Local 627, Intern. Union of Operating Engineers, AFL-CIO v. N.L.R.B.

• Decision Date: 04 April 1979
• Docket Number: AFL-CI,P,No. 77-2031,77-2031
• Parties: 100 L.R.R.M. (BNA) 2792, 194 U.S.App.D.C. 37, 85 Lab.Cas. P 11,168 LOCAL 627, INTERNATIONAL UNION OF OPERATING ENGINEERS,etitioner, v. NATIONAL LABOR RELATIONS BOARD, Respondent, South Prairie Construction Company, Intervenor.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 844

595 F.2d 844

100 L.R.R.M. (BNA) 2792, 194 U.S.App.D.C. 37,

85 Lab.Cas. P 11,168

LOCAL 627, INTERNATIONAL UNION OF OPERATING ENGINEERS, AFL-CIO, Petitioner, v. NATIONAL LABOR RELATIONS BOARD, Respondent, South Prairie

Construction Company, Intervenor.

No. 77-2031.

United States Court of Appeals, District of Columbia Circuit.

Argued Jan. 8, 1979.

Decided March 6, 1979.

Rehearing Denied April 4, 1979.

Laurence Gold, Washington, D. C., with whom J. Albert Woll and Marsha S. Berzon, Washington, D. C., were on the brief, for petitioner.

Mary Schuette, Atty., N. L. R. B., Washington, D. C., a member of the bar of the Supreme Court of New York, pro hac vice, by special leave of court, with whom John S. Irving, Gen. Counsel, Carl L. Taylor, Associate Gen. Counsel, and Robert G. Sewell, Atty., N. L. R. B., Washington, D. C., were on the brief, for respondent.

Stanley R. Strauss, Washington, D. C., with whom Michael J. Bartlett, Washington, D. C., was on the brief, for intervenor.

Before TAMM and WILKEY, Circuit Judges, and BARRINGTON D. PARKER, United States District Judge for the District of Columbia. ^*

Opinion for the court filed by Circuit Judge TAMM.

TAMM, Circuit Judge:

In this "double breasted" ¹ construction case, we face issues concerning a construction company's simultaneous operation of union and nonunion subsidiaries. We affirm the decision of the National Labor Relations Board (Board) that the construction workers employed by South Prairie Construction Company (South Prairie), a subsidiary of Peter Kiewit Sons', Inc. (Kiewit, Inc.), form a separate appropriate bargaining unit from the unit of construction workers employed by Peter Kiewit Sons' Company (Kiewit), another subsidiary of Kiewit, Inc.

I

Both Kiewit and South Prairie are wholly owned subsidiaries of Kiewit, Inc., a Nebraska corporation. For many years, Kiewit engaged in heavy and highway construction in Oklahoma. In 1970, the company signed a collective bargaining agreement with Local 627 of the International Union of Operating Engineers, which had represented Kiewit's employees since 1960. ² The agreement was to run for three years, and included union shop and hiring hall provisions. ³

Kiewit was the only highway contractor in Oklahoma to have a union contract with its employees and, consequently, paid higher wages than its competitors. ⁴ In order to improve its competitive position vis-a-vis rival contractors, Kiewit, Inc. brought South Prairie, which had operated as a nonunion contractor outside Oklahoma, into that state to seek construction work.

After South Prairie began doing business in Oklahoma, Local 627 tried unsuccessfully to persuade Kiewit, Inc. and South Prairie to apply the Kiewit union agreement to South Prairie. It then filed a charge alleging that the employers' conduct violated the National Labor Relations Act. In September, 1972 the General Counsel of the Board issued a complaint charging that the employers' refusal to recognize Local 627 as the representative of South Prairie employees violated Sections 8(a)(1) ⁵ and 8(a)(5) ⁶ of the Act.

An administrative law judge (ALJ) upheld the General Counsel's complaint. The ALJ found that South Prairie's Oklahoma operations had been instituted in order to maximize Kiewit, Inc.'s profits, and that South Prairie performed construction work that Kiewit otherwise would have performed under the contract. Peter Kiewit Sons' Co., 206 N.L.R.B. 562, 573 (1973). The ALJ further found that the two subsidiaries were sufficiently interrelated so that the Kiewit contract could be imposed upon South Prairie. Id. at 573-75. Finally, the ALJ concluded that employees of both Kiewit and South Prairie constituted a single appropriate bargaining unit. Id. at 575. ⁷

The Board reversed. It concluded that Kiewit and South Prairie could not be considered a "single employer" for collective bargaining purposes, and thus, South Prairie could not be bound by Kiewit's contract. The Board supported its separate employer holding on several grounds: the two subsidiaries had been operated as separate enterprises for many years, they had different offices with separate officers and permanent employees, they did not subcontract work to each other, their employees received different wages and benefits, and the labor policies of South Prairie, other than the decision to operate as a union or nonunion company, were set by the officials of the subsidiary. Id. at 562-63.

On appeal, this court found the Board's decision that Kiewit and South Prairie were separate employers unsupported by the record. Local 627, International Union of Operating Engineers v. NLRB, 171 U.S.App.D.C. 102, 109, 518 F.2d 1040, 1047 (1975), Aff'd in part, remanded in part sub nom. South Prairie Construction Co. v. Local 627, 425 U.S. 800, 96 S.Ct. 1842, 48 L.Ed.2d 782 (1976) (per curiam). The court relied, Inter alia, on the uncontested facts that Kiewit, Inc. had decided that South Prairie would operate as a nonunion company, and that the subsidiaries had interchanged key supervisory employees, ⁸ to find a "substantial qualitative degree of interrelation of operations and common management," Id. 171 U.S.App.D.C. at 108, 518 F.2d at 1046-47. Accordingly, it held that Kiewit and South Prairie were a single employer. The court also held that Kiewit and South Prairie employees made up an appropriate collective bargaining unit. Id. 171 U.S.App.D.C. at 110, 112, 518 F.2d at 1048, 1050.

The Supreme Court, in a per curiam opinion, affirmed in part and remanded in part. The Court upheld this court's decision that South Prairie and Kiewit form a single employer, ⁹ but stated that this court should not have decided the appropriateness of the bargaining unit without first allowing the Board to pass on the issue. South Prairie Construction Co. v. Local 627, International Union of Operating Engineers, 425 U.S. 800, 805, 96 S.Ct. 1842, 48 L.Ed.2d 782 (1976) (per curiam). ¹⁰ The Court termed this court's consideration of the scope of the bargaining unit issue "incompatible with the orderly functioning of the process of judicial review." Id. (quoting NLRB v. Metropolitan Life Insurance Co., 380 U.S. 438, 444, 85 S.Ct. 1061, 1064, 13 L.Ed.2d 951 (1965) ).

On remand, the Board found that South Prairie's employees have a "distinct and separate community of interests" ¹¹ from Kiewit employees, and constitute an appropriate bargaining unit separate from the unit formed by Kiewit's employees. Peter Kiewit Sons' Co., 231 N.L.R.B. No. 13 (1977). The Board relied on the factors used to determine whether a multiplant or single plant unit is appropriate, ¹² to conclude that imposition of the Kiewit agreement onto South Prairie's employees would therefore be improper. Id. at 8.

II

Section 9(b) of the National Labor Relations Act, 29 U.S.C. § 159(b) (1976) confers authority upon the Board to designate an appropriate bargaining unit: "The Board shall decide in each case whether, in order to assure to employees the fullest 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." Section 9(b) confers a broad discretion on the Board to determine appropriate bargaining units, International Union of Elec. Workers v. NLRB, 135 U.S.App.D.C. 355, 363, 418 F.2d 1191, 1199 (1969). Board determinations will not be overturned unless they are arbitrary and unreasonable, American Bread Co. v. NLRB, 411 F.2d 147, 153 (6th Cir. 1969), and a reviewing court may not substitute its own judgment for a rationally supported position adopted by the Board, Local 1325, Retail Clerks International Association v. NLRB, 134 U.S.App.D.C. 298, 304, 414 F.2d 1194, 1200 (1969).

The breadth of agency discretion is emphasized in the oft-echoed statement that "(t)he Board's duty is to choose An appropriate unit, and it may select among several appropriate ones," Wheeler-Van Label Co. v. NLRB, 408 F.2d 613, 617 (2d Cir.), Cert. denied, 396 U.S. 834, 90 S.Ct. 90, 24 L.Ed.2d 84 (1969) (emphasis in original). ¹³ More than one appropriate bargaining unit logically can be defined in any particular factual setting. Local 1325, Retail Clerks International Ass'n, 134 U.S.App.D.C. at 306, 414 F.2d at 1202. For example, in Sheraton-Kauai Corp. v. NLRB, 429 F.2d 1352, 1354 (9th Cir. 1970), the court upheld the Board's decision to group a single Sheraton hotel's employees in a separate appropriate bargaining unit although the Board acknowledged that a unit composed of employees of all the Sheraton hotels in the state would also be appropriate. The Board's decision to favor the smaller unit was held to be a lawful exercise of its discretion. As the Supreme Court has stated, "the appropriate unit is the one declared by the Board under § 9(b), not one that might be deemed appropriate under other circumstances." Pittsburgh Plate Glass Co. v. NLRB, 313 U.S. 146, 153, 61 S.Ct. 908, 912, 85 L.Ed. 1251 (1941).

In reviewing the Board's decision, therefore, it is not our duty to determine whether other units would be appropriate or inappropriate. We will uphold the Board's decision in this case if it is rational and in accord with its past precedent and if the unit chosen is appropriate.

III

The union asserts that the finding that Kiewit and South Prairie form a single employer necessarily establishes an appropriate bargaining unit comprised of the operating engineers of both subsidiaries. Although the union points to some Board precedent to support its position, See Royal Oak Tool & Machine Co., 132 N.L.R.B. 1361, 1371-2 (1961), Enforced NLRB v. Royal Oak Tool & Machine Co., 320 F.2d 77 (6th Cir. 1963); Don Burgess Construction Corp., 227 N.L.R.B. 765, 774 (1977), Application for enforcement pending (9th Cir. No. 77-3437), ¹⁴ the Board has stated that a "single-employer determination does not necessarily establish that an employer-wide unit is...