N.L.R.B. v. D.A. Nolt, Inc., 04-2321.

Decision Date04 May 2005
Docket NumberNo. 04-2321.,No. 04-2681.,04-2321.,04-2681.
Citation406 F.3d 200
PartiesNATIONAL LABOR RELATIONS BOARD Petitioner/Cross-Respondent v. D.A. NOLT, INC. Respondent/Cross-Petitioner
CourtU.S. Court of Appeals — Third Circuit

David Habenstreit (Argued), Kira D. Vol, Aileen A. Armstrong, National Labor Relations Board, Washington, D.C., for Petitioner/Cross-Respondent.

Thomas C. Zipfel (Argued), Cohen, Seglias, Pallas, Greenhall & Furman, P.C., Philadelphia, PA, for Respondent/Cross-Petitioner.

Before: SLOVITER, AMBRO and ALDISERT, Circuit Judges.


ALDISERT, Circuit Judge.

We must evaluate an Application for Enforcement by the National Labor Relations Board ("the Board") and a Cross-Petition for Review by D.A. Nolt, Inc. ("D.A. Nolt"). In a split decision, the Board held that D.A. Nolt was bound to a successor agreement negotiated by the Roofing Contractors' Association (the "RCA") and United Union of Roofers, Waterproofers and Allied Workers ("the Union"). It concluded that there were no "unusual circumstances" to justify D.A. Nolt's withdrawal from the agreement because the conduct at issue did not constitute "collusion or conspiracy" as contemplated by the dicta in Chel LaCort, 315 NLRB 1036 (1994).

We must determine whether the following legal conclusions of the Board are rational and consistent with the National Labor Relations Act ("the Act"): (1) the conduct at issue did not constitute "unusual circumstances;" and (2) even if "unusual circumstances" had existed, D.A. Nolt had forfeited its opportunity to withdraw from the RCA. We have jurisdiction over the Board's Application for Enforcement pursuant to 29 U.S.C. § 160(e) and D.A. Nolt's Cross-Petition for Review pursuant to 29 U.S.C. § 160(f). We will uphold a Board rule as long as it is rational and consistent with the Act, even if we would have formulated a different rule had we sat on the Board. NLRB v. Curtin Matheson Scientific, Inc., 494 U.S. 775, 787, 110 S.Ct. 1542, 108 L.Ed.2d 801 (1990). Although judicial review of the Board's balancing of conflicting interests is limited, "the balance struck by the Board is [not] immune from judicial examination and reversal in proper cases." NLRB v. Brown, 380 U.S. 278, 290-291, 85 S.Ct. 980, 13 L.Ed.2d 839 (1965). "When the Board's decisions create an artificial and unwarranted imbalance of economic weapons, the courts are not bound to show abject deference to the Board's views." Charles D. Bonanno Linen Serv., Inc. v. NLRB, 454 U.S. 404, 421, 102 S.Ct. 720, 70 L.Ed.2d 656 (1982) (Burger, J., dissenting).

We will deny the Board's Application for Enforcement and grant D.A. Nolt's Cross-Petition for Review. We conclude that the Board's holding is not rational or consistent with the Act.


D.A. Nolt is a corporation engaged in commercial, industrial and residential roof repair and installation. David Nolt ("Nolt") is the president who incorporated the business in 1990. The RCA is a multiemployer bargaining association of contractors who perform commercial roofing work. Richard Harvey is the executive director of the RCA. The Union has historically entered into collective bargaining agreements with the RCA. Tom Pedrick is vice-president of the Union.

Since 1993, the RCA and the Union have entered into collective bargaining agreements ("RCA agreements") covering commercial work. Historically, negotiations are conducted between the Union and the RCA, and after an agreement is reached, copies are sent to independent employers for their acceptance and execution. Generally, a new RCA agreement is negotiated approximately three months before the expiration of the old RCA agreement.

Nolt signed assents binding D.A. Nolt to the terms of the 1993-1997 and 1997-2001 RCA agreements. In June 1999, Nolt signed a Bargaining Agent Authorization ("BAA") with the RCA, allowing the RCA to negotiate a new commercial roofing contract with the Union on behalf of D.A. Nolt. Under the BAA, an employer may withdraw from the RCA 90 days prior to the expiration of the contract in place at that time.

In June, 2000, ten months before expiration of the 1997-2001 RCA agreement, Pedrick, vice-president of the Union, initiated a discussion with Harvey, executive director of the RCA, about beginning negotiations for the subsequent RCA agreement. Negotiating committees for the Union and the RCA began discussing the terms of a new, eight year contract. Harvey testified that, in the course of negotiations, Union officials told him that they did not want the Union membership to become aware of the terms being discussed and they asked if the RCA would keep the negotiations confidential. Harvey testified that the Union and the RCA agreed to keep the negotiations secret from their respective memberships. Michael McCann, the Union's business manager, denied that the negotiations were kept secret from the Union membership.

On July 5, 2000, Harvey faxed a memorandum of the agreement to the Union and the eight employer-members of the negotiating committee. Following their vote for ratification, Harvey then faxed the agreement to the ten other employer-members who were not included in the negotiating committee, including D.A. Nolt. According to Harvey, there was continued concern that the terms of the agreement would reach the employee-members of the Union. To avoid that possibility, Harvey testified that each owner was instructed to stand by their fax machines to receive the memorandum of agreement, ballot and cover letter.

The July 12, 2000, cover letter for the agreement instructed each member that the ballot had to be returned by July 14, 2000, and to vote for one of three options: (1) acceptance; (2) rejection; or (3) withdrawal from the RCA. Regarding the last option, the cover letter stated:

Members who wish to exercise their right to withdraw their bargaining agent authorization from the Association ... must do so at this time and should not vote to accept or reject the tentative agreement, but rather should use the ballot form to provide written notice to the Association of their decision to resign....

Paradoxically, the cover letter also stated on the same page:

This authorization may only be revoked by written notice by the undersigned to the Association no less than 90 days prior to the expiration of the current labor agreement between the Association and Union. Upon the giving of such notice to the Association, this authorization will terminate for all purposes.

On July 18, 2000, Nolt voted to accept the terms of the agreement. He gave several reasons for his action at that time: (1) He did not understand the ballot and did not know what it was; (2) He was pressured by Harvey to cast his ballot and he did not have time to consult with an attorney; (3) He thought he could withdraw from the RCA at a later time; and (4) He feared that prematurely withdrawing from the RCA would strain his relationship with the Union.

On January 30, 2001, approximately 90 days prior to the expiration of the 1997-2001 RCA Agreement, Nolt advised Harvey that D.A. Nolt was withdrawing from the RCA. McCann then demanded that D.A. Nolt abide by the terms of the 2001-2009 RCA agreement. The Union filed a complaint charging unfair labor practice against D.A. Nolt and a hearing was held before Administrative Law Judge Margaret Kern ("ALJ"). She issued a decision in favor of D.A. Nolt. The Union filed exceptions to the ALJ's decision and the RCA filed an amicus curiae brief in support of the Union's position. In a split decision, the Board reversed the ALJ's decision, holding that she erred in finding that D.A. Nolt lawfully withdrew from the RCA and that D.A. Nolt was bound to the 2001-2009 RCA Agreement. The Board filed an Application for Enforcement of the Order and D.A. Nolt filed a Cross-Petition for Review.


In accordance with the Act's fundamental purpose of fostering and maintaining stability of bargaining relationships, an employer or union may not withdraw from a multiemployer bargaining unit after negotiations have begun absent "unusual circumstances" or "mutual consent." Retail Associates, 120 NLRB 388, 395 (1958). Historically, the "unusual circumstances" exception has been limited to extreme situations, as where the employer is subject to extreme financial pressure or where the multiemployer unit has dissipated to the point where the unit is no longer a viable bargaining entity. Bonanno, 454 U.S. at 411, 102 S.Ct. 720.

In Chel LaCort, the Board refused to extend the "unusual circumstances" exception to situations where the multiemployer association fails, either deliberately or otherwise, to inform its employer-members of the start of negotiations. 315 NLRB at 1036. To extend the exception would impose a notice requirement on the multiemployer association and insert the Board into the association/member relationship unnecessarily and with uncertain consequences. Id. at 1037. The Board noted in dicta, however, that there was no evidence of "collusion or conspiracy," stating that "[w]e leave to another case to decide whether or when such evidence would be sufficient to show `unusual circumstances.'" Id. at 1036 n. 5. We now decide that this is a such a case.

In Resort Nursing Home v. NLRB, 389 F.3d 1262 (D.C.Cir.2004), the court held that there was no collusion or conspiracy when a multiemployer association and union began negotiations for a new agreement eight months prior to the expiration of the old agreement, id. at 1271, and that the Chel La Cort rule is rational and consistent with the Act, id. at 1269. There was, however, no evidence that the negotiations were conducted in secret. See id. at 1266-1267.


Although our review of the Board's decision is limited, we conclude that its decision is not rational or consistent with the Act and that the ALJ and dissenting Board Chairman Battista properly determined that "unusual circumstances" justified D.A. Nolt's withdrawal from the 2001-2009...

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2 cases
  • Roofers Local No. 30 Combined Pension Fund v. D.A. Nolt Inc.
    • United States
    • U.S. District Court — Eastern District of Pennsylvania
    • August 25, 2010
    ...decision and issued an opinion in favor of Nolt, finding that Nolt was not bound by the terms of the agreement. 2 See NLRB v. D.A. Nolt, Inc., 406 F.3d 200 (3d Cir.2005). 3 The instant action derives from the same factual circumstances as the labor dispute. Nolt ceased making contributions ......
  • Local Union 30, United Union v. D.A. Nolt, Inc.
    • United States
    • U.S. District Court — Eastern District of Pennsylvania
    • July 29, 2008
    ...the case before the Third Circuit took place within the legal framework of the National Labor Relations Act. See N.L.R.B. v. D.A. Nolt, Inc., 406 F.3d 200 (3d Cir.2005). While the question before this Court is whether the RCA and Local 30 are liable to Nolt for fraud, the question before th......

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