Local Joint Executive Bd. of Las Vegas v. Nat'l Labor Relations Bd.

• Decision Date: 13 September 2011
• Docket Number: No. 10–72981.,10–72981.
• Citation: 11 Cal. Daily Op. Serv. 11729,161 Lab.Cas. P 10407,2011 Daily Journal D.A.R. 13923,191 L.R.R.M. (BNA) 2609,657 F.3d 865
• Parties: LOCAL JOINT EXECUTIVE BOARD OF LAS VEGAS; Culinary Workers Union Local # 226; Bartenders Union Local 165, Petitioners,v.NATIONAL LABOR RELATIONS BOARD, Respondent.
• Court: U.S. Court of Appeals — Ninth Circuit

657 F.3d 865

191 L.R.R.M. (BNA) 2609

161 Lab.Cas. P 10,407

11 Cal. Daily Op. Serv. 11,729

2011 Daily Journal D.A.R. 13,923

LOCAL JOINT EXECUTIVE BOARD OF LAS VEGAS; Culinary Workers Union Local # 226; Bartenders Union Local 165, Petitioners,

v.NATIONAL LABOR RELATIONS BOARD, Respondent.

No. 10–72981.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted June 7, 2011.Filed Sept. 13, 2011.

Richard G. McCracken, Andrew J. Kahn, and Barry J. Jellison, Davis, Cowell & Bowe LLP, San Francisco, CA, for petitioners Local Joint Executive Board of Las Vegas, Culinary Workers Union Local 226 and Bartenders Union Local 165.Usha Dheenan and Greg P. Lauro, National Labor Relations Board, Washington, D.C., for respondent, National Labor Relations Board.On Petition for Review of an Order of the National Labor Relations Board. NLRB Nos. 28–CA–13274/75.Before: WILLIAM C. CANBY, JR., SUSAN P. GRABER, and RICHARD A. PAEZ, Circuit Judges.

OPINION

PAEZ, Circuit Judge:

We review a petition by the Local Joint Executive Board of Las Vegas, Culinary Workers Union Local 226 and Bartenders Union Local 165 (the “Union”) from an order of the National Labor Relations Board (“NLRB” or the “Board”) dismissing a complaint alleging unfair labor practices by Hacienda Resort Hotel and Casino and Sahara Hotel and Casino (the “Employers”). This dispute between the Union and the Employers is now more than 15 years old, and this is the third petition brought by the Union challenging a ruling by the Board. The Union alleges that the Employers violated sections 8(a)(1) and 8(a)(5) of the National Labor Relations Act (“NLRA”), 29 U.S.C. §§ 151–169, when the Employers unilaterally terminated union dues-checkoff before bargaining to agreement or impasse.

On remand from this court for the second time, the Board deadlocked on the merits with one of five members recused. Hacienda Hotel, Inc. Gaming Corp. ( Hacienda III ), ––– N.L.R.B. ––––, 355 NLRB No. 154, 2010 WL 3446120, at *1 (Aug. 27, 2010). Unable to form a majority in support of a different rule, the Board followed its prior rulings in Bethlehem Steel Co., 136 N.L.R.B. 1500 (1962), and Tampa Sheet Metal Co., 288 N.L.R.B. 322 (1988), in concluding that termination of dues-checkoff is an exception to the rule articulated in NLRB v. Katz, 369 U.S. 736, 82 S.Ct. 1107, 8 L.Ed.2d 230 (1962), that unilateral changes to mandatory subjects of bargaining violate the duty to bargain collectively under the NLRA. Hacienda III, 2010 WL 3446120, at *1. The Board affirmed the ruling of an administrative law judge (ALJ) dismissing the Union's complaint.

We have jurisdiction under 29 U.S.C. § 160(f) to review the Board's ruling. As we explain below, we conclude that the Board's decision in Hacienda III is arbitrary and capricious because the Board provides no explanation for the rule it follows in dismissing the Union's complaint. We further conclude that, although we must show deference to the Board in its promulgation of labor policy, a third open remand is inappropriate in this case because the Board, after more than fifteen years, has reached a deadlock on the merits and continues to be unable to form a reasoned analysis in support of its ruling. Last, upon consideration of the merits, we conclude that the Employers violated section 8(a)(5) of the NLRA when they unilaterally ceased dues-checkoff before bargaining to impasse. We therefore grant the Union's petition, vacate the Board's ruling, and remand to the Board so that it can determine what relief is appropriate in light of our opinion.

I. Background

The Employers operate resorts and casinos in the state of Nevada. The Union maintained collective bargaining relationships with the Employers for more than thirty years, and each union had a substantially identical collective bargaining agreement (“CBA”) in place with the Employers. Nevada is a “right-to-work” state where union security clauses conditioning employment upon membership in a union are prohibited. Nev.Rev.Stat. § 613.250; ¹ see also 29 U.S.C. § 164(b) (providing that federal law does not authorize union security provisions in right-to-work states). Although the CBAs between the Union and the Employers therefore did not include a union security clause, the Union successfully negotiated for automatic union membership dues deductions from employees's wages, or “dues-checkoff.”

Under the dues-checkoff provision, the Employers, upon written authorization by a union-member employee, were required to deduct union dues automatically from the worker's paycheck and submit that amount directly to the Union.² Thus, although the Union could not require that all workers become dues-paying members of the Union because of Nevada's right-to-work law, it was guaranteed timely, accurate payment of dues by the workers who chose to join the Union and authorize a checkoff. The dues-checkoff provision also benefitted participating employees, who did not incur the cost and effort of submitting dues to the Union themselves.

The CBAs expired in May 1994, and the parties unsuccessfully negotiated for new agreements through the end of 1994. Despite the expiration of the CBAs, the Employers initially continued to deduct union dues from workers' paychecks under the dues-checkoff clause in the expired CBAs. In June 1995, however, the Employers informed the Union that they intended to cease checking off dues, and they in fact stopped deducting dues from employees' paychecks shortly thereafter.

A. Hacienda I and LJEB I

In response to the Employers' unilateral cessation of dues-checkoffs, the Union filed unfair labor practice charges against the Employers. The Union alleged that the Employers' cessation of dues-checkoffs violated the unilateral change doctrine affirmed by the Supreme Court in Katz. Under that doctrine, “an employer's unilateral change in conditions of employment under negotiation is ... a violation of § 8(a)(5) [of the NLRA], for it is a circumvention of the duty to negotiate which frustrates the objectives of § 8(a)(5) much as does flat refusal.” Katz, 369 U.S. at 743, 82 S.Ct. 1107.

General Counsel for the NLRB consolidated the charges and issued complaints against the Employers. An ALJ dismissed the complaints. Upon review of the ALJ's decision, the NLRB affirmed the dismissal in a 3–2 decision,³ relying on the “well-established precedent [of Bethlehem Steel and its progeny] that an employer's obligation to continue a dues-checkoff arrangement expires with the contract that created the obligation.” Hacienda Hotel, Inc. Gaming Corp. ( Hacienda I ), 331 N.L.R.B. 665, 666 (2000).⁴ The Board ruled that, although this line of precedent “initially developed in the context of a contract containing both union security and dues checkoff, it has clearly come to stand for the general rule that an employer's dues-checkoff obligation terminates at contract expiration.” Id. at 667. The Board ruled that the exception to the unilateral change doctrine first stated in Bethlehem Steel had been applied in a right-to-work context in Tampa Sheet Metal, 288 N.L.R.B. 322, and this extension of the exception to contracts not involving union security had been relied on in numerous Board decisions. Hacienda I, 331 N.L.R.B. at 668–69.

The Union filed a petition for review of the Board's decision with this court, and we granted the petition, vacated the Board's ruling, and remanded for further proceedings. Local Joint Exec. Bd. of Las Vegas v. NLRB ( LJEB I ), 309 F.3d 578, 580 (9th Cir.2002). We explained that “[w]e are unable to discern the Board's rationale for excluding dues-checkoff from the unilateral change doctrine in the absence of union security.” Id. at 582. We rejected as inadequate the Board's conclusion that the rule of Bethlehem Steel, a case concerning dues-checkoff in the context of a union security agreement, was equally valid in right-to-work states merely because such a rule had been assumed without explanation in Tampa Sheet Metal and was subsequently repeated in several prior NLRB decisions. Id. We remanded the case “so that the Board c[ould] either articulate a reasoned explanation for its rule or adopt a different rule with a reasoned explanation to support it.” Id.

B. Hacienda II and LJEB II

On remand, the Board abandoned its reliance on Bethlehem Steel but again affirmed the ALJ's dismissal, in another split decision, on the ground that the CBAs contained an express waiver of the right to continued dues-checkoff past the expiration of the CBA. Hacienda Hotel, Inc. Gaming Corp. ( Hacienda II ), 351 N.L.R.B. 504, 505 (2007).⁵ The Union petitioned for review and we concluded that there was “simply no clear and unmistakable waiver.” Local Joint Exec. Bd. of Las Vegas v. NLRB ( LJEB II ), 540 F.3d 1072, 1075 (9th Cir.2008). We granted the Union's petition, vacated the Board's decision, and remanded the case to the Board for a second time. Id. Noting that “[t]he Board is the appropriate body for developing and applying national labor policy,” we directed the Board to either “explain the rule it adopted in Hacienda I, or abandon Hacienda I to adopt a different rule and present a reasoned explanation to support it.” Id. at 1082. We explained that “the question squarely in front of the Board is whether dues-checkoff in right-to-work states is subject to unilateral change, or whether, under such circumstances, dues-checkoff is a mandatory subject of bargaining.” Id.

C. Hacienda III

On the second remand, the Board deadlocked on the merits of the Union's claim. Hacienda III, 2010 WL 3446120, at *1. Two members of the Board, Liebman and Pearce, voted in favor of overturning the Board's rule in Bethlehem Steel and argued that the Hotel had engaged in an unfair labor practice. Id. at *2 (Liebman & Pearce, concurring). Two other members, Schaumber and Hayes, voted in favor of upholding the ALJ's decision and dismissing the Union's complaints. Id. at *6 (Schaumber & Hayes, concurring). Member Becker...