Colo. Fire Sprinkler, Inc. v. Nat'l Labor Relations Bd.

• Decision Date: 08 June 2018
• Docket Number: No. 16-1261,C/w 16-1319,16-1261
• Citation: 891 F.3d 1031
• Parties: COLORADO FIRE SPRINKLER, INC., Petitioner v. NATIONAL LABOR RELATIONS BOARD, Respondent Road Sprinkler Fitters Local Union No. 669, U.A., AFL-CIO, Intervenor
• Court: U.S. Court of Appeals — District of Columbia Circuit

891 F.3d 1031

COLORADO FIRE SPRINKLER, INC., Petitioner

v. NATIONAL LABOR RELATIONS BOARD, RespondentRoad Sprinkler Fitters Local Union No. 669, U.A., AFL-CIO, Intervenor

No. 16-1261

C/w 16-1319

United States Court of Appeals, District of Columbia Circuit.

Argued September 7, 2017

Decided June 8, 2018

Thomas A. Lenz argued the cause for petitioner. With him on the briefs was L. Brent Garrett.

John N. Raudabaugh and Glenn M. Taubman were on the brief for amicus curiae Robert Blackwell in support of Colorado Fire Sprinkler, Inc.

Jeffrey W. Burritt, Attorney, National Labor Relations Board, argued the cause for respondent. With him on the brief were Richard F. Griffin, Jr., General Counsel at the time the brief was filed, Jennifer Abruzzo, Deputy General Counsel at the time the brief was filed, John H. Ferguson, Associate Deputy Counsel, Linda Dreeben, Deputy Associate General Counsel, and Usha Dheenan, Supervisory Attorney.

William W. Osborne Jr. argued the cause and filed the brief for intervenor, Road Sprinkler Fitters Local Union 669, U.A., AFL-CIO.

Before: Rogers and Millett, Circuit Judges, and Randolph, Senior Circuit Judge.

Millett, Circuit Judge

When the Colorado Fire Sprinkler company's labor agreement with the Road Sprinkler Fitters Union expired, the Company announced that it would no longer recognize or negotiate with the Union as a representative of the Company's employees. The Company asserted a right under Section 8(f) of the National Labor Relations Act, 29 U.S.C. § 158(f) (which applies to labor agreements in the construction and building industries), to walk away from the union relationship. The Union begged to differ, contending that a different provision of the National Labor Relations Act, Section 9(a), 29 U.S.C. § 159(a), obligated the Company to continue negotiating in good faith with the Union. The Union filed a grievance, and the National Labor Relations Board sided with the Union. Because the Board's decision rested on insubstantial evidence and failed to address important evidence supporting the Company, we grant the Company's petition for review, deny the Board's cross-application for enforcement, vacate the Board's decision, and remand.

I

A

This is a tale of two statutory provisions, and of a Union's effort to move between them.

Under the more commonly employed Section 9(a) of the National Labor Relations Act, a union that obtains the support of "the majority of the employees in a unit" will become the recognized representative of those employees, and the employer will be obligated to communicate and negotiate with it on the terms and conditions of employment. 29 U.S.C. § 159(a). A union recognized under Section 9(a) "enjoys numerous benefits, including a conclusive presumption of majority status during the term of any collective-bargaining agreement, up to three years." Raymond F. Kravis Center for the Performing Arts, Inc. v. NLRB , 550 F.3d 1183, 1188 (D.C. Cir. 2008) (citation omitted). An employer's refusal to bargain with a union recognized as the employees' Section 9(a) representative is an unfair labor practice. See 29 U.S.C. § 158(a)(5).

A different rule operates in the building and construction industries. For those businesses, labor costs need to be known in advance so that companies can bid for work. In addition, union organization is difficult because projects can be relatively short-lived and employees migrate between jobs. See Nova Plumbing, Inc. v. NLRB , 330 F.3d 531, 534 (D.C. Cir. 2003) (explaining that Section 8(f) addresses "the unique nature" of industries that "need to draw on a pool of skilled workers and to know their labor costs up front in order to generate accurate bids," and in which employees often "work for multiple companies over short, sporadic periods").

To address those challenges, Section 8(f) of the National Labor Relations Act allows employers and unions in the building and construction industries to enter into what is known as a "pre-hire agreement." Nova Plumbing , 330 F.3d at 534 (citation omitted). Under such an agreement, the business and union agree in advance that a particular union will represent employees, and they may even negotiate the initial terms and conditions of employment directly between themselves. That can all occur without any vote by the employees, or even before a single employee is hired. See 29 U.S.C. § 158(f).

A pre-hire agreement in the construction and building industries is presumed to be governed by Section 8(f) rather than Section 9(a). Allied Mechanical Services, Inc. v. NLRB , 668 F.3d 758, 766 (D.C. Cir. 2012). A Section 8(f) relationship can convert into a Section 9(a) relationship only if the union "either petition[s] for a representation election or demand[s] recognition from the employer by providing proof of majority support." M & M Backhoe Service, Inc. v. NLRB , 469 F.3d 1047, 1050 (D.C. Cir. 2006).

Under the more commonplace Section 9(a) union representation, when a collective bargaining agreement expires, the employer generally must continue to negotiate with the union in good faith and preserve the status quo in employment terms and conditions. See , e.g. , NLRB v. Katz , 369 U.S. 736, 743, 82 S.Ct. 1107, 8 L.Ed.2d 230 (1962) (holding that "an employer's unilateral change in conditions of employment under negotiation" is a violation of the National Labor Relations Act because "it is a circumvention of the duty to negotiate"); Nova Plumbing , 330 F.3d at 534 (noting that, under Section 9(a), when a collective bargaining agreement expires, an employer must "continue bargaining *** unless the company can demonstrate either that the union has in fact lost majority support or that the employer has a good faith uncertainty as to the union's status").

Not so for Section 8(f) agreements. For them, the employer (or the union) "may repudiate the terms of a pre-hire agreement when it expires," and the employer has "no obligation to bargain with the union" upon expiration. M & M Backhoe , 469 F.3d at 1048.

That is all a long way of saying that, when a labor agreement expires, an employer's rights and obligations under Section 8(f) and Section 9(a) of the National Labor Relations Act are substantially different. And therein lies the rub in this case.

B

Colorado Fire Sprinkler, Inc., installs, services, and inspects fire sprinkler systems across commercial properties in Southern Colorado. Ken Stringer founded the Company in 1991 and still serves as its sole owner. At the time of the Company's founding, Stringer entered into a Section 8(f) pre-hire agreement with the Road Sprinkler Fitters Local Union No. 669, a national union. In that Agreement, the Company agreed to recognize the Union as the representative of its employees, to comply with the terms and conditions for employees' work set by the Union, and to make monthly payments to the Union's national Health and Welfare, Education, and Pension Funds to cover its future employees' health insurance, retirement, and ongoing training requirements.

The Section 8(f) pre-hire agreement was actually a form agreement the terms of which were predetermined by the National Fire Sprinkler Association (an outside association of sprinkler installation companies of which the Company was not a member) and the national Union. The Company did not negotiate or have any input concerning the terms of the agreement. Illustrating the cookie-cutter nature of the terms, the first agreement that Stringer signed was in 1991, three years before the Company hired a single sprinkler fitter. Yet that 1991 Agreement included a provision labeled "Acknowledgement of the Representative Status of Road Sprinkler Fitters Local Union No. 669," purportedly certifying that "on the basis of objective and reliable information," the Company had "confirmed that a clear majority of the sprinkler fitters in its employ"—of which it had none—"have designated, are members of, and are represented by [the Union] for purposes of collective bargaining." J.A. 93. The 1991 Agreement went on to have the Company "unconditionally acknowledge[ ] and confirm[ ]" that the national Union "is the exclusive bargaining representative of its sprinkler fitter employees pursuant to Section 9(a) of the National Labor Relations Act." J.A. 93.

In 1994, the Company hired its first employees. Over the next two decades, the Company continued to hire employees primarily through the Union's apprenticeship program, and entered into successive multi-year representation Agreements with the Union. The next three Agreements—in 1994, 1997, and 2000—likewise said that the Company acknowledged "the Union's status as the exclusive bargaining representative of its employees pursuant to Section 9(a) of the National Labor Relations Act." J.A. 85; 87; 89.

In 2005, the Company signed its fifth Agreement with the Union, which again was a nationwide form contract. The 2005 Agreement included a similar acknowledgement of representative status, and then added the additional statement "that the Union has offered to provide the Employer with confirmation of its support by a majority of such employees." J.A. 83. The subsequent two Agreements retained that same language.

In 2010, Stringer told the Union that the Company was in serious financial straits, and that he was concerned that he would be unable to continue meeting the same contractual obligations, especially the payments into the Union's Health and Welfare, Education, and Pension Funds. After some convincing, Stringer chose to renew the Agreement. Stringer's predictions came true, however, and the Company became delinquent on fund payments three months before the contract's expiration in March 2013. Stringer met with the Union several times over the next few months, and eventually reached a settlement agreement under which, in June 2013, the Company paid back the three missed contributions.

At that same time, Stringer and the Union were also attempting to hammer out a new collective bargaining agreement. Stringer told...