Coletta Beneli v. NLRB ( 2017 )


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  •                FOR PUBLICATION
    UNITED STATES COURT OF APPEALS
    FOR THE NINTH CIRCUIT
    COLETTA KIM BENELI,                      No. 15-73426
    Petitioner,
    NLRB No.
    v.                       28-CA-022625
    THE NATIONAL LABOR RELATIONS
    BOARD,                                    OPINION
    Respondent,
    and
    BABCOCK & WILCOX CONSTRUCTION
    CO., INC.,
    Respondent-Intervenor.
    On Petition for Review of an Order of the
    National Labor Relations Board
    Argued and Submitted May 15, 2017
    San Francisco, California
    Filed October 17, 2017
    2                        BENELI V. NLRB
    Before: William A. Fletcher and Richard C. Tallman,
    Circuit Judges, and Paul C. Huck, * District Judge.
    Opinion by Judge Huck;
    Concurrence by Judge W. Fletcher
    SUMMARY **
    National Labor Relations Board
    The panel denied an employee’s petition for review, held
    that the National Labor Relations Board (“NLRB”) properly
    applied a new standard for deferring to arbitral decisions
    only prospectively, and upheld the NLRB’s substantive
    decision to affirm an arbitral decision – denying the
    employee’s unfair labor practice complaint – under the
    previous more deferential standard.
    The panel applied the five factors articulated in
    Montgomery Ward & Co. v. FTC, 
    691 F.2d 1322
    , 1333 (9th
    Cir. 1982), to review the NLRB’s decision to apply only
    prospectively the new standard for arbitral deferral. First,
    the panel held that this case was a case of “first impression,”
    and the factor weighed in favor of retroactive application of
    the new standard. Second, the panel held that the new
    standard represented an abrupt departure from well-
    established practice, and this factor strongly favored
    *
    The Honorable Paul C. Huck, United States District Judge for the
    Southern District of Florida, sitting by designation.
    **
    This summary constitutes no part of the opinion of the court. It
    has been prepared by court staff for the convenience of the reader.
    BENELI V. NLRB                         3
    prospective application. Third, the panel held that the
    employer relied on the old standard that was in place for
    nearly 60 years, and this reliance and other equitable
    considerations supported only the prospective application of
    the new standard. Fourth, the panel held that retroactive
    application would severely burden the employer, and this
    favored prospective application. Fifth, the panel held that
    the balance of statutory interests favored prospective
    application. The panel concluded that the NLRB did not
    abuse its discretion when it deferred to the arbitral decision
    under the old more deferential standard set forth in Spielberg
    Mfg. Co., 
    112 N.L.R.B. 1080
    (1995), and Olin Corp.,
    
    268 N.L.R.B. 573
    (1984).
    Judge Fletcher concurred in the result. Judge Fletcher
    dissented from the majority’s use of the factors articulated in
    Montgomery Ward & Co. to review the NLRB’s decision to
    apply only prospectively the new deference rule. Instead,
    Judge Fletcher would address the prospective-only
    application of the new rule under the NLRB v. Wyman-
    Gordon, 
    394 U.S. 759
    (1969), framework, which addresses
    concerns of informed and deliberate agency rulemaking.
    COUNSEL
    Myron L. Scott (argued), Law Office of Myron Scott,
    Tempe, Arizona, for Petitioner.
    Ruth E. Burdick (argued), Deputy Assistant General
    Counsel; Heather S. Beard, Attorney; Robert J. Engleheart,
    Supervisory Attorney; Linda Dreeben, Deputy Associate
    General Counsel; John H. Ferguson, Associate General
    Counsel; Jennifer Abruzzo, Deputy General Counsel;
    4                     BENELI V. NLRB
    Richard F. Griffin Jr., General Counsel; National Labor
    Relations Board, Washington, D.C.; for Respondent.
    Julie A. Trout (argued), Akron, Ohio, for Respondent-
    Intervenor.
    Michael Goldberg (argued), Cherry Hill, New Jersey, for
    Amicus Curiae Association for Union Democracy.
    OPINION
    HUCK, District Judge:
    The central issue on appeal is whether the National
    Labor Relations Board (the “NLRB” or “Board”) properly
    determined that a new standard for deferring to arbitral
    decisions, which was developed by the Board in the
    underlying case, should only be applied prospectively. As a
    result of the prospective application of the new standard,
    Petitioner Coletta Kim Beneli’s unfair labor practice
    complaint against Respondent-Intervenor Babcock &
    Wilcox Construction Co., Inc. (“B&W”) was analyzed under
    the previous standard and consequently denied. Beneli also
    challenges the Board’s substantive decision to affirm the
    arbitral decision under the previous deferral standard.
    The Board’s usual practice is to apply its new policies
    and standards in all pending cases, at whatever stage, subject
    to balancing such retroactivity against “the mischief of
    producing a result which is contrary to a statutory design or
    to legal and equitable principles.” Levitz Furniture Co. of
    the Pac., Inc., 
    333 N.L.R.B. 717
    , 729 (2001). This Court has
    adopted a five-factor analysis to balance the interests in
    considering retroactive application of a new standard. Oil,
    Chem. & Atomic Workers Int’l Union Local 1-547 v. NLRB,
    BENELI V. NLRB                       5
    
    842 F.2d 1141
    , 1145 (9th Cir. 1988) (citing Montgomery
    Ward & Co. v. FTC, 
    691 F.2d 1322
    , 1333 (9th Cir. 1982)).
    Balancing those factors here, the NLRB properly applied the
    new standard only prospectively. Therefore, we deny
    Beneli’s petition for review.
    I. BACKGROUND
    Beneli worked for B&W as a forklift and crane operator
    and served as a job steward for her union, the International
    Union of Operating Engineers (“the Union”). Beneli was
    fired from her job approximately two months after she was
    hired. According to Beneli, her firing culminated a running
    dispute over her actions as a union job steward. According
    to B&W, Beneli was fired for cause because of repeated
    safety violations and inappropriate conduct.
    On the day she was fired, B&W’s project superintendent
    summoned Beneli to a meeting with two B&W safety
    representatives. One of the representatives told Beneli that
    she was being suspended for three days without pay for two
    safety policy violations. Beneli responded to the proposed
    suspension by stating, “[i]s this the fucking game you guys
    are going to play?”—a statement which she then repeated.
    The representatives told Beneli that they considered that
    language a threat and terminated her. Beneli refused to sign
    termination papers that claimed that she was fired for
    “inappropriate conduct.”
    The Union, in accordance with its collective-bargaining
    agreement (“CBA”) with B&W, filed a grievance over
    Beneli’s suspension and termination, alleging that she had
    been fired for union activities and without just cause. The
    grievance moved through the CBA process to binding
    arbitration before a joint labor-management Grievance
    Review Subcommittee (the “Subcommittee”). Both Beneli
    6                     BENELI V. NLRB
    and B&W presented witness testimony before the
    Subcommittee supporting their respective positions. The
    Subcommittee denied the grievance and upheld Beneli’s
    discharge, finding just cause based on her “use of profanity
    and insubordination.”
    After reviewing the Subcommittee decision and
    determining that it was “repugnant to the [National Labor
    Relations] Act” (the “NLRA”), the NLRB issued a
    complaint against B&W. Following a hearing before an
    administrative law judge (“ALJ”) where Beneli and B&W
    once again presented witness testimony, the ALJ issued a
    proposed order recommending that the Board defer to the
    Subcommittee decision and dismiss the complaint. In
    explaining his deferral decision, the ALJ stated, in part, that
    although he credited Beneli’s version of events, the
    Subcommittee could have credited B&W’s witnesses and
    reached a different conclusion.
    The ALJ’s decision to defer was based on long-standing
    NLRB precedent set forth in Spielberg Mfg. Co.,
    
    112 N.L.R.B. 1080
    (1955), and Olin Corp., 
    268 N.L.R.B. 573
    (1984) (“Spielberg/Olin”). Under the Spielberg/Olin
    standard, deferral to arbitral decisions is appropriate when:
    (1) all parties agree to be bound by the decision; (2) the
    proceedings appear to be fair and regular; (3) the arbitrator
    adequately considers the unfair labor practice issue, which
    requires the unfair labor practice issue and the contractual
    issue to be “factually parallel” and the arbitrator to have been
    “presented generally” with the relevant facts; and (4) the
    arbitration award is not clearly repugnant to the NLRA.
    
    Spielberg, 112 N.L.R.B. at 1082
    ; 
    Olin, 268 N.L.R.B. at 574
    .
    The NLRB General Counsel filed exceptions to the ALJ’s
    decision on the merits. In addition, the NLRB General
    Counsel recommended that the Board revisit the standard for
    BENELI V. NLRB                          7
    determining when to defer to an arbitral decision. The Board
    requested briefing on whether to adhere to, modify, or
    abandon the Spielberg/Olin standard.
    Following an extensive review, the Board adopted the
    ALJ’s decision, denying Beneli’s complaint. In its order, the
    Board decided to change the standard for determining
    whether to defer to an arbitration decision. Under the new
    standard, the Board will now defer to an arbitral decision if
    the party urging deferral shows that: (1) the arbitrator was
    explicitly authorized to decide the unfair labor practice issue;
    (2) the arbitrator was presented with and considered the
    statutory issue, or was prevented from doing so by the party
    opposing deferral; and (3) Board law reasonably permits the
    award. This standard shifts the burden of proof and makes
    deferral to an arbitral decision less likely. The NLRB
    applied the new deferral standard prospectively and declined
    to apply it in the present case because of its impact on settled
    expectations of employers and unions, who had bargained
    for dispute resolution mechanisms under the old NLRB
    standard. Beneli petitions for review of this retroactivity
    decision.
    II. ANALYSIS
    A. Standard of Review
    Whether new standards should be applied retroactively
    is a question of law, which we review de novo. Oil, Chem.
    & Atomic Workers 
    Int’l, 842 F.2d at 1144
    n.2. However,
    “while the court is not bound by the Board’s views on
    retroactive application, it should defer to those views absent
    manifest injustice.” NLRB v. Best Products Co., Inc.,
    
    765 F.2d 903
    , 913 (9th Cir. 1985). See also Saipan Hotel
    Corp. v. NLRB, 
    114 F.3d 994
    , 998 (9th Cir. 1997) (same);
    Garfias-Rodriguez v. Holder, 
    702 F.3d 504
    , 518–19 (9th Cir.
    8                    BENELI V. NLRB
    2012) (en banc) (“When an agency consciously overrules or
    otherwise alters its own rule or regulation, we presume that
    it does so as an exercise of its judgment.”). Accordingly,
    where, as here, it is clear from the Board’s decision that it
    considered the question of retroactive versus prospective
    application, and it provided a reasoned explanation for its
    choice, we are inclined to give considerable deference to the
    Board’s expertise. See Hotel, Motel & Rest. Emps. &
    Bartenders Union Local No. 19 v. NLRB, 
    785 F.2d 796
    , 798
    (9th Cir. 1986).
    Review of a Board decision to defer to an arbitral award
    is limited to determining whether the Board has abused its
    discretion. Garcia v. NLRB, 
    785 F.2d 807
    , 809 (9th Cir.
    1986). We “will not deny enforcement of a deferral decision
    unless the Board clearly departs from its own standards or
    the standards themselves are invalid.” 
    Id. (citing Servair,
    Inc. v. NLRB, 
    726 F.2d 1435
    , 1439 (9th Cir. 1984)).
    B. Retroactivity Analysis
    The Board’s usual practice is to apply new policies and
    standards in all pending cases at whatever stage, and to
    balance “the mischief of producing a result which is contrary
    to a statutory design or to legal and equitable principles.”
    Levitz 
    Furniture, 333 N.L.R.B. at 729
    . To effectuate that
    balancing, we consider:
    (1) whether the particular case is one of first
    impression, (2) whether the new rule
    represents an abrupt departure from well
    established practice or merely attempts to fill
    a void in an unsettled area of law, (3) the
    extent to which the party against whom the
    new rule is applied relied on the former rule,
    (4) the degree of the burden which a
    BENELI V. NLRB                         9
    retroactive order imposes on a party, and
    (5) the statutory interest in applying a new
    rule despite the reliance of a party on the old
    standard.
    Oil, Chem. & Atomic Workers 
    Int’l, 842 F.2d at 1145
    (citing
    Montgomery 
    Ward, 691 F.2d at 1333
    ). Applying those five
    factors to the present case, the balance tips in favor of
    prospective application of the new standard.
    1. This case is one of first impression
    The first factor—whether the issue is one of first
    impression—in this context means something different from
    what is ordinarily referred to as a “case of first impression.”
    As developed in Retail, Wholesale & Department Store
    Union v. NLRB, a case of “first impression” is a case in
    which one party successfully urged the NLRB to change its
    rule while a case of “second impression” is any subsequent
    case brought before the NLRB on the same issue. 
    466 F.2d 380
    , 383–84, 387 (D.C. Cir. 1972). A new rule is more
    likely to be applied in a case of “first impression,” but less
    likely in a pending case of “second impression.” 
    Id. The new
    deferral standard qualifies this case as a case of
    “first impression.” The Board established a new standard to
    replace the Spielberg/Olin deferral standard that had been in
    existence for decades. Thus, this factor weighs in favor of
    retroactively applying the new standard, at least to the
    present case, as prospective application would “deny the
    benefits of a change in the law to the very parties whose
    efforts were largely responsible for bringing it about.”
    
    Garfias-Rodriguez, 702 F.3d at 520
    (citing Retail 
    Union, 466 F.2d at 390
    ).
    10                    BENELI V. NLRB
    However, as acknowledged at oral argument by amicus
    curiae Association for Union Democracy, the deferral
    standard was changed on the recommendation of the NLRB
    General Counsel, not Beneli. Beneli never advocated for the
    change. Therefore, Beneli’s “efforts were [not] largely
    responsible for bringing it about.” 
    Garfias-Rodriguez, 702 F.3d at 520
    . Given the facts of this case, this factor is
    entitled to lesser weight.
    2. The new rule represents an abrupt
    departure from well-established practice
    The Spielberg/Olin deferral standard was based on
    NLRB decisions that served as controlling law for decades—
    see Spielberg, 
    112 N.L.R.B. 1080
    (decided June 8, 1955),
    and Olin, 
    268 N.L.R.B. 573
    (decided January 19, 1984). The
    new standard shifts the burden of proof for challenging the
    arbitration award to the party advocating deferral to the
    arbitral award and is less deferential to the arbitrator’s
    decision. The more deferential Spielberg/Olin standard
    controlled for almost 60 years, and employers and unions
    relied upon it during that time period. Courts of appeals
    throughout the country, including this one, repeatedly
    upheld that standard. Thus, the new standard represents an
    abrupt departure from well-established practice.
    Even more, the shift in burden of proof reinforces the
    significance of this factor. See Oil, Chem. & Atomic
    Workers 
    Int’l, 842 F.2d at 1145
    (“The Indianapolis decision
    shifted the . . . burden of proof, 180 degrees. . . . Thus, the
    Union would bear the burden of proving the clause did not
    waive sympathy strikes, while, before, the employer needed
    to prove such waiver was intended. This burden is
    significant, as the Union might have continued to bargain for
    the express exclusion of sympathy strikes, had it known it
    would be required to prove intent.”). And altering decades
    BENELI V. NLRB                         11
    of precedent by formulating a new, more lenient test for
    deference similarly warrants prospective application given
    that deference is the primary question before the ALJ and the
    Board. See Levitz 
    Furniture, 333 N.L.R.B. at 729
    (applying
    new, “significantly more lenient” standard prospectively
    when the previous standard “was the law for nearly half a
    century”); cf. John Deklewa & Sons, 
    282 N.L.R.B. 1375
    ,
    1389 (1987) (acknowledging that “new law [that] represents
    a sharp departure from past precedent” should be applied
    prospectively); Retail 
    Union, 466 F.2d at 391
    (“The standard
    . . . was well established and long accepted by the Board. . . .
    [T]he Board had confronted the problem before, had
    established an explicit standard of conduct, and [retroactive
    application of the new standard would] punish conformity to
    that standard under a new standard subsequently adopted.”).
    Thus, this factor strongly favors prospective application.
    3. B&W relied           on    the   Spielberg/Olin
    standard
    The Spielberg/Olin standard was in place when B&W
    and the Union entered into the CBA in 1996, the parties
    amended the CBA’s grievance procedure in 2004, the
    Subcommittee heard Beneli’s grievance in 2009, and the
    ALJ issued his decision in this matter in 2012. At each of
    those steps, B&W would have relied upon the
    Spielberg/Olin standard in formulating its decisions with
    regard to negotiating the CBA with the Union, determining
    whether to oppose the Union before the Subcommittee, and
    developing and presenting its case to the Subcommittee.
    Presumably, B&W would have more explicitly argued and
    requested a decision on the unfair labor practice issue had it
    been operating under the new standard. In order to meet the
    Board’s new deferral requirement that the arbitrator must
    “identify the issue and generally explain why he or she finds
    12                      BENELI V. NLRB
    that the facts presented either do or do not support the unfair
    labor practice allegation—or was prevented from doing so
    by the party opposing deferral,” B&W would have changed
    its approach before the Subcommittee. However, because
    B&W was operating under the Spielberg/Olin standard that
    had been in place for nearly 60 years, it had no reason to
    ensure that the Subcommittee decision met these specific
    identification and explanation requirements. 1 Moreover, no
    party objected to that standard nor proffered the standard
    ultimately adopted by the Board. It was only after receiving
    the ALJ’s adverse determination that any party in the present
    case found fault with the Spielberg/Olin standard. These
    reliances and similar equitable considerations support the
    prospective application of the new standard.
    4. Retroactive application would severely
    burden B&W
    The Subcommittee hearing and decision occurred in
    2009, over seven years ago. It cannot be questioned that
    beginning a new arbitration (from October 2009) or
    relitigating the original NLRB complaint (from August
    2011) would be exceedingly difficult and burdensome given
    the passage of time, the closure of B&W’s worksite, faded
    memories, and the likely dispersal of percipient witnesses.
    Such a heavy burden on B&W favors prospective
    application. See Retail 
    Union, 466 F.2d at 392
    (“Unless the
    burden of imposing the new standard is de minimis, or the
    newly discovered statutory design compels its retroactive
    application, the principles which underlie the very notion of
    an ordered society, in which authoritatively established rules
    1
    The Union also relied on, and proceeded in accordance with, the
    CBA’s grievance procedure that was negotiated under Spielberg/Olin
    when the Union prosecuted Beneli’s grievance.
    BENELI V. NLRB                        13
    of conduct may fairly be relied upon, must preclude its
    retroactive effect . . .”).
    5. The balance of statutory interests favors
    prospective application
    Congress has established that labor arbitration agreed
    upon by a union and an employer is “the desirable method
    for settlement of grievance disputes arising over the
    application or interpretation of an existing collective-
    bargaining agreement.” 29 U.S.C. § 173(d). In fact, the
    NLRA is “‘primarily designed to promote industrial peace
    and stability by encouraging the practice and procedure of
    collective bargaining.’” Carey v. Westinghouse Elec. Corp.,
    
    375 U.S. 261
    , 271 (1964) (quoting Int’l Harvester Co.,
    
    138 N.L.R.B. 923
    , 925–26 (1962)).
    One of the Board’s primary functions is to foster stability
    in labor relations, to encourage good-faith negotiation, and
    to give effect to the parties’ agreements. See, e.g., Colgate-
    Palmolive-Peet Co. v. NLRB, 
    338 U.S. 355
    , 362 (1949) (“To
    achieve stability of labor relations was the primary objective
    of Congress in enacting the National Labor Relations Act.”).
    Arbitration plays a central role in achieving this goal. United
    Steelworkers of Am. v. Warrior & Gulf Navigation Co.,
    
    363 U.S. 574
    , 578 (1960) (“[A]rbitration is the substitute for
    industrial strife.”). As the Board noted below, this stability
    is undermined when the Board adopts policies that detract
    from final and binding arbitration procedures to which
    employers and unions have previously agreed.
    Because the Subcommittee’s decision did not include the
    explicit findings required under the new standard, retroactive
    application would necessitate new analysis by the
    Subcommittee and an ALJ. Such a requirement would
    undermine the binding arbitration to which the Union,
    14                    BENELI V. NLRB
    Beneli, and B&W agreed and would impair the “stability of
    labor relations [that] was the primary objective of Congress
    in enacting the National Labor Relations Act.” Colgate-
    
    Palmolive-Peet, 338 U.S. at 362
    . Therefore, the primary
    purpose of the NLRA favors prospective application.
    C. Substantive Review under Spielberg/Olin
    The Board is afforded broad discretion in its
    determination whether to defer to an arbitration panel’s
    decision. The Board did not abuse its discretion when it
    deferred to the Subcommittee decision under the
    Spielberg/Olin standard.
    In her appeal, Beneli challenges the Board’s deferral
    decision only under the fourth prong of the Spielberg/Olin
    standard, i.e., that the arbitration award is “clearly
    repugnant” to the Act. 
    Spielberg, 112 N.L.R.B. at 1082
    ;
    
    Olin, 268 N.L.R.B. at 574
    . An arbitrator’s decision is
    “clearly repugnant” to the NLRA if the decision is “palpably
    wrong, i.e., unless the arbitrator’s decision is not susceptible
    to an interpretation consistent with the Act.” 
    Olin, 268 N.L.R.B. at 574
    (internal quotation marks and footnote
    omitted). Thus, “[i]f the reasoning behind an award is
    susceptible of two interpretations, one permissible and one
    impermissible, it is simply not true that the award is ‘clearly
    repugnant’ to the Act.” Douglas Aircraft Co. v. NLRB,
    
    609 F.2d 353
    , 354–55 (9th Cir. 1979).
    Beneli was cited for multiple safety violations prior to
    her termination, including two safety violations the day of
    her termination. Additionally, Beneli used profanity toward
    her superiors when she was presented with a three-day
    suspension for safety violations. The Union presented
    testimony to the Subcommittee that included evidence
    concerning Beneli’s union activities. B&W presented
    BENELI V. NLRB                       15
    evidence that it was Beneli’s safety violations and use of
    profanity, not her union activities, that served as the
    motivation for her termination. Finding B&W’s evidence
    credible, the Subcommittee determined that Beneli’s
    profanity and insubordinate conduct were the impetus for
    Beneli’s termination and upheld her discharge. Thus, the
    arbitration decision that Beneli was discharged for cause was
    susceptible to an interpretation consistent with the Act. See
    
    id. Therefore, the
    Board did not abuse its discretion in
    deferring to the Subcommittee decision.
    III.    CONCLUSION
    Although Beneli’s case was one of first impression
    before the Board, the other four factors of the retroactivity
    test substantially outweigh that one factor. The new deferral
    standard represents an abrupt departure from the more
    deferential Spielberg/Olin standard that had been followed
    in labor disputes for almost 60 years. The reliance interests
    of the parties combined with the primary purpose of the
    NLRA strongly favor prospective application of the new
    standard. Retroactive application of the newly-devised
    standard would result in “work[ing] hardship upon [B&W]
    altogether out of proportion to the public ends to be
    accomplished.” NLRB v. Guy F. Atkinson, 
    195 F.2d 141
    ,
    149 (9th Cir. 1952). Therefore, the new standard should be
    prospectively applied. Finally, because the Subcommittee
    decision could be interpreted in a manner that is not clearly
    repugnant to the NLRA, the Board did not abuse its
    discretion in deferring to the arbitral decision.
    Each party shall bear its own costs of this appeal.
    PETITION FOR REVIEW DENIED.
    16                    BENELI V. NLRB
    W. FLETCHER, Circuit Judge, concurring in the result:
    I concur in the result. However, I respectfully dissent
    from the majority’s use of the factors articulated in
    Montgomery Ward & Co. v. FTC, 
    691 F.2d 1322
    , 1333 (9th
    Cir. 1982) (relying on Retail, Wholesale and Department
    Store Union v. NLRB, 
    466 F.2d 380
    , 390–93 (D.C. Cir.
    1972)), to review a decision of the National Labor Relations
    Board to apply only prospectively a new rule declared in an
    adjudicative proceeding.
    Prior to its decision in this case, the Board reviewed
    arbitral decisions under a highly deferential standard.
    During the administrative appeal in this case, the Board
    changed its standard so that it now reviews arbitral decisions
    less deferentially. However, the Board declined to apply its
    new standard to the case before it. Appellant, who lost the
    arbitration, and who lost before the Board when it applied its
    highly deferential standard, asks us to hold that the Board
    erred in refusing to apply its new standard to her case.
    Citing Oil, Chemical & Atomic Workers Int’l Local 1-
    547 v. NLRB, 
    842 F.2d 1141
    , 1145 n.2 (9th Cir. 1988), the
    majority reviews de novo the Board’s decision to apply its
    new standard only prospectively. In Oil, Chemical, we used
    the factors articulated in Montgomery Ward in reviewing the
    Board’s decision to apply its new rule retroactively. 
    Id. at 1145.
    Consistent with Oil, Chemical, we have applied the
    Montgomery Ward factors to review agency decisions to
    apply retroactively new rules developed in agency
    adjudication. See, e.g., Garfias-Rodriguez v. Holder,
    
    702 F.3d 504
    , 520–23 (9th Cir. 2012) (en banc). The
    majority applies these factors in its review today.
    However, we have never applied the Montgomery Ward
    factors to review an agency’s decision to apply only
    BENELI V. NLRB                       17
    prospectively a new rule developed in adjudication.
    Retroactive application of a new rule in an adjudicative
    proceeding raises obvious concerns of fairness, which we
    explicitly invoked in Oil, Chemical:
    [I]t is inappropriate to apply retroactively
    the new . . . standard to interpret the
    collective bargaining agreement in this case,
    since the new placement of the presumption
    [under the new standard] could not have been
    anticipated by the parties and thus could not
    have been their intent.
    
    Id. at 1144.
    Prospective application of a new rule developed
    in adjudication does not raise these concerns. If a rule is
    new, the parties could not have relied on it when they
    engaged in the conduct that later became the subject of the
    adjudicative proceeding.
    Prospective-only application of a new rule declared in
    agency adjudication raises different concerns.            The
    Administrative Procedure Act allows an agency to declare
    interpretive rules in adjudication, but requires notice-and-
    comment procedure for the promulgation of legislative rules.
    An agency does not have the authority to declare
    prospective-only legislative rules through adjudication, for
    such rules avoid the required notice-and-comment
    rulemaking procedure. See NLRB v. Wyman-Gordon,
    
    394 U.S. 759
    (1969) (holding invalid a legislative rule
    developed in agency adjudication). I would not analyze the
    prospective-only application of the NLRB’s new rule under
    the Montgomery Ward framework, which addresses
    concerns of fairness arising out of retroactive application. I
    would, instead, address the prospective-only application of
    the new rule under the Wyman-Gordon framework, which
    18                BENELI V. NLRB
    addresses concerns of informed and deliberate agency
    rulemaking.