Petition for Writ of Certiorari — Northern California District Council of Laborers v. Mesa Verde Construction Co.

Supreme Court brief1990

Ask Donna

What actually matters in this document.

Text

Supreme Court US

89-1661 i

ee APR 25 1996

SOL, JR.

CLERK

IN THE

Supreme Court of the United States

OCTOBER TERM, 1989

NORTHERN CALIFORNIA DISTRICT COUNCIL

OF LABORERS, AND

CARPENTERS 46 NORTHERN CALIFORNIA.

COUNTIES CONFERENCE BOARD,

Petitioners,

MESA VERDE CONSTRUCTION Co.,

Respondent.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

VICTOR J. VAN BOURG *

SANDRA RAE BENSON

VAN BourcG, WEINBERG,

ROGER & ROSENFELD

875 Battery Street, 3rd Floor

San Francisco, CA 94111

(415) 864-4000

Attorneys for Petitioners

April, 1990 * Counsel of Record

WILSON - EPES PRINTING Co., INC. - 789-0096 - WASHINGTON, D.C. 20001

@ XE. 00

QUESTIONS PRESENTED

1. Whether the Court of Appeals for the Ninth Circuit

erred in refusing to retroactively apply the decision of

the National Labor Relations Board in Deklewa v. Inter-

national Ass’n of Bridge, Structural and Ornamental

Tron Workers, 282 NLRB No. 184 (1987) contrary to the

Board’s determination and contrary to the determination

of the other Circuits which have considered the question?

2. Whether the decision of the Court below creates an

irreconcilable conflict between the National Labor Rela-

tions Board and the Courts over employee representa-

tion issues normally within the expertise and exclusive

jurisdiction of the National Labor Relations Board?

(i)

LIST OF PARTIES

The parties to the proceedings below and before this

Court are:

1. Northern California District Council of Laborers;

2. Carpenters 46 Northern California Counties Con-

ference Board;

3. Mesa Verde Construction Co.

TABLE OF CONTENTS

Uf gO Ee 2) i Od |

I I ccs ccd epscnnwerapetecercetacsneeeserereuverecuseuaaee

EE eR

da ans ncneasirconnhogucvensunvctnisoreservsions

eet eee BPP V ORV EEL .............-.000..0000-020 EAR OR chase Be

STATEMENT OF THE CASE .....00.00000.02ee eee

REASONS FOR GRANTING THE WRIT .............. pee

I. FAILURE TO APPLY DEKLEWA RETRO-

II.

ACTIVELY WILL RESULT IN INCONSIST-

ENT DECISIONS BEING RENDERED BY

THE N.L.R.B. AND THE COURTS, AND

WILL OVERBURDEN THE FEDERAL

COURT SYSTEM WITH DECISIONS WhICH

SHOULD BE MADE BY THE N.L.R.B. _.........

THE FACTORS SET OUT IN CHEVRON OIL

CO v. HUSON, 404 U.S. 97 (1971) FAVOR

RETROACTIVE APPLICATION OF DEK-

a i AEA ER

A. The Rule Announced in Deklewa Did Not

Overrule Clear Past Precedent or Decide an

Issue of First Impression Whose Resolution

Was Not Clearly Foreshadowed ....................

B. The Equities Favor Retroactive Application

Rad ea CRE ee a

nena pnaececsnciviasrenrvvsenensitoueniowvers

(iii)

TABLE OF AUTHORITIES

Cases: Page

Carpenters Local Union No. 1478 v. Stevens, 743

F.2d 1271, 1278 (9th Cir., 1984), cert. denied,

gt A 4 RRR ee ee rere 10, 12, 19

Chevron Oil Co. v. Huson, 404 U.S. 97 (1971) -....... passim

Contractors, Laborers, Teamsters & Engineers

Health and Welfare Plan v. Associated Wreck-

ing Company, 638 F.2d 1128 (8th —————) ..... 16

Deklewa v. International Association of Bridge,

Structural and Ornamental Iron Workers, Local

3, 282 NLRB No. 184, 124 LRRM 1185 (1987)... passim

Goodman v. Lukens Steel Co., 482 U.S. 656 (1987).. 8

Howard Johnson Co. v. Hotel Employees Union,

riy gia He " & ° Oy. . | | SRAMiekenee neon oneeeenwemennuneEn 8

International Association of Bridge, Structural and

Ornamental Iron Workers v. NLRB, 843 F.2d

770 (3d Cir., 1988), cert. den., 57 U.S.L.W. 3259

I 52a Laces secede tov sareetogtennt mae cone tiert 6, 14, 19, 22

Jim McNeff, Inc. v. Todd, 461 U.S. 260 (1983) _..... 15, 16,

17, 19, 23

John S. Griffith Construction Co. v. United Brother-

hood of Carpenters, 785 F.2d 706 (1986) — _..... 17

Laborers Health and Welfare Trust Fund for

Northern California v. Advanced Lightweight

Concrete Co., Inc., 484 U.S. 539 (1988) ............... 11

Mesa Verde v. Northern Cal. Dist. Council of

Laborers, 861 F.2d 1124 (9th Cir. 1988) (en

oe. A ees pa ubpeueRiis Seomeo ner annua pre =e oat’ nmr en pans oe 2) e

Mesa Verde v. Northern Cal. Dist. Council of

Laborers, 885 F.2d 594 (9th Cir. 1989) ............. 14, 21

Mesa Verde v. Northern Cal. Dist. Council of La-

borers, 598 F. Supp. 1095 (N.D. Cal., 1984) ..... 17

Mitsubishi Motors Corp. v. Solar Chrysler-Plym-

outh, Inc., 473 U.S. 614, 628 (1985) .................... 22

Mo-Can Teamsters Pension Fund v. Creason, 716

F.2d 772, 775 (10th Cir., 1983), cert. denied,

464 U.S. 1045 (1984) ee ES ESR EE PR 16

TABLE OF AUTHORITIES—Continued

Page

N.L.R.B. v. Local Union No. 103, International

Association of Bridge, Structural and Orna-

mental Iron Workers (Higdon), 484 U.S. 335

Eg Stee ene ctr ine hed NOSE NBN We Draade Lt 15

N.L.R.B. v. W. L. Miller Co., 871 F.2d 745 (8th

Cir., 1989) _.... nasaaeases Cermaa cogs dapat nae taRE Lee ata 6, 14

New Mexico District Council of Carpenters v. May-

hew Co., 664 F.2d 215 (10th Cir., 1981) 16

Operating Engineers Pension Trust v. Beck En-

ginecring & Surveying Co., 746 F.2d 557 (9th

| I NTI Fase Ae ee eels 17

R.W. Granger v. Eastern Massachusetts Carpen-

ters, 686 F. Supp. 22 (D. Mass., 1988) 19

S.E.C. v. Chenery Corp., 332 U.S. 194 (1947),

rehg. denied, 332 U.S. 783 (1947) 19

San Diego Building Trades Council v. Garmon, 359

Wikis Se DEWOE ccc le, Pe en 8

Shearson-American Express, Inc. v. McMahon, 482

US. , 96 L. Ed. 24 185 (1987) ..................... on

South Prairie Construction Co. v. Local 627,

1.U.0.E., 425 U.S. 800 (1976), supplemented,

231 N.L.R.B. No. 13, 95 L.R.R.M. 1510 (1977).. 9, 10,

United Brotherhood of Carpenters v. Endicott

Enterprises, Inc., 808 F.2d 918 (1986) __. Rabat ae 17

Statutes:

Employee Retirement Income Security Act, as

amended, § 515, 29 U.S.C. $1145 (1982) 8,9

Labor-Management Relations Act, as amended,

S901, FP USL. 6306... 8,11, 16

National Labor Relations Act, as amended:

§ 2(d), 29 U.S.C. § 152(d) Se ae eeactea doy eee

§$ 8(b) (7) (C), 29 U.S.C. § 158 (b) (7) (C)... 15

SOtt) Seu ac. 6 eee) ......... fe passim

5.30, SP OB. © MRE ooo 17

TABLE OF AUTHORITIES—Continued

Legislative History:

126 Cong. Rec. 23039 and 23288 (1980) ............. aaa

Publications:

“Federal Court Watch, Criminal Case Load Brings

New Tenor,” Legal Times, April 2, 1990, p. 7....

IN THE

Supreme Court of the United States

OCTOBER TERM, 1989

No.

NORTHERN CALIFORNIA DISTRICT COUNCIL

OF LABORERS, AND

CARPENTERS 46 NORTHERN CALIFORNIA

COUNTIES CONFERENCE BOARD,

= Petitioners,

MESA VERDE CONSTRUCTION Co.,

Respondent.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

The Northern California District Council of Laborers

(hereinafter “Laborers Union’) and the Carpenters 46

Northern California Counties Conference Board (here-

inafter “Carpenters Union”) respectfully pray that a

Writ of Certiorari issue to review the Order and

Amended Opinion of the United States Court of Appeals

for the Ninth Circuit entered in this proceeding on Jan-

uary 26, 1990.

OPINIONS BELOW

The Order and Amended Opinion of the United States

Court of Appeals for the Ninth Circuit after remand

from the en banc Court (Appendix A, infra) is reported

at 885 F.2d 594. The Opinion of the en banc Court (Ap-

pendix B, infra) filed November 15, 1988 is reported at

861 F.2d 1124. The Opinion of the original three judge

panel of the United States Court of Appeals for the

Ninth Cireuit (Appendix C, infra) filed June 23, 1987

is reported at 820 F.2d 1006. The Decision of the United

States District Court for the Northern District of Cal-

ifornia (Appendix D, infra) nied December 138, 1984 is

reported at 598 F. Supp. 1092. The Order of the United

States District Court for the Northern District of Caii-

fornia denying the Motion for Alteration, Amendment or

Vacation of Order ‘Appendix E, infra) filed February

11, 1985 is reported at 602 F. Supp. 327.

JURISDICTION

The Judgment and Opinion of the original three judge

panel of the United States Court of Appeals for the

Ninth Circuit was entered on June 23, 1987. A timely

Petition for Rehearing and Suggestion for Rehearing ’n

Banc was filed and granted. The Decision of the en banc

Court reversing the earlier Opinion and remanding the

case to the three judge panel to determine the question of

retroactivity was filed on November 15, 1988. The Deci-

sion of the three judge panel after remand was filed on

September 13, 1989. A timely Petition for Rehearing

and Suggestion for Rehearing En Banc was filed on Sep-

tember 27, 1989. On January 26, 1990, the Petition for

Rehearing was denied, and the Suggestion for Rehearing

En Bane was rejected, and the Order of the three judge

panel was amended. The jurisdiction of this Court is in-

voked under 28 U.S.C. § 1254/1). This Petition is timely

filed with this Court under 28 U.S.C. § 2101(c¢).

STATUTES INVOLVED

The relevant statutory provisions are:

A. National Labor Relations Act, as amended, Section

8(f), 29 U.S.C. § 158 (f).

B. Labor-Management Relations Act of 1947, as

amended, Section 301, 29 U.S.C. § 185.

Pertinent portions of these statutory provisions are

reproduced at Appendix F, infra.

STATEMENT OF THE CASE

The Northern California District Council of Laborers

and the Carpenters 46 Northern California Counties Con-

ference Board are labor organizations within the meaning

of the National Labor Relations Act of 1947, as amended

(hereinafter “NLRA”), 29 U.S.C. § 152/(d). They exist

in whole or in part for the purpose of negotiating and

entering into collective bargaining agreements on behalf

of themselves and their constituent members.

Mesa Verde Construction Company is an employer

primarily engaged in the construction industry within

the meaning of § 8(f) of the NLRA, 29 U.S.C. § 158(f).

In 1979 Mesa Verde entered into its first collective

bargaining agreement with the Laborers Union and

signed an additional collective bargaining agreement with

the Laborers Union on June 26, 1980. The contract was

to remain in effect until June 15, 1983 and would con-

tinue in effect from year to year thereafter absent timely

termination under the termination mechanism provided

in the agreement. On November 17, 1982, Mesa Verde

and the Laborers Union agreed in writing that their

1980 contract would continue in effect until June 15,

1986.

Mesa Verde first entered into a collective bargaining

agreement with the Carpenters in August, 1979. Through

a subsequent agreement executed in June, 1980, Mesa

Verde accepted the new June 16, 1980 to June 15, 1983

Carpenters Master Agreement. On September 8, 1982,

Mesa Verde and the Carpenters entered into an early

extension of the agreernent to June 15, 1986, the quid

pro quo for such extension being certain concessions by

the union limiting wage increases and providing more

flexible working conditions for Mesa Verde. The Car-

penters’ agreement, like the Laborers’ Agreement, also

contained a termination mechanism.

Both of the collective bargaining agreements contained

arbitration provisions. The Laborers agreement provided

for arbitration, with certain limited exceptions, of “any

dispute concerning the interpretation or application of

the agreement.”’ The Carpenters agreement provided for

arbitration of “{a]ny dispute concerning the relationship

of the parties, any application or interpretation of this

Agreement.”

Despite the fact that the agreements with both unions

were to remain in effect until June 15, 1986, Mesa Verde,

by way of letters, informed the unions of its intent to

abrogate or repudiate its collective bargaining agreements

in May of 1984. At the time of this abrogation, or

repudiation, Mesa Verde was working on a project in

Hercules, California, at which it employed members of

both unions. In late May or early June of 1984, Mesa

Verde began work on another project employing non-

union workers in contravention of the collective bargain-

ing avreements. Both unions filed grievances against

Mesa Verde and requested arbitration over Mesa Verde’s

contractual obligations on the new project.

Mesa Verde brought suit against both unions seeking

a declaratory judgment that it need not comply with the

agreements with respect to projects begun after its re-

pudiation in May. 1984. The District Court stayed the

arbitrations pending resolution of the declaratory judg-

ment action and later granted Mesa Verde summary

judgment against both unions. The Court held that the

collective bargaining agreements at issue were “pre-hire”’

agreements authorized by § &(f) of the N.L.R.A. and that

Mesa Verde’s May, 1984 letters were sufficient to effec-

tively repudiate the agreements.

The unions appeaied the decision to the Ninth Circuit

Court of Appeal. While the appeal was pending, the Na-

tional Labor Relations Board (hereinafter “the Board’’)

decided the ease of Deklewa v. International Association

of Bridge, Structural and Ornamental Iron Workers, Lo-

cal 3, 282 NLRB No. 184, 124 LRRM 1185 (1987).

In Deklewa, the Board solicited argument and comment

from the parties and from amici curiae across the coun-

try as to the continued viability of the “repudiation doc-

trine.” The Board noted that the law concerning the

repudiation doctrine was ‘unsettled and confusing” and,

as a result, “both labor and management across the coun-

try were generally united in the desire for changes in

existing 8(f) law.” (Dekiewa, supra, 124 LRRM at

1198). As a result, the Board held that employers may

not repudiate pre-hire collective bargaining agreements

authorized by § 8(f) of the NLRA during their term

absent a Board-conducted election in which the majority

of the employees vote to decertify their union. In addi-

tion, the Board ruled that Deklewa should be applied

retroactively to all cuses. (Jd. at 1198)

The original panel decision in the instant case affirmed

the Judgment of the District Court, but invited the

Unions to file a Petition for Rehearing En Bane to con-

sider whether the rujie enunciated by the Board in

Dellewa saould be adopted as the law of the Circuit and

applied to actions brought under § 301 of the Labor-

Management Relations Act (29 U.S.C. $185). A Peti-

tion for Rehearing En Pane was timely filed and granted.

The en bane Court exhaustively reviewed the Board’s

decision in Dekiewa and the legislative history of § 8(f)

of the N.L.R.A. and determined that the rules enunciated

in Deklewa better served the policies of labor stability

and employee free choice. Thus, the en bane Court

adopted the rule in Deklewa_as the law of the Ninth Cir-

cuit, but did not reach the issue of whether Deklewa

should be applied retroactively. Rather, the en banc

Court remanded the case to the original three judge

panel to determine, under the factors set out in Chevron

Oil Co. v. Huson, 404 U.S. 97 (1971), whether Deklewa

should be applied retroactively.

In the meantime, the Third Circuit and the Eighth

Circuit, both of which were considering the same issue,

ruled, as did the N.L.R.B., that Deklewa should be ap-

plied retroactively. See, International Association of

Bridge, Structural and Ornamental Iron Workers v.

NLRB, 843 F.2d 770 (3d Cir. 1988), cert. den., 57

U.S.L.W. 3259 (1989) and NLRB v. W.L. Miller Co.,

871 F.2d 745 (8th Cir., 1989). However, the Ninth Cir-

cuit panel here issued a split decision refusing to apply

Deklewa retroactively, thereby creating a conflict in the

circuits and a conflict with the Board.

REASONS FOR GRANTING THE WRIT

As a result of the decision below, there is a conflict in

the Circuits concerning retroactive appreciation of Dek-

lewa. As a result of this conflict, there are scores of

eases in the federal courts which have been stayed pend-

ing the outcome of this case. This conflict in the circuits

can only be resolved by this Court’s plenary review.

At issue is whether the Federal Courts are to be

burdened for many years to come litigating the complex

questions involved in repudiation issues, or whether these

issues will be determined by the N.L.R.B., the expert

agency vested by Congress with the authority to deter-

mine collective bargaining representation issues. It is

common knowledge that the federal courts are facing

a crisis situation. Many of the federal courts through-

out the nation cannot even try civil cases because their

dockets are so crowded with criminal actions. See, e.g.,

“Federal Court Watch Criminal Case Load Brings New

Tenor,” Legal Times, April 2, 1990, p. 7. As a result

of the Ninth Circuit’s decision in this case, those same

dockets are now being overcrowded with employee repre-

sentation issues, issues which should properly be resolved

by the N.L.R.B., not the courts.

Because the decision conflicts with the N.L.R.B.’s retro-

active application of the rule enunciated in Deklewa, the

Ninth Circuit’s decision fosters forum shopping and in-

consistent rulings between the Board and the courts.

Since labor stability is an issue of national concern, this

case affects a rule of national significance where there

is an overriding need for uniform application of the

nation’s labor laws.'

If Deklewa is not applied retroactively, the rule enun-

ciated therein will be emasculated and will become a

nullity. The decision in this case places a legal cloud

over all pre-hire agreements entered into prior to the

Deklewa decision, and severely undermines the objectives

of labor stability and employee free choice which the

N.L.R.B. sought to achieve in the Deklewa decision.

Moreover, this is not a problem which will cease to exist

in a few years. Rather, as a result of the decision here,

every pre-hire agreement entered into prior to the

Deklewa decision will be vulnerable indefinitely to a re-

pudiation defense.

The Ninth Circuit decision contains three fundamental

errors. First, the Court did not address the need for

uniform application of the nation’s labor laws and the

need for labor stability, both of which will be under-

mined by conflicting decisions between the courts and the

N.L.R.B. Second, the Court confused the “right” to re

pudiate with the ‘proper method” to effectuate such a

repudiation and, therefore, misapplied the Chevron fac-

tors resulting in a conflict in the circuits. Third, the

Court misapplied the equities in this case by rewarding

employers who chose to risk repudiating agreements by

means other than that provided for in the statute, and by

penalizing employees who, through no fault of their own,

were denied the opportunity to vote in Board-conducted

elections. Only by plenary review by this Court cai these

problems be rectified.

! Petitioners respectfully urge the Court to invite the filing of an

amicus brief by the National Labor Relations Board to aid the

Court in its consideration of this Petition since the decision below

will have an impact on the N.L.R.B. The N.L.R.B. appeared as an

amicus curiae in this case before the en bane Court.

I. FAILURE TO APPLY DEKLEWA RETROAC-

TIVELY WILL RESULT IN INCONSISTENT DE-

CISIONS BEING RENDERED BY THE N.L.R.B.

AND THE COURTS, AND WILL OVERBURDEN

THE FEDERAL COURT SYSTEM WITH DECI-

SIONS WHICH SHOULD BE MADE BY THE

N.L.R.B.

Only by applying Deklewa retroactively can uniform

application of the nation’s labor laws be assured. In San

Diego Building Trades Council v. Garmon, 359 U.S. 236

(1959), this Court made clear that when an activity is

“arguably subject to $7 or $8 of the Act” the states

“as well as the federal courts” must “defer to the exclu-

sive competence of the N.L.R.B. if the danger of interfer-

ence with national policy is to be averted.” /d. at 245).

In addition, this Court has noted that in § 301 lawsuits,

the Courts are to enforce collective bargaining agreements

in accordance with the federal labor policies developed by

the Board. Howard Johnson Co. v. Hotel Employees

Union, 417 U.S. 249, 256 (1974). Moreover, the usual

rule is that cases are to be decided in accordance with

the law at the time of the decision. Goodman v. Lukens

Steel Co., 482 U.S. 656 (1987).

Because the Ninth Circuit has refused to follow the

federal labor policy developed by the Board with respect

to retroactive application of Deklewa, the scarce judicial

resources of the courts and the resources of the litigants

are being overburdened with litigation concerning re-

pudiation issues. In an overwhelming number of cases

where a union files a Petition to Compel Arbitration, or

a Petition to Confirm an Arbitration Award, or where

an employee benefit trust fund files an action to collect

delinquent trust fund contributions, the employer raises

majority support as a defense.* Once such a defense is

2In the context of an action for delinquent trust fund contribu-

tions, even permitting the issue to be raised by way of defense is

antithetical to the legislative history of § 515 of the Employee Re-

raised, the judicial resources of the courts and the re-

sources of the litigants are diverted from considering the

case on the merits to making bargaining unit and ma-

jority support determinations, representation questions

which, under the primary jurisdiction doctrine, should

properly be resolved by the N.L.R.B., not by the courts.

See e.g., South Prairie Construction Co. v. Local 627,

I.U.0.E., 425 U.S. 800 (1976).

Moreover, failure to apply Deklewa retroactively in

the § 301 context will simply increase the “morass of con-

fusing evidentiary problems” which led to the “fractious

litigation” that the Board and the Ninth Circuit Court

en banc sought to eliminate by adopting Deklewa’s non-

repudiation rule. As the en banc Court noted here, deter-

mining repudiation issues involves a multitude of evi-

dentiary problems. Mesa Verde Construction Co. v.

Northern Cal, Dist. Council of Laborers, 861 F.2d 1124,

1133-34 (9th Cir. 1988) (en banc). Indeed, the Board’s

recognition of the inherent litigation difficulties in deter-

mining repudiation issues was one of the primary rea-

sons for adopting the rule announced in Deklewa. The

Board noted that the pre-Deklewa rule gave rise to seri-

ous practical problems dealing with the reliability and

relevance of evidence. The determination required that

the trier of fact “ ‘look back’ any number of years into

a relationship characterized by sporadic and shifting em-

ployment patterns to determine whether the union, at

any time, enjoyed majority support.” (Deklewa, supra,

124 L.R.R.M. at 1193). The Board pointed out that the

documentary evidence of such factors “is often incom-

tirement Income Security Act, as amended, 29 U.S.C. § 1145 (1982).

The comments of Representative Thomas and Senator Williams in

the legislative history of § 515 demonstrate Congressional disap-

proval of courts allowing employers to raise the defenses of union

majority status and repudiation in actions for the collection of un-

paid trust fund contributions. See 126 Cong. Rec. 23039 and 23288

(1980),

plete, contradictory or unavailable.” (Jd.) These prac-

tical difficulties are “compounded when unit determina-

tion questions arise” because the appropriate bargaining

unit must be determined before a ruling can be made

on the effectiveness of the repudiation. (Jd. at 1193

n.37).

In view of the Ninth Circuit’s decision, the courts will

have to deal with all of the evidentiary problems which

the Board, after many years of administering the re-

pudiation doctrine, determined were overwhelming and

not manageable. Thus, in all future cases where repu-

diation is raised, the Courts will have to determine:

1. Whether the Union attained majority status

within an appropriate unit; *

2. Whether the appropriate unit is a single-employer

unit or whether the unit has merged into a multi-

employer unit; *

3. Whether the agreement converted from a § 8(f)

agreement into a § 9(a) agreement; * and

4. Whether the employer hired on a job-site-by-job-

site basis or on a permanent and stable basis."

3 Bargaining unit determinations, however, are within the pri-

mary jurisdiction of the N.L.R.B., not the courts. South Prairie

Construction Co. v. Local 627, 1.U.0.E., 425 U.S. 800 (1976), supple-

mented, 231 N.L.R.B. No. 13, 95 L.R.R.M. 1510 (1977); Carpenters

Local Union No. 1478 v. Stevens, 743 F.2d 1271, 1278 (9th Cir.,

1984).

4 The N.L.R.B., however, has abolished the merger doctrine which

was a Board-created doctrine. See Deklewa, 124 L.R.R.M. At 1187,

1192 n.30, 1194 n.42.

5 The conversion doctrine which was also a Board-created doctrine

has likewise been abolished by the N.L.R.B. See Deklewa, 124

L.R.R.M. at 1192.

6 The N.L.R.B. has also abolished the job-site-by-job-site versus

permanent and stable distinctions. See, Deklewa, 124 L.R.R.M. at

1191, 1194.

As a result of the Ninth Circuit’s decision, the courts

will for years to come be required to litigate and deter-

mine all of these issues based on Board-created doctrines,

all of which have been abolished by the Board. In Dek-

lewa, the Board noted that if it were to apply the non-

repudiation doctrine prospectively only, “we would then

be required for an indefinite period of time to perpetuate

the administrative and litigational difficulties entailed in

application of arcane current law to all pending &(f)

cases.” Deklewa, supra, 1124 L.R.R.M. at 1198. As a

result of the Ninth Circuit’s decision, the Courts will in-

definitely face that identical problem in § 301 actions.

Such a result places a cloud over all pre-hire agree-

ments entered into prior to Dek/ewa, and severely under-

mines the objective of labor stability which the N.L.R.B.

sought to achieve in the Deklewa decision.

Moreover, since the N.L.R.B. has determined that it

will apply Deklewa retroactively and the Ninth Circuit

has decided it will not, the result obtained in any par-

ticular case will now depend entirely on the forum

chosen, and the gual of uniformity in the enforcement

of our labor laws will be seriously undermined.

In view of the decision below a substantial risk of

inconsistent decisions between the Courts and the Board

has arisen. Two divergent lines of cases necessarily will

emerge-——one from the N.L.R.B. and one from the Courts

—with diametrically opposed results. For instance, in

Laborers’ Health and Welfare Trust Fund for Northern

California v. Advanced Lightweight Concrete Co., Inc.,

484 U.S. 539 (1988), this Court held that federal courts

do not have jurisdiction to entertain an action by an

employee benefit trust fund to collect delinquent contri-

butions post-contract termination. Rather, this Court

held that such issues must be determined by the N.L.R.B.

Therefore, any time an employee benefit trust fund

files an action to collect delinquent contributions and

the employer raises repudiation as a defense, the trust

fund will file an unfair labor practice charge before

the N.L.R.B. In that situation, two separate actions

will be pending simultaneously before the N.L.R.B. and

the Court. The Board, applying Deklewa retroactively,

will find the employer bound to the agreement. The

Court, refusing to apply Deklewa retroactively, on the

same set of facts, will find the same employer not bound

to the agreement. Under these circumstances, which

decision will prevail? The Ninth Circuit’s decision did

not even address this issue, let alone answer this

question,

Petitioner submits that under the primary jurisdic-

tion doctrine, the Board’s decision would prevail since

determination of the “appropriate bargaining unit” is

crucial to resolving a repudiation claim. See, e.g., Car-

penters Local Union No. 1478 v. Stevens, 743 F.2d 1271,

1278 (9th Cir., 1984), discussing the “primacy” of the

Board’s authority under Section 9 of the N.L.R.A (29

U.S.C. § 159) over representation questions.

If the Board’s decision would prevail, then the entire

litigation of the repudiation issue before the District

Court becomes an exercise in futility, not justifying the

imposition on the Court’s scarce judicial resources.

Additionally, inconsistent decisions between the Board

and the Courts will result in inconsistent rights and obli-

gations. The parties will never fully be sure of their

rights and obligations under the agreement. The em-

ployees, likewise, will not know for sure whether they

are or are not entitled to union wages and fringe bene-

fits, or whether they are or are not protected by the

grievance procedure. This confusion will disserve the

national interest of labor stability and uniform appli-

cation of the nation’s labor laws, resulting in chaotic

labor relations in the construction industry. Only by

uniformly applying one set of laws and rules can

this situation be avoided. Since the N.L.R.B. is the

expert agency created by Congress to interpret the stat-

ute, and since all courts which have considered the

question agree that the Board’s interpretation in Dek-

lewa better serves the statutory objectives, the Board’s

interpretation concerning retroactive application of Dek-

lewa should prevail.

Il. THE FACTORS SET OUT IN CHEVRON OIL CO.

v. HUSON, 404 U.S. 97 (1971) FAVOR RETROAC-

TIVE APPLICATION OF DEKLEWA.

In Chevron Oil Co. v. Huson, 404 U.S. 97 (1971), this

Court set out the three factors which must be considered

in determining that a new rule of law will be applied

prospectively only and will not be given retroactive effect.

In order for the decision to be applied prospectively only

the decision 1) must establish a new principle of law,

either by overruling clear past precedent on which liti-

gants may have relied or by deciding an issue of first

impression whose resolution was not cleariy foreshadowed;

2) the court must weigh the merits of the case and de-

termine whether retroactive application will further or

retard the application of the rule; and 3) the court must

determine whether retroactive application will produce

substantial inequitable results. (Jd. at 106-107). As

demonstrated supra, failure to apply Dek/ewa retroac-

tively retards rather than furthers the objectives of the

rule. As applied here, each of the remaining factors like-

wise favors retroactive application of Deklewa.

A. The Rule Announced in Deklewa Did Not Overrule

Clear Past Precedent or Decide an Issue of First

Impression Whose Resolution Was Not Clearly

Foreshadowed.

The Ninth Circuit acknowledged in this case that its

decision not to apply Deklewa retroactively would result

in a conflict in the circuits; however, it determined that

it would not follow the lead of the Eighth Circuit, the

Third Circuit and the Board because it believed that

Deklewa had overruled clear past precedent on which

Mesa Verde had relied in iepudiating the agreement.

While the Court acknowledged that “neither the Su-

preme Court nor this Court had specifically addressed the

proper method of repudiation” at the time Mesa Verde

purported to repudiate the agreements (Mesa Verde Con-

struction Co. v. Northern Cal. Dist. Council of Laborers,

885 F.2d 594, 596-97 (9th Cir. 1989), it nevertheless

held that Mesa Verde had relied on its ‘undoubted right”’

to repudiate. This, however, does not resolve the issue of

whether Mesa Verde’s reliance upon that “right” was

justified. Although the right to repudiate may have been

“undoubted” prior to Deklewa, that right was never

“absolute.” Therefore, the method of repudiation is crit-

ical. The question was not, as the Ninth Circuit phrased

it, whether Mesa Verde properly relied upon a “right to

repudiate” but, rather, whether Mesa Verde properly re-

lied upon the method it chose to attempt the repudiation.

Section 8(f) was added to the Act in the 1959 amend-

ments in an attempt to accommodate the needs of both

labor and management in the construction industry. The

purpose in enacting § 8if) was to legitimize pre-hire

agreements which were prevalent in the construction in-

dustry, and which were required as a result of the unique

characteristics of that industry. The primary charac-

teristic of the construction industry is, of course, the

sporadic employment patterns. As the Board in Deklewa

noted, the legislative history of $ 8(f) demonstrates that

Congress intended by the enactment of § 8/f) to legiti-

mize and make enforceable the array of construction in-

dustry bargaining, referral, hiring and employment prac-

tices which were prevalent in the industry. (Deklewa,

supra, 124 L.R.R.M. 1191). The legislative history of

‘ 8(f) contains no hint that Congress intended to create

a right to repudiate the very type of agreement which

Congress was specifically legitimizing. ( /d.)‘

7The Board’s reading of the legislative history of §&8(f) was

accepted by the Third Circuit in International Association of Tron

Workers v. N.L.R.B., supra, the Fighth Cireut in N.L.R.B. v. W.L.

Miller Co., supra, and the Ninth Circuit en bane in the instant case.

In N.L.R.B. v. Local Union No, 103, International As-

sociation of Bridge, Structural and Ornamental Iron

Workers (Higdon), 484 U.S. 335 (1978), this Court up-

held the Board’s interpretation of the repudiation doc-

trine. The Court’s opinion in Higdon was based on def-

erence to the Board’s expertise in construing the Act.

Thus, Justice White emphasized that “|wle have con-

cluded that the Board’s construction of the Act, although

perhaps not the sole feasible one, is an acceptable reading

of the statutory language and a reasonable implementa-

tion of the purposes of the relevant statutory section.”

(Higdon, supra, 484 U.S. at 341). Higdon dealt with the

sole question of whether a union violated § 8(b) (7) (C)

of the Act (29 U.S.C. § 158(b)(7)(C) when it picketed

to enforce a pre-hire agreement.” Higdon dealt only with

statutory rights and obligations enforced via the

N.L.R.A., not with contractual rights and obligations en-

forced via § 301 of the L.M.R.A.

In Jim MeNeff, Inc. v. Todd, 461 U.S. 260 (1983), this

Court made that point clear by noting that there is “a

critical distinction between an employer’s obligations

under the Act to bargain with the representative of the

majority of its employees and its duty to satisfy lawful

contractual obligations that accrue after it enters into a .

pre-hire contract. Only the former obligation was treated

in Higdon.” (Id. at 267)

Section 8(f) on its face speaks of only one method of

terminating the collective bargaining relationship—that

is by a Board-conducted election in which a majority of

the employees vote to decertify the union. Prior to Dek-

lewa being decided, that was the only cwuaranteed method

by which the relationship could be terminated. In Mce-

Neff, this Court unequivoeally held that pre-hire agree-

* Section 8(b)(7)(C) prohibits “recognitional” picketing beyond

a “reasonable time” without filing a petition for an election with

the NLRB under § 159(c) of the NLRA.

ments authorized by § 8(f) are binding agreements fully

enforceable under § 301 of the L.M.R.A., 29 U.S.C. § 185.

Moreover, in McNeff, this Court specifically declined to

determine what method would be required to effectively

repudiate a pre-hire agreement, but noted that it may

well be necessary to “precipitat{e] a representational

election pursuant to the final proviso in § 8(f) that shows

the union does not enjoy majority support” (/d., at

207 n. 11). That is exactly what the Board determined

is necessary in Deklewa.

Thus, the proper method by which a $ 8(f) agreement

could be repudiated was strongly in doubt. Indeed,

whether or not a Court could even consider the issue of

repudiation in a § 301 action was in doubt.

In Contractors, Laborers, Teamster & Engineers Health

and Welfare Plan v, Associated Wrecking Company, 638

F. 2d 1128 (&th Cir., 1981), the Eighth Circuit stated:

“Local 103 (Higdon) held that an employer does

not commit an unfair labor practice for breach of

its duty to bargain by unilaterally abrogating a pre-

hire agreement with a labor union that never ob-

tains majority support. It does not necessarily fol-

low, however, that the absence of majority status

leaves the union without a remedy for breach of

contract on any provision of the $ 8(f) agreement.

To say that an employer may challenge the majority

status of a union in an unfair labor practice pro-

ceeding is not to say that the employer may assert

the union’s lack of majority status as a defense in

a breach of contract action on a type of contract

specifically authorized by the Act.” (/d., at 1133)

(emphasis the Court’s).°

» Accord, New Mevico District Council of Carpenters v. Mayhew

Co., 664 F.2d 215, 219-220 (10th Cir., 1981); see also Mo-Can

Teamsters Pension Fund v. Creason, 716 F.2d 772, 775 (10th Cir.,

1983) (“If the employer believed that the union did not represent

a majority of his employees, his proper recourse was before the

N.L.R.B. Lack of majority status can only be challenged in an

In fact, at the time Deklewa was decided, the Ninth

Circuit itself did not have a clear line of cases upon

which an employer could have relied as to the proper

method of repudiating a pre-hire agreement. See, e.v.,

Operating Engineers Pension Trust v. Beck Enqineer-

ing & Surveying Co., 746 F.2d $57 (9th Cir. 1984)

(N.L.R.B. has exclusive jurisdiction over repudiation

issues except where the unit at all times was a single

employee unit over which the Board would not assert

jurisdiction) ;'" Mesa Verde v. Northern Cal. Dist. Coun-

cil of Laborers, 598 F. Supp. 1095 (N.D. Cal., 1984)

(Letters sufficient to constitute repudiation); John S.

Griffith Construction Co. v. United Brotherhood of Car-

penters, 785 F.2d 706 (9th Cir. 1986) (Exhaustion re-

quirement whereby employer must file Petition with the

N.L.R.B. and the N.L.R.B. must decline to assert juris-

diction prior to proceeding to Court); and United Broth-

erhood of Carpenters v. Endicott Enterprises, Inc., 808

F.2d 918 (9th Cir. 1986) (Open and notorious breach of

the agreement as to which union and employees have ac-

tual notice sufficient to repudiate. )

In addition to the lack of any clear line of cases which

would establish the proper method for repudiating, the

“right” to repudiate prior to Deklewa was never absolute.

Under pre-Deklewa law. once a union attained majority

status, that is, represented the majority of the employees

in an appropriate bargaining unit, the pre-hire agreement

“converted” into a standard § 91a) (29 U.S.C. § 159(a))

collective bargaining agreement which was no loneer

capable of repudiation. McNeff, supra, 461 U.S. 260, 271

unfair labor practice proceeding, over which the N.L.R.B. has

exclusive jurisdiction.” ).

1 Indeed, at the time Mesa Verde “repudiated” the agreements,

Beck Engineering was the law of the Circuit. Sinee it was undis-

puted that Mesa Verde never employed only a “single employee

unit,” Mesa Verde could not have reasonably relied upon Beck to

justify its repudiations.

(1983). In adopting Deklewa as the law of the Circuit,

the Ninth Circuit Court en banc noted that under the

co: .ersion doctrine, a pre-hire agreement could be con-

verted to a standard collective bargaining agreement at

any time from several days to some years after the pre-

hire agreement was negotiated. Mesa Verde, supra, 861

F.2d at 1133. Conversion could even occur immediately

upon adoption of the pre-hire agreement. (/Jd.) More-

over, conversion could occur without a majority of the

unit’s employees ever voting to accept a bargaining rep-

resentative (Jd. at 1134) and without the parties even

being aware that a conversion had taken place. Thus, this

“undoubted right” to repudiate could cease to exist at any

point during the collective bargaining relationship. As a

result of the conversion doctrine, the only sure method

of effecting a repudiation was by way of a Board-con-

ducted election.

The Board, in determining to apply Dellewa_ retro-

actively, specifically addressed whether employers had a

legitimate reliance interest in attempting to repudiate

pre-hire agreements by methods other than precipitating

a Board-conducted election, and determined that they did

not. The Board acknowledged that during the pre-

Deklewa period the law was “unsettled and confusing.”

Deklewa, 124 L.R.R.M. at 1198). In discussing the past

cases upon which employers may have relied, the Board

noted:

The interest which is entitled to protection is the

ability of an employer to avail itself of the Board

processes to determine whether there is continued

majority support to undergird the union and the

agreement. The new rule, which affirms the Boarad’s

election procedures for resolving that issue, does not

seriously detract from what an employer should ap-

propriately expect in the way of protection under

the old rule. (Jd. at 1198 n.61) (emphasis added).

Finally, not only was the proper method of repudiation

unclear prior to Deklewa but, more important, the rule

in Deklewa was clearly foreshadowed. This Court in

McNeff suggested that there may be “considerations prop-

erly cognizable by a Court under § 301 which might pre-

vent a party in particular circumstances from exercising

its option under § 8(f) to repudiate a pre-hire agreement

before the union demonstrates majority status.” McNeff,

461 U.S. at 271 n.13) (emphasis added).'' That state-

ment clearly put all parties on notice that they could not

justifiably rely upon any perceived “absolute right’ to

repudiate pre-hire agreements in mid-term by any

method other than that specifically provided for in the

statute, namely, a Board-conducted election. See N.L.R.B.

v. Miller Co., 871 F.2d 745 (8th Cir. 1989) (upholding

the Board’s retroactive application of Deklewa and point-

ing out that the prior rule permitting repudiation had

“twice been rejected by the District of Columbia Circuit”

and had been “sharply questioned by the Third Circuit”) ;

International Association of Bridge, Structural and Or-

namental Iron Workers, Local 3 v. N.L.R.B., 843 F.2d

770, 780 n.12 (3d Cir., 1988), cert. den., 57 U.S.L.W.

3529 (1989) (affirming retroactive application of Dek-

lewa and noting that retroactive application would be

appropriate under the tests in either S.E.C. v. Chenery

Corp., 332 U.S. 194 (1947) or Chevron v. Huson, 404

U.S. 97 (1971)); See also, RW. Granger v. Eastern

Massachusetts Carpenters, 686 F. Supp. 22 (D. Mass.,

1988) (applying Deklewa retroactively on the ground that

11 Petitioners submit that this statement is a reference to the

primary jurisdiction doctrine which vests primary jurisdiction in

the N.L.R.B. over bargaining unit and representation matters. See,

South Prairie Construction Co. v. Local 627, 1.U.0.E., 425 U.S. 800

(1976); Carpenters Local Union No. 1478 v. Stevens, 743 F.2d

127i, 1278 (9th Cir., 1984). Bargaining unit determinations and

representation issues are at the heart of determining whether or

not a union has obtained majority status within an appropriate

bargaining unit.

no manifest injustice would occur because the employer’s

reliance was not without risk and “at the time Granger

repudiated the 1986-1989 collective bargaining agreement

there was a substantial risk that the union may have

obtained majority status.”’)

In view of the fact that the “proper method’’ for re-

pudiation was unsettled, any employer who sought to

repudiate a § 8(f) agreement by any method other than

precipitating a Board-conducted election did so at their

own risk.'* Since the employer voluntarily assumed the

risk of attempting to repudiate by any method other than

a Board-conducted election, that voluntary assumption of

the risk cannot meet the standard of having relied on

“clear past precedent” under Chevron v. Huson and

should not justify creating a conflict in the circuits on

this important issue.

B. The Equities Favor Retroactive Application of

Deklewa.

In adopting Deklewa, the Board sought to “serve better

the fundamental statutory policies of employee free choice

and labor relations stability.”” Dek/ewa, 124 L.R.R.M. at

1198. As demonstrated, supra, failure to apply Dek/ewa

retroactively disserves the policy of labor relations sta-

bility. In addition, employee free choice suffers if Dek-

lewa is not applied retroactively because courts, unlike the

NLRB, lack an election mechanism whereby employees

may express their representational preference. The Ninth

12 Tt is not hard to understand why the employer here did not

file for such an election since, as the en bane court found, at the

time of the purported repudiation “Mesa Verde was working on a

project ... at which it emploved members of both unions.” (Mesa

Verde, 861 F.2d at 1126) Indeed, it was undisputed that a majority

of Mesa Verde’s emplovees had at all times been members of the

union. Thus, Mesa Verde stood virtually no chance of winning an

election before the Board and chose, instead, to take the risk of

attempting to repudiate the agreement by way of a letter rather

than by way of an election.

ees ; =:=:}= ===...

Circuit discounted this argument, stating that since the

case involves “strictly historical disputes,” a representa-

tion election can no longer be effectively held. Mesa

Verde, supra, 885 F.2d at 597). That, however, is an

assumption without a basis in fact or law.

In Deklewa, the employer attempted to repudiate the

agreement in 1983. In 1987, the Board found no obstacle

to applying the rule retroactively despite the four in-

tervening years. The Board specifically addressed the

issue of elections in the construction industry and noted

that “since 1959 the Board has gained substantial ex-

pertise and developed detailed procedures for conducting

elections in the construction industry. ... The Board is

not inexperienced in developing election rules and _ pro-

cedures to accommodate short-term and sporadic employ-

ment patterns.” (Deklewa, supra, 124 L.R.R.M. at 1195

n.45). The Board noted that henceforward, after Dek-

lewa, employer R.M. petitions will no longer have to be

supported by traditional ‘objective considerations” and

that the mere existence of a $ 8(f) agreement will be

sufficient to obtain an election. (Jd. at 1194, 1195 n.42).

Thus, the Board has anticipated in Deklewa that it

will be required to exercise the expertise with which it

was vested by Congress to develop rules and systems

designed to deal with the myriad of election situations

which will develop under the non-repudiation rule. The

Ninth Circuit decision anticipates that the Board will

fail in this task which the Board acknowledged it would

have to undertake. Significantly, however, the Court’s

decision does not cite any facts to support this antici-

pated failure on the part of the Board. Mere speculation

as to Board’s ability or inability to deal with election

issues should not be the basis for depriving employees of

a voice in the decision as to whether their collective bar-

gaining agreement remains in existence.

Moreover, it simply strains credibility to argue that

enforcement of the unambiguous terms of a collective

bargaining agreement is inequitable. See, /nternational

Association of Iron Workers v. N.L.R.B., 843 F.2d at

781. When the unions entered into the collective bar-

gaining agreements, they assumed that Mesa Verde would

terminate those agreements only at the time and in the

manner provided for in the agreements.'* If the em-

ployer wanted the assurance that it could terminate the

agreements at any time, it was incumbent upon it to

-negotiate such assurance into the language of the agree-

ments. Retroactive application of Deklewa requires that

the courts do nothing more than enforce the terms of

the agreements to which the parties have voluntarily

agreed. (International Association of Iron Workers v.

N.L.R.B., 843 F.2d at 781).

The fact that the employer may have to make mone-

tary restitution for its breach of the collective bargain-

ing agreements is not a reason to deny retroactive appli-

cation. Here the employer undertook its contractual vio-

lation knowing full well the legal uncertainties of its

position. The employer could have filed for an election

with the N.L.R.B. to avoid those uncertainties. However,

it chose not to do so. Being required to pay damages for

its contractual violation is no different than the remedy

awarded for a breach of any other type of contract. This

13 Significantly, it should also be noted that the unions in this

case argued that since the agreements contained mechanisms for

terminating the collective bargaining relationships, the issue of

whether the repudiation was effective was for an arbitrator to

determine under the broad arbitration clauses. The District Court

and the Ninth Circuit disagreed, based on the fact that Mesa Verde

was exercising a “statutory” right as opposed to a “contractual”

right. This holding, however, is directly contrary to this Court’s

holding that statutory rights and obligations are arbitrable just

as contractual rights and obligations are arbitrable. See, Mitsu-

bishi Motors Corp. v. Solar Chrysler-Plymouth, Inc., 473 U.S. 614,

628 (1985) and Shearson-American Express, Inc. v. McMahon, 482

U.S. ——, 96 L. Ed. 2d 185 (1987).

ile be

Court has already addressed this issue in McNeff, supra,

where, despite a claimed repudiation of the pre-hire agree-

ment, an employer was required to make monetary resti-

tution:

However limited the binding effect of a pre-hire

agreement may be, it strains both logic and equity

to argue that a party to such an agreement can reap

its benefits and then avoid paying the bargained for

consideration. Nothing in the legislative history of

$ &8(f) indicates that Congress intended employers to

obtain free the benefits of stable labor costs, labor

peace, and the use of the union hiring hall. Having

had the music, he must pay the piper. McNeff, supra,

461 U.S. at 271.

In short, the “right” to repudiate pre-hire agreements

was a windfall for employers. Now that it has been

determined by the Board, the Third Circuit, the Eighth

Circuit, and the Ninth Circuit en banc that repudiation

does not serve the policies of labor stability and employee

free choice, it is not unjust to deprive employers of the

benefits of their prior windfall. Rather, an inequity

results if the courts shift the burden of the employers’

breach of the agreements to the employees who have lost,

among other things, their pension and health and wel-

fare benefits, and whose rights to free choice in the selec-

tion of their bargaining representative were sacrificed in

the first place. Where the burden of the breach must be

borne by either the employer or the employees, equity

requires that the employer, who was acting in its own

“self-interest,” assume the liability for its own breach

of the agreements.

CONCLUSION

For all the foregoing reasons, it is respectfully sub-

mitted that the Writ of Certiorari should issue to resolve

this significant conflict in the circuits.

Respectfully submitted,

VICTOR J. VAN BOURG *

SANDRA RAE BENSON

VAN BourcG, WEINBERG,

ROGER & ROSENFELD

875 Battery Street, 3rd Floor

San Francisco, CA 94111

(415) 864-4000

Attorneys for Petitioners

April, 1990 * Counsel of Record

APPENDIX

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

No. 85-1655

D.C. No. CV-84-4389 WWS

MESA VERDE CONSTRUCTION Co.,

Plaintiff-A ppellee,

¥.

NORTHERN CALIFORNIA DISTRICT COUNCIL OF LABORERS,

Defendant-A ppellant.

No. 85-2074

D.C. No. C-84-5519 WWS

MESA VERDE CONSTRUCTION COMPANY,

Plaintiff-A ppellee,

CARPENTERS 46 NORTHERN CALIFORNIA COUNTIES

CON®ERENCE BOARD,

Defendant-A ppellant.

Appeal from the United States District Court

for the Northern District of California

William W. Schwarzer, District Judge, Presiding

Argued En Banc and Submitted March 16, 1988

Remanded by Opinion of November 15, 1988

Filed September 13, 1989

Amended January 26, 1990

ORDER AND AMENDED OPINION

Before: Dorothy W. Nelson, Charles Wiggins and

John T. Noonan, Jr., Circuit Judges

Opinion by Judge Wiggins; Dissent by Judge Noonan

Victor J. Van Bourg, Van Bourg, Weinberg, Roger &

Rosenfeld, San Francisco, California, for the defendant

appellant.

Mark R. Thierman, Thierman, Cook, Brown & Mason,

San Francisco, California, for the plaintiff /appellee.

Patrick J. Syzmanski, Washington, D.C., for the

amicus National Labor Relations Board.

Lawrence Gold, Washington, D.C., for the amicus

District Council of Carpenters of Seattle, King County &

Vicinity, and Local 3 International Union of Operating

Engineers.

G. Brockwell Heylin, Washington, D.C., for the amicus

Associated General Contractors of America, Inc.

Douglas N. Friefield, San Francisco, California, for the

amicus W.B. Skinner, Inc.

Judd H. Lees, Williams, Kastner & Gibbs, Bellevue,

Washington, for the amicus Ken Hash Construction.

ORDER

The Opinion filed on September 13, 1989 is amended

as follows:

The phrase “to employers who repudiated pre-hire

arreements prior to that decision” is added after the word

“rule” in the last sentence of the opinion.

With the above amendment, the Petition for Rehearing

is denied and the Suggestion for Rehearing En Banc is

rejected.

OPINION

WIGGINS, Circuit Judge:

The Northern California District Council of Laborers

and the Carpenters 46 Northern California Counties Con-

ference Board (collectively Laborers) appeal from the

district court’s declaratory judgment that Mesa Verde

Construction Company (Mesa Verde) effectively repudi-

ated pre-hire collective bargaining agreements between the

parties. This panel affirmed, but the Laborers suggestion

for rehearing en bane was subsequently granted. The en

bane pane! adopted as the law of this circuit the decision

of the National Labor Relation Board (NLRB or Board)

in Deklewa v. International Ass’n of Bridge, Structural

and Ornamental Ironworkers, Local 3, 282 N.L.R.B. No.

184, 1986-87 (NLRB Dec. (CCH) 18,549 (Feb. 20,

1987), enforced, 843 F.2d 770 (3d Cir. 1988), that pre-

hire collective bargaining agreements may not be uni-

laterally repudiated prior to a Board-certified election or

termination of the contracts. The en banc panel remanded

the case to this panel to determine whether to apply

Deklewa retroactively. We hold that Deklewa should not

be applied retroactively and affirm the judgment below.

BACKGROUND

In our original opinion we summarized the facts as

follows:

Mesa Verde is a general contractor, specializing

primarily in constructing shopping centers in Ari-

zona, California, and Colorado. Mesa Verde typically

subcontracts out most of its work except for some

carpentry and odd jobs. In 1979 it reached its first

agreement with the Laborers, and on June 26, 1980

it siened the contract with the Laborers that is here

in dispute. The contract was to remain in effect

until June 15, 1983 and would continue thereafter

from year to year absent written notice by either

party. By the contract’s terms Mesa Verde agreed to

“comply with all wages, hours, and working condi-

tions set forth in the Laborer’s Master Agreement

for Northern California.” That agreement is a sixty-

seven-page contract between the Laborers, the Asso-

ejated General Contractors of California, Ine. and

the Bay Counties General Contractors Association.

It sets wave rates for numerous jobs and provides

for arbitration, with certain exceptions, of “any dis-

pute concerning the interpretation or application of

the agreement.”” On November 17, 1982 Mesa Verde

and the Laborers agreed in writing that their 1980

contract would continue in effect until June 15, 1986.

Mesa Verde first entered into a collective bargain-

ine agreement with the Carpenters in August 1979.

Throuch a memorandum agreement Mesa Verde and

the Carpenters accepted the Carpenters Master

Agreement for Northern California, a forty-nine-

page contract between the Carpenters, the Building

Industry Association of Northern California, the

California Contractors Council, Ine. and the Mill-

wright Employers Association. That agreement sets

rates for numerous jobs and provides for arbitration

of “{alny dispute concerning the relationship of the

parties, any application or interpretation of this

Acreement.” Through a subsequent memorandum

agreement executed in June 1980 the parties ac-

cepted the new June 16, 1980 to June 15, 1983

Carpenters Master Agreement. On September 8,

1982 Mesa Verde and the Carpenters early extended

the master agreement to June 15, 1986, with certain

modifications limiting wage increases and providng

more flexible working conditions for Mesa Verde.

BEST AVAILABI

Mesa Verde informed the unions of its intent to

abrogate its agreements with them in May of 1984.

At the time Mesa Verde was working on a project in

Hercules, California, at which it employed members

of both unions. Mesa Verde notified the Carpenters

of its repudiation through a May 8, 1984 letter and

notified the Laborers through a May 15, 1984 letter.

In late May or early June of 1984, after its notice to

the unions, Mesa Verde started another project in

Orland, California without union workers, in con-

travention of the collective bargaining agreements, -- ----—----

if they were still in effect. Both unions gave Mesa

Verde notice of grievance and requested arbitration

retarding Mesa Verde’s contractual obligations for

the Orland project. Mesa Verde then brought suit

against both unions seeking a declaration that it

need not comply with the agreements with regard to

projects begun after its repudiations in May 1984.

Mesa Verde Constr. Co. v. Northern. Cal. Dist. Council

of Laborers, 820 F.2d 1006, 1007-08 (9th Cir. 1987),

withdrawn, 832 F.2d 1164 (9th Cir. 1987).

The district court granted Mesa Verde summary judg-

ment against both unions, holding that the collective

bargaining agreements at issue were construction indus-

try “pre-hire’” avreements and that under section 8(f)

of the National Labor Relations Act (NLRA), 29 U.S.C.

§$158(f) (1982), Mesa Verde’s May 1984 letters were

sufficient to repudiate their agreements with respect to

future projects. 598 F. Supp. 1092, 1101 (N.D. Cal.

1984). This panel affirmed, finding that circuit prececent

permitted an employer to repudiate unilaterally a pre-

hire collective bargaining agreement. &20 F.2d at 1012.

Upon rehearing, the en bane panel adopted Deklewa as

the law of this circuit, holding that a “pre-hire agree-

ment|] may not be unilaterally repudiated by either a

union or an employer prior to its termination or absent

an election among the ap)ropriate bargaining unit’s

employees to reject the union.” 861 F.2d 1124, 1137 (9th

Cir. 1988) (en bane). The en banc panel, however, re-

manded the case to this panel to determine whether

Deklewa should be applied retroactively. Id.

DISCUSSION

The en banc panel directed that our retroactivity anal-

ysis be governed by Chevron Oil Co. v. Huson, 404 U.S.

97 (1971). In Chevron the Supreme Court articulated

three factors applicable to the analysis: (1) whether the

decision to be applied retroactively established a new

principle of law, either by overruling clear past precedent

on which litigants may have relied or by deciding an

issue of first impression; (2) the effect of retroactivity

on accomplishing the purpose of the law, and (3) the

inequity imposed by retroactive application. Jd. at

106-07.

The en banc panel noted that “Deklewa overrules clear

precedent that the employer in Mesa Verde obviously

relied on in repudiating the pre-hire agreements.” 861

F.2d at 1137. The Laborers take issue with this state-

ment, arguing that at the time Mesa Verde’s repudia-

tion occurred, Ninth Circuit law did not permit an em-

ployer unilaterally to repudiate an agreement absent a

NLRB election. The case cited by the Laborers, Oper-

ating Engrs Pension Trust v. Beck Enq’q & Surveying,

746 F.2d 557 (9th Cir. 1984), however, does not stand

for that proposition. Acknowledging that the Supreme

Court had left open the question of what specific acts

would effect repudiation of a pre-hire avreement, Oper-

ating Engineers expressly declined to decide the issue.

Id. at 564-65 (citine Jim McNeff, Inc. v. Todd, 461 US.

260, 270-71 n.11 (1983)). We agree with the en banc

panel that Mesa Verde relied on clear precedent in re-

pudiating the agreement. Although neither the Supreme

Court nor this court had specifically addressed the proper

method for repudiation. both courts had clearly held that

“an employer is able to exercise the right of repudiation

until the union achieves a majority status.” Todd v. Jim

McNeff, Inc., 667 F.2d 800, 803 (9th Cir. 1982), afi’d,

461 U.S. 260 (1983).

The Laborers contend that retroactive application

would further statutory objectives of labor relations sta-

bility and employee free choice. Noting that the NLRB

applies Deklewa retroactively to cases pending at the

administrative level, they argue that the federal courts

should also apply the rule retroactively to ensure uni-

formity of decision. The Board’s decision to apply Dek-

lewa retroactively is not binding on this court. See NLRB

v. Best Products Co., 765 F.2d 903, 913 (9th Cir. 1985).

At least two district courts have declined to apply Dek-

lewa retroactively. See Trustees of the Nat’l Automatic

Sprinkler Indus. Pension Fund v. American Automatic

Fire Protection, 680 F. Supp. 731, 735 (D. Md. 1988);

Construction Indus. Welfare Fund v. Jones, 672 F. Supp.

291, 294 (N.D. Ill. 1987). The Laborers contend that

employee free choice will suffer if the rule is not applied

retroactively because courts lack the ability to conduct

an election allowing employees to express their prefer-

ence. This argument, however, ignores the fact that in

cases such as the present one, “involving strictly his-

torical disputes, a representation election can no longer

be effectively held.” Nat’l Automatic Sprinkler Indus.

680 F. Supp. at 735.

'In Best Products we stated that “while the court is not bound

by the Board’s view on retroactive application, it should defer to

those views absent manifest injustice.” 765 F.2d at 912. The Ei:vhth

Circuit adopted this standard in deciding whether to apply Delele iw

retroactively. NLRB v. W. L. Miller Co., 871 F.2d 745. 748 (&th

Cir. 1989) (deferring to the Beard’s decision to apply Delleiwa

retroactively). Although the en bane panel directed us to review

retroactive application independently under Cherron, we would

reach the same conclusion were we to apply the deferential standard.

We conclude that it would bé manifestly unjust to apply Deklewa

retroactively in this case because it would effectively punish the

employer for conduct that was lawful at the time it occurred.

If Deklewa is applied retroactively, Mesa Verde

“would be subjected to a penalty for having taken action

which was entirely lawful under pre-Deklewa law with-

out being afforded the opportunity to have their assertion

of the union’s lack of majority status tested either by

election or by litigation.” /d. Since retroactive applica-

tion in this context would not significantly advance statu-

tory objectives, imposing such an injustice on the em-

ployer is clearly unwarranted.

CONCLUSION

Applying the Chevron factors, we find that: (1) the

existing law clearly allowed either party to repudiate the

pre-hire agreement prior to the union’s attainment of

majority status; (2) retroactive application would punish

the emplover for doing something that was lawful when

done: and (3) advancement of statutory objectives is

only questionably served by retroactive application when

the relationship between the parties has been terminated.

We therefore hold that retroactive application of the

Deklewa rule to employers who repudiated pre-hire agree-

ments prior to that decision is inappropriate and accord-

ingly AFFIRM the judgment below.

NOONAN, Circuit Judge:

I dissent.

UNITED STATES COURT OF APPEALS

NINTH CIRCUIT

Nos. 85-1665, 85-2074

MESA VERDE CONSTRUCTION Co.,

Plaintiff-A ppellee,

¥e

NORTHERN CALIFORNIA DISTRICT COUNCIL OF LABORERS,

Defendant-A ppellant.

MESA VERDE CONSTRUCTION COMPANY,

Plaintiff-A ppellee,

CARPENTERS 46 NORTHERN CALIFORNIA COUNTIES

CONFERENCE BOARD,

Defendant-A ppellant.

Appeal from the United States District Court

for the Northern District of California

Argued En Bane and Submitted March 16, 1988

Decided Nov. 15, 1988

Remanded.

Wallace, Circuit Judge, dissented with opinion.

Hug. Circuit Judge, dissented with opinion in which

Brunetti and Kozinski, Circuit Judges joined.

10a

Kozinski, Cireuit Judge dissented with opinion in which

Brunetti, Circuit Judge joined.

Victor J. Van Bourg, Weinberg, Roger & Rosenfeld,

San Francisco, Cal., for defendants-appellants.

Mark R. Thierman, Thierman, Cook, Brown & Mason,

San Francisco, Cal., for plaintiff-appellee.

Patrick J. Syzmanski, Washington, D.C., for amicus

N.L.R.B.

Lawrence Gold, Washington, D.C., for amicus Dist.

Council of Carpenters of Seattle, King County & Vicinity,

and Local 8 Intern. Union of Operating Engineers.

G. Brockwell Heylin, Washington, D.C., for amicus

Associated General Contractors of America, Ine.

Douglas N. Friefield, San Franciseo, Cal., for amicus

W.B. Skinner, Ine.

Judd H. Lees, Williams, Kastner & Gibbs, Bellevue,

Wash., for amicus Ken Hash Const.

Before GOODWIN, Chief Judge, WALLACK, AN-

DIERSON,* HUG, TANG, SCHROEDER, FLETCHER,

POOLE, WIGGINS, BRUNETTI, and KOZINSKI, Cir-

cuit Judges.

WIGGINS, Cireuit Judge:

The Northern California District Council of Laborers

and the Carpenters 46 Northern California Counties Con-

ference Board (together Laborers) appeal from the dis-

trict court’s declaratory judgment that Mesa Verde Con-

struction Company (Mesa Verde) effectively repudiated

pre-hire collective bargaining agreements between the

parties. Mesa Verde Constr. Co. v. Northern Cai. Dist.

* Judge Anderson participated in the argument of this case, but

died before the decision was rendered.

lla

Council of Laborers, 598 F.Supp. 1092 (N.D.Cal.1984).

A panel of this court affirmed, 820 F.2d 1006 (9th Cir.

1987), but the Laborers’ suggestion for rehearing en

bance was subsequently granted. 832 F.2d 1164 (9th Cir.

1987). We hold that the decision of the National Labor

Relations Board (NLRB) in Deklewa v. International

Ass'n of Bridge, Structural and Ornamental Lronworkers,

Local 3, 282 N.L.R.B. No. 184, 1986-87 NLRB Dee.

(CCH) § 18,549 (Feb. 20, 1987), enforced 843 F.2d 770

(3rd Cir.1988), determining that pre-hire collective bar-

gaining agreements may not be unilaterally repudiated

prior to a Board-certified election or termination of the

contracts, applies in this circuit. We remand to the panel

to determine whether to apply Deklewa retroactively

under the principles of Chevron Oil Co. v. Huson, 404

U.S. 97, 106-07, 92 S.Ct. 349, 355-56, 30 L.Ed.2d 296

(1971).

FACTS

The panel summarized the facts of the case:

Mesa Verde is a general contractor, specializing

primarily in constructing shopping centers in Ari-

zona, California, and Colorado. Mesa Verde typically

subcontracts out most of its work except for some

carpentry and odd jobs. In 1979 it reached its first

agreement with the Laborers, and on June 26, 1980

it signed the contract with the Laborers that is here

in dispute. The contract was to remain in effect

until June 15, 1988 and would continue thereafter

from year to year absent written notice by either

party. By the contract’s terms Mesa Verde agreed to

“comply with all wages, hours, and working condi-

tions set forth in the Laborers’ Master Agreement

sixty-seven-page contract between the Laborers, the

Associated General Contractors of California, Ine.

and the Bay Counties General Contractors Associa-

tion. It sets wage rates for numerous jobs and pro-

vides for arbitration, with certain exceptions, of

12a

“any dispute concerning the interpretation or appli-

cation of the agreement.” On November 17, 1982

Mesa Verde and the Laborers agreed in writing that

their 1980 contract would continue in effect until

June 15, 1986.

Mesa Verde first entered into a collective bargain-

ing agreement with the Carpenters in August 1979.

Through a memorandum agreement Mesa Verde and

the Carpenters accepted the Carpenters Master Agree-

ment for Northern California, a forty-nine-page con-

tract between the Carpenters, the Building Industry

Association of Northern California, the California

Contractors Council, Inc. and the Millwright Em-

ployers Association. That agreement sets rates for

numerous jobs and provides for arbitration of “[a]ny

dispute concerning the relationship of the parties,

any application or interpretation of this Agreement.”

Through a subsequent memorandum agreement exe-

cuted in June 1980 the parties accepted the new

June 16, 1980 to June 15, 1983 Carpenters Master

Agreement. On September 8, 1982 Mesa Verde and

the Carpenters early extended the master agreement

to June 15, 1986, with certain modifications limiting

wage increases and providing more flexible working

conditions for Mesa Verde.

Mesa Verde informed the unions of its intent to

abrogate its agreements with them in May of 19#4.

At the time Mesa Verde was working on a project in

Hercules, California, at which it employed members

of both unions. Mesa Verde notified the Carpenters

of its repudiation through a May 8, 1984 letter and

notified the Laborers through a May 15, 1984 letter.

In late May or early June of 1984, after its notice

to the unions, Mesa Verde started another project

in Orland, California without union workers, in con-

travention of the collective bargaining agreements,

if they were still in effect. Both unions gave Mesa

13a

Verde notice of grievance and requested arbitration

regarding Mesa Verde’s contractual obligations for

the Orland project.

Mesa Verde, 820 F.2d at 1007-08.

Mesa Verde sought a declaratory judgment that it was

not obligated to arbitrate the grievances which arose after

it gave notices of termination. The district court stayed

arbitration of the grievances pending resolution of the

declaratory judgment action. The court then granted

Mesa Verde summary judgment against both the Car-

penters and the Laborers. Mesa Verde, 598 F.Supp. at

1094. The court held that the collective bargaining agree-

ments at issue were construction industry “pre-hire”

agreements and that, therefore, under 29 U.S.C. § 158(f)

(section 8/(f) of the National Labor Relations Act

(NLRA)), Mesa Verde’s May 1984 letters were sufficient

to repudiate their agreements with respect to future proj-

ects. Mesa Verde, 598 F.Supp. at 1101. The court denied

a subsequent motion by the Laborers to vacate the court’s

judgment and to grant the Laborers additional discovery

to demonstrate the existence of a core group of employees.

Mesa Verde Constr. Co. v. Northern Cal. Dist. Council of

Laborers, 602 F.Supp. 327, 330 (N.D.Cal.1985).

A panel of this court affirmed. It followed circuit

precedent and held that unilateral repudiation by an em-

ployer of a pre-hire collective bargaining agreement was

permitted. Mesa Verde, 820 F.2d at 1012; see also In-

ternational Bhd. of Elec. Workers, Local 441 v. KBR

Elec., 812 F.2d 495, 497-98 (9th Cir.1987): NLRB v.

Pacific Erectors, Inc., 718 F.2d 1459, 1462-63 (9th Cir.

1983). A majority of this court voted to rehear the

Laborers’ appeal en banc. 832 F.2d 1164 (9th Cir.

1987). En bane review was limited to: (1) whether

Dek'ewa should be applied retroactively to this case, and

(2) whether -the rule of Royal Dev. Co., Ltd. v. NLRB,

703 F.2d 363, 369 (9th Cir.1983), that a panel may not

l4a

overrule prior panels’ interpretations of the NLRA even

when intervening NLRB cases decide differently, should

be overruled.

Background—Judicial History of Section 8(f)

The NLRA generally requires that a union possess

majority support before it may act as the bargaining

representative for a group of employees. Sections 8/a)

(1), (2) and 8(b)(1) (A), 29 U.S.C. $ 158(a) (b),

collectively require that a union possess majority suppert

before a collective bargaining agreement can be nego-

tiated. See ILGWU v. NLRB, 366 U.S. 731, 737, 81

S.Ct. 1603, 1607, 6 L.Ed.2d 762 1961 [hereinafter Gar-

ment Workers|. Historically, however, the construction

industry had established its own unique collective bar-

gaining practices. One such practice was the use of pre-

hire agreements between construction unions and em-

ployers that allowed the industry’s employers to obtain a

guaranteed work force before a particular job was begun.

In 1948, the NLRB first asserted jurisdiction over the

construction industry. See, e.g., Carpenters Local 74,

80 N.L.R.B. 533 (1948); Ozark Dam Constructors, 77

N.L.R.B. 1136 (1948): cf. In re Johns Manville Corp., 61

N.L.R.B. 1 (1945) The Board refused to make any

exceptions to its general rule that minority contracts

were illegal and unenforceable. In a number of cases, the

Board rejected the general custom and practice in the

construction industry” and held that pre-hire collective

bargaining agreements were illegal and unenforceable.

See, e.g., Daniel Hamm Drayage Co., 84 N.L.R.B. 458,

460 (1950) (“eustom and practice” argument better di-

rected to Congress than to the Board); Chicago Freight

Car. 83 N.L.R.B. 1163 (1949). In response, Congress,

recognizing the longstanding use of pre-hire agreements

in the construction industry, added subsection (if) to

section 8 of the NLRA. S.Rep. No. 187, 86th Cong., 1st

Sess. 27 (1959), U.S. Code Cong. & Admin.News 1959,

p. 2318, reprinted in I Legislative History of the Labor-

15a

Management Reporting and Disclosure Act of 1959, at

397, 425-24 1959) [hereinafter Leg.Hist.]}.'

Following the enactment of section 8(f), the Board

first held that the majority status of a union executing a

pre-hire agreement may not be challenged in an unfair

labor practice proceeding. Bricklayers Local 3, 162

N.L.R.B. 476, 477-79 (1966), enforced 405 F.2d 469 (9th

Cir.1968) ; Oilfield Maintenance Co., 141 N.L.R.B. 1384,

1387 and n. 10 (1963). See NLRB v. Local Union No.

103, Intl Ass’n of Bridge Structural & Ornamental Iron-

workers, 434 U.S. 335, 350-51, 98 S.Ct. 651, 660-61,

54 L.Ed.2d 586 (1978) [hereinafter Higdon]. Thus, an

employer could not unilaterally repudiate a pre-hire agres-

ment with a union. The Board later switched its position

regarding the repudiation issue and allowed unilateral

repudiation of such pre-hire agreements. R.J. Smith

Constr. Co., 191 N.L.R.B. 693 (1971), enforcement de-

nied sub nom. Local 150, Int’l Union of Operating

Engrs v. NLRB, 480 F.2d 1186 (D.C.Cir.1973); Rutt-

man Constr. Co., 191 N.L.R.B 701 (1971) (companion

case to RJ. Smith). In Ruttman, the Board stated:

|I|n enacting Section 8(f) to assist in resolving

such problems, Congress merely permitted parties to

enter into such pre-hire agreements without vio-

lating the Act. It does not mean that a failure to

abide by such an agreement is automatically a

refusal to bargain. In essence, therefore, this pre-

hire agreement is merely a preliminary step that

contemplates further action for the development of

a full bargaining relationship... .

1 The history of the passage of the amendment to section & was

protracted. In 1951, a bill was first introduced by Senators Taft and

Humphrey to allow pre-hire agrecments, but it failed to obtain

approval in the 82nd Congress. Similar bills, supported by the

Eisenhower administration, were introduced in every Congress after

that. Finally, in 1958, Senators Kennedy and Ervin proposed an

amendment substantially similar to the original bill and it was

ultimately signed into law.

16a

Ruttman, 191 N.L.R.B. at 702. The Board in Ruttman

dismissed Oi! field Maintenance as being “primarily con-

cerned” with ‘the right of a successor-employer to disa-

vow contracts made by a predecessor” employer. /d. at

701 n. 5; see also Higdon, 424 U.S. at 350-51, 98 S.Ct.

at 660-61.

DISCUSSION

As appears from our discussion of the history of sec-

tion 8(f), the latest expression of opinion by the Board

prior to Deklewa was that a pre-hire agreement could be

terminated by the unilateral repudiation of it by either

the employer or the union. We gave effect to that opinion

in our circuit. See, e.g., KBR Elec., 812 F.2d at 497-98.

In Deklewa, the NLRB announced a new rule. The

Board decided that section 8(f)} * collective bargaining

2Seetion &(f), 29 U.S.C. §$158(f) (Agreement Covering Em-

ployees in the Building and Construction Industry), provides:

It shall not be an unfair labor practice under subsections

(a) and (b) of this section for an employer engaged primarily

in the building and construction industry to make an agreement

covering employees engaged (or who, upon their employment,

will be engaged) in the building and construction industry with

a labor organization of which building and construction em-

ployees are members (not established, maintained, or assisted

by any action defined in section 8(a) of this Act [subsee. (a)

of this section] as an unfair labor practice) because (1) the

majority status of such labor organization has not been estab-

lished under the provisions of section 9 of this Act [29 USCS

$159] prior to the making of such agreement, or (2) such

agreement requires as a condition of employment, membership

in such labor organization after the seventh day following the

beginning of such employment or the effective date of the

agreement, whichever is later, or (3) such agreement requires

the employer to notify such labor organization of opportunities

of employment with such employer, or gives such labor organi-

zation an opportunity to refer qualified applicants for such

employment, or (4) such agreement specifies minimum train-

ing or experience qualifications for employment or provides

for priority in opportunities for employment based upon length

17a

agreements may not be unilaterally repudiated by em-

ployers or unions. “When parties enter into an 8(f)

agreement, they will be required . . . to comply with that

agreement unless the employees vote, in a Board-con-

ducted election, to reject (decertify) or change their bar-

ga'ning representative.” Deklewa, 1986-87 NLRB Dee.

(CCH) 18,549, at 31-708. The Board expressly re-

jected RJ. Smith and Ruttman. It decided that pre-hire

collective bargaining agreements should confer on a union

at least some section 9/a) exclusive bargaining agent

status. Deklewa, NLRB Dee. (CCH) at 31,709.

The primary issues: before the en bane panel are

whether this court has the power in view of existing

Supreme Court precedent to adopt the rule of Deklewa

as the law of this circuit, and if that power exists,

whether it best serves the interests of employers and

employees to do so.

[. Supreme Court Precedent.

Deklewa’s non-repudiation rule seems to conflict with

Supreme Court precedent set out in Jim McNeff, Inc. v.

Todd, 461 U.S. 260, 103 S.Ct. 1753, 75 L.Ed.2d 830

(1983); NERB v. Local Union No. 103, Int'l Ass’n of

Bridge, Structural & Ornamental Iron Workers, 434 U.S.

335, 98 S.Ct. 651, 54 L.Ed.2d 586 (1978) [hereinafter

Higdon}. In Higdon, the Court reversed a decision of the

D.C. Circuit and upheld the NLRB’s determination that

an uncertified union with an 8(f) agreement with an

employer committed an unfair labor practice under sec-

tion &(b)(7)1(C), 29 U.S.C. §$ 158(b1 17) (C), by picket-

of service with such employer, in the industry or in the par-

ticular geographical area: Provided, That nothing in this sub-

section shall set aside the final proviso to section 8(a)(3) of

this Act [subsec. (a)(3) of this section}: Provided further,

That any agreement which would be invalid, but for clause

(1) of this subsection, shall not be a bar to a petition filed pur-

suant to section 9(c) or 9(e) [29 USCS § 159(¢) or (e) }.

18a

ing the employer to force it to adhere to the agreement.

Higdon, 434 U.S. at 341, 98 S.Ct. at 655. In McNeff, the

Court held that despite the repudiation of an 8(f) agree-

ment by the employer, monetary obligations incurred by

the employer to an uncertified union prior to the repudi-

ation survived the repudiation. McNeff, 461 U.S. at 271-

72, 103 S.Ct. at 1759. The Court stated, however, that

8(f) agreements may be repudiated at will. /d. at 270,

103 S.Ct. at 1758. Thus, it would seem that Supreme

Court precedent requires that we reject Deklewa’s new

rule. In neither case, however, did the Supreme Court

definitely construe 8(f}. Rather, the Court found that

the Board’s interpretation of 8(f) was an acceptable in-

terpretation of the statute and that it reasonably imple-

mented the purposes of the Act. The Court, therefore,

deferred to the NLRB’s interpretation of 8(f).

Specific language in both opinions supports our con-

clusion that the Supreme Court in Higdon and McNeff

only deferred to the NLRB’s interpretation of 8(f) and

we are not precluded from adopting the Board’s new

interpretation. The Court in Higdon recognized that

““'tl}he function of striking that balance to effectuate

national labor policy is often a difficult and delicate re-

sponsibility, which the Congress committed primarily to

the National Labor Relations Board, subject to limited

— review. ” Higdon, 434 U.S. at 350, 98 S.Ct. at

660 (quoting NURB v. Truck Drivers Local Union No.

19, Intl Bhd. of Teamsters, Chauffeurs, Warehousemen

and Helpers of America, 353 U.S. 87, 96, 77 S.Ct. 64

648, 1 L.Ed.2d 676 (1957)). The Court found that the

3oard’s then current construction of section 8(f) in R.J.

Smith, 191 N.L.R.B. 693 (1971), enforcement denied sub

nom. Local 150, Intl Union of Operating Engrs ».

7 NLRB, 480 F.2d 1186 (D.C.Cir.1973), was not funda-

mentally inconsistent with the Act nor had the Board

moved into a new area of regulation that Congress had

not committed to it. Higdon, 434 U.S. at 350, 98 S.Ct. at

19a

660; accord NLRB v. Insurance Agents’ Int'l Union, 361

U.S. 477, 499, 80 S.Ct. 419, 482, 4 L.Ed.2d 454 (1960)

(Court rejected Board’s policy decision because outside

congressional mandate). The Court “concluded that the

Board’s construction of the Act, although perhaps not

the only tenable one, is an acceptable reading of the

statutory language and a reasonable implementation of

the purposes of the relevant statutory sections.” Higdon,

434 U.S. 341, 98 S.Ct. at 656. Thus, in Higdon, the Court

did not independently construe the reach and scope of

section 8(f)}. Rather, the Court recognized the expertise

and experience of the Board in effectuating national labor

policy as mandated by Congress and limited its review to

whether the Board’s interpretation of 8(f! was reason-

able.

McNeff similarly is not an independent construction

of 8(f)}. The Court relied on Hiqdon’s affirmance of the

Board’s view of the status of an 8(f) collective bargain-

ing agreement. MceNeff, 461 U.S. at 266-67, 198 S.Ct. at

1756-57. The Court noted that in Higdon it “approved

the Board’s conclusion that a ‘pre-hire agreement is void-

able.’”’ Jd. at 269, 103 S.Ct. at 1758." Also, as the Higdon

Court recognized, “‘|aln administrative agency is not dis-

qualified from changing its mind; and when it does, the

courts still sit in review of the administrative decision

and should not approach the statutory construction issue

de novo and without regard to the administrative under-

standing of the statutes.” Higdon, 484 U.S. at 351, 98

S.Ct. at 660-61. We hold that neither Higdon nor McNe/f

3 Even in McNeff, the Court noted that it did not decide that in

every case a section &8(f) contract may be unilaterally repudiated.

“We need not consider in this case whether considerations properly

cognizable by a court under $301 might prevent either party, in

particular circumstances, from exercising its option under § &(f)

to repudiate a prehire agreement before the union demonstrates

majority status.” McNeff, 461 U.S. at 271 n. 13, 103 S.Ct. at 1759

n, 13. The instant case is likewise a section 301, 29 U.S.C. § 185,

contract enforcement case.

20a

preclude this court from adopting the view of the NLRB

as expressed in Deklewa. Neither constitutes an inde-

pendent construction of the statute. Rather, the Su-

preme Court looked to the Board’s interpretation, found

it reasonable and consistent with the NLRA, and deferred

to the Board’s interpretation. Accord NLRB v, Action

Automotive, Inc., 469 U.S. 490, 496, 105 S.Ct. 984, 988,

83 L.Ed.2d 986 (1985) (“In reviewing Board decisions,

we consistently yield to the Board’s reasonable inter-

pretations and applications of the Act... .”).° We now

4The Third Circuit recently enforced the NLRB’s decision in

Deklewa. 843 F.2d at 781-82. The court’s examination of Higdon

and McNeff comports with our own:

In neither case has the Supreme Court adopted the Board’s

R.J. Smith interpretation of $ &8(f) as definitive and binding.

Indeed, in Higdon, ... [t|he Supreme Court thus made clear

that it was merely reviewing the Board’s interpretation of

§ 8(f) and not substituting its own judgment or prescribing its

own interpretation of the statute. .

While McNeff is not as explicit as Higdon in making it clear

that the Supreme Court was merely reviewing the Board’s

interpretation and not establishing one of its own, nowhere in

the McNeff opinion does the Court hold that the statute re-

quires § 8(f) agreements to be voidable. Furthermore, MceNeff

relies very heavily upon Higdon which did make it clear that

the Court was doing no more than holding that the Board‘s

reading of the act was reasonable.

Id. at 776.

5 The Supreme Court in Chevron U.S.A. v. Natural Resources

Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694

(1984), recently set out the proper scope of judicial review of an

agency’s construction of statute:

When a court reviews an agency‘s construction of the statute

which it administers, it is confronted with two questions. First,

always, is the question whether Congress has directly spoken

to the precise question at issue. If the intent of Congress is

clear, that it the end of the matter; for the court as well as

the agency, must give effect to the unambiguously expressed

intent of Congress. If, however, the court determines Con-

gress has not directly addressed the precise question at issue

—SS LULU

2la

turn to Deklewa to determine whether the Board’s new

approach is a reasonable and tenable construction of

section 8(f).

the court does not simply impose its own construction on the

statute, as would be necessary in the absence of an administra-

tive interpretation. Rather, if the statute is silent or ambigu-

ous with respect to the specific issue, the question for the

court is whether the agency’s answer is based on a permissible

construction of the statute.

“The power of an administrative agency to administer a

congressionally created . .. program necessarily requires the

formulation of policy and the making of rules to fill any gap

left, implicitly or explicitly, by Congress.” If Congress has

explicitly left a gap for the agency to fill, there is an express

delegation of authority to the agency to elucidate a_ specific

provision of the statute by regulation. Such legislative regula-

tions are given controlling weight unless they are arbitrary,

capricious, or manifestly contrary to the statute. Sometimes

the legislative delegation to an agency on a particular question

is implicit rather than explicit. In such a case, a court may not

substitute its own construction of a statutory provision for a

reasonable interpretation made by the administrator of an

agency.

We have long recognized that considerable weight should be

accorded to an executive department’s construction of a statu-

tory scheme it is entrusted to administer, and the principle of

deference to administrative interpretations

“has been consistently followed by this Court whenever

decision as to the meaning or reach of a statute has in-

volved reconciling conflicting policies, and a full under-

standing of the force of the statutory policy in the given

situation has depended upon the matters subjected to

agency regulations.

“Tf this choice represents a reasonable accommodation of

conflicting policies that were committed to the agency’s care

by the statute, we should not disturb it unless it appears frem

the statute or its legislative history that the accommodation is

not one that Congress would have sanctioned.”

In light of these well-settled principles it is clear that the

Court of Appeals misconceived the nature of its role in review-

ing the reculations at issue. Once it determined, after its own

examination of the legislation, that Congress did not actually

22a

II. Deklewa.

A. Legislative History of Section 8(f).

Congress enacted 8if) in response to the “serious

problems” created by the assertion of jurisdiction by the

Board over the building and construction industry. Leg.

Hist., supra, at 423. (Report of Senator Kennedy). Con-

gr ess also recognized that the industry had special needs

which the NLRA did not otherwise address. For an em-

ployee, “|t|he occasional nature of the employment rela-

tionship makes this industry markedly different from

manufacturing and other types of enterprise. An indi-

vidual employee typically works for many employers and

for none of them continuously. Jobs are frequently of

short duration, depending upon various stages of con-

struction.” Jd. For the emplover, “it is necessary for

the employer to know his labor costs before making the

estimate upon which his bid will be based. A second

reason is that the employer must be able to have ayail-

able a supply of skilled craftsmen ready for quick re-

ferral.” Id. at 424. Enactment of section 8(f, repre-

sented a recognition of the industry’s widespread use of

pre-hire collective bargaining agreements dez igned to =

dress these needs. Congress knew that these agreement

were not entirely consistent with “rulings of the NL RB

that exclusive bargaining contracts can law fully be con-

cluded only if the union makes its agreement after a i

resentative number of employees have been hired.” Jd.:

see also H.R.Rep. No. 741, 86th Cong., 1st Sess. 19, U.S.

have an intent regarding the applicability of the... program,

the question before it was not whether in its view the concept

is “inappropriate” in the general context of a program ... but

whether the Administrator’s view that it is appropriate in the

context of this particular program is a reasonable one.

Id. at 842-45, 104 S.Ct. at 2781-83 (footnotes and citations omitted).

See also, NLRB v. United Food and Commercial Worl rs T'nion

Local 23, —— U.S. ——, 108 S.Ct. 413, 421, 426, 98 L.Ed.2d 429

(1987) (Scalia, J. concurring) (discussing Chevron).

23a

Code Cong. & Admin.News 1959, pp. 2318, 2424, re-

printed in Leg.Hist., supra, at 759, 777-78 (following

Senate Report in discussing special problems of construc-

tion industry). In passing section 8(f), Congress in-

tended to ratify the use of such prehire agreements.

The R.J. Smith approach, allowing unilateral repudiation

of these collective bargaining agreements, has not in the

Board’s view advanced this evident congressional intent.

In refusing to enforce R.J. Smith, the D.C. Circuit

noted that it could not “conceive of such an exercise in

futility on the part of Congress as to validate a contract

with a union having minority status, but to permit its

abrogation because of the union’s minority status.” Local

No. 150, Int’?l Union of Operating Enq’rs v. NLRB, 480

F.2d 1186, 1190 (D.C.Cir.1973) : see also NLRB v. Irvin,

475 F.2d 1265, 1271 (3d Cir.1973) (“{n]othing in either

the text or the legislative history of § 8(f) suggests that

it was intended to leave construction industry employers

free to repudiate contracts at will”); but see Higdon, 434

U.S. at 349, 98 S.Ct. at 659. We agree with the D.C.

Circuit. When a construction employer “hires a union” it

should be held to its bargain and not be allowed to back

out of the deal at the employer’s convenience. We find

that the legislative history of 8(f) better supports Dek-

lewa’s non-repudiation rule rather than the RJ. Smith

approach.

B. Labor Stability and Employee Free Choice.

Now that we have examined 8/f1’s legislative history,

we turn to the two maior interests at issue controlling

whether prehire agreements should be voidable at will.

First, sections 7 and 9 of the NLRA, 29 U.S.C. $$ 157 &

159, grant employees complete “freedom of choice and

majority rule in employee selection of representatives.”

Garment Workers, 366 U.S. at 739, 81 S.Ct. at 1608.

Second, the structure of the collective bargaining process

itself and such provisions as the “contract bar’ of the

Act guarantee labor relations stability to both employees

24a

and employers. 29 U.S.C. § 159(¢) (3) (“Contract bar’’).°

The balancing of these interests is certainly within the

statutory mandate of the NLRB. Truck Drivers, 353 U.S.

at 96, 77 S.Ct. at 647. In comparing R.J. Smith and

Deklewa, it would seem that the former, by refusing to

confer 9(a) status on a union that had not dc nonstrated

majority support, serves the first interest while Deklewu

serves the second.’ See Higdon, 434 U.S. 341, 98 S.Ct.

at 655 (noting R.J. Smith’s focus on employee free choice).

However, based on its “expertise and in light of {its}

experience in administering Section 8(f)”, the Board in

Deklewa perceived that the R.J. Smith voidability rule

did not serve, but actually hindered effective expression

of employee free choice while seriously damaging mainte-

nance of labor stability in the construction trades. Dek-

lewa, NLRB Dee. (CCH) at 31,706-07.

The appellee and amici here argue that by retaining

the power to repudiate unilaterally a pre-hire agreement,

employers have it in their power to protect their em-

ployees’ ‘“‘free choice” rights. We are mindful, as was

the Board in Deklewa, that an employer’s decision to

repudiate is more likely based on “the employer’s own

economic considerations, without reference to or concern

for the employees’ desire to continue the status quo.” 7d.

6 The “contract bar” provides that ence a certification election is

held within an appropriate bargaining unit, no other election may be

held for twelve months.

7 Section 8(f) confers only limited 9(a) status on unions that

have pre-hire agreements with employers. The second proviso to

section 8(f) allows for a certification or decertification election at

any time during a contract period in contradiction to the normal

presumption of majority support enjoyed by a full 9(a) bargaining

representative. Decklewa also noted:

fe]ven absent an election, upon the contract’s expiration, the

signatory union will enjoy no majority presumption and either

party may repudiate the &(f) relationship. The signatory em-

plover will be free at all times from any coercive union efforts,

including strikes and picketing, to compel the negotiation and,

or adoption of a successor agreement.

Deklewa, NLRB Dec. (CCH) at 31,709.

25a

at 31,706.* Also, both the employer and the emp!oyees

possess explicit statutory means by which to test em-

ployee support of a pre-hire bargaining representative.

By its terms, section &(f) does not confer full 9/a)

status on a union. The second proviso to the subsection

states that the ‘‘contract bar’ does not apply to an 8(f)

agreement. F.J. Smith interpreted the second proviso to

mean Congress intended to immunize only the prelim-

inary contractual steps which precede an employer’s ac-

quisition of a workforce. F.J. Smith, 191 N.L.R.B. at

694. In R.J. Smith, the Board determined that the pro-

viso, by limiting the 9(a) status of unions entering into

pre-hire agreements, was proof that Congress intended

that pre-hire agreements not be mandatory subjects of

bargaining and thus voidable at will. Jd. No necessary

connection exists, however, between the right to seek a

certification election and the right to refuse to follow a

freely negotiated contract. We conclude that Deklewa’s

literal reading of the second proviso is a more likely read-

ing of congressional intent than that given by R.J. Smith.

An employer is not required to wait one year before seek-

ing a representation election after he has entered into

a pre-hire contract. An employer, who after a reasonable

time perceives that he is bound by a contract with the

union whose minority status seems permanent, may peti-

tion under section 9(c) for an election.” Likewise, em-

8 Congress was also aware that:

fa] substantial majority of the skilled employees in this indus-

try constitute a pool of such help centered about their appro-

priate craft union. If the employer relies upon this pool of

skilled craftsmen, members of the union, there is no doubt

under these circumstances that the union will in fact represent

a majority of the employees eventually hired.

Leg.Hist., supra, at 424.

® Section 9(c), 29 U.S.C. § 159(c) (Hearings on questions affect-

ing commerce—Rules and regulations), states:

{ Continued |

26a

ployees may petition at any time under 9(c) or 9(e) to

either fully certify a union under 9(a) or to decertify

their putative union.'” The Board’s prior rule, allowing

repudiation of such agreements in addition to these ex-

plicit statutory protections, has proved unwise We agree

with the Board that it should be rejected. Neither the

language of the section nor its legislative history support

such an extra-statutory self-help remedy.

® | Continued }

(1) Whenever a petition shall have been filed, in accordance

with such regulations as may be prescribed by the Board—

(B) by an employer, alleging that one or more individuals

or labor organizations have presented to him a claim to be

recognized as the representative defined in section 9(a)

[subsec. (a) of this section];

the Board shall investigate such petition and if it has reason-

able cause to believe that a question of representation affecting

commerce exists shall provide for an appropriate hearing upon

due notice. Such hearing may be conducted by an officer or

emplovee of the regional office, who shall not make any recom-

mendations with respect thereto. If the Board finds upon the

record of such hearing that such a question of representation

exists, it shall direct an election by secret ballot and _ shall

certify the results thereof.

10 Section 9(e), 29 U.S.C. § 159(e) (Secret ballot—Limitation of

elections), states:

(1) Upon the filing with the Board, by 30 per centum or more

of the employees in a bargaining unit covered by an agree-

ment between their employer and a labor organization made

pursuant to section 8(a)(3). of a petition alleging they desire

that such authority be resemded, the Board shall take a secret

Sallot of the employees in such unit and certify the results

thereof to such labor organization and te the employer. (2) No

election shall be conducted pursuant to this subsection in any

bargaining unit or any subdivision within which, in the preced-

ing twelve-month period, a valid election shall have been held.

In Deklewa, the Board set out its policy covering the results of

such elections:

A vote to reject the signatory union will void the 8(f) agree-

ment and will terminate the 8(f) relationship. In that event,

27a

The R.J. Smith approach also spawned another species

of extra-statutory remedies to wnions. Under the “conver-

sion” doctrine, an 8(f) relationship and agreement may

“convert” to a full 9(a) relationship and agreement. Con-

version requires a showing that the signatory union en-

joyed majority support, during a relevant period, among

an appropriate unit of the employer’s employees. Con-

version may occur at any time during the working re-

lationship, from several days to some years after the

pre-hire agreement was negotiated. Conversion may oc-

cur without a majority of a bargaining representative.

See Deklewa, NLRB Dee. (CCH) at 31,705-07.

Indicia of majority support have included diverse and

often complex evidentiary proof. The courts and the

Board have looked at such factors as union membership

roles, Pacific Erectors, 256 N.L.R.B. 421, 424 (1981),

enforced sub nom. NLRB v. Pacific Erectors, Inc., 718

F.2d 1459, 1463 (9th Cir.1983), presence of enforced

union security clauses, Jrvin, 475 F.2d at 1270, employer

use of referrals from exclusive union hiring halls, Con-

struction Erectors Inc., 265 N.L.R.B. 786, 788 (1982),

union administered fringe benefit programs, Davis Indus.,

232 N.L.R.B. 946, 952 (1977), and employee statements

and actions. Amado Elec., 238 N.L.R.B. 37, 39 (1978).

Proof of these complex and difficult evidentiary issues is

often lacking. Deklewa, NLRB Dec. (CCH) at 31,707.

the Board will prohibit the parties from reestablishing the

8(f) relationship covering unit employees for a l-year period.

The purpose of this general prohibition is to preclude an

emplover and a union both from ignoring the electorally ex-

pressed preference of a majority of unit employees and from

maintaining an &(f) relationship during a period when the

Act precludes holding another election, the availability of which

is the sine qua non safeguard to permitting and enforcing an

8(f) contract. Failure to terminate the &8(f) relationship or its

premature reestablishment after an election will subject the

parties to &8(a)(2) and &(b)(1)(A) liability.

Deklewa, NLRB Dec. (CCH) at 31,709 (footnotes omitted).

28a

The courts and the Board also have been inconsistent in

their application of these factors. See, e.g., Precision

Striping, Inc. v. NLRB, 642 F.2d 1144, 1148 (9th Cir.

1981) (existence of majority union membership insuffi-

cient); Authorized Air Conditioning Co. v. NLRB, 606

F.2d 899, 906 (9th Cir.1979) ‘union membership not

necessarily proof of union support), cert. denied, 445 U.S.

950, 100 S.Ct. 1598, 63 L.Ed.2d 785 (1980); contra John

Ascuaga’s Nugget, 230 N.L.R.B. 275 n. 1 (1977) (ab-

sence of union membership does not necessarily indicate

lack of majority support).

Determining the appropriate bargaining unit under the

conversion doctrine is particularly difficult due to the

fragmented nature of the employment relationship in the

construction industry. The examination must determine

whether there is a single employer or multiple employers

and whether the employer uses a permanent and stable

workforce or hires on a job-to-job basis. The answers to

these questions will determine how and in what fashion

conversion takes place. See Mesa Verde, 820 F.2d at

1009-11; KBR Elec., 812 F.2d at 497-98.

In addition to the evidentiary problems created by the

conversion doctrine, it does little to promote employee

free choice or foster labor relations stability. Conversion

of an 8if) agreement into a full 9(a) agreement may

take place without the employees ever voting for or

against a proposed union. Conversion can take place al-

most immediately after negotiation of a pre-hire agree-

ment. Pacific Intercom, 255 N.L.R.B. 184, 191 (1981);

Wheeler Constr. Co., 219 N.L.R.B 541, 542 (1975) (con-

version occurred immediately on the parties’ adoption of

an 8if) agreement); cf Carrothers Constr. Co., 258

N.L.R.B. 175 n. 1 (1981) (conversion took place ten

years before an attempted repudiation). Rather than

protect the free choice of employees to choose or reject a

union, R.J. Smith and its associated conversion doctrine

may often prevent them from ever voting for or against

a particular union.

29a

The doctrine does not further industry stability. Its

complex nature inevitably fosters litigation, as in Mesa

Verde, to establish whether conversion ever took place,

among whom, and at what time. Neither the union, the

employer, nor the employees can ever know with real

certainty what their rights and obligations are under the

contract. Deklewa completely eliminates these problems.

On the signing of the contract, both parties will be re-

quired to comply with the agreement, absent a Board-

conducted election to reject or change a bargaining rep-

resentative. In determining the appropriate unit for

election purposes, the Board will no longer distinguish

between “permanent and stable” and “project by project”

workforces. Single unit employer units will be presumed

appropriate. Deklewa, NLRB Dee. (CCH) at 31,709.

In summary, we find that the Deklewa non-repudiation

rule appears consistent with the legislative history of sec-

tion 8‘f), as well as the dominant principles of employee

free choice and labor relations stability. Accordingly, we

adopt Deklewa’s non-repudiation rule as the law in this

circuit. We now turn to the other issue presented for

en banc review.

III. Royal Development.

On en banc review, we have also considered the “rule”

of Royal Dev. Co., Ltd. v. NLRB, 703 F.2d 363, 369 (9th

Cir.1983), that a panel of this court may not adopt a

Board decision that conflicts with circuit precedent. The

Mesa Verde panel stated that Royal Development pre-

cluded it from adopting Deklewa because circuit precedent

had followed the R.J. Smith approach. Mesa Verde, 820

F.2d at 1013.

Both the Board and the circuit courts are charged with

interpreting the NLRA and other labor laws. As noted,

the Board’s interpretation of its statutory mandate is

entitled to deference. Also, the Board is free to change

its interpretation of the law if its interpretation is rea-

30a

sonable and not precluded by Supreme Court precedent.

We should defer to its judgment if reasonable. See

Higdon, 434 U.S. at 350-51, 98 S.Ct. at 660-61. ~

The Royal Development rule, however, would seem to

preclude a three-judge panel of this court from adopting

a reasonable interpretation of labor law even though our

prior precedent was adopted out of deference to the

Board. We note the inconsistency of such a rule with our

treatment of Higdon and McNeff in this case. By hold-

ing that these Supreme Court cases are not binding con-

structions of section 8(f), we recognize the deferential

nature of judicial review of administrative decision-

making. To accord decisions of cur own court greater

deference than that given to the Supreme Court, would

be anomalous indeed. We hold, therefore, that if prior

decisions of this court constitute only deferential review

of NLRB interpretations of labor law, and do not decide

that a particular interpretation of statute is the only

reasonable interpretation, see United Food, 108 S.Ct. at

421, subsequent panels of this court are free to adopt

new and reasonable NLRB decisions without the require-

ment of en banc review."

Our holding is consistent with this and other circuits’

past adoption of NLRB decisions which conflicted with

prior circuit case law. For example, in Blueflasn Express,

109 N.L.R.B. 591, 592 (1954), the Board examined the

11Qn a pure question of statutory construction, our first job is

to try to determine congressional intent, using ‘traditional

tools of statutory construction.” If we can do so, then that

interpretation must be given effect . . . however, where “the

statute is silent or ambiguous with respect to the specific issue,

the question for the court is whether the agency’s answer is

based upon a permissible construction of the statute...

Under this principle, we have traditionally accorded the Board

deference with regard to its interpretation of the NLRA as

long as its interpretation is rational and consistent with the

statute.”

Id. (citations omitted).

8la

issue of “interrogations” by employers of employees’ views

about unions. The Board articulated an “all-the-cireum-

stances” test to determine whether the interrogation

restrained or interfered with employee rights under sec-

tion 8/a) (1) of the NLRA, 29 U.S.C. § 158(a) (1). This

court adopted this standard in numerous cases. See, ¢.9.,

NLRB v. Brooks Cameras, 691 F.2d 912, 919 (9th Cir.

1982); Lippincott Indus. v. NLRB, 661 F.2d 112, 114

(9th Cir.1981); Penasquitos Village, Inc. v. NLRB, 565

F.2d 1074, 1080 (9th Cir.1977). Later, the Board moved

away from the “all-the-cireumstances” test and adopted

a per se rule that any such interrogation was unlawful

under the Act. See, e.g., PPG Indus., 251 N.L.R.B. 1146,

1147 (1980); Paceo, a Div. of Fruehauf Corp., 237

N.L.R.B. 399, 400 (1978), vacated in part and remanded

in part, 601 F.2d 180 (5th Cir.1979). The Ninth Circuit

in turn has applied the per se rule. See, e.g., J.M. Tanaka

Constr., Inc. v. NLRB 675 F.2d 1029, 1037 (9th Cir.

1982); NLRB v. Fort Vancouver Plywood Co., 604 F.2d

596, 599 n. 1 (9th Cir.1979), cert. denied, 445 U.S. 915

100 S.Ct. 1275, 63 L.Ed.2d 599 (1980). Despite this con-

flicting case law, a panel of this circuit in Hotel Em-

ployees and Restaurant Employees Union, Local 11 v,

NLRB, 760 F.2d 1006, 1009 (9th Cir.1985), affirmed the

Board’s return to the “all-the-circumstances” test.'- The

court found that the current approach was a consistent

and reasonable interpretation of the Act and deferred

to the Board’s decision to change its standard. The

court did not find that it was bound by the prior circuit

precedents.

There are streng policy reasons why we should limit

the Royal Development rule. First, Royal Development

hinders the policy of judicial deference to “the Board's

reasonable interpretations and applications of the [Na-

12 Hotel Employees did not cite the Royal Development rule. The

court noted that the “‘all-the-circumstances” test “conflictled| with

a few Ninth Circuit cases” following a per se rule. Jd. at 1008.

32a

tional Labor Relations] Act.” Action Automotive, 469

U.S. at 496, 105 S.Ct. at 988. As the Supreme Court

recently recognized in Chevron, “considerable weight

should be accorded to an executive department’s construc-

tion of a statutory scheme it is entrusted to administer.”

467 U.S. at 844, 104 S.Ct. at 2782. This is especially

true “ ‘whenever decision as to the meaning or reach of

a statute has involved reconciling conflicting policies,

and a full understanding of the force of the statutory

policy in the given situation has depended upon more

than ordinary knowledge respecting the matters subjected

to agency regulations.’” Jd. (quoting United States v.

Shimer, 367 U.S. 374, 382, 81 S.Ct. 1554, 1560, 6 L.Ed.2d

908 (1961)). Deference is due even when the adminis-

trative agency changes its interpretation of statutes. See

Higdon, 434 U.S. at 351, 98 S.Ct. at 660. Royal Develop-

ment inhibits this court in affording the deference due

to reasonable NLRB interpretations where the circuit has

ruled on an earlie: interpretation, therefore impeding the

NLRB’s ability to change its interpretation in accord

with its experience and altered objectives.

Second, Royal Development prevents the NLRB from

enacting consistent, nationwide policies. Under the Royal

Development rule, our circuit will be frozen on certain

interpretations of NLRB statutes, whereas other circuit

would not, depending on the random occurrence of cases

. within the circuits. For example, if all circuits were to

follow Royal Development, the Ninth Circuit might be

bound by the NLRB’s 1963 interpretation of a given

statute, the Second Circuit might follow a completely

different 1971 interpretation, and the Fifth Circuit might

be bound by a third interpretation handed down in 1984.

Conversely, in the absence of Royal Development the

NLRB could gain simultaneous and timely application of

its interpretation throughout the country, thereby acting

with the flexibility and policymaking power granted to it

by Congress.

33a

Third, Royal Development is likely to encourage un-

justified appeais and delay by increasing the uncertainty

as to the law that ultimately will be applied in any case

where the NLRB has changed its interpretation after a

circuit precedent upholding a prior circuit interpretation.

Under Royal Development, the appeals court initially

will apply the circuit’s prior interpretation, but it is

always possible that an en bane court will reconsider the

issue and adopt the new interpretation if it is reasonable.

Fourth, it is likely that time constraints will preclude

en banc review of most cases and Royal Development,

therefore, will prevent the circuit from adopting the

NLRB’s reasonable interpretations of the statutes that

it is entrusted tu administer. Even if we make the im-

probable assumption that en bane courts will be able to

review every case presenting a new NLRB interpreta-

tion, the en bane procedures required by Royal Develop-

ment would constitute an enormous, unnecessary waste

of time. The determination in the first instance whether

an NLRB interpretation is reasonable is entrusted to

three-judge panels, and such panels may easily make this

same determination in cases where another panel already

has addressed a prior interpretation of the statute.’® For

reasons of efficiency, en bane review concerning the rea-

sonableness of an NLRB interpretation should be a matter

of last resort, not the initial means of considering the

new interpretation.

In summary, if a panel finds that a NLRB interpre-

tation of the labor laws is reasonable and consistent with

those laws, the panel may adopt that interpretation even

if circuit precedent is to the contrary. This is so, how-

ver, only where the precedent constituted deferential

review of NLRB decisionmaking. If the precedent held

either that the NLRB decision was unreasonable or the

13 As noted above, such cases do not merit en banc review be-

cause there exists no conflict with prior decisions.

34a

only possible interpretation of the statue, then the Royal

Development rule will apply.

We now turn to the final issue on en bane review—

whether Deklewa should be applied retroactively to this

case.

IV. Retroactivity.

In Chevron Oil Co. v. Huson, 404 U.S. 97, 92 S.Ct.

349, 30 L.Ed.2d 296 (1971), the Supreme Court articu-

lated the three factors applicable to. retroctivity anal-

ysis:

First, the decision to be applied nonretroactively

must establish a new principle of law, either by over-

ruling clear past precedent on which litigants may

have relied .. . or by deciding an issue of first im-

pression whose resolution was not clear foreshadowed.

... Second, it has been stressed that “we must...

weigh the merits and demerits in each case by look-

ing to the prior history of the rule in question, its

purpose and effect, and whether retrospective opera-

tion will further or retard its operation.” ... Fi-

nally, we have weighed the inequity imposed by

retroactive application, for “[w]here a decision of

this Court could produce substantial inequitable re-

sults if applied retroactively, there is ample basis

in our cases for avoiding the ‘injustice or hardship’

by a holding of nonretroactivity.”

Id. at 106-07, 92 S.Ct. at 355 (citations omitted).

We note that Deklewa overrules clear precedent that

the employer in Mesa Verde obviously relied on in re-

pudating the pre-hire avreements. We remand to the

Mesa Verde panel to apply the Chevron factors.

CONCLUSION

We adopt Deklewa as the law of this circuit and hold

that pre-hire agreements may not be unilaterally re-

eee

| |

35a

pudiated by either a union or an employer prior to its

termination or absent an election among the appropriate

bargaining unit’s employees to reject the union. We find

that Deklewa better advances the statutory objectives of

the NLRA, better serves the goals of employee free choice

and labor-management stability, and assists in reducing

litigation fostered by prior precedent. We limit the Royal

Development rule to cases where this circuit has found

an NLRB interpretation unreasonable or the only pos-

sible construction of statute. We REMAND the issue of

retroactivity to the Mesa Verde panel to consider that

issue in light of Chevron Oil Co. v. Huson.

REMANDED.

WALLACE, Circuit Judge, dissenting:

In Chevron U.S.A. Inc. v. National Resources Defense

Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d

694 (1984), the Supreme Court set forth a two-step

review of an agency’s construction of the statute which

it administers:

First, always, is the question whether Congress has

directly spoken to the precise question at issue. If

the intent of Congress is clear, that is the end of

the matter; for the court, as well as the agency, must

give effect to the unambiguously expressed intent of

Congress. If, however, the court determines Con-

gress has not directly addressed the precise question

at issue, the court does not simply impose its own

construction on the statute, as would be necessary in

the absence of an administrative interpretation.

Rather, if the statute is silent or ambiguous with

respect to the specific issue, the question for the court

is whether the agvency’s answer is based on a per-

missible construction of the statute.

Id. at 842-43, 104 S.Ct. at 2781-82 (footnotes omitted).

The Court has reaffirmed the continuing vitality of both

36a

the first step under Chevron, see, e.g., Bethesda Hospital

Association v. Bowen, U.S. , 108 S.Ct. 1255,

1258, 99 L.Ed.2d 460 (1988); INS v. Cardoza-Fonseca,

480 U.S. 421, 107 S.Ct. 1207, 1220-21, 94 L.Ed.2d 434

(1987), and the second step. See, e.g., Fall River Dyeing

& Finishing Corp. v. NLRB, US. , 107 S.Ct.

2225, 2235, 96 L.Ed.2d 22 (1987) (cited in NLRB v.

United Food & Commercial Workers Union, U.S.

, 108 S.Ct. 4138, 421, 98 L.Ed.2d 429 (1987), as a

case in which the Court applied the second step under

Chevron). When the Court interprets a statute under

the first step of Chevron, its interpretation is conclusive

and authoritative.

Although I believe the question is close concerning the

Supreme Court’s conduct in the pre-Chevron cases of

Jim McNef, Inc. v. Todd, 461 U.S. 260, 103 S.Ct. 1753,

75 L.Ed.2d 830 (1983), and NLRB v. Local Union No.

103, International Association of Bridge Structural &

Ornamental Iron Workers, 434 U.S. 335, 98 S.Ct. 651,

54 L.Ed.2d 586 (1978), I am persuaded that the Supreme

Court conclusively and authoritatively interpreted section

8(f), rather than merely deciding that the NLRB’s in-

terpretation was permissible. Thus, as a circuit court,

we are bound to follow the Court’s interpretation. There-

fore, I concur in the result reached by Judge Hug and

dissent from the majority opinion.

HUG, Circuit Judge, with whom Circuit Judges

BRUNETTI and KOZINSKI concur, dissenting:

I respectfully dissent.

The principal issue in this case is whether a prehire

agreement entered into under the authority of section

8(f) of the National Labor Relations Act (“NLRA’’) can

be repudiated by the employer until the union establishes

majority status. The Supreme Court, in a unanimous

opinion and in language that could not be clearer, has

held that it can be. The Court stated:

37a

A § 8(f) prehire agreement is subject to repudia-

tion until the union establishes majority status.

Jim MeNeff, Inc. v. Todd, 461 U.S. 260, 271, 103 S.Ct.

17538, 1759, 75 L.Ed.2d 830 (1983).

Despite this clear statement in McNeff, the majority

upholds a contrary view of the NLRB. It dismisses the

language in McNeff on the ground that the Court there

merely followed its prior decision, NLRB v. Iron Work-

ers, 484 U.S. 335, 98 S.St. 651, 54 L.Ed.2d 586 (1978)

(hereinafter Higdon). The majority feels, in turn, that

the Court in Higdon did not actually construe section

8(f), but instead simply held that the Board’s construc-

tion of section 8(f) was within a range of possible

reasonable constructions. Such a limited holding would

leave room for other, equally reasonable, constructions

of the Act. Thus the majority contends that a new con-

struction by the Board, even one which is directly con-

trary to the pronouncement of the Supreme Court in

McNeff, is permissible if it can be justified as being

reasonable. See Opinion at 1129-1131.

I part company from the majority because I believe

the Supreme Court did definitively construe section 8(f)

in both Higdon and McNeff, although the Court may have

given deference to the Board’s interpretation in doing so.

The Court did not, as the majority suggests, decide only

that the Board’s interpretation was a reasonable con-

struction of the Act subject to change at the agency’s

whim. Instead—after giving heightened consideration to

the Board’s arguments—the Court passed judgment upon

the meaning of section 8(f) and such judicial interpre-

tation is binding under our principle of stare decisis.

This case presents a vital question concerning the

relative roles of the judiciary and administrative agen-

cies in construing statutes, the importance of which, in

38a

my view, transcends the particular point of labor law

at issue. We are here faced with a question of pure

stautory interpretation. We are concerned with deter-

mining Congressional intent. Specifically, our inquiry is

how Congress intended a prehire agreement to operate.

The Supreme Court in Higdon and McNeff interpreted

the statute after giving some deference to the interpre-

tation of the NLRB, the agency charged with administer-

ing the Act. The NLRB, at that time, gave persuasive

arguments that Congress intended to allow either party

to repudiate the contract until the Union achieved major-

ity status.

The NLRB’s position, however, was by no means bind-

ing on the Court. Congress did not delegate to the NLRB

the discretion to determine how a prehire agreement was

to operate, allowing the Board to treat the agreement in

any manner that the Board considered would best imple-

ment sound labor policy. Congress simply enacted sec-

tion 8/f), which was to be interpreted by the courts.

That section has been interpreted by the highest court

authority—the United States Supreme Court—after care-

ful consideration of the statutory language, legislative

history, and the interpretation placed upon it by the

agency charged with its enforcement. That interpretation

must stand until it is overruled by the Supreme Court or

until Congress amends the statute.

I therefore believe we are bound by Higdon and Mc-

Neff to reject the Board’s new Deklewa rule. The major-

ity apparently believes that the stare decisis value of

Higdon and McNeff is vitiated by virtue of the deference

accorded in those cases to the Board’s interpretation of

the Act. I submit that the majority misconceives the true

nature of the deference granted in those eases. An exam-

ination of the role of deference in the two cases reveals

that the Court did, in fact. render its own interpretation

of section 8(f), and, in doing so, created precedent to

which we must adhere.

39a

Confusion in this area is quite understandable. A vast

number of cases discuss the proper deference accorded to

an agency’s interpretation of a statute, but, as one dis-

tinguished author notes, such discussions are often laced

with “verbalisms [that] have rarely been helpful and

have usually been harmful; [and] are often uncertain,

conflicting and even confusing.” 5 K. Davis, Administra-

tive Law Treatise, § 29.1, at 334 (2d ed. 1984). Behind

the confusing verbiage lies, I believe, two very distinct

principles of judicial deference to agencies. Moreover,

the two breeds of deference have vastly different effects

on the principle of stare decisis. It is evident to me that

the majority has mistaken one type of deference for the

other, and thereby misjudged the stare decisis effect of

both Higdon and McNeff.

IT.

The type of deference underlying the Supreme Court’s

ruling in Higdon and McNeff is appropriate in cases

when the Court confronts a pure question of statutory

construction. When the Court seeks to ascertain the mean-

ing of an ambiguous statutory provision, it gives special

consideration to the viewpoint of the agency charged with

implementing the statute. Such deference is due because

the agency “constitute[s] a body of experience and in-

formed judgment to which courts . . . may properly re-

sort for guidance.” Federal Maritime Bd. v. Isbrandtsen

Co., 356 U.S. 481, 499, 78 S.Ct. 851, 862, 2 L.Ed.2d 926

(1958). As Davis notes, the deference given by judges

for interpretations of administrators “is not at all sur-

prising’: it is simply a matter of “[{d]eference of gen-

eralists for the views of specialists [which] could be

deemed a part of the law of nature... .” K. Davis,

supra, at 400.

However, such deference does not intrude on the

Court’s role as the final authority on questions of statu-

tory construction. As the Supreme Court stated in Securi-

40a

ties Indus. Ass’n v. Board of Governors, 468 U.S. 1387,

143, 104 S.Ct. 2979, 2982, 82 L.Ed.2d 107 (1984), “Judi-

cial deference to an agency’s interpretation of a statute

‘only sets “the framework for judicial analysis; it does

not displace it.”’” See also Barlow v. Collins, 397 U.S.

159, 166, 90 S.Ct. 832, 837, 25 L.Ed.2d 192 (1970)

(“{When] the only or principal dispute relates to the

meaning of the statutory term, the controversy must ulti-

mately be resolved, not on the basis of matters within

the special competence of the [agency], but by judicial

application of canons of statutory construction.”); Bat-

terton v. Francis, 482 U.S. 416, 424, 97 S.Ct. 2399, 2405,

53 L.Ed.2d 448 (1977) (‘|A|dministrative interpreta-

tions of statutory terms are given important but not con-

trolling significance.” ).

Over the years, the Supreme Court has repeatedly af-

firmed its role as the final authority on issues of statutory

construction. See, e.g., SEC v. Sloan, 436 U.S. 103, 118,

98 S.Ct. 1702, 1711, 56 L.Ed.2d 148 (1978) (“[T]he

courts are the final authorities on issues of statutory

construction |and] ‘are not obliged to stand aside and

rubber-stamp their affirmance of administrative decisions.

. .” (Citations omitted.)); 7NS v. Cardoza-Fonseca,

480 U.S. 421, 107 S.Ct. 1207, 1221, 94 L.Ed.2d 434

(1987). (“The judiciary is the final authority on issues

of statutory construction. ...’’) (quoting Chevron U.S.A.,

Inc. v. Natural Resources Defense Council, 467 U.S. 837,

843 n. 9, 104 S.Ct. 2778, 2781 n. 9, 81 L.Ed.2d 694

(1984)); Federal Election Comm’n v. Democratic Sena-

torial Campaiqn Committee, 454 U.S. 27, 32, 102 S.Ct.

38, 42, 70 L.Ed.2d 23 (1981); Bureau of Alcohol, To-

bacco and Firearms v. F.L.R.A., 464 U.S. 89, 97, 104

S.Ct. 439, 444, 78 L.Ed.2d 195 (1983).

It is equally well-settled that deference is not due to

an agency’s construction of a statute where the statutory

language is clear. United States v. Missouri Pacific R.

Co., 278 U.S. 269, 280, 49 S.Ct. 133, 187, 73 L.Ed. 322

4la

(1929); Swift Co. v. United States, 105 U.S. 691, 695,

26 L.Ed. 1108 (1881); United States v. Tanner, 147 U.S.

661, 663, 13 S.Ct. 436, 437, 37 L.Ed. 321 (1893). When

the statutory language is ambiguous, the amount of

weight given to the agency’s interpretation depends on a

variety of factors, such as the thoroughness of the agen-

cy’s consideration, whether the agency’s construction has

been consistent over the years, and whether the timing

of the agency’s construction was contemporaneous with

the passage of the statute. United States v. Sweet, 189

U.S. 471, 473, 23 S.Ct. 638, 638, 47 L.Ed. 907 (1902);

Federal Maritime Bd. 356 U.S. at 499-500, 78 S.Ct. at

862-63: United States v. Johnston, 124 U.S. 236, 253,

8 S.Ct. 446, 455, 31 L.Ed. 389 (1888); United States v.

American Trucking Ass’ns., Inc., 310 U.S. 534, 549, 60

S.Ct. 1059, 1067, 84 L.Ed. 1345 (1940); United States v.

Leslie Salt Co., 350 U.S. 383, 396-97, 76 S.Ct. 416, 423-

24, 100 L.Ed. 441 (1956). See also Cardoza-Fonseca, 107

S.Ct. at 1221 n. 30 (less deference accorded to agency

when agency has changed its mind).

With these principles in mind, it is evident that a court

faced with an issue of pure statutory interpretation must

make its own independent judgment as to the meaning

of the statute. Because it is the final authority on such

matters, it cannot delegate its function to the agency.

Though a court may give a certain amount of deference

to the agency’s interpretation of the statute, its analysis

must not end there. Rather, the court must either adopt

the agency’s position as its own interpretation of the

Act, or adopt a construction other than that promoted

by the agency. In either case, the court makes its own

final judgment as to the meaning of the statute. The

court’s determination as to the meaning of the statute

is no less its own simply because it accorded deference to

the agency and accepted the agency’s construction.

Because courts cannot escape their function as final

authorities on issues of statutory interpretation, their

42a

decisions on such matters are binding regardless of the

degree of deference given to the agency in reaching the

decision. As the Supreme Court noted in Estate of San-

ford v. Commissioner, 308 U.S. 39, 60 S.Ct. 51, 84 L.Ed.

20 (1939), “[Wle should be... free to reject [an ad-

ministrative] practice when it conflicts with our own

decisions. A change of practice... will be accepted as

controlling when consistent with our decisions.” Id. at

53, 60 S.Ct. at 60 (emphasis added). In a similar vein,

Justice Stevens noted the binding effect of the Supreme

Court’s decisions of statutory interpretation in Shearson

American Express, Inc. v. McMahon, 482 U.S. 220, 107

S.Ct. 2332, 96 L.Ed.2d 185 (1987), where he stated:

Gaps in the law must, of course, be filled by judi-

cial construction. But after a statute has been con-

strued, either by this Court or by a consistent course

of decision by other federal judges and agencies, it

acquires a meaning that should be as clear as if the

judicial gloss had been drafted by the Congress itself.

Id, 107 S.Ct. at 23859 (J. Stevens, concurring and dis-

senting). To summarize, in cases where the Supreme

Court confronts an issue of pure statutory interpretation,

the deference accorded to the agency’s construction of

the statute does not impinge in the least upon the stare

decisis effect of the decision. The decision is binding

upon the agency and upon lower courts.'

1Of course, after operating under a decision of the Court, the

agency may persuade the Court that the Court’s initial construc-

tion of the statute was erroneous, and may urge the Court to adopt

an alternative construction. The Court may be persuaded to do so,

for the agency’s experience in implementing the statute under the

former construction may demonstrate that such a _ construction

could not have been intended by Congress in light of the difficulties

it poses for implementation, or in light of other policy reasons

unveiled since the Court’s decision. But for the Court to adopt

the later agency position, it would have to overrule its prior decision

adopting the former construction.

43a

ITT.

The other type of deference is markedly different and

readily distinguishable from the type discussed above.

This is the deference given to an administrative agency

when Congress has delegated to the agency the authority

to further define the specifics of a general proposition

of law. Unlike the deference discussed above, when this

type of deference underlies a court’s decision, stare decisis

is affected. Exploring the roots of such deference demon-

strates why.

In some instances, Congress purposefully does not re-

solve competing economic or social interests in particular

areas and instead leaves this to the agency. In other

situations, Congress enacts quite general provisions, with

the specifics to be filled in by the agency. As noted in

Chevron,

If Congress has explicitly left a gap for the agency

to fill, there is an express delegation of authority to

the agency to elucidate a specific provision of the

statute by regulation. Such legislative regulations

are given controlling weight unless they are arbi-

trary, capricious, or manifestly contrary to the stat-

ute. Sometimes the legislative delegation to an

agency on a particular question is implicit rather

than explicit. In such a case, a court may not sub-

stitute its own construction of a statutory provision

for a reasonable interpretation made by the admin-

istrator of an agency.

We have long recognized that considerable weight

should be accorded to an executive department’s con-

struction of a statutory scheme it is entrusted to

administer. ...

Chevron, 467 U.S. at 848-44, 104 S.Ct. at 2783 (foot-

notes omitted). Thus there are two categories of deleza-

tion: (a) explicit delegation: and (b) implicit delega-

tion.

44a

The Chevron case itself provides excellent examples of

both explicit and implicit delegation. The case concerned

the Clean Air Act, the administration of which is

entrusted to the Environmental Protection Agency

(“EPA”). Congress directed the EPA to promulgate

National Ambient Air Quality Standards, to publish a

list of categories of pollution sources, and to establish

new source performance standards for each. See Chev-

ron, 467 U.S. at 846, 104 S.St. at 2783. This was an

express delegation of authority by Congress to develop

the specifies of general legislation. At issue in Chevron

was the meaning of the statutory term “stationary

source.” There had been no specific delegation of au-

thority to define that term. However, the Court found

that Congress intended that there not be a static judicial

definition of the term but, instead, a flexible definition

to be applied by the EPA in order to carry out the gen-

eral policy of the Act. Thus the Court found an implicit

delegation of authority to the EPA to determine the

meaning of “stationary source.” See id. at 862-66, 104

S.Ct. at 2791-93.

When there exists an ewplicit delevation of authority

to fill gaps in the legislation, this function is generally

fulfilled by the adoption of regulations. When the agency

enacts rezulations or procedures designed to apply the

statute to various factual situations its rule-making as-

sumes a quasi-lezislative character. See Batterton, 432

U.S. at 424 n. 8, 97 S.Ct. at 2405 n. 8 (“ ‘Administra-

tion, when it interprets a statute so as to make it apply

to particular circumstances, acts as a delegate to the legis-

lative power.’”) (Citations omitted.) See also NLRB v.

Hearst Publications, Inc., 322 U.S. 111, 130-31. 64 S.Ct.

851, 860-61, 88 L.Ed. 1170 (1944); State of Montana v.

Clark, 749 F.2d 740, 745 (D.C.Cir.1984), cert denied,

474 U.S. 919, 106 S.Ct. 246, 88 L.Ed.2d 255 (1985).

A court, in reviewing such regulations, is not actually

confronted with an issue of statutory interpretation, for

45a

there is nothing in the statute per se to interpret: Con-

gress left a gap, entrusting the agency to fill it. A re-

viewing court is not free to set aside those regulations

simply because it would have refined the statute in a

different manner. Batterton, 432 U.S. at 425, 97 S.Ct. at

2405. Thus, the judicial task when reviewing an agency’s

regulations designed to fill a gap left by Congress differs

fundamentally from the judicial task in determining the

meaning of the statute. In the former case, the court

does not confront an issue of statutory interpretation

and, thus, its authority is limited to reviewing the regu-

lations to ensure that Congress gave the agency the power

to make such regulations, and to ensure that the regula-

tions are consistent with the statutory scheme. In the

latter case, the court is the final authority as to the

statute’s meaning and may defer to the agency’s inter-

pretation as it deems appropriate, but its holding reflects

a judicial construction of the statute. In both types of

cases, the principle of deference is employed by courts,

but the principle operates very differently in each con-

text.

When the delegation from Congress is implicit rather

than explicit, the principle is the same. In Chevron, the

Court determined that the term “stationary source” in

the Clean Air Act had been intended by Congress as a

fiexible definition to be refined by the EPA, to which it

had entrusted wide discretion in administering the legis-

lation. Thus, the Court’s inquiry was only whether the

EPA’s construction of that term was reasonable. As in

the case of an express delegation. where Coneress con-

templates future regulations, the Court deferred to the

EPA’s interpretation of the term as being a reasonable

exercise of the delegated authority. Chevron, 467 U.S. at

865-66, 104 S.Ct. at 2793. This differs markedly from

the deference given to an agency in resolving a pure

question of statutory interpretation.

As an example of how the principle of deference oper-

ates in each context, it is useful to contrast Chevron with

46a

Cardoza-Fonseca. In Chevron, the Court determined that

Congress left a gap in the statute for the agency to fill;

consequently, the Court exercised very limited review of

the agency’s regulations. Chevron, 467 U.S. at 845, 104

S.Ct. at 2783. In Cardoza-Fonseca, however, the Court

found that the question before it was a “pure question

of statutery construction for the courts to decide” and

repected the agency’s interpretation of the statute.

Cardoza-Fonseca, 107 S.Ct. at 1220-21.

As previously noted, stare decisis cyerates with full

force whenever a court decides a question of statutory

interpretation, regardless of the amount of deference

given to the agency in reaching its decision.

IV.

With this framework of statutory analysis in mind, the

next step is to examine what the Supreme Court actually

did in the Higdon and McNeff cases, when it construed

section 8(f) of the NLRA. Did the Court, as I main-

tain, make a determination of Congressional intent as to

the type of contract that a prehire agreement was meant

to be? Or did the Court merely find that Congress dele-

gated to the NLRB the task of determining the contrac-

tual nature of a prehire agreement, and that the NLRB’s

determination was reasonable, thus leaving the agency

free to adopt other positions at a later time?

I bezin with Hiqdon. In that case, the Court held that

the Board properly applied section 8(b)(7)(C) of the

NLRA to a section &8(f) prehire agreement. The Board

had held that picketing to enforce a section 8(f} prehire

agreement was tantamount to recognitional picketing, and

that section 8/b)(7){C) was violated when the union

failed to request an election within 30 days.

In analvzing the Court’s discussion of section 8(f)

within the framework of statutory analysis I have set

forth above, it is apparent to me that the interpretation

of section 8(f)' is one of pure statutory construction.

47a

The deference given to the Board was that of considering

the Board’s position in arriving at that construction.

There is no indication that there wis either an express

or implicit delegation to the Board to refine standards or

to fill in gaps in section 8(f). Nor is it a situation in

which the statute is merely being applied to the facts of

a particular case. It is purely a construction of what

Congress intended in enacting section 8(f). There are

extensive references in Higdon to the legislative history

and statutory policy of Congress. The Court concluded

2 See e.g.,

The Board’s position is rooted in the generally prevailing

statutory policy that a union should not purport to act as the

collective bargaining agent for all unit employees, and may

not be recognized as such, unless it is the voice of the majority

of the employees in the unit.

As for $8(b)(7), which, along with § 8(f), was added in

1959, its major purpose was to implement one of the Act’s

principal goals—to ensure that employees were free to make an

uncoerced choice of bargaining agent. As we recognized in

Connell Construction Co. v. Plumbers & Steamfitters, 421 U.S.

616 [95 S.Ct. 1830, 44 L.Ed.2d 418] (1975), “[o]ne of the

major aims of the 1959 Act was to limit ‘top down’ organizing

campaigns, in which unions used economic weapons to force

recognition from an employer regardless of the wishes of his

employees.” Id., at 632 [95 S.Ct., at 1840], and references cited

therein.

Congressional concern about coerced designations of bar-

gaining agents did not evaporate as the focus turned to the

construction industry. (n. 10)

(n. 10) Congress was careful to make its intention clear that

prehire agreements were to be arrived at voluntarily, and no

element of coercion was to be admitted into the narrow excep-

tion being established to the majority principle. Representa-

tive Barden, an important House floor leader on the bill and a

conferee, introduced as an expression of legislative intent

Senator Kennedy's explanation the vear before of the voluntary

nature of the prehire provision]. |

Higdon, 434 U.S. at 344-48, 98 S.Ct. at 657-59 (emphasis added).

48a

that although the Act made prehire agreements in any

other industry an unfair labor practice, Congress in-

tended to create an exception for the construction indus-

try. The Court found that Congress authorized an em-

ployer and a union to enter into a voluntary prehire

agreement in the construction industry without the union

having achieved majority status, and that Congress did

not give prehire agreements any other status within the

NLRA. It was a voluntary agreement that could be re-

pudiated until the union achieved majority status.

The majority cites the following language in the Hig-

don opinion.

We have concluded that the Board’s construction of |

the Act, although perhaps not the only tenable one,

is an acceptable reading of the statutory language

and a reasonable implementation of the purposes of

the relevant statutory sections.

Id. 434 U.S. at 341, 98 S.Ct. at 656 (footnote omitted).

The majority interprets this language to mean that the

Court did not “independently construe the reach and

scope of section 8(f).” Maj. op. at 1129-30. I do not

read it that way. In my mind, the Court simply articu-

lated the deference it gave to the Board’s views in reach-

ing its own interpretation of the statute.

Certainly, if Higdon leaves any doubt, there is abun-

dant language in McNeff to demonstrate that, in both

cases, the Court arrived at its own interpretation of

Congressional intent in enacting section 8(f). The issue

in McNeff was whether the monetary obligations of a

section 8(f) prehire agreement could be enforced prior

to repudiation. The opinion repeatedly acknowledged that

a section 8(f) agreement was voidable. The references

throughout McNeff are to the intent of Congress in en-

acting section 8(f). For example, the Court stated:

Y In unholding the Board’s view that a union com-

mits an unfair labor practice by picketing to enforce

ee |

49a

a prehire agreement before it has attained majority

status, we noted in Higdon that this view protects

two interests that Congress intended to uphold when

it enacted § 8(f).

> 66,

[O]ur decision in Higdon promotes Congress’ “in-

tention . . . that prehire agreements were to be ar-

rived at voluntarily... .” Higdon, 434 U.S., at 348,

n. 10 [98 S.Ct., at 659, n. 10]. In accord with this

intention, we approved the Board’s conclusion that a

‘nrehire azreement is voidable” “until and unless

[the union] attains majority support in the relevant

unit.” Jd., at 341 [98 S.Ct., at 655]. Allowing the

union to picket to enforce a prehire agreement be-

fore it attains majority status is plainly inconsistent

with the voidable nature of a prehire agreement.

The concerns with the $7 rights of employees to

select their own bargaining representative and our

fidelity to Congress’ intent that prehire agreements

be voluntary—and voidable—that led to our decision

in Higdon are not present in this case.

In a § 301 suit, the District Court merely enforces

a contract entered into by the employer—a contract

that Congress has legitimated to meet a special situa-

tion even though employees themselves have no part

in its negotiation or execution. Such enforcement

does not grant the plaintiff union a right otherwit

enjoyed only by a majority union except in the very

narrow sense, expressly intended by Congress, that

employers and minority unions in the construction

industry do not violate the Act by entering into pre-

hire agreements. There is no sense in which re-

spondents’ contract action has a recognitional pur-

pose like that forbidden in Higdon.

Neither does respondents’ § 301 action trench on

the voluntary and voidable characteristics of a § 8(f)

50a

prehire agreement. It is clear in this case that peti-

tioner entered into the prehire agreement voluntarily.

Moreover, although the voidable nature of prehire

agreements clearly gave petitioner the right to re-

pudiate the contract, it is equally clear that petitioner

never manifested an intention to void or repudiate

the contract. . . . Whatever may be required of a

party wishing to exercise its undoubted right to re-

pudiate a prehire agreement before the union attains

majority support in the relevant unit, no appropriate

action was taken by petitioner to do so in this case.

Consequently, respondents’ suit does not enervate

the voluntary and voidable characteristics of the pre

hire agreement.

Apart from not offending the concerns noted in

Higdon, allowing a minority union to enforce over-

due obligations accrued under a prehire agreement

prior to its repudiation vindicates the policies Con-

gress intended to implement in § 8(f). Congress

clearly determined that prehire contracts should be

lawful to meet problems unique to the construction

industry.

Id. 461 U.S. at 267-71, 103 S.Ct. at 1757-59 (footnotes

omitted) (emphasis added).

Throughout the opinion, the Court repeatedly referred

to the prehire agreements as being voluntary and voidable

with the undoubted right of a party to repudiate the

agreement prior to the union achieving majority status.

The constant reference to the “voidable nature” of such

agreements serves as a strong reminder that the Supreme

Court has decided the issue before us in this case and,

in doing so, has discerned the Congressional intent behind

section 8(f) and rendered its own independent interpre-

tation of that section. As previously discussed, the Court

had no choice but to render its independent construction

oi section 8(f) for it was faced with a pure question of

5la

statutory construction. The Supreme Court is the final

authority on such matters and the deference it gives to

the Board’s view cannot impinge on the stare decisis

effect of its ruling.

The majority points to a line of cases in which this

circuit adopted a changed Board position, even in face

of prior circuit precedent upholding the former Board

position. See Opinion at 1135. The cases cited are ones

in which we reviewed the Board’s test for determining

whether an employer’s interrogation of an employee

regarding union activities violates the employee’s

rights under section 8(a)(1) of the NLRA. The

majority is quite correct in pointing out that the Board

over the years changed its test from an “all the circum-

stances” test to a “per se” rule and back again. Despite

the vacillation, and even though we had previously upheld

the per se rule, (see, e.g., NLRB v. Fort Vancouver Ply-

wood Co., 604 F.2d 596, 599 n. 1 (9th Cir.1979)), we

affirmed the Board’s return to the “all the circumstances”

test in Hotel Employees & Restaurant Employees Union,

Local 11 v. NLRB, 760 F.2d 1006, 1009 (9th Cir.1985).

The majority, however, has again failed to examine the

type of deference operating in those cases. Those cases

did not involve questions of pure statutory interpretation,

but rather questions relating to the Board’s application

of a statutory provision to the facts in particular cases.

Specifically, the cases dealt with the standard developed

by the Board to apply section 8(a)(1) of the NLRA to

circumstances in which an employer interrogates an em-

ployee about the employee’s union sympathies. Section

8(a)(1) makes it an unfair labor practice for an em-

ployer “to interfere with, restrain, or coerce employees

in the exercise of the [employee organizational] rights.

..” 29 U.S.C. § 158(a) (1). In applying the statutory

proscription on a case-by-case basis, the Board, at dif-

ferent times, developed two different evidentiary require-

ments. Under the “per se” standard developed by the

52a

Board, any questions concerning union sympathies were

deemed inherently coercive in violation of section 8(a)

(1). See Hotel, 760 F.2d at 1007. Under the “all the

circumstances” test, the interrogation was found unlaw-

ful only where “ ‘under all the circumstances the- inter-

rogation reasonably tend[ed] to restrain or interfere with

the employees in the exercise of rights guaranteed by

the Act.’” Jd. at 1008 (citation omitted).

These differing standards represent a classic example

of the Board applying the statute to everyday situations.

The review in those cases is directed towards the Board’s

manner of enforcing the Act, not to the meaning of the

statutory language itself. As in all cases which apply

the law to everyday circumstances, the proper scope of

review of the Board’s standard in Hotel was “for ra-

tionality and consistency with the Act.” Jd. The panel

concluded, “A standard which considers the totality of

the circumstances surrounding an employee interroga-

tion is a realistic approach to the enforcement of section

8(a) (1). It is a standard that is consistent with the Act

because the Board . . . can determine, on a case-by-case

basis, whether all the facts demonstrate coercive be-

havior.” Jd. at 1009 (emphasis added).

In sum, the line of cases cited by the majority do not

provide authority for this court’s departure from either

Supreme Court precedent or this circuit’s precedent in

which questions of statutory meaning are decided.*

3 Another example of the agency changing its position with this

court’s approval is the Board’s treatment of representation elec-

tions. Over a period of 20 years, the NLRB changed its position

four times on the issue of when a representation election should

be set aside on the grounds of misrepresentation. NLRB v. Best

Products Co., Inc., 765 F.2d 903, 910 (9th Cir. 1985). The NLRB

vacillated between the Hollywood Ceramics standard, where an elec-

tion would be set aside when there was a “substantial departure

from the truth,” and the Shopping Kart Food Market standard, un-

der which an election would not be set aside solely because there

had been misrepresentations of fact. See Best, 765 F.2d at 910-11

53a

VI.

I agree with the majority that we must treat our

own circuit precedent in a manner consistent with our

treatment of Supreme Court precedent. The majority

achieves its consistency by overruling Royal Development

v. NLRB, 703 F.2d 363 (9th Cir.1983). My belief is

simply that, when a panel of our court decides an issue

of pure statutory construction, its ruling is binding on

future panels and may be departed from only by an en

bane panel. This is so despite the deference accorded

to the agency in arriving at that interpretation of the

statute.

CONCLUSION

I believe the ramifications of the majority’s ruling ex-

tend far beyond the area of labor law into the entire

realm of administrative law. Underlying the majority’s

holding is, in my mind, a misconception of the nature of

(discussing NLRB’s changes of policy). In Best, this court upheld

the Board’s adherence to the Shopping Kart standard even though

the Board had vacillated between the two standards, and even though

this court had previously upheld the Hollywood Ceramics standard.

See, e.g., NLRB v. Sauk Valley Mfg. Co., Inc., 486 F.2d 1127, 1131

(9th Cir. 1973). We recognized in Best, “The Board may alter

its standards provided that its new rules are both rational and con-

sistent with the Act.”’ 765 F.2d at 912. We noted that the “NLRB

has wide discretion to determine representation matters and ques-

tions arising during election proceedings,” id. at 908, and confined

our standard of review to two inquiries: (1) “‘whether the Board

acted within an area of regulation committed to it by Congress,”

and (2) “whether the Board properly applied the correct legal

standard.” Jd. at 907. We concluded that there was a “ ‘reasonable

basis in law’ for the Board’s change of policy” and deferred to the

Board’s decision. 7d. at 913. Again, this is the type of deference

which is properly employed in reviewing a Board’s application

of the statute to the facts of particular cases. It must not be con-

fused with the deference accorded to an agency’s view of the mean-

ing of the statute. As with the line of cases mentioned in the

majority opinion, this example provides no support for departing

from prior circuit precedent on issues of statutory construction.

54a

deference given to an agency on a purely legal question

of statutory interpretation. In the name of administra-

tive deference, the majority would deprive this court of

its role of divining Congressional intent behind a statu-

tory provision, and assign that role to the agency charged

with administering the statute. The potentially grave

consequences resulting from this misapplication of the

deference principle need not be enumerated here.

I reiterate my position that McNeff and Higdon con-

stitute binding precedent which we are obliged to follow.

The Supreme Court’s holdings, in my view, cannot be

dismissed as simply affirming the Board’s then-position

while leaving room for the Board to adopt the opposite

approach at a later point in time. Rather, the Supreme

Court in those cases construed section 8(f) and found,

after giving a certain amount of deference to the Board’s

views, that Congress intended prehire agreements to be

voidable. We are bound by that determination unless

and until such time the Court overrules its prior opinions

or Congress amends the statute.

KOZINSKI, Circuit Judge, with whom BRUNETTI,

Circuit Judge, joins, dissenting:

“Tt is, emphatically, the province and duty of the ju-

dicial department, to say what the law is.” Marbury ».

Madison, 5 U.S. (1 Cranch) 137, 176, 2 L.Ed. 60 (1803).

To Marbury’s ringing pronouncement the majority would

add a codicil: ‘‘until and unless the agency charged with

administering the law changes its mind.” According to

the majority, if a federal court relies on an agency’s in-

terpretation of a statute, the court’s construction is bind-

ing only until the agency decides the statute means

something else altogether. At that point the court, or a

higher court, or a lower court, may—nay, must—follow

the agency’s new interpretation unless that interpreta-

tion is unreasonable. This, I respectfully suggest, results

55a

in a significant shift of authority from the judiciary to

the executive branch. Whenever Congress charges an

agency, board, commission or department with adminis-

tering a statute—I would venture to guess that this in-

cludes a substantial majority of our most significant fed-

eral laws—the judges become the handmaidens of the

agency, relegated to deciding not what the law is, but

only whether the agency’s construction of the law is

reasonable.

This is no small change. Courts and agencies are

fundamentally different, both institutionally and func-

tionally. Judicial decisionmaking is hedged about with

a variety of constitutional safeguards designed to pro-

tect it from manipulation by the political branches. In

interpreting statutes, courts are bound to find and apply

the meaning endowed them by Congress and the Presi-

dent. It is emphatically not the function of courts to

read policy content into statutes, or to interpret them

in a way that will foser a particular political viewpoint.

Administrative agencies, by contrast, are designed to

bend with the political winds. The leadership and policy

direction of executive departments change with every

administration; members of so-called independent agen-

cies are appointed with reference to their political af-

filiations. Agency officials are expected to rely on their

views of public policy in carrying out their responsibili-

ties.

Because judges must read a statute in the way that

best reflects its meaning, courts are far slower than

agencies in overruling their decisions. Once a circuit

interprets a statute, only an en banc panel of the same

court or the Supreme Court may adopt a different con-

struction; only the Supreme Court may modify or re-

verse its own prior construction of a statute. By con-

trast, agencies can change their outlook as often and

easily as a chameleon changes its color. A change of ad-

ministration may prompt an executive department to

56a

alter its position on a particular piece of legislation over-

night. As positions taken by a regulatory agency may

hinge on a narrow majority, appointment of a single

commissioner may drastically change hte agency’s ap-

proach to its organic statute.

This difference between the constraints on the ju-

diciary and the broad freedom afforded agencies derives

directly from the disparate functions they perform.

When courts interpret a statute, they search for its true

meaning—-and there can never be more than one true

meaning. To be sure, reasonable minds may differ as to

what that meaning may be; occasionally it may be

necessary to correct a judicial decision that misreads

that meaning. But in performing their proper function,

judges must listen for the voice of the legislature, not to

the sound of their own heartbeats. Because courts are

bound by the best construction of the statute, they may

alter their interpretation only in response to a powerful

new insight as to the law’s meaning, not because a dif-

ferent panel of judges prefers a different result.

Agencies, on the other hand, may turn on a dime:

Their proper function is to fill in policy gaps pursuant

to an explicit or implicit delegation of authority from

Congress. See, e.g., Morton v. Ruiz, 415 U.S. 199, 231,

94 S.Ct. 1055, 1072, 39 L.Ed.2d 270 (1974) (“[t}he

power of an administrative agency to administer a con-

gressionally created ... program necessarily requires the

formulation of policy and the making of rules to fill any

gap left, implicitly or explicitly, by Congress’). Where

Congress has delegated such authority, the statute be-

comes a clear vessel which changes its tint as it is filled

and refilled by various policy pig

This text is long and has been trimmed here. Open the source document for the complete record.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.