N.L.R.B. v. Memc Electronic Materials, Inc.

• Citation: 363 F.3d 705
• Decision Date: 09 April 2004
• Docket Number: No. 03-2471.,No. 03-2764.,03-2471.,03-2764.
• Parties: NATIONAL LABOR RELATIONS BOARD, Petitioner/Cross Respondent, v. MEMC ELECTRONIC MATERIALS, INC., Respondent/Cross Petitioner.
• Court: U.S. Court of Appeals — Eighth Circuit

363 F.3d 705

NATIONAL LABOR RELATIONS BOARD, Petitioner/Cross Respondent, v. MEMC ELECTRONIC MATERIALS, INC., Respondent/Cross Petitioner.

No. 03-2471.

No. 03-2764.

United States Court of Appeals, Eighth Circuit.

Submitted: November 17, 2003.

Filed: April 9, 2004.

COPYRIGHT MATERIAL OMITTED

Arthur F. Rosenfeld, argued, Washington, D.C. (Robert J. Englehart, John R. McIntyre, John E. Higgins, Jr., John H. Ferguson, and Aileen A. Armstrong, on the brief), for petitioner/cross-respondent.

Timothy J. Sarsfield, argued, St. Louis, Missouri (Richard E. Jaudes and Stephen D. Smith, on the brief), for respondent/cross-appellee.

Before LOKEN, Chief Judge, McMILLIAN and BEAM, Circuit Judges.

LOKEN, Chief Judge.

The International Association of Machinists and Aerospace Workers (the IAM) petitioned the National Labor Relations Board to represent the maintenance workers employed by MEMC Electronic Materials, Inc. (MEMC), at its silicon wafer manufacturing plant in St. Peter's, Missouri. MEMC and the IAM then entered into a Stipulated Election Agreement (the Agreement) defining the collective-bargaining unit as consisting of MEMC's maintenance employees and excluding all other employees. Less than one week before the election, the IAM filed a second petition to represent MEMC's production employees. MEMC moved to withdraw from the Agreement and postpone the scheduled election, arguing that the proper bargaining unit included all production and maintenance employees.

After the Board's Regional Director denied MEMC's motion to withdraw, the IAM prevailed in the election and the Board certified the IAM as the maintenance employees' exclusive collective bargaining representative. When MEMC refused to bargain, the Board commenced an unfair labor practice proceeding and ruled that MEMC had violated 29 U.S.C. §§ 158(a)(1) and (5) by refusing to bargain. The Board ordered MEMC to bargain with the IAM as the exclusive representative of the maintenance employees. MEMC Elec. Materials, Inc., 338 N.L.R.B. No. 142 (Apr. 10, 2003). The Board now petitions to enforce its unfair labor practice order. MEMC cross-petitions for review of that order, which is the proper way to obtain judicial review of the underlying order certifying the IAM. See NLRB v. Superior of Mo., Inc., 351 F.3d 805, 806 (8th Cir.2003). We conclude that the Board did not abuse its discretion in denying MEMC's motion to withdraw and in refusing to set aside the election. Accordingly, we enforce the Board's order.

I.

When a union or group of employees petitions for certification as an exclusive bargaining representative, the Board must determine the appropriate collective bargaining unit to be represented. See 29 U.S.C. § 159(b). The Board has broad discretion to determine whether a group of employees has a sufficient "community of interest" to be an appropriate bargaining unit. NLRB v. Action Auto., Inc., 469 U.S. 490, 494, 105 S.Ct. 984, 83 L.Ed.2d 986 (1985); NLRB v. Catalytic Indus. Maint. Co., 964 F.2d 513, 518 (5th Cir. 1992). That includes the discretion to define multiple bargaining units for an employer's single facility. See, e.g., Am. Hosp. Ass'n v. NLRB, 499 U.S. 606, 111 S.Ct. 1539, 113 L.Ed.2d 675 (1991); Barnert Mem'l Hosp. Ctr., 217 N.L.R.B. 775, 776-77 (1975).

The Board applies a different standard, however, when the employer and the petitioning employees enter into a consent agreement or stipulation that defines the appropriate bargaining unit for purposes of the impending representation election. The statute authorizes the Board to approve such agreements. See 29 U.S.C. § 159(c)(4). The Board's regulations authorize election agreements, subject to the approval of the regional director, and provide that such agreements "shall include a description of the appropriate unit." 29 C.F.R. § 102.62(a). When the parties have agreed to an appropriate bargaining unit in an election agreement, the Board will approve that agreement unless it determines that the bargaining unit contravenes the National Labor Relations Act or Board policy. This standard has been upheld — indeed, mandated — in numerous circuit court decisions. See, e.g., NLRB v. Mike O'Connor Chevrolet-Buick-GMC Co., 512 F.2d 684, 687 (8th Cir.1975); NLRB v. J.J. Collins' Sons, Inc., 332 F.2d 523, 525 (7th Cir.1964).

This appeal raises the related question of when the Board should permit a party to an approved election agreement to withdraw from that agreement. In denying MEMC's motion to withdraw, the Board relied on its well-established rule that a party may withdraw from an approved election agreement only upon a showing of "unusual circumstances." See Hampton Inn & Suites, 331 N.L.R.B. 238 (2000). Under this standard, it is not enough to show that, absent the election agreement, the Board would have defined the appropriate bargaining unit differently. See Micro Pac. Dev. Inc. v. NLRB, 178 F.3d 1325, 1335 (D.C.Cir.1999). Applying this standard, the Regional Director concluded there was no showing of unusual circumstances because, "if, as [MEMC] stipulated in the election agreement, the maintenance employees constitute an appropriate unit, the appropriateness of that unit is not defeated because the [IAM] seeks [to represent] another unit of [MEMC's] employees." We review this ruling for abuse of the Board's discretion. See NLRB v. Unifemme, Inc., 570 F.2d 230, 232 (8th Cir.1978) (standard of review).

MEMC argues that the Board's denial of the motion to withdraw is contrary to our decision in Unifemme. The Board responds that it properly relied on Hampton Inn in denying the motion to withdraw. Because we must follow our own precedents if they conflict with the Board's, we must examine the facts in those two cases.¹

In Unifemme, an employer and a union entered into an election agreement defining the appropriate bargaining unit. After the regional director approved the agreement, a second union filed a motion to intervene in the election, a procedure authorized by the Board's regulations. See 29 C.F.R. § 102.65(b). The Board granted the motion to intervene. The employer then moved to withdraw from the election agreement, stating that it wished to contest the proposed unit if the second union would participate in the election. The regional director denied the motion to withdraw, the second union won the election, and the Board entered an unfair labor practice order when the employer refused to bargain. We denied the Board's petition to enforce its order, concluding that the Board should have granted the motion to withdraw because allowing the second union "to intervene after the scope of the bargaining unit had been determined between other parties created changed circumstances and parties sufficient to require that Unifemme be allowed to withdraw." Unifemme, 570 F.2d at 233.

In Hampton Inn, on the day the regional director approved an election agreement defining an appropriate bargaining unit, the union filed a second petition to represent a second group of employees. The employer moved to withdraw from the agreement, arguing, as MEMC does in this case, that only a single unit was appropriate. The Board denied the motion to withdraw in a three-to-two decision. The majority, emphasizing that "election agreements are contracts, binding on the parties who execute them," concluded that the employer failed to show "unusual circumstances" because it had been free to negotiate unit issues and the union was not required "to identify its organizing plans or forfeit an executed stipulated election agreement." Hampton Inn, 331 N.L.R.B. at 238. The dissent, on the other hand, concluded that the Board should not "permit the contract to stand where, as here, a material fact has been withheld by one party and not known by the other party, to the detriment of the latter party." Id. at 239.

In seeking to reconcile these two decisions, we are troubled by the open-ended nature of the Board's "unusual circumstances" standard because the agency has never explained what factors may make a circumstance "unusual." When asked to approve election agreements, the Board's long-standing approach has been to honor the parties' freedom of contract, unless their contract is contrary to the statute or Board policy. See Semi-Steel Casting Co. v. NLRB, 160 F.2d 388, 391 (8th Cir.1947). That is a sensible policy. Defining the bargaining unit is a step in the process leading to a collective bargaining agreement (should the union prevail in the election). If the parties can agree on the employees to be represented by the union, that helps establish a favorable environment for the more difficult contract negotiations that may lie ahead. Thus, the Board majority in Hampton Inn was on sound ground in emphasizing that parties are bound by an approved election agreement, just as they are bound by other contracts.

Focusing on the contractual underpinnings of the issue places the Board's unusual circumstances standard in a relevant context. A motion to withdraw from an approved election agreement is analogous to a lawsuit seeking to rescind an executory contract. Because the law favors the enforcement of contracts, a right to rescind arises only in circumstances that may fairly be described as "unusual." But the law of contracts has developed over a long period of time well-known standards for deciding when a party should be permitted to rescind an otherwise binding contract. For example, fraud in the inducement, duress, lack of capacity, and mutual mistake warrant rescission; one party's unilateral mistake does not. See RESTATEMENT (SECOND) OF CONTRACTS § 7 cmt. b (1981). Given the Board's overall deference to election agreements, we conclude that we should look to contract law rescission principles in...