Everport’s obligations under

the Longshore Contract. The Board cannot simply label a

substantial contractual argument a “red herring” in order to

avoid addressing it. Everport, slip op. at 43.

Second, the Board intimated in its order that the Longshore

Contract actually permitted Everport to bargain with a

mechanic-specific unit, irrespective of whether the Terminal

remained red-circled. For instance, it claimed that “[t]he red-

circle language … recognizes that a number of [mechanic]

units were not historically represented by ILWU.” Id. at 41. But

the fact that a number of units were not historically represented

by the ILWU does not support the conclusion that Everport

could bargain with a mechanic-specific unit even if the

Terminal’s red-circle status lapsed. The Longshore Contract

clearly covers mechanics unless a relevant exception applies.

Therefore, only if the Terminal remained red-circled could

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Everport bargain with a mechanic-specific unit, but that was

the question the Board refused to answer.

The Board also sought to rely on the fact that Everport

considered hiring a subcontractor that could retain Marine and

Miles’ mechanics, claiming that such actions were

“contradictory to Everport’s position that the red circle

language no longer applied” after it joined the PMA. Id. at 39.

Everport’s behavior, however, was entirely consistent with its

reading of the Longshore Contract. If Everport had found a

subcontractor to oversee mechanic work at the Terminal, and

if that subcontractor was not a PMA member, then the

subcontractor could potentially have rehired Marine and Miles’

workers and recognized the IAM as their representative. Here

again, the Board’s reason for ignoring Everport’s contractual

obligations was unfounded.

Finally, although PMA held the Longshore Contract

clearly assigns all mechanic work at PMA-operated terminals

to the ILWU, so long as no exception applies, the Board argued

that PMA was not controlling because that case “had no

successorship issues.” Everport, slip op. at 41. The Board

cannot evade its precedents so easily. That the Longshore

Contract’s “clear” terms require PMA members to hire their

mechanics from the ILWU, absent an applicable exception,

was central to the Board’s conclusion in PMA. 256 NLRB at

770. The Board also deflected by arguing that the version of

the Longshore Contract at issue in PMA was “superseded in

2008 with [the] red circle language.” Everport, slip op. at 41.

That is true, but it does not excuse the Board’s failure to assess

whether the Terminal in fact remained red-circled. If the red-

circle status had lapsed before Everport began operations,

Everport would have had a “clear” duty to bargain with the

coastwide ILWU unit. PMA, 256 NLRB at 770. In other words,

without showing why Everport’s reading of the Longshore

16

Contract was in error, the Board could not square its unit-

appropriateness finding with PMA.

In “certify[ing] appropriate bargaining units … the Board

cannot ignore its own relevant precedent but must explain why

it is not controlling.” LeMoyne-Owen Coll. v. NLRB, 357 F.3d

55, 60 (D.C. Cir. 2004) (cleaned up). Here, both Shipowners

and PMA required Everport to recognize the ILWU as the sole

representative of all employees that came within the Longshore

Contract’s scope. The Board could not find that a mechanic-

specific unit was appropriate, therefore, without determining

whether the Terminal’s mechanics were covered by the

Longshore Contract. Because the Board “entirely failed to

consider [that] important aspect of the problem,” its selection

of a mechanic-specific bargaining unit was unreasonable.

Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm Mut.

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

B.

The Board also concluded that Everport’s hiring process

was distorted by animus towards the IAM. That too was

arbitrary.

As explained above, the third prong of the Burns

successorship test is satisfied if the Board finds that a new

employer’s hiring decisions were motivated by antiunion

animus. Love’s Barbeque, 245 NLRB at 82; Cap. Cleaning

Contractors, Inc. v. NLRB, 147 F.3d 999, 1005 (D.C. Cir.

1998). In other words, a new business owner cannot evade the

duty to bargain by refusing to hire its predecessors’ employees

because of their union affiliation. To establish whether a new

employer’s refusal to hire its predecessor’s employees was

driven by antiunion animus, the Board relies on the test set out

in Wright Line, 251 NLRB 1083 (1980). Under Wright Line,

“the General Counsel must [first] make a prima facie showing

17

sufficient to support the inference that protected [union]

conduct was a motivating factor behind the [employer’s

action].” Wendt Corp. v. NLRB, 26 F.4th 1002, 1010 (D.C. Cir.

2022) (cleaned up). “Once a prima facie case has been

established, the burden shifts to the company to show that it

would have taken the same action in the absence of the

unlawful motive.” Ozburn-Hessey Logistics, LLC v. NLRB,

833 F.3d 210, 218 (D.C. Cir. 2016) (cleaned up). If the

employer’s reasons are pretextual, they do not rebut the prima

facie showing of animus. See id. at 219–20.

As prima facie evidence of animus against the IAM, the

Board pointed to two sets of facts. First, it found Everport had

intentionally prioritized job applicants from the ILWU over

those from the IAM in various ways—telling the ILWU about

its vacant mechanic positions before the IAM; interviewing the

ILWU’s candidates before the IAM’s; hiring less experienced

ILWU applicants instead of better qualified IAM ones; and, on

at least one occasion, telling an IAM applicant he could not be

hired because of his union affiliation. Second, the Board found

that Everport had used a secret hiring quota. Based on the

testimony of three IAM-represented applicants, the Board

determined Everport had resolved to give fifty-one percent of

the available mechanic positions to ILWU-represented

applicants and forty-nine percent to Marine and Miles’

employees, so that a majority of its mechanics would be

ILWU-represented. Everport and the ILWU do not contest

these findings.

In response, Everport argued its hiring process was not

discriminatory when properly viewed in light of the Longshore

Contract. In staffing the Terminal, Everport’s “only duty” was

to hire its employees on “a basis other than hostility to a union,”

Sierra Realty Corp. v. NLRB, 82 F.3d 494, 496 (D.C. Cir.

1996), and it must be the case that the requirements of a Board-

18

sanctioned collective bargaining agreement can furnish a non-

discriminatory rationale for a company’s hiring decisions. The

Board did not find, and does not argue, that Everport’s initial

decision to join the PMA was motivated by animus against the

IAM. And as a general matter, the Board conceded that

Everport’s hiring process was “consistent” with the one

required by the Longshore Contract. Everport, slip op. at 18.

Therefore, if Everport’s interpretation of the Longshore

Contract were correct—if the Terminal’s red-circle status had

lapsed, requiring Everport to prioritize mechanic applicants

from the ILWU and fill remaining vacancies through the

Herman-Flynn process—it had a valid business reason for

preferring ILWU applicants over IAM-represented ones.

Nevertheless, the Board explicitly declined to engage with

Everport’s reading of the Longshore Contract. The Board

claimed Everport’s invocation of its contract obligations was

“pretextual,” since it “did not remain neutral” and its “actions

were pro-ILWU.” Id. at 36–37. As evidence of Everport’s bias,

however, the Board pointed to the fact that it followed the

hiring process required by the Longshore Contract. The

Board’s circular conclusion, in other words, was that

Everport’s asserted reason for prioritizing ILWU-represented

job applicants could not be credited because Everport had

prioritized ILWU-represented job applicants. That is not

reasoned decisionmaking.

That leaves the Board’s finding that Everport secretly

employed a hiring quota. Since the Longshore Contract does

not require quota-based hiring, Everport could not justify its

decision to use one by pointing to its PMA membership.3 The

3

The Longshore Contract does not require quotas for hiring

mechanics. Rather, as explained above, it simply obligates PMA

19

Board, however, failed to explain why a finding of animus

towards the IAM necessarily followed from its finding that

Everport used a quota. When viewed in context, it is possible

that Everport adopted the quota in order to discriminate against

the IAM’s applicants. But the opposite conclusion is plausible

too.

The record indicates that Everport more than once

declined to hire qualified ILWU applicants, instead hiring

better-qualified IAM ones.4 The record also shows that

“Everport’s internal documentation [indicated] a preference for

keeping the mechanic units as they existed” before the

handover. Id. at 37. In light of these facts, it is at least possible

that Everport used the hiring quota to hire more of the

Terminal’s incumbent mechanics than the Longshore

Contract’s terms allowed, but not so many as to trigger a clash

for recognition between the ILWU and the IAM. If that were

so, then Everport adopted the quota not from animus towards

the IAM, but to favor IAM applicants in the hiring process.

The Board was required to set out “a rational connection

between the facts found and the choice made.” State Farm, 463

U.S. at 43 (cleaned up). Here, it failed to reasonably explain

why Everport’s quota, viewed in light of the Longshore

Contract, supported an inference of animus against the IAM.

Instead, without explanation, it chose to ignore the substantial

evidence that undercut its conclusion. Cf. Lakeland Bus Lines,

Inc. v. NLRB, 347 F.3d 955, 963 (D.C. Cir. 2003) (holding that

members to exhaust all qualified ILWU applicants before offering

vacancies to any non-ILWU applicant.

4

Although the issue is not before us, we note the ILWU could have

raised a claim that Everport violated the Longshore Contract by

rejecting qualified ILWU applicants in order to hire Marine and

Miles’ former mechanics.

20

the Board’s “clipped view of the record” did not support its

finding that the employer had committed unfair labor

practices). We therefore conclude that “the process by which

the agency reached its judgment was neither logical nor

rational.” Fox v. Clinton, 684 F.3d 67, 80 (D.C. Cir. 2012)

(cleaned up); see also Allentown Mack Sales & Serv., Inc. v.

NLRB, 522 U.S. 359, 374 (1998) (“Not only must an agency’s

decreed result be within the scope of its lawful authority, but

the process by which it reaches that result must be logical and

rational.”).5

***

The Board did not reasonably explain its conclusion that

Everport was a Burns successor with a duty to bargain with the

IAM. Therefore, its finding that Everport unlawfully refused to

bargain with the IAM was arbitrary and must be vacated.

III.

We next address the Board’s finding that Everport

prematurely recognized the ILWU as its mechanics’

representative and that the ILWU unlawfully accepted its

recognition.

In most cases, an employer who recognizes a union before

it employs a “substantial and representative complement of its

projected work force” and is “engaged in normal business

operations” commits an unfair labor practice. Elmhurst Care

Ctr., 345 NLRB 1176, 1177 (2005); see generally Int’l Ladies

Garment Workers’ Union v. NLRB, 366 U.S. 731, 737–40

(1961). Here, the Board found that Everport recognized the

5

For the reasons given in this subsection, the Board’s conclusions

that Everport discriminated against the IAM, and that the ILWU

encouraged it to do so, must also be set aside.

21

ILWU repeatedly throughout the summer and fall of 2015,

before it “employ[ed] any mechanics at the Terminal” or was

“engaged in normal business operations.” Everport, slip op. at

39. Therefore, the Board found that Everport’s recognition of

the ILWU as its mechanics’ representative was premature.

Given the unique bargaining landscape in which Everport

was operating, however, the Board needed to explain its

decision to apply a rigid version of the premature recognition

test to Everport and the ILWU. The Board has long permitted

groups of employers to negotiate with their employees

collectively through multiemployer bargaining units. See

Arbor Constr. Pers., Inc., 343 NLRB 257, 257–58 (2004); cf.

Brown v. Pro Football, Inc., 518 U.S. 231, 240 (1996)

(“Multiemployer bargaining … is a well-established,

important, pervasive method of collective bargaining.”). The

Board has recognized the PMA as the “multiemployer

bargaining association” responsible for negotiating with the

ILWU. ILWU Loc. 19, 266 NLRB 193, 194 (1983). It is

undisputed that because of the Board’s decision in Shipowners,

it is not feasible to operate a West Coast port without joining

the PMA. Finally, all PMA members are required to recognize

the ILWU as their employees’ bargaining representative. See

PMA, 256 NLRB at 770 (“[E]mployers who join the PMA after

the execution of the bargaining agreement are subject to its

terms.”).

If the Board’s rigid view of the premature recognition test

applied in this context, then every employer who joins the

PMA—thereby committing to hire its longshoremen from the

ILWU and to recognize the ILWU as their representative—

commits an unfair labor practice the moment it joins. But that

would make the system of collective bargaining the Board

sanctioned in Shipowners nonsensical and unworkable: a port

operator could not lawfully join the PMA before hiring its

22

workforce and it could not hire a workforce before joining the

PMA. The Board neither acknowledged nor explained this

apparent Catch-22, which is a telltale sign of arbitrary and

capricious agency action. See Advanced Life Sys. Inc. v. NLRB,

898 F.3d 38, 49 (D.C. Cir. 2018) (vacating a Board order that

left the employer “in a Catch-22”).

IV.

Finally, the Board found that Everport committed an unfair

labor practice when it imposed the Longshore Contract’s terms

on the Terminal’s mechanics. For the reasons given above,

neither of the Board’s justifications for this conclusion was

reasonable. First, the Board claimed that Everport lost the right

to set its mechanics’ initial terms and conditions of

employment because it “used a general discriminatory hiring

plan, applicable to all applicants from the predecessor

workforce,” which made it a “perfectly clear” Burns successor.

Everport, slip op. 1 n.4. The Board’s successorship finding was

not reasonably supported, see supra Part II, so its ancillary

finding that Everport was a perfectly clear successor was

arbitrary a fortiori. Alternatively, the Board claimed that the

terms and conditions imposed on the Terminal’s mechanics

were unlawful because they stemmed from Everport’s

premature recognition of the ILWU. Because the Board’s

purported application of the premature recognition test was

unfounded and left Everport in an untenable Catch-22, the

Board’s alternative basis for its decision does not pass muster.

See FCC v. Fox Television Stations, Inc., 556 U.S. 502, 515

(2009) (holding that agencies may not change their policies

“sub silentio”).

23

***

For the foregoing reasons we grant the petitions for

review, deny the Board’s cross application for enforcement,

and vacate the Board’s order.

So ordered.