Indep. Elec. Contractors of Hous. v. Nat'l Labor Relations Bd., No. 10-60822

CourtUnited States Courts of Appeals. United States Court of Appeals (5th Circuit)
Writing for the CourtEDITH H. JONES
PartiesINDEPENDENT ELECTRICAL CONTRACTORS OF HOUSTON, INCORPORATED, Petitioner — Cross-Respondent v. NATIONAL LABOR RELATIONS BOARD, Respondent — Cross-Petitioner
Docket NumberNo. 10-60822
Decision Date17 June 2013

INDEPENDENT ELECTRICAL CONTRACTORS OF HOUSTON,
INCORPORATED, Petitioner — Cross-Respondent
v.
NATIONAL LABOR RELATIONS BOARD, Respondent — Cross-Petitioner

No. 10-60822

UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT

FILED: June 17, 2013


Petitions for Review for Enforcement
of Orders of the National Labor Relations Board

Before JONES, WIENER, and GRAVES, Circuit Judges.

EDITH H. JONES, Circuit Judge:

A trade group representing over a hundred electrical contractors, Independent Electrical Contractors of Houston ("IEC-Houston"), petitions for review of two National Labor Relations Board orders dated August 27 and September 30, 2010. NLRB cross-petitions for enforcement of the August 27, 2010 order. Because we conclude that the Board denied IEC-Houston due process of law and misapplied its own precedents, we grant the petition for review and deny the Board's cross-petition for enforcement.

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BACKGROUND

This opinion seeks to end more than a decade of uncertainty for IEC-Houston. Commencing in 1996 and 1997, the International Brotherhood of Electrical Workers ("IBEW"), Local Union No. 716, brought multiple unfair labor practice charges against IEC-Houston and various of its contractor members. See KenMor Elec. Co., 355 N.L.R.B. No. 173, 2010 WL 3463868, at *34 (Aug. 27, 2010).1 The General Counsel issued a complaint based on the union's allegations on October 3, 1997. Id. Further charges were brought against Correct Electrical and IEC-Houston in an overlapping case presenting almost the same facts. See Indep. Elec. Contractors of Houston, Inc., 355 N.L.R.B. No. 225, 2010 WL 3864537 (Sept. 30, 2010). Each complaint alleged that IEC-Houston's member employment-assistance programs discriminated against the hiring of union members and "salts" in violation of Sec. 8(a)(3) of the National Labor Relations Act, 29 U.S.C. § 158(a)(3).

As a loose trade association and an affiliate of a national organization, IEC-Houston has provided services to member contractors in the Houston, Texas area for several decades. It operated during the period covered by these charges (1996-97 and 1997-99, respectively) on a very modest budget with four full-time employees, two of whom were clerical workers. In addition to its training programs, lobbying, trade shows, and social functions, IEC-Houston offered two

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employment services to the members. These services were the focus of unfair labor charges.

The Shared Man Program

Since 1955, IEC-Houston has run a program that enables member contractors who need additional electricians to borrow workers for up to sixty days from other IEC-Houston contractors who have less work. In 1989, the program was formalized in writing. It provides several benefits: the borrowing contractor gains access to trained, reliable help; the lending contractor avoids paying unemployment benefits; and the employee electricians avoid breaks in employment. IEC-Houston kept no records about the utilization of this program.

In a case concerning an IEC-Houston member, the Board held that the shared man program did not discriminate against union supporters in violation of § 8(a)(3). Pollock Elec., Inc., 349 N.L.R.B. 708, 710 (2007). The Board's opinion reaffirms it had "repeatedly found that hiring policies that give priority to former employees and recommended employees are not unlawful, even if the effect of such policies is to limit or exclude union applicants." Id.2 Pollock squarely rejected the administrative law judge's finding of discrimination in the shared man program. Further, in another case involving an IEC member, the Board upheld the IEC shared man program. Centex Indep. Elec. Contractors

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Ass'n, 344 N.L.R.B. 1393, 1403 (2005) (employer's preference for borrowed employees lawful).

Application Referral Service

In 1990, years before the union salting campaign that precipitated the instant charges, IEC-Houston instituted an application referral service for members; its purpose is to save them the time and expense of running employment ads and dealing with staffing agencies. During the period covered by these charges, electricians looking for work could fill out a five-page application at the offices of IEC-Houston. The clerical staff would ensure the application was complete and then identify the worker as "green" (inexperienced), an apprentice, or a journeyman. The applications were filed according to these levels and were placed in an active file for thirty days. Thereafter, all applications were maintained in a file cabinet for a year. An applicant thus had to fill out a new application each thirty days in order to remain in the active file. However, since many employers using the service only wanted to see applications that were up to a few days old, it became common for applicants to refile their applications more frequently than once a month. About 15-20 applications were filed each day.

Initially, IEC-Houston did not charge the applicant for this service. In 1997, the association realized that the referral service's cost ($60,000 to $100,000 annually) was becoming too high. On September 9, it began charging applicants $50 for each additional application filed within a thirty-day period. The fee was waived for electricians who had recently been laid off by an IEC-Houston member.

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When a member asked to review the applications, they would be made available for in-person review or by fax according to the skill level and recency requested. It is undisputed that IEC-Houston sent all the applications on file to any member as requested. No applications were withheld or modified based on an applicant's union affiliation. IEC-Houston hired no electricians itself, but acted only as a conduit to the members, who each made independent hiring decisions. Because of its tiny staff, IEC-Houston kept no records showing which applications went to which recipients, nor did it inform applicants where their applications had been sent.

IEC-Houston Newsletters

Two newsletters are material to this case, as the Board held them relevant to labor law violations. IEC-Houston urged its free speech rights consistent with NLRA § 8(c). We summarize the articles as background information but do not consider the legal issues surrounding them.

In March 1994, the IEC-Houston newsletter contained an article entitled "IEC members can defeat COMET,"3 written by National IEC First Vice President Jon Pollock. This article described a tactic whereby union salts (union organizers) would intentionally induce employers to fire covert salts and then file NLRB charges. The resulting legal expenses for contractors were often devastating. Pollock warned that advertising for electricians directly in the newspapers was "equivalent to waving a red flag to the union." Moreover, he opined, "when a stranger shows up looking for work, we are not allowed to ask

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'are you here to work or are you here to destroy us?' Unknown workers may come with hidden motivations and questionable agendas."

To defend against "this union attack," Pollock advocated the use of IEC services, such as the application referral service and shared man program, to "minimize their exposure to risks." He pointed out that "[m]any IEC chapters advertise for electrician applications on behalf of [their] members," and that this system allowed the contractors to avoid some problems of "hiring off the street." "[C]ontractors who are short handed can obtain a fax list of potential applicants, and they select from it those who have the best credentials."

In the March 1996 newsletter, IEC-Houston published an article entitled "Coping with Labor's COMET Campaign," written by Peter Cockshaw, of "COCKSHAW'S Construction Labor News and Opinion." Cockshaw observed that after the Town & Country Electric4 decision, non-union contractors were "scrambling for strategies to counter new and accelerated union organizing attacks." He opined that, "[c]urrently, the best bet for some anti-'salting' relief is the program run by IEC's Houston Chapter."

Bob Wilkinson, the president of IEC-Houston, is quoted—inaccurately5—as saying that: "IBEW locals in this area and many others monitor all ads and then send union members to apply." Cockshaw states that "[t]o counter labor's attack on the open shop's skills' sources, the Houston Chapter and some other IEC affiliates have developed referral procedures. They advertise on behalf of their members and sign up applicants at various offices."

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Wilkinson described the program: "Contractors who are short-handed can obtain a fax list of potential applications. They then select those who have the best credentials. Aside from helping to avoid potential 'salting' problems, this process eliminates duplication of effort among member firms." Finally, Wilkinson reaffirmed that IEC's programs were created long before the COMET Program, but stated that even though "it was created for other reasons, this arrangement minimizes our members' exposure to the current 'salting' risk." Wilkinson concluded that charges brought by the IBEW against the IEC's programs do not bother him "because [he] realizes that business agents who filed the complaints are just doing their jobs."

The KenMor Decision

The first unfair labor practices complaint alleged violations of § 8(a)(3) and derivative violations of § 8(a)(1): that the respondents refused...

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