Local Joint ex. Bd. v. Nlrb, 00-71138.

• Decision Date: 28 October 2002
• Docket Number: No. 00-71138.,00-71138.
• Citation: 309 F.3d 578
• Parties: LOCAL JOINT EXECUTIVE BOARD OF LAS VEGAS, Culinary Workers Union Local 226, and Bartenders Union Local 165 affiliated with Hotel Employees International Union, AFL-CIO, Petitioner, v. NATIONAL LABOR RELATIONS BOARD, Respondent.
• Court: U.S. Court of Appeals — Ninth Circuit

309 F.3d 578

LOCAL JOINT EXECUTIVE BOARD OF LAS VEGAS, Culinary Workers Union Local 226, and Bartenders Union Local 165 affiliated with Hotel Employees International Union, AFL-CIO, Petitioner, v. NATIONAL LABOR RELATIONS BOARD, Respondent.

No. 00-71138.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted November 8, 2001.

Filed October 28, 2002.

Michael T. Anderson, San Francisco, CA, argued the cause for the petitioner. Barry Jellison, San Francisco, CA, assisted on the brief.

Charles Donnelly, Supervisory Attorney, National Labor Relations Board, Washington, DC, argued the cause for the respondent. Aileen A. Armstrong, Deputy Associate General Counsel, National Labor Relations Board, Washington, DC, assisted on the brief.

On Petition for Review of an Order of the National Labor Relations Board. NLRB No. 28-CA-13274/75.

Before CANBY, JR., GRABER, and PAEZ, Circuit Judges.

OPINION

PAEZ, Circuit Judge.

Petitioner Local Joint Executive Board of Las Vegas, Culinary Workers Union Local 226 and Bartenders Union Local 165 ("the Union"),¹ petitions for review of a National Labor Relations Board ("NLRB" or "the Board") order dismissing its consolidated complaints against Hacienda Resort Hotel and Casino and Sahara Hotel and Casino ("the Employers"). The Board concluded that the Employers had not violated sections 8(a)(1) and 8(a)(5) of the National Labor Relations Act ("NLRA" or "the Act"), 29 U.S.C. §§ 158(a)(1) and (5), in unilaterally discontinuing dues-checkoff after expiration of their collective bargaining agreements with the Union. The Union contends that, in the absence of a union security provision in the expired agreement, an employer's obligation to abide by a dues-checkoff arrangement survives expiration of the contract under the "unilateral change doctrine" of NLRB v. Katz, 369 U.S. 736, 82 S.Ct. 1107, 8 L.Ed.2d 230 (1962). Accordingly, the Union argues that the Employers committed an unfair labor practice in violation of sections 8(a)(1) and 8(a)(5) of the Act when they unilaterally terminated dues-checkoff before bargaining to agreement or impasse. We have jurisdiction under section 10(f) of the NLRA, 29 U.S.C. § 160(f), and grant the petition for review. Because we are unable to discern the Board's rationale for excluding dues-checkoff from the unilateral change doctrine in the absence of union security, we grant the petition for review, vacate the decision of the Board, and remand so that the Board can articulate a reasoned explanation for the rule it adopted, or adopt a different rule and present a reasoned explanation to support it.

I. BACKGROUND

The Employers and the Union had collective bargaining relationships for more than 30 years. The Employers had separate, but substantially identical, agreements with the Union. The most recent agreements contained the following dues-checkoff provision under which the Employers agreed to deduct union dues directly from employee paychecks and remit them to the Union:²

The Check Off Agreement and system heretofore entered into and established by the Employer and the Union for the check-off of Union dues by voluntary authorization, as set forth in Exhibit 2, attached to and made part of this Agreement, shall be continued in effect for the term of this Agreement.

The State of Nevada, where the Employers are located, is a "right-to-work" state.³ Under section 14(b) of the LMRA, 29 U.S.C. § 164(b), the agreements legally could not, and therefore did not, include a union security provision requiring union membership as a condition of employment.⁴

Both agreements expired on May 31, 1994. The Employers continued to abide by the dues-checkoff arrangement for more than a year after expiration of the agreements. In June 1995, however, after notifying the Union, the Employers ceased giving effect to the dues-checkoff provision in the expired agreements and thereafter redirected amounts, which previously had been deducted and remitted to the Union, to their employees as part of their regular wages.

On October 26, 1995, the General Counsel for the Board issued consolidated complaints alleging that the Employers' unilateral termination of dues-checkoff, without bargaining to impasse, constituted an unfair labor practice in violation of sections 8(a)(1) and 8(a)(5) of the Act, 29 U.S.C. §§ 158(a)(1) and (5). The administrative law judge ("ALJ") dismissed the complaints solely on the basis of the text of the dues-checkoff provision in the collective bargaining agreements, noting that it was therefore "unnecessary to examine the state of the law on checkoff clauses, whether in right-to-work States or otherwise, with an eye to changing it." The ALJ concluded that "the most reasonable interpretation of [the dues-checkoff provision] is that the system would continue through the duration of the contract but would not survive thereafter."

Although the Board affirmed the dismissal, it explicitly rejected the ALJ's reliance on the text of the dues-checkoff provision. In concluding that the Employers' unilateral termination of dues-checkoff did not violate the Katz prohibition against unilateral changes and, therefore, did not constitute an unfair labor practice under sections 8(a)(1) and 8(a)(5) of the Act, the Board relied on "well-established precedent that an employer's obligation to continue a dues-checkoff arrangement expires with the contract that created the obligation." The Board traced its rule excluding dues-checkoff from the unilateral change doctrine to its decision in Bethlehem Steel Co., 136 N.L.R.B. 1500, 1502 (1962), enforced in pertinent part, Bethlehem Steel Co. v. NLRB, 320 F.2d 615(3d Cir.1963). As evidence that its rule is "well-established," the Board cited numerous Board and court cases citing the holding of Bethlehem Steel for the proposition that an employer's checkoff obligation does not survive the contract that created the obligation. Two members of the Board dissented, stating that "[t]he Board has never acknowledged that the result in these cases cannot be justified under the original Bethlehem Steel rationale, nor has it ever attempted to articulate a substitute rationale that would justify the broader rule the majority reaffirms today."

II. ANALYSIS

Sections 8(a)(5) and 8(d) of the NLRA, 29 U.S.C. §§ 158(a)(5) and (d), make it an unfair labor practice for an employer to refuse to bargain "in good faith with respect to wages, hours, and other terms and conditions of employment." In Katz, 369 U.S. at 747, 82 S.Ct. 1107, the Supreme Court affirmed the Board's determination that an employer violates its obligation to bargain in good faith if it imposes unilateral changes in mandatory subjects of bargaining — "wages, hours, and other terms and conditions of employment" — before bargaining to agreement or impasse over the relevant term. Therefore, an employer must maintain the status quo after the expiration of a collective bargaining agreement until a new collective bargaining agreement has been negotiated or the parties have bargained to impasse. NLRB v. Carilli, 648 F.2d 1206, 1214 (9th Cir.1981).

It is undisputed that union security and dues-checkoff are mandatory subjects of bargaining. Bethlehem Steel, 136 N.L.R.B. at 1502. However, in Bethlehem Steel, the Board concluded that the employer had not committed an unfair labor practice under sections 8(a)(1) and (5) of the Act when, after expiration of its agreement with the union, it unilaterally ceased giving effect to both provisions of the expired agreement. Id. With regard to union security, the Board reasoned that "[t]he acquisition and maintenance of union membership cannot be made a condition of employment except under a contract which conforms to the proviso to Section 8(a)(3)." Id. On the basis of its interpretation of section 8(a)(3) as prohibiting union security arrangements in the absence of an existing agreement, the Board reasoned that, upon expiration of the contract, "the union-security provisions become inoperative and no justification remains for either party to the contract thereafter to impose union-security requirements." Id. Accordingly, the Board concluded that the employer's refusal to enforce the union security provision of the expired collective bargaining agreement was "in accordance with the mandate of the Act." Id.

Turning to the employer's obligation to continue dues-checkoff after expiration of the agreement, the Board noted that "[s]imilar considerations prevail." Id. The Board found that "[t]he checkoff provisions in [the] contracts with the Union implemented the union-security provisions." Id. The Board reasoned that "[t]he Union's right to such checkoffs in its favor, like its right to the imposition of union security, was created by the contracts and became a contractual right which continued to exist so long as the contracts remained in force." Id. Thus, the Board concluded that, "when the contracts terminated, the [employer] was free of its checkoff obligations to the Union." Id.

Unlike the agreements in Bethlehem Steel, the collective bargaining agreements at issue here do not contain a union security provision. Although the Board acknowledged that its rule excluding dues-checkoff from the unilateral change doctrine "initially developed in the context of a contract containing both union security and dues-checkoff," rather than offering any explanation for its applicability in the absence of union security, the Board simply concluded that the rule announced in Bethlehem Steel "has clearly come to stand for the general rule that an employer's dues-checkoff obligation terminates at contract expiration."

The Board and the Union frame their arguments primarily in terms of whether the Board's rule excluding dues-checkoff from the unilateral change doctrine in the absence of union security is "rational and consistent" with the Act. The AFL-CIO, appearing as amicus curiae, argues that the case should be remanded because the Board has...