NLRB v. DA Nolt Inc ( 2005 )

Opinions of the United
2005 Decisions States Court of Appeals
for the Third Circuit
5-4-2005
NLRB v. DA Nolt Inc
Precedential or Non-Precedential: Precedential
Docket No. 04-2321
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PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
Nos. 04-2321, 04-2681
NATIONAL LABOR RELATIONS BOARD
Petitioner/Cross-Respondent
v.
D.A. NOLT, INC.
Respondent/Cross-Petitioner
Application for Enforcement and Cross-Petition for Review
of an Order of the National Labor Relations Board
(Nos. 4-CA-30325-1, 4-CA-30325-2)
Argued: February 14, 2005
Before: SLOVITER, AMBRO and ALDISERT, Circuit
Judges
(Filed: May 4, 2005)
David Habenstreit (Argued)
Kira D. Vol
Aileen A. Armstrong
National Labor Relations Board
1099 14th Street, NW
Washington, D.C. 20570
Attorney for Petitioner/Cross-Respondent
Thomas C. Zipfel (Argued)
Cohen, Seglias, Pallas, Greenhall & Furman, P.C.
1515 Market Street, Eleventh Floor
Philadelphia, PA 19102
Attorney for Respondent/Cross-Petitioner
OPINION OF THE COURT
ALDISERT, Circuit Judge.
We must evaluate an Application for Enforcement by
the National Labor Relations Board (“the Board”) and a
Cross-Petition for Review by D.A. Nolt, Inc. (“D.A. Nolt”).
In a split decision, the Board held that D.A. Nolt was bound
to a successor agreement negotiated by the Roofing
Contractors’ Association (the “RCA”) and United Union of
Roofers, Waterproofers and Allied Workers (“the Union”). It
concluded that there were no “unusual circumstances” to
justify D.A. Nolt’s withdrawal from the agreement because
the conduct at issue did not constitute “collusion or
conspiracy” as contemplated by the dicta in Chel LaCort, 315
NLRB 1036 (1994).
We must determine whether the following legal
conclusions of the Board are rational and consistent with the
National Labor Relations Act (“the Act”): (1) the conduct at
issue did not constitute “unusual circumstances;” and (2) even
if “unusual circumstances” had existed, D.A. Nolt had
forfeited its opportunity to withdraw from the RCA. We have
jurisdiction over the Board’s Application for Enforcement
pursuant to 29 U.S.C. § 160(e) and D.A. Nolt’s Cross-Petition
for Review pursuant to 29 U.S.C. § 160(f). We will uphold a
Board rule as long as it is rational and consistent with the Act,
even if we would have formulated a different rule had we sat
on the Board. NLRB v. Curtin Matheson Scientific, Inc., 494
U.S. 775, 787 (1990). Although judicial review of the Board’s
balancing of conflicting interests is limited, “the balance
struck by the Board is [not] immune from judicial
examination and reversal in proper cases.” NLRB v. Brown,
380 U.S. 278, 290-291 (1965). “When the Board’s decisions
create an artificial and unwarranted imbalance of economic
weapons, the courts are not bound to show abject deference to
4
the Board’s views.” Charles D. Bonanno Linen Serv., Inc. v.
NLRB, 454 U.S. 404, 421 (1982) (Burger, J., dissenting).
We will deny the Board’s Application for Enforcement
and grant D.A. Nolt’s Cross-Petition for Review. We
conclude that the Board’s holding is not rational or consistent
with the Act.
I.
D.A. Nolt is a corporation engaged in commercial,
industrial and residential roof repair and installation. David
Nolt (“Nolt”) is the president who incorporated the business
in 1990. The RCA is a multiemployer bargaining association
of contractors who perform commercial roofing work.
Richard Harvey is the executive director of the RCA. The
Union has historically entered into collective bargaining
agreements with the RCA. Tom Pedrick is vice-president of
the Union.
5
Since 1993, the RCA and the Union have entered into
collective bargaining agreements (“RCA agreements”)
covering commercial work. Historically, negotiations are
conducted between the Union and the RCA, and after an
agreement is reached, copies are sent to independent
employers for their acceptance and execution. Generally, a
new RCA agreement is negotiated approximately three
months before the expiration of the old RCA agreement.
Nolt signed assents binding D.A. Nolt to the terms of
the 1993-1997 and 1997-2001 RCA agreements. In June
1999, Nolt signed a Bargaining Agent Authorization (“BAA”)
with the RCA, allowing the RCA to negotiate a new
commercial roofing contract with the Union on behalf of D.A.
Nolt. Under the BAA, an employer may withdraw from the
RCA 90 days prior to the expiration of the contract in place at
that time.
6
In June, 2000, ten months before expiration of the
1997-2001 RCA agreement, Pedrick, vice-president of the
Union, initiated a discussion with Harvey, executive director
of the RCA, about beginning negotiations for the subsequent
RCA agreement. Negotiating committees for the Union and
the RCA began discussing the terms of a new, eight year
contract. Harvey testified that, in the course of negotiations,
Union officials told him that they did not want the Union
membership to become aware of the terms being discussed
and they asked if the RCA would keep the negotiations
confidential. Harvey testified that the Union and the RCA
agreed to keep the negotiations secret from their respective
memberships. Michael McCann, the Union’s business
manager, denied that the negotiations were kept secret from
the Union membership.
On July 5, 2000, Harvey faxed a memorandum of the
7
agreement to the Union and the eight employer-members of
the negotiating committee. Following their vote for
ratification, Harvey then faxed the agreement to the ten other
employer-members who were not included in the negotiating
committee, including D.A. Nolt. According to Harvey, there
was continued concern that the terms of the agreement would
reach the employee-members of the Union. To avoid that
possibility, Harvey testified that each owner was instructed to
stand by their fax machines to receive the memorandum of
agreement, ballot and cover letter.
The July 12, 2000, cover letter for the agreement
instructed each member that the ballot had to be returned by
July 14, 2000, and to vote for one of three options: (1)
acceptance; (2) rejection; or (3) withdrawal from the RCA.
Regarding the last option, the cover letter stated:
Members who wish to exercise their right to withdraw
8
their bargaining agent authorization from the
Association . . . must do so at this time and should not
vote to accept or reject the tentative agreement, but
rather should use the ballot form to provide written
notice to the Association of their decision to resign . . .
.
Paradoxically, the cover letter also stated on the same page:
This authorization may only be revoked by written
notice by the undersigned to the Association no less
than 90 days prior to the expiration of the current labor
agreement between the Association and Union. Upon
the giving of such notice to the Association, this
authorization will terminate for all purposes.
On July 18, 2000, Nolt voted to accept the terms of the
agreement. He gave several reasons for his action at that time:
(1) He did not understand the ballot and did not know what it
was; (2) He was pressured by Harvey to cast his ballot and he
did not have time to consult with an attorney; (3) He thought
he could withdraw from the RCA at a later time; and (4) He
feared that prematurely withdrawing from the RCA would
strain his relationship with the Union.
9
On January 30, 2001, approximately 90 days prior to
the expiration of the 1997-2001 RCA Agreement, Nolt
advised Harvey that D.A. Nolt was withdrawing from the
RCA. McCann then demanded that D.A. Nolt abide by the
terms of the 2001-2009 RCA agreement. The Union filed a
complaint charging unfair labor practice against D.A. Nolt
and a hearing was held before Administrative Law Judge
Margaret Kern (“ALJ”). She issued a decision in favor of
D.A. Nolt. The Union filed exceptions to the ALJ’s decision
and the RCA filed an amicus curiae brief in support of the
Union’s position. In a split decision, the Board reversed the
ALJ’s decision, holding that she erred in finding that D.A.
Nolt lawfully withdrew from the RCA and that D.A. Nolt was
bound to the 2001-2009 RCA Agreement. The Board filed an
Application for Enforcement of the Order and D.A. Nolt filed
a Cross-Petition for Review.
10
II.
In accordance with the Act’s fundamental purpose of
fostering and maintaining stability of bargaining relationships,
an employer or union may not withdraw from a
multiemployer bargaining unit after negotiations have begun
absent “unusual circumstances” or “mutual consent.” Retail
Associates, 120 NLRB 388, 395 (1958). Historically, the
“unusual circumstances” exception has been limited to
extreme situations, as where the employer is subject to
extreme financial pressure or where the multiemployer unit
has dissipated to the point where the unit is no longer a viable
bargaining entity. Bonanno, 454 U.S. at 411.
In Chel LaCort, the Board refused to extend the
“unusual circumstances” exception to situations where the
multiemployer association fails, either deliberately or
otherwise, to inform its employer-members of the start of
11
negotiations. 315 NLRB at 1036. To extend the exception
would impose a notice requirement on the multiemployer
association and insert the Board into the association/member
relationship unnecessarily and with uncertain consequences.
Id. at 1037. The Board noted in dicta, however, that there was
no evidence of “collusion or conspiracy,” stating that “[w]e
leave to another case to decide whether or when such
evidence would be sufficient to show ‘unusual
circumstances.’” Id. at 1036 n.5. We now decide that this is a
such a case.
In Resort Nursing Home v. NLRB, 389 F.3d 1262(D.C. Cir. 2004), the court held that there was no collusion or
conspiracy when a multiemployer association and union
began negotiations for a new agreement eight months prior to
the expiration of the old agreement, id. at 1271, and that the
Chel La Cort rule is rational and consistent with the Act, id. at
12
1269. There was, however, no evidence that the negotiations
were conducted in secret. See id. at 1266-1267.
III.
Although our review of the Board’s decision is limited,
we conclude that its decision is not rational or consistent with
the Act and that the ALJ and dissenting Board Chairman
Battista properly determined that “unusual circumstances”
justified D.A. Nolt’s withdrawal from the 2001-2009 RCA
agreement. The Board improperly valued stability over
freedom in the context of multiemployer bargaining. See
Bonnano, 454 U.S. at 412 (“The Board has recognized the
voluntary nature of multiemployer bargaining . . . . At the
same time, it has sought to further the utility of multiemployer
bargaining as an instrument of labor peace . . . .”).
Accordingly, the Board’s Application for Enforcement will be
13
denied and D.A. Nolt’s Cross-Petition for Review will be
granted.
A.
The Board first concluded that the RCA and Union’s
conduct did not constitute collusion or conspiracy as
contemplated under the Chel La Cort dicta because the effort
to have secrecy in the negotiations was directed at the Union’s
membership, not at D.A. Nolt or other employer-members of
the RCA. D.A. Nolt, Inc., 340 NLRB No. 152, 2003 WL
22970620, at *4 (Dec. 15, 2003). The Board defined
“collusion or conspiracy” as “actions by the union and the
employer association that are deliberately intended to prevent
an employer from exercising its right to withdraw.” Id.We are not satisfied that this restricted definition is
rational and consistent with the Act’s purpose of maintaining
industrial peace. It does not balance freedom in
14
multiemployer negotiations with stability because it impinges
upon an employer’s freedom to withdraw when it has been
intentionally kept in the dark about the negotiation process.
Whether the negotiating groups deliberately intended
to prevent D.A. Nolt from exercising its right to withdraw is
not as significant as whether the effect of their actions was to
prevent D.A. Nolt from exercising its right to withdraw.
Board Chairman Battista reasoned in his dissenting opinion:
My colleagues say that the Union and the
employer association did not deliberately intend
to prevent the Respondent from withdrawing
from the association. However, they deliberately
kept them in the dark about the start of
negotiations and, under the Retails Associates
rule, this interfered with Respondent’s right to
withdraw from the association prior to the start
of negotiations.
D.A. Nolt, Inc., 340 NLRB No. 152, at *9 (Chairman Battista,
dissenting).
15
In accordance with the purpose of the Act, it is not
necessary to show that the parties actually agreed to an illegal
plan to harm a specific person to prove “conspiracy” or that
they specifically intended to defraud a person of his rights to
prove “collusion.” It is enough to prove that there was a secret
agreement that resulted in harm to another. The proximate
cause of the harm to D.A. Nolt—the deprivation of his right
to withdraw from the multiemployer group prior to the
commencement of negotiations—was twofold: (1) the
agreement to negotiate in secret (the “conspiracy”); and (2)
the actual participation in the secret meetings (the
“collusion”). As Chairman Battista emphasized, the harm was
not the negotiating committee’s stated intention, but the
result that irrefragably followed.
Our conclusion encourages unions and bargaining
associations to be open and honest in their dealings. To be
16
sure, it may be counter-productive for negotiating committees
to broadcast the substance of offers and counter-offers made
during the negotiation process, but no precept of labor
management law mandates that negotiating committees keep
secret the fact that negotiations have begun when profound
deleterious effects may directly result from the secrecy. And
here we have such a case. D.A. Nolt was unable to withdraw
from the RCA after the start of contract negotiations in
accordance with the Retail Associates rule.
We are satisfied that “unusual circumstances” took
place here that constituted the proximate cause of injury to
D.A. Nolt. The record shows that: (1) the RCA and the Union
met secretly to negotiate a new agreement ten months before
the expiration of the old agreement; (2) the Union requested
that the RCA keep the negotiations secret from its members,
including D.A. Nolt; and (3) when Harvey faxed the
agreement to the employer-members of the RCA, owners
were instructed to stand by their fax machines to receive it so
17
that word would not get out to the employee-members of the
Union.
The facts here are distinguishable from those in Resort
Nursing Home. Although the multiemployer associations and
unions began their negotiations abnormally early in both
cases, there was no evidence that the negotiations were kept
secret in Resort Nursing Home. See 389 F.3d at 1266-1267(“On January 9 [the day negotiations began], the Association
sent a letter to the Union ‘confirm[ing] the intent of the
Association . . . to enter into an extension of the current
collective bargaining agreements.’”). At any event, the
employer in Resort Nursing Home had notice of the ongoing
negotiations before an agreement was reached. In contrast, in
the case before us, Harvey testified that Union officials
specifically requested that the RCA keep the negotiations
confidential and there was no proof that D.A. Nolt had
knowledge of the secret talks.
18
Accordingly, the NLRB’s conclusion that the conduct
at issue did not constitute “conspiracy or collusion” is not
consistent with the Act because it impinges upon a single
employer’s freedom to make a timely withdrawal from
multiemployer negotiations.
B.
The Board held that “even assuming arguendo that the
conduct by the RCA and the Union constituted ‘unusual
circumstances,’ the Respondent by its own conduct forfeited
any right to withdraw.” D.A. Nolt, Inc., 2003 WL 22970620at *5. The Board reasoned that D.A. Nolt forfeited its
withdrawal right because it waited seven months instead of
taking action “promptly after it learned of the new agreement
in July 2000.” Id. The Board relied on Gary Jasper
Enterprises, 287 NLRB 746, 747 (1987), for the proposition
that employers are obligated to withdraw as soon as the
“unusual circumstances” are evident. Id. The Board also
19
emphasized the fact that Nolt voted to “accept” the 2001-2009
RCA agreement after careful deliberation.
We are not persuaded that the Board’s conclusion that
D.A. Nolt forfeited its right to withdraw is rational or
consistent with the Act. The Board has cited no case to
support the suggestion that an employer is obligated to
withdraw as soon as “unusual circumstances” become
manifest. Gary Gasper Enterprises merely held that an
employer acted as “expeditiously as possible” in withdrawing
from multiemployer bargaining two weeks after negotiations
commenced. 287 NLRB at 747. In that case, the NLRB stated
that the timing of withdrawal “must be evaluated in the
overall context of the parties’ bargaining history.” Id.Here, D.A. Nolt’s withdrawal from the RCA seven
months after learning of the 2001-2009 RCA agreement was
done as “expeditiously as possible” in light of the “overall
context of the parties’ bargaining history.” Because of the
express 90 day provision in the cover letter to the 2001-2009
20
RCA Agreement, it was reasonable for Nolt to conclude that
he could withdraw within 90 days of the old agreement’s
expiration.
The Board erred in emphasizing the fact that Nolt
voted to “accept” the 2001-2009 RCA Agreement after
careful deliberation. This acceptance should not be given
controlling effect because of the internal inconsistency in the
July 12, 2000 cover letter accompanying the ballot sheet. The
cover letter included a provision stating that each employer
could withdraw from the RCA until 90 days before the
present contract’s expiration, i.e., until January 30, 2001. The
letter also stated, paradoxically, that if the employer wished to
withdraw from the RCA it must do so within two days. Both
the Union and the RCA are responsible for this glaring
inconsistency. As between those who are responsible for
creating this problem (the Union and the RCA) or D.A. Nolt,
an innocent party who elected to follow a course explicitly
21
provided for in the RCA’s written notification, we conclude
that D.A. Nolt’s Cross-Petition for review should be granted.
*****
We agree with the views set forth by the ALJ and
Chairman Battista in his dissenting opinion and reject the
analysis of the Board.
We will grant D.A. Nolt’s Cross-Petition for Review
and deny the NLRB’s Application for Enforcement.