El Torito-La Fiesta Restaurants, Inc. v. N.L.R.B.

• Decision Date: 28 March 1991
• Docket Number: TORITO-LA,AFL-CIO,Nos. 89-70284,89-70343,s. 89-70284
• Citation: 929 F.2d 490
• Parties: 136 L.R.R.M. (BNA) 2908, 118 Lab.Cas. P 10,644 ELFIESTA RESTAURANTS, INC., Petitioner, v. NATIONAL LABOR RELATIONS BOARD, Respondent, Hotel Employees and Restaurant Employees Union, Local 100, of New York, New York and Vicinity,("Local 100"), Respondent-Intervenor. NATIONAL LABOR RELATIONS BOARD, Petitioner, v. ELFIESTA RESTAURANTS, Respondent.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 490

929 F.2d 490

136 L.R.R.M. (BNA) 2908, 118 Lab.Cas. P 10,644

EL TORITO-LA FIESTA RESTAURANTS, INC., Petitioner, v. NATIONAL LABOR RELATIONS BOARD, Respondent,

Hotel Employees and Restaurant Employees Union, Local 100,

of New York, New York and Vicinity, AFL-CIO

("Local 100"), Respondent-Intervenor.

NATIONAL LABOR RELATIONS BOARD, Petitioner, v. EL TORITO-LA FIESTA RESTAURANTS, Respondent.

Nos. 89-70284, 89-70343.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Dec. 12, 1990.

Decided March 28, 1991.

H. Reed Ellis, DeMaria, Ellis & Hunt, Newark, N.J., for petitioner.

Laurence S. Zakson, N.L.R.B., Washington, D.C., for respondent.

Harold Ickes, Meyer, Suozzi, English & Klein, Mineola, N.Y., for respondent-intervenor.

On Petition for Review of an Order of the National Labor Relations Board.

Before HUG, BEEZER and BRUNETTI, Circuit Judges.

BEEZER, Circuit Judge:

El Torito petitioned for review of an order of the National Labor Relations Board (NLRB or Board) requiring it to recognize and to bargain with the Hotel Employees and Restaurant Employees Union, Local 100 (Union). We deny the petition and grant the Board's cross-application for enforcement.

I

The Howard Johnson Company owned and operated the Red Coach Grill in Yonkers, New York, until 1982. On May 15, 1981, Howard Johnson entered into a collective-bargaining agreement (CBA) with Hotel, Restaurant and Club Employees and Bartenders Union Local 6, covering dining room, bar and kitchen employees at the restaurant. The contract was effective from May 16, 1981 to January 15, 1986. In 1982, Howard Johnson sold the Red Coach Grill to Exeter Equities, which assumed the CBA.

Effective January 1, 1983, the International of the Hotel Union formed Local 100 to represent employees formerly represented by Local 6.

On May 6, 1983, Exeter sold the Red Coach Grill to El Torito-La Fiesta Restaurants, Inc. (El Torito or the Company). El Torito signed two agreements with Local 100 in which El Torito and the Union agreed to adopt the CBA between Howard Johnson and Local 6 and El Torito agreed to recognize Local 100 as the successor to Local 6 and as the collective-bargaining representative for the employees covered by the CBA. El Torito operated the Red Coach Grill and honored the CBA until December 31, 1983, when it closed the restaurant to remodel it into an El Torito mexican restaurant.

On March 4, 1985, the new El Torito restaurant opened. Eight of the original 80 or 90 Red Coach Grill bargaining unit employees were among the 180 to 200 El Torito restaurant employees. On March 5, Local 100 demanded that El Torito recognize it as the representative of the restaurant employees and apply the CBA. El Torito refused. After a hearing, an Administrative Law Judge (ALJ) determined that there was no continuity of representation between Local 6 and Local 100 and that El Torito did not violate the National Labor Relations Act (the Act) by refusing to recognize Local 100. However, the ALJ found that if there had been continuity of representation, the withdrawal and refusal to honor the CBA would have violated sections 8(a)(1) and (5) of the Act.

On review, the NLRB held that El Torito was estopped from challenging Local 100's representation of the employees by virtue of the agreements El Torito entered into with Local 100. The Board also held that the CBA barred El Torito from challenging Local 100's majority status at the time El Torito withdrew recognition. The Board thus found violations of sections 8(a)(1) and (5) of the Act and ordered El Torito to recognize the Union and to bargain with it on request, as well as to make the employees whole for any loss of wages or benefits.

El Torito petitioned this court for review and the Board filed a cross-application for enforcement of its order. We found substantial evidence to support the Board's determination that El Torito was estopped from challenging Local 100's assumption of Local 6's representational rights, but remanded for clarification of the decision that the CBA barred El Torito from challenging Local 100's majority status. 852 F.2d 571. We were concerned that the case might be an appropriate one for the application of one of the exceptions to the Board's contract bar rule, recognized in General Extrusion, Co., Inc., 121 NLRB 1165 (1958), Montgomery Ward & Co., Inc., 137 NLRB 346 (1962), 1962 CCH NLRB 17,500, and Harte & Co., 278 NLRB 947 (1986). We remanded to the Board for reconsideration or clarification of its decision.

The Board reaffirmed its decision that the Union enjoyed an irrebuttable presumption of majority status during the term of its CBA with El Torito, and reaffirmed its order. El Torito petitioned for review and the NLRB filed a cross-application for enforcement of its order.

II

An employer may not "interfere with, restrain or coerce employees" in the exercise of their rights to act collectively, and may not "refuse to bargain collectively with the representatives of his employees." National Labor Relations Act, Sec. 8(a)(1), (5), 29 U.S.C. Sec. 158(a)(1), (5) (1988). Under the contract bar rule, once an employer and a union enter into a valid collective-bargaining agreement, the majority status of the union is presumed for the duration of the contract, not to exceed three years. Westwood Import Co. Inc. v. NLRB, 681 F.2d 664, 666 (9th Cir.1982) (citations omitted). The rule is designed "to promote industrial stability between contractual partners and to afford employees a reasonable opportunity to change or eliminate their bargaining representative." East Mfg. Corp., 242 NLRB 5, 6 (1979). In order to protect the bargaining atmosphere, the rule is applied "even if a majority of the employees withdraw their support." Pioneer Inn Associates v. NLRB, 578 F.2d 835, 838 (9th Cir.1978) (citation omitted).

Because the contract bar rule is not statutorily or judicially mandated, but is instead a creation of the Board, the Board has broad discretion to apply or waive the rule "in order to effectuate its policy underpinnings." NLRB v. Circle A & W Products Co., 647 F.2d 924, 926 (9th Cir.), cert. denied, 454 U.S. 1054, 102 S.Ct. 600, 70 L.Ed.2d 590 (1981). However, the Board must explain its decisions so that a reviewing court can "determine whether it attempted to effectuate these policies in a reasoned and deliberate manner." Bob's Big Boy Family Restaurants v. NLRB, 625 F.2d 850, 852, 853-54 (9th Cir.1980). We will not enforce an NLRB order that clearly departs from the Board's own standards or that is based on standards that are themselves invalid. NLRB v. Buckley Broadcasting Corp., 891 F.2d 230, 232 (9th Cir.1989), cert. denied, --- U.S. ----, 110 S.Ct. 2619, 110 L.Ed.2d 640 (1990). Additionally, "[w]here the objectives of contract stability and adequate employee representation conflict, the Board must exercise its discretion to reach an appropriate balance, but it must give explicit recognition to both sides of the balance." Circle A & W, 647 F.2d at 926.

The Board has recognized an exception to the contract bar rule where, after an indefinite period of closing, an employer resumes operations with new employees. General Extrusion Co., Inc., 121 NLRB at 1167. In Montgomery Ward, 137 NLRB 346, 1962 CCH NLRB 17,500, the employer terminated its retail operations and reopened two days later as a catalog store with 14 employees, all of whom were members of the original bargaining unit of 52 employees. The Board noted that the new operations required no more than two months of employee instruction. The Board then stated:

While there are differences between the two types of operation, these differences appear primarily to concern the employer's administration, rather than its labor relations.... [W]e find that there has not been a sufficiently substantial change in either the employer's operations or the character of the bargaining unit to remove the contract as a bar.

Id. at 350-51, 1962 CCH NLRB at 17,503.

In the present case, the changes in El Torito's operations were cosmetic, but there was a substantial change in the employees who made up the bargaining unit. Nevertheless, the Board held that the contract bar rule applied. The Board cited the temporary nature of the shutdown and a reasonable expectation of reemployment on the part of the employees as evidence that the bargaining unit remained intact through the hiatus in operations. These are appropriate factors to consider because they suggest the understanding of both the employer and the employees that the positions by which the bargaining unit is defined will continue to exist upon resumption of the employer's operations.

Because a union has the exclusive right to represent a bargaining unit that has selected that union as its representative, see National Labor Relations Act Sec. 9(a), 29 U.S.C. Sec. 159(a) (1988), the essential factor in finding a valid CBA to be a bar after a shutdown in operations is the continuing existence of the bargaining unit. See Coastal Cargo Co., 286 NLRB 200, 204 (1987), 1987-88 CCH NLRB 32,681, 32,684-85 (The CBA was a bar because the temporary nature of the shutdown indicated that "the bargaining unit continued at all times relevant to this proceeding"). A bargaining unit "is comprised of jobs or job classifications and not of the particular persons working at those jobs at any given time." R. Gorman, Labor Law 66 (1976). Thus a change in the character of the work done will suggest that the bargaining unit did not remain intact, whereas a change in the individual workers will not necessarily imply the same thing. ¹ Cf. General Extrusion, 121 NLRB at 1167-68, 42 BNA LRRM at 1510 (the transfer of a considerable portion of the employees to a new location, "without an accompanying change in the character of the jobs and the functions of the employees in the contract unit, does not remove a contract as a bar") (emphasis added). This is consistent with the principle that new...