Rhino Northwest, LLC v. NLRB , 867 F.3d 95 ( 2017 )

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued March 13, 2017 Decided August 11, 2017
No. 16-1089
RHINO NORTHWEST, LLC,
PETITIONER
v.
NATIONAL LABOR RELATIONS BOARD,
RESPONDENT
INTERNATIONAL ALLIANCE OF THEATRICAL STAGE
EMPLOYEES, LOCAL 15,
INTERVENOR
Consolidated with 16-1115
On Petition for Review and Cross-Application
for Enforcement of an Order
of the National Labor Relations Board
Timothy A. Garnett argued the cause for petitioner. With
him on the briefs was Heidi Kuns Durr.
Greg P. Lauro, Attorney, National Labor Relations
Board, argued the cause for respondent. On the brief were
Richard F. Griffin, Jr., General Counsel, John H. Ferguson,
Associate General Counsel, Linda Dreeben, Deputy Associate
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General Counsel, Ruth E. Burdick, Deputy Assistant General
Counsel, and Michael R. Hickson, Attorney.
Dmitri Iglitzin argued the cause and filed the brief for
intervenor.
Before: ROGERS and SRINIVASAN, Circuit Judges, and
EDWARDS, Senior Circuit Judge.
Opinion for the Court filed by Circuit Judge SRINIVASAN.
SRINIVASAN, Circuit Judge: Rhino Northwest, LLC,
helps assemble equipment for concerts, festivals, and other
events throughout the Pacific Northwest. A group of its
employees called “riggers” sought to form a separate
collective-bargaining unit. The National Labor Relations
Board certified the proposed unit, and Rhino now challenges
the Board’s certification. According to Rhino, the company’s
other employees are so similar to its riggers that a bargaining
unit cannot consist solely of the latter. Because a legitimate
basis exists for excluding non-riggers from the bargaining
unit, we sustain the Board’s order.
I.
A.
Section 7 of the National Labor Relations Act guarantees
employees the right “to bargain collectively through
representatives of their own choosing.” 29 U.S.C. § 157.
Under Section 9 of the NLRA, a proposed unit of employees
must be “appropriate” for the enterprise of collective
bargaining. Id. § 159(a). Once a group of employees
petitions for union representation, “[t]he Board shall decide in
each case whether, in order to assure to employees the fullest
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freedom in exercising the rights guaranteed by this
subchapter, the unit appropriate for the purposes of collective
bargaining shall be the employer unit, craft unit, plant unit, or
subdivision thereof.” Id. § 159(b). This case concerns the
conditions under which the Board may deem a proposed
bargaining unit to be “appropriate.”
Under the Board’s decisions, two considerations
determine the prima facie appropriateness of a proposed unit.
First, the employees must be “readily identifiable as a group”
based on such factors as “job classifications, departments,
functions, work locations, [or] skills.” Specialty Healthcare
& Rehab. Ctr. of Mobile, 357 N.L.R.B. 934, 945 (2011).
Second, the petitioned-for employees must share a
“community of interest.” Blue Man Vegas, LLC v. NLRB, 529
F.3d 417, 421 (D.C. Cir. 2008). The Board “weigh[s] all
relevant factors on a case-by-case basis” to determine whether
a set of employees are sufficiently alike to constitute an
appropriate bargaining unit. Id. (quoting Country Ford
Trucks, Inc. v. NLRB, 229 F.3d 1184, 1190-91 (D.C. Cir.
2000)). As long as the requisite connections exist, “the unit is
prima facie appropriate.” Id.Under the Board’s approach, “more than one appropriate
bargaining unit logically can be defined in any particular
factual setting.” Id. (quoting Country Ford Trucks, 229 F.3d
at 1189). As a result, an employer challenging a proposed
unit must do more than show that an alternate unit would also
be appropriate, or even more appropriate. Of particular
salience in this case, when an employer seeks to challenge a
prima facie appropriate unit as underinclusive, the employer
must demonstrate that the unit is “truly inappropriate,” as is
the case when excluded employees share “an overwhelming
community of interest with the included employees.” Id.That “overwhelming community of interest” standard is
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satisfied only if “there is no legitimate basis upon which to
exclude certain employees.” Id.B.
Rhino employs personnel who help set up venues for
concerts and other planned events throughout the Pacific
Northwest. Successful staging of a concert or comparable
event requires various types of employees to work together.
At a typical event, employees must unload the equipment,
carry it to the event site, assemble it, disassemble it, and
ultimately transport it back to the truck.
This case arose when the International Alliance of
Theatrical Stage Employees, Local No. 15 (the Union), filed a
petition with the Board seeking to represent a bargaining unit
composed of all riggers employed by Rhino at its Fife,
Washington facility. Riggers are responsible for “using
motors to safely suspend objects overhead before events and
safely removing them with motors afterwards.” Reg’l Dir.’s
Decision and Direction of Election at 4.
Rhino disputed the appropriateness of the proposed
bargaining unit under Section 9 of the NLRA. The company
maintained that any appropriate unit must include, not just
riggers, but “all audio, audio/visual, camera, construction,
deck hand, forklift, lighting, loading, production assistant,
stagehand, video, wardrobe, climber/scaffer, rope access
supervisor, and rope access technician employees” at the Fife
facility. Id. at 1.
After a hearing, the Board regional director rejected
Rhino’s challenge. He first concluded that Rhino’s riggers
formed a facially appropriate bargaining unit because they
shared a community of interest and were “readily identifiable
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as a group based on their classification and function.” Id. at
3. The regional director further determined that the
employees Rhino sought to add to the bargaining unit did not
share an overwhelming community of interest with the
riggers. He therefore deemed the riggers to be “a unit
appropriate for the purposes of collective bargaining,” and
directed an election among them. Id. at 7. The Board denied
Rhino’s request for review of the regional director’s decision.
A majority of Rhino’s riggers then voted for union
representation. The regional director therefore certified the
Union as the riggers’ exclusive collective-bargaining
representative. After Rhino refused the Union’s requests to
bargain, the Union filed an unfair-labor-practice charge with
the Board. Rhino admitted its refusal to bargain, but claimed
it had no duty to deal with the representative of an improperly
certified unit.
The Board held that Rhino’s refusal to bargain with the
Union violated the NLRA. Rhino petitions this Court to
review the Board’s order, and the Board cross-applies for
enforcement of the order.
II.
Rhino contends that the Board’s “overwhelming
community of interest” standard, articulated as such in its
2011 Specialty Healthcare decision, runs afoul of the NLRA.
The company further contends that, even under the Specialty
Healthcare framework, a riggers-only unit is inappropriate
because an overwhelming community of interest exists
between the riggers and the other Rhino employees excluded
from the Union’s petition. We reject both arguments.
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A.
We review “deferentially” the Board’s determination of
the “unit appropriate for the purposes of collective
bargaining” within the meaning of 29 U.S.C. § 159(b).
Dodge of Naperville, Inc. v. NLRB, 796 F.3d 31, 38 (D.C. Cir.
2015). The Board’s “broad” discretion “in this area . . .
reflect[s] Congress’ recognition of the need for flexibility in
shaping the bargaining unit to the particular case.” Id.(quoting Serramonte Oldsmobile, Inc. v. NLRB, 86 F.3d 227,
236 (D.C. Cir. 1996)); see United Food & Commercial
Workers Local 540 v. NLRB, 519 F.3d 490, 494 (D.C. Cir.
2008). It is well-established that “the Board need only select
an appropriate unit, not the most appropriate unit.” Dodge of
Naperville, 796 F.3d at 38 (quoting Serramonte, 86 F.3d at
236). The mere fact “[t]hat other potential unit
determinations appear equally or more appropriate is
insufficient to justify reversal.” Country Ford Trucks, 229
F.3d at 1191.
The Board does face some constraints when reviewing
proposed bargaining units. For instance, “[i]n determining
whether a unit is appropriate[,] . . . the extent to which the
employees have organized shall not be controlling.” 29
U.S.C. § 159(c)(5). But the form in which employees have
elected to organize, even if not controlling, may certainly be
considered. NLRB v. Metro. Life Ins. Co., 380 U.S. 438, 441-
42 (1965). Just like any other agency decision, moreover, the
Board’s unit determinations cannot be sustained if they are
“arbitrary” or “not supported by substantial evidence in the
record.” NLRB v. Tito Contractors, Inc., 847 F.3d 724, 732
(D.C. Cir. 2017) (quoting Blue Man Vegas, 529 F.3d at 420).
But “it is not for a court to substitute its own judgment for a
rationally supported position espoused by the agency.” Local
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1325, Retail Clerks Int’l Ass’n v. NLRB, 414 F.2d 1194, 1200
(D.C. Cir. 1969).
Here, Rhino principally contends that the Board used an
improper framework to assess the appropriateness of a
riggers-only bargaining unit. The Board followed its decision
in Specialty Healthcare, which set forth that an
“overwhelming community of interest” standard governs the
Board’s determination whether certain employees can be
validly excluded from a proposed bargaining unit. According
to Rhino, the Board imported that standard from an entirely
different context, breaking from the agency’s past practice
without adequate explanation. We disagree.
Specialty Healthcare consciously adopted the
“overwhelming community of interest” standard from this
Court’s decision in Blue Man Vegas, 529 F.3d 417. There,
we reaffirmed Board and judicial decisions establishing that,
when a proposed bargaining unit is facially appropriate, the
employer must do more than show that another unit would
also share a community of interest. The employer instead
must demonstrate an “overwhelming community of interest”
between the included and excluded employees, such that
“there is no legitimate basis upon which” to compose a
bargaining unit consisting only of the former. Id. at 421.
We used the “overwhelming community of interest”
formulation to encapsulate decisions that, in our words,
“conform[ed] to a consistent analytic framework.” Id. The
Board in fact had occasionally employed exactly the same
phraseology. See, e.g., Jewish Hosp. Ass’n, 223 N.L.R.B.
614, 617 (1976) (finding a proposed bargaining unit
inappropriate because of an “overwhelming community of
interest” between included and excluded employees). And
we, following the Board’s lead, had deemed a proposed unit
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“irrational” due to the absence of “any separate community of
interest justifying a separate bargaining unit.” Trident
Seafoods, Inc. v. NLRB, 101 F.3d 111, 120 (D.C. Cir. 1996).
The Board in Specialty Healthcare therefore stood on solid
ground in explaining that, when assessing whether a facially
appropriate unit invalidly excludes certain employees, it had
“repeatedly used words that describe a heightened
standard”—one that “in essence” asks whether “the included
and excluded employees share an overwhelming community
of interest”—even if it had invoked “slightly varying verbal
formulations.” 357 N.L.R.B. at 944-45.
Our own review of the decisions confirms that the Board
in Specialty Healthcare simply took a fitting “opportunity to
make clear” the exact language it would employ going
forward, and that its “formulation” was “drawn from Board
precedent.” Id. at 945, 947; see Blue Man Vegas, 529 F.3d at
421-23. Throughout, the Board’s approach has remained
fundamentally the same: are individual groups of employees
so similarly situated that dividing them into separate
bargaining units would be irrational? We thus join seven of
our sister circuits in concluding that Specialty Healthcare
worked no departure from prior Board decisions. See
Constellation Brands, U.S. Operations, Inc. v. NLRB, 842
F.3d 784, 792-93 (2d Cir. 2016); FedEx Freight, Inc. v.
NLRB, 839 F.3d 636, 638 (7th Cir. 2016); NLRB v. FedEx
Freight, Inc., 832 F.3d 432, 441-43 (3d Cir. 2016); Macy’s,
Inc. v. NLRB, 824 F.3d 557, 567 (5th Cir. 2016); Nestle
Dreyer’s Ice Cream Co. v. NLRB, 821 F.3d 489, 500 (4th Cir.
2016); FedEx Freight, Inc. v. NLRB, 816 F.3d 515, 523-24
(8th Cir. 2016); Kindred Nursing Ctrs. East, LLC v. NLRB,
727 F.3d 552, 561 (6th Cir. 2013).
Rhino next argues that the Specialty Healthcare
framework has caused the Board to abdicate its statutory duty
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to decide the appropriateness of a proposed unit “in each
case.” 29 U.S.C. § 159(b). In practice, the company claims,
the Board will necessarily deem appropriate any petitioned-
for unit that consists of all employees sharing a job title.
Rhino’s concern is unfounded.
Specialty Healthcare itself explained that employees
inside and outside a proposed unit could share an
overwhelming community of interest if “the proposed unit is a
‘fractured’ unit.” 357 N.L.R.B. at 946. Fractured units are
“combinations of employees that are too narrow in scope or
that have no rational basis” for including certain employees
while excluding others. Id. (quoting Seaboard Marine, Ltd.,
327 N.L.R.B. 556, 556 (1999)). Specialty Healthcare’s own
language belies the premise of Rhino’s challenge: “Even if
the proposed unit contained all employees occupying a
nominally distinct classification, the proposed unit would be a
fractured unit if, in fact, the employees in the classification
did not perform distinct work under distinct terms and
conditions of employment.” Id. at 946 n.31.
In fact, the Board, both before and after Specialty
Healthcare, has rejected proposed units consisting of an entire
class or category of employees. In just one pre-Specialty
Healthcare example, Wal-Mart Stores, Inc., 328 N.L.R.B.
904 (1999), the Board refused to permit an employer’s
meatcutters to unionize along their preferred lines. The Board
found that those employees shared “substantial common
interests” with the store’s wrappers and cleaners. Id. at 908.
As for post-Specialty Healthcare decisions, in both Odwalla,
Inc., 357 N.L.R.B. 1608, 1611-12 (2011), and A.S.V., Inc.,
360 N.L.R.B. 1252, 1255 (2014), the Board, after describing
the Specialty Healthcare framework, found that a proposed
unit was a fractured one and that an excluded group of
employees shared an overwhelming community of interest
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with the petitioned-for employees. Additionally, multiple
decisions by Board regional directors since Specialty
Healthcare have rejected proposed units consisting of a single
job classification. See, e.g., Golden State Overnight Delivery
Serv., Inc., Decision and Order, 31-RC-185685 (Nov. 4,
2016); PHS/MWA Aviation Servs., Decision and Order, 21-
RC-184349 (Oct. 20, 2016).
Insofar as Rhino contends that the Board’s
“overwhelming community of interest” standard
inappropriately gives dispositive weight to “the extent to
which the employees have organized,” 29 U.S.C. § 159(c)(5),
Rhino’s argument is misconceived. As we explained in Blue
Man Vegas, the Board “does not . . . give[] controlling
weight” to the extent of employees’ organization “[a]s long as
[it] applies the overwhelming community-of-interest standard
only after the proposed unit has been shown to be prima facie
appropriate.” 529 F.3d at 423. The Board did just that here.
We also reject Rhino’s claim that Specialty Healthcare
disserves the interests of both employers and employees,
thereby contravening the NLRA’s core purpose of facilitating
collective bargaining. Rhino’s argument to that effect
amounts to a policy preference, one not dictated by any
particular understanding of the statutory term “appropriate.”
And the argument ultimately is a manifestation of Rhino’s
undue skepticism that the Board could ever find a proposed
unit to be inappropriately underinclusive.
Rhino likewise errs in contending that the NLRA on
balance favors marginally larger bargaining units. The
Supreme Court has recognized the virtues of a contrary
vision: “A cohesive unit—one relatively free of conflicts of
interest—serves the Act’s purpose of effective collective
bargaining, and prevents a minority interest group from being
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submerged in an overly large unit.” NLRB v. Action Auto.,
Inc., 469 U.S. 490, 494 (1985) (citations omitted). And the
NLRA expressly contemplates the possibility of sensible
fragmentation, establishing that “the unit appropriate for the
purposes of collective bargaining [may] be the employer unit,
craft unit, plant unit, or subdivision thereof.” 29 U.S.C.
§ 159(b) (emphasis added). Section 9 thus confers discretion
on the Board to accommodate competing visions of
workplace organization.
Lastly, the Board, contrary to Rhino’s argument, did not
violate the APA by announcing a new substantive standard
via adjudication rather than notice-and-comment rulemaking.
First, Specialty Healthcare, as explained, clarified the precise
verbiage the Board would apply in unit-determination cases; it
did not establish any new substantive legal test. In any event,
even if it had done so, “the Board is not precluded from
announcing new principles in an adjudicative proceeding.”
NLRB v. Bell Aerospace Co., 416 U.S. 267, 294 (1974). The
Supreme Court has made clear that “the choice between
rulemaking and adjudication lies in the first instance within
the Board’s discretion.” Id.B.
With regard to the Board’s application of the Specialty
Healthcare framework in this case, we hold that substantial
evidence supports the Board’s determination that Rhino’s
riggers do not share an overwhelming community of interest
with the company’s other employees. Riggers perform a
“unique function”—they “use[] motors to temporarily
suspend objects . . . overhead at Employer events.” Reg’l
Dir.’s Decision and Direction of Election at 3. In light of the
associated risks, prospective riggers must attend a three-day
training course before Rhino will allow them to assume those
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duties. That prerequisite means that “riggers alone perform
rigging duties.” Id. at 5. Riggers also have a “significantly
higher hourly wage rate range” than their fellow employees—
$20 to $40 per hour, rather than $11 to $20 per hour. Id. at 3.
Riggers, moreover, receive larger gas reimbursements for
certain events. And they “take direction from their own
rigger supervisor,” who qualifies as a statutory “supervisor”
under Section 2(11) of the NLRA. Id. at 4. That person
meets with all riggers at the start of each call.
Unlike many other Rhino employees, riggers “do not
have any responsibility for unloading or loading items,” and
they “do not generally work during the shows.” Id. Rather,
before events begin, riggers “go[] up into the grid to attach
chains to hoist motors in the air.” Id. at 3. That task requires
“unique tools.” Id. And although riggers are guaranteed four
hours of pay for four-hour event calls, they—unlike all other
Rhino event workers—may leave before the call ends (i.e.,
once they have completed their rigging tasks).
To be sure, Rhino has made a case that a bargaining unit
consisting of all of its employees would have been statutorily
“appropriate,” as well. But that is not enough to show that the
petitioned-for unit is inappropriate. What matters instead is
that some legitimate basis plainly exists for permitting riggers
to form their own unit. The record indicates that the
distinctions between riggers and other Rhino employees—
concerning wages, hours, training, supervision, equipment,
and physical working conditions—are significant. Therefore,
the Board “reasonably conclude[d]” that those distinctions
sufficiently “differentiate the employment interests” of
Rhino’s riggers and non-riggers such that riggers may form
their own bargaining unit. Blue Man Vegas, 529 F.3d at 424.
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* * * * *
For the foregoing reasons, we deny the petition for
review and grant the Board’s cross-application for
enforcement of its order.
So ordered.