Sheraton-Kauai Corporation v. NLRB, 24665

CourtUnited States Courts of Appeals. United States Court of Appeals (9th Circuit)
Writing for the CourtJERTBERG, BROWNING, and HUFSTEDLER, Circuit
Citation429 F.2d 1352
Docket NumberNo. 24665,24825.,24665
Decision Date23 July 1970

429 F.2d 1352 (1970)



Nos. 24665, 24825.

United States Court of Appeals, Ninth Circuit.

July 23, 1970.

429 F.2d 1353

Ernest C. Moore, Jr. (argued), Robert S. Katz, of Moore, Torkildson & Schulze, Honolulu, Hawaii, for Sheraton-Kauai Corp.

Marcel Mallet-Prevost (argued), Asst. Gen. Counsel, N.L.R.B., Washington, D. C., Roy O. Hoffman, Reg. Director, N.L. R.B., San Francisco, Cal., Dennis R. MacCarthy, Officer-In-Charge, Honolulu, Hawaii, for N.L.R.B.

Rogers M. Ikenaga (argued), Ikenaga & Tam, Moore, Torkildson & Schulze, Bouslog & Symonds; Honolulu, Hawaii, for Union.

Before JERTBERG, BROWNING, and HUFSTEDLER, Circuit Judges.

BROWNING, Circuit Judge:

Sheraton-Kauai Corporation and Hotel, Restaurant Employees and Bartenders Union, Local 5, AFL-CIO, seek review of a National Labor Relations Board unfair labor practice decision and order. The Board cross-petitions for enforcement.

Sheraton Corporation of America operates a number of hotels in the State of Hawaii through wholly owned subsidiaries. In 1967 three of these subsidiaries entered into a collective bargaining agreement with Local 5. The agreement purported to cover all workers in relevant categories then employed at Sheraton hotels in the State of Hawaii,

429 F.2d 1354
or at any Hawaii hotel thereafter operated by Sheraton, and included a clause requiring covered employees to join Local 5 within 31 days of their employment. When the agreement was entered into, Sheraton subsidiaries operated four hotels on the Island of Oahu and one on the Island of Maui. Sheraton-Kauai was later formed to build and operate a hotel on the Island of Kauai. When the new hotel opened, the company and the union extended the prior agreement, including the union security clause, to its employees. The Board found that in doing so the company violated sections 8(a) (1), (2), and (3) of the National Labor Relations Act (29 U.S.C. § 158(a) (1), (2), and (3)), and the union violated sections 8(b) (1) (A) and 8(b) (2) of the Act (29 U.S.C. § 158(b) (1) (A) and (b) (2).1

Sheraton-Kauai and Local 5 justify extension of the agreement to employees at the new hotel on alternative grounds, contending that the new employees were lawfully added to a state-wide bargaining unit without their consent under the doctrine of "accretion";2 and that, in any event, an uncoerced majority of the new employees expressed their wish to be represented by Local 5.

The Board found that either a state-wide unit of Sheraton employees or a local unit consisting entirely of employees at the new hotel would be an appropriate bargaining unit under section 9(b) of the Act. 29 U.S.C. § 159(b).3 Sheraton-Kauai and Local 5 do not dispute the conclusion that the local unit would be appropriate,4 but contend that when, as here, the more inclusive, multiple location unit is also an appropriate one, the addition of employees at a new location to that unit by agreement of the employer and the union cannot be considered an unfair labor practice, at least in the absence of a claim by a rival union that it represents a majority of the new employees. The Board's policy, however, is that whenever the single-location unit is an appropriate one for collective bargaining the employees in that unit should be given an opportunity to determine for themselves which union they wish to represent them, or whether they wish to reject union representation entirely. We think this policy is a lawful exercise of the discretion vested in the Board by the Act.

Section 9(b) of the Act, which requires the Board to determine the unit appropriate for collective bargaining, provides that the Board shall choose the unit which will "assure to employees the fullest freedom in exercising the rights guaranteed" by the Act; namely, "The

429 F.2d 1355
right to self-organization, to form, join, or assist organization * * * and the right to refrain from any or all such activities." Section 7 of the Act, 29 U.S. C. § 157. And, of course, the Board should exercise its authority under section 9(b) in such a way as to effectuate the Act's general purpose of minimizing industrial strife by encouraging collective bargaining. 29 U.S.C. § 151. Pittsburgh Plate Glass Co. v. NLRB, 313 U.S. 146, 165, 61 S.Ct. 908, 85 L.Ed. 1291 (1941); NLRB v. Sunset House, 415 F.2d 545, 548-549 (9th Cir. 1969); Spartans Industries, Inc. v. NLRB, 406 F.2d 1002, 1005 (5th Cir. 1969); NLRB v. Food Employees Council, Inc., 399 F.2d 501, 504 (9th Cir. 1968); Hall, The Appropriate Bargaining Unit, 18 Western Res.L. Rev. 479, 482, 535-536 (1967); Note, The Board and Section 9(c) (5), 79 Harv. L.Rev. 811, 833-834 (1966)

These standards are general. They define ultimate objectives rather than immediate means, and necessarily allow the Board, enlightened by continuing experience, to exercise "a large measure of informed discretion." Packard Motor Car Co. v. NLRB, 330 U.S. 485, 491, 67 S.Ct. 789, 793, 91 L.Ed. 1040 (1947). See also NLRB v. Jones & Laughlin Co., 331 U.S. 416, 425-427, 67 S.Ct. 1274, 91 L.Ed. 1575 (1947); Pittsburgh Plate Glass Co. v. NLRB, supra, 313 U.S. at 152-153, 165, 61 S.Ct. 908. The Board has dealt with the problem involved here within this framework.

For some time the Board held that appropriate units in multiple-location retail chain operations should include all employees at locations within the geographic area which the employer treats as a unit. The Board eventually concluded, however, that this policy "too frequently * * * operated to impede the exercise by employees in retail chain operations of their rights of self-organization guaranteed by Section 7 of the Act," Sav-On Drugs, Inc., 138 N.L. R.B. 1032, 1033 (1962), and developed a new policy to better protect those rights. Under the new policy, the appropriate unit is to be "determined in the light of the circumstances of each case," Id. at 1033, with each single-unit location within a multiple-location enterprise considered presumptively correct for collective bargaining. See Hagg Drug Co., 169 N.L.R.B. No. 111 and cases cited at n. 3 (1968). As the Board stated in Hagg:

"Absent a bargaining history in a more comprehensive unit or functional integration of a sufficient degree to obliterate separate identity, the employees\' `fullest freedom\' is maximized, we believe, by treating the employees in a single store or restaurant of a retail chain operation as normally constituting an appropriate unit for collective-bargaining purposes."

In developing this policy the Board considered the possibility that employer operations would be disrupted, but concluded: "Bargaining in less than employerwide units has been effectively conducted in other industries without such results, and no reason has been presented, nor are we aware of any, which indicates that the situation would be different in the retail chain industry." Hagg Drug Co., supra. See also Frisch's Big Boy Ill-Mar, Inc., 147 N.L.R.B. 551 (1964).

These rulings directly concerned unit determinations in connection with initial representation petitions. As the Board has noted, however, essentially the same factors are involved in determining whether employees at a subsequently established single location should be absorbed into an existing multiple-location unit without their consent. In the latter situation, section 7 rights are even more clearly at stake. If the Board, in making its initial...

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