Everport Terminal Services Inc v. NLRB

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued November 17, 2021 Decided August 26, 2022
No. 20-1411
EVERPORT TERMINAL SERVICES, INC.,
PETITIONER
v.
NATIONAL LABOR RELATIONS BOARD,
RESPONDENT
INTERNATIONAL ASSOCIATION OF MACHINISTS AND
AEROSPACE WORKERS, DISTRICT LODGE 190, LOCAL LODGE
1546, AFL-CIO AND INTERNATIONAL ASSOCIATION OF
MACHINISTS AND AEROSPACE WORKERS, DISTRICT LODGE
190, LOCAL LODGE 1414, AFL-CIO,
INTERVENORS
Consolidated with 20-1412, 20-1432
On Petitions for Review and Cross Application
for Enforcement of an Order of
the National Labor Relations Board
Ashley C. Parrish argued the cause for petitioner Everport
Terminal Services, Inc. On the briefs were Jeffrey S. Bucholtz
and Brigham M. Cheney.
2
Emily M. Maglio argued the cause for petitioner
International Longshore and Warehouse Union. With her on
the briefs was Eleanor Morton.
Gregoire Sauter, Attorney, National Labor Relations
Board, argued the cause for respondent. With him on the brief
were Ruth E. Burdick, Deputy Associate General Counsel,
David Habenstreit, Assistant General Counsel, and Julie
Broido, Supervisory Attorney.
David A. Rosenfeld argued the cause and filed the brief for
intervenors in support of respondent.
Before: SRINIVASAN, Chief Judge, RAO, Circuit Judge,
and EDWARDS, Senior Circuit Judge.
Opinion for the Court filed by Circuit Judge RAO.
RAO, Circuit Judge: This case arises from a dispute over
which union—the International Association of Machinists
(“IAM”) or the International Longshore and Warehouse Union
(“ILWU”)—is entitled to represent the mechanic workforce at
the Ben Nutter Terminal in Oakland, California. For many
years, the Terminal’s mechanics were represented by the IAM.
In 2015, Everport Terminal Services, Inc., took over the
Terminal’s operation and decided to hire a new workforce. As
a member of the multi-employer Pacific Maritime Association
(“PMA”), Everport was party to a collective bargaining
agreement negotiated between the PMA and the ILWU. As
Everport read that agreement, it required Everport to prioritize
ILWU applicants in hiring its new mechanics and to recognize
the ILWU as their representative. Everport therefore gave
qualified ILWU applicants first choice of the available
mechanic positions, filling the remaining vacancies with
3
applicants from the Terminal’s existing, IAM-represented
workforce.
After the IAM cried foul, the National Labor Relations
Board (“Board”) found that Everport had unlawfully
discriminated against the Terminal’s incumbent mechanics on
the basis of their IAM affiliation; that it had violated its
statutory obligation to recognize and bargain with the
incumbent mechanics’ chosen union, the IAM; and that it had
prematurely recognized the ILWU as the representative of the
Terminal’s mechanics. The Board also found the ILWU had
unlawfully demanded and accepted recognition from Everport.
In its order, the Board did not dispute—or even engage with—
Everport’s reading of the PMA-ILWU agreement, instead
dismissing it as a “red herring.” Because that was arbitrary, we
grant the petitions for review and vacate the Board’s order.
I.
A.
Workers at West Coast ports have historically bargained
with their employers on a coastwide basis. In 1938, the Board
certified the ILWU as the bargaining representative for “all the
workers employed at longshore labor in the Pacific Coast ports
of the United States.” Shipowners’ Ass’n of the Pac. Coast, 7
NLRB 1002, 1022 (1938). Coastwide representation was
necessary, the Board found, because employers were
coordinating workers’ terms of employment on a coastwide
basis. See id. at 1023–24; see also Cal. Cartage Co. v. NLRB,
822 F.2d 1203, 1206 (D.C. Cir. 1987) (explaining the Board’s
decision in Shipowners). Since 1949, West Coast port operators
have bargained with the ILWU through the Pacific Maritime
Association, a “multi-employer bargaining representative …
with the primary purpose of negotiating, executing, and
administering collective bargaining agreements.” PMA v.
4
NLRB, 967 F.3d 878, 881 (D.C. Cir. 2020). ILWU members
will work only for port operators that are in the PMA, and
because of the Board’s decision to certify a coastwide
bargaining unit, the ILWU represents virtually all skilled
longshoremen on the West Coast.
All PMA employers are bound by the terms of a collective
bargaining agreement negotiated between the PMA and the
ILWU, the Pacific Coast Longshore Contract Document
(“Longshore Contract”). The Longshore Contract specifies the
longshore jobs PMA employers must give to ILWU members.
It also sets the terms of employment for those workers—the
wages and benefits they receive, the process through which
they are hired, and the reasons for which they may be fired.
The Longshore Contract’s scope is broad, reaching
“[v]irtually all longshore work at West Coast ports,” ILWU v.
NLRB (“Kinder Morgan”), 978 F.3d 625, 630 (9th Cir. 2020),
and the Board has upheld many of its jurisdiction setting
provisions as consistent with the National Labor Relations Act,
see PMA, 256 NLRB 769, 770 (1981); cf. IAM, Loc. Lodge No.
1484 v. ILWU, Loc. 13, 781 F.2d 685, 688 n.2 (9th Cir. 1986).
In its earliest iterations, it covered stevedore work—i.e.,
loading and unloading ships. Later, the PMA and the ILWU
expanded the Longshore Contract to cover mechanics—the
workers who maintain and repair the equipment used to load
and unload ships—but agreed that PMA members who had
employed non-ILWU mechanics before 1978 could continue
doing so. PMA, 256 NLRB at 769–70. The parties again
modified the Longshore Contract in 2008, making clear that
mechanic work at “all new marine terminal facilities that
commence operations after July 1, 2008, shall be assigned to
the ILWU.” As before, however, they made an exception for
terminals where non-ILWU mechanics were employed before
2008—sites the parties designated as “red-circled.” Thus, if
5
non-ILWU mechanics had been employed at a terminal since
before 1978, the Longshore Contract’s amendments permit
PMA members to continue employing them.
For all work that falls within its scope, the Longshore
Contract sets out a hiring process that PMA members must
follow. At each port on the West Coast, the ILWU maintains
dispatch halls where ILWU jobseekers may submit
applications. PMA members may hire only from these dispatch
halls and must allocate work based on applicants’
qualifications, skills, and seniority. The PMA and the ILWU,
however, have historically made a limited exception for
mechanics. If there are too few ILWU members seeking
mechanic work at the relevant dispatch hall, then after offering
jobs to all of the hall’s qualified mechanics, a PMA member
may fill any remaining vacancies “off the street.” These non-
ILWU hires are onboarded through the so-called “Herman-
Flynn process.” Off-the-street hires are subjected to a ninety-
day probationary period, after which they become “registered”
employees that are entitled to the same benefits as ILWU
members and are required to pay ILWU dues.
B.
This case centers on twenty-seven mechanic positions at
the Ben Nutter Terminal. The Terminal was “red-circled” in
2008 because non-ILWU mechanics had been working there
since before 1978.
For many decades, the Terminal was operated by two
PMA members—Marine Terminals Corporation (“Marine”)
and its subsidiary, Miles Motor Transport System (“Miles”)—
whose stevedores were represented by the ILWU and whose
6
mechanics were represented by the IAM.1 In 2002, Evergreen
Marine Corporation acquired the right to operate the Terminal
and then subcontracted the Terminal’s operation to Marine and
Miles. In 2012, Evergreen entrusted the Terminal’s operation
to its subsidiary, Everport, which again rehired Marine and
Miles to run the Terminal. The same workforce remained at the
Terminal—Marine and Miles continued using ILWU-
represented stevedores and IAM-represented mechanics—and
Everport had no direct relationship with these workers.
In 2015, dissatisfied with the state of the Terminal’s
operations, Everport resolved to operate the Terminal itself and
informed Marine and Miles that their contract would end on
December 4, 2015. Everport needed to hire stevedores from the
ILWU to run the Terminal, so it joined the PMA in June 2015.
Everport explored subcontracting the Terminal’s mechanic
work, but ultimately decided to employ the Terminal’s
mechanics directly.
The ILWU informed Everport that if it chose to employ its
own mechanics, it would need to hire them from the local
dispatch hall. “[T]he ‘red-circle’ waiver at the [Terminal] is
fully based on the direct bargaining relationship between
[Marine and Miles] and IAM,” the ILWU explained. “Upon
termination of the subcontracting relationship with [Marine
and Miles ], the ‘red circle’ waiver no longer applies.” After
Marine and Miles ceased operations, the Terminal would
become a “new marine terminal”—which the Longshore
Contract defined to include “vacated facilities.” As such, its
red-circle status would lapse and the Terminal’s mechanic jobs
would come within the ILWU’s jurisdiction. Therefore,
1
The mechanics employed by Marine and Miles were divided into
two separate IAM-affiliated bargaining units, but for the purposes of
this opinion we refer to them as a single bargaining “unit.”
7
according to the ILWU, Everport was obligated to hire its
mechanics from the ILWU dispatch hall and, if necessary,
through the Herman-Flynn process. The ILWU was clear that
“failure to comply with the full terms of the [Longshore
Contract] will result in the Union pursuing all available
remedies.”
Unsure of its obligations, Everport consulted the PMA,
which corroborated the ILWU’s reading of the Longshore
Contract. According to the PMA, after Marine and Miles
ceased operations at the Terminal, it would “no longer [be] a
red-circle facility because Everport had no prior agreement
with any union at the Terminal and the Terminal was [being]
vacated.” Based on the PMA and the ILWU’s mutual
understanding of their contract, Everport told the ILWU that
“qualified [ILWU] workers will receive first consideration for
steady mechanic jobs.” Everport indicated that if vacancies
remained after exhausting the pool of qualified ILWU
applicants, it would try to rehire the mechanics currently
working for Marine and Miles.
After learning of Everport’s job postings at the ILWU
dispatch hall, the IAM demanded that Everport recognize it as
the rightful bargaining representative of the Terminal’s
mechanics. In response, Everport explained its interpretation of
the Longshore Contract and why it had to prioritize ILWU
applicants for the Terminal’s mechanic positions after the
Terminal’s red-circle designation lapsed.
Everport began hiring mechanics in late November. It first
interviewed candidates who had submitted applications
through the ILWU hiring hall; afterwards, it considered Marine
and Miles’ employees, treating them as off-the-street, potential
Herman-Flynn hires. Everport’s interviewers kept notes about
which applicants were ILWU-represented and which were not.
8
Everport ultimately hired fifteen ILWU applicants and twelve
applicants from Marine and Miles’ mechanic workforce.
The Terminal reopened under Everport’s operation in
December 2015. Pursuant to the Herman-Flynn process,
Everport treated Marine and Miles’ former mechanics as new
hires, which meant they lost the seniority-based benefits they
had formerly received from Marine and Miles as IAM
members. With minor exceptions, Everport’s mechanics did
the same work, in the same conditions, as their predecessors.
C.
Soon after Everport reopened the Terminal, the IAM filed
charges, arguing that Everport and the ILWU had colluded to
discriminate against Marine and Miles’ mechanics—depriving
some of them of their jobs, unilaterally changing their terms
and conditions of employment, and violating their right to be
represented by the union of their choice. After investigating,
the Board’s General Counsel filed a complaint against Everport
and the ILWU.
The administrative law judge (“ALJ”) sided with the IAM.
See Everport Terminal Servs., Inc., 370 NLRB No. 28, slip op.
at 45–46 (Sept. 30, 2020). Specifically, she found that Everport
had unlawfully discriminated against IAM-represented
mechanics on the basis of their union affiliation, see 29 U.S.C.
§ 158(a)(1), (3), and had prematurely recognized and bargained
with the ILWU before it was clear that Everport’s mechanics
would choose to be ILWU-represented, see id. § 158(a)(1)–(2).
The ALJ also found that Everport was a “successor employer”
of Marine and Miles under NLRB v. Burns International
Security Services, 406 U.S. 272 (1972). Everport therefore had
a duty to bargain with the incumbent mechanics’ chosen union,
a duty it breached by refusing to recognize the IAM. See 29
U.S.C. § 158(a)(1), (5). Further, the ALJ found that because
9
Everport’s hiring process was infused by a general “animus”
towards the IAM, it was also a “perfectly clear” successor
under Burns, and therefore lost the right to set its mechanics’
terms and conditions of employment. Everport, slip op. at 33;
see also Karl Kallmann (“Love’s Barbeque”), 245 NLRB 78,
82 (1979), enf’d in relevant part, 640 F.2d 1094 (9th Cir.
1981). Everport’s unilateral imposition of the Longshore
Contract’s terms onto the Terminal’s existing workforce was
therefore unlawful. See 29 U.S.C. § 158(a)(1), (5). Finally, the
ALJ found that the ILWU had demanded recognition “before
Everport began operations and when it did not represent an
uncoerced majority of the [Terminal’s mechanics],” and had
unlawfully induced Everport to discriminate against the
incumbent mechanics based on their IAM affiliation. Everport,
slip op. at 46 (finding violations of 29 U.S.C. § 158(b)(1)(A),
(b)(2)).
After Everport and the ILWU appealed, a three-member
panel of the Board adopted the ALJ’s findings and conclusions.
See id. at 1–2. With respect to the conclusion that Everport had
unlawfully imposed the Longshore Contract on the Terminal’s
mechanics, the panel split as to the ALJ’s reasoning. Two of
the Board members agreed with the ALJ that because Everport
had “used a general discriminatory hiring plan applicable to all
applicants from the predecessor workforce,” it was not only a
Burns successor, but had also forfeited the right to set its
mechanics’ initial terms and conditions of employment.2 Id. at
1 n.4. In the alternative, however, all three Board members
agreed that even if Everport had retained the right to set its
mechanics’ initial terms of employment, its recognition of the
2
Member Emanuel would have found that Everport retained the right
to set its mechanics’ terms of employment. In his view, it was not
clear that but for Everport’s discrimination, all or substantially all of
the Terminal’s incumbent mechanics would have retained their jobs.
10
ILWU as its mechanics’ representative was still premature, and
so its imposition of the Longshore Contract onto those
mechanics was unlawful.
The Board ordered Everport to revoke its recognition of
the ILWU, cease applying the Longshore Contract to its
mechanics, recognize and bargain with the IAM, and offer to
rehire any IAM mechanics who had lost their jobs. It also
ordered Everport and the ILWU to make whole any workers
who were financially harmed by the unfair labor practices.
Everport and the ILWU each timely petitioned for review,
challenging the Board’s conclusions as arbitrary and capricious
in violation of the Administrative Procedure Act. 5 U.S.C.
§ 706(2)(A). The Board filed a cross application, asking this
court to enforce its order, and the IAM intervened on the
Board’s behalf. We have jurisdiction under 29 U.S.C. § 160(e),
(f).
II.
We begin with the Board’s finding that Everport was a
successor employer to Marine and Miles’ mechanics and that
it unlawfully refused to recognize their chosen union, the IAM.
It is an “unfair labor practice for an employer … to refuse
to bargain collectively with the representatives of his
employees.” Id. § 158(a)(5). When a business with unionized
employees changes hands, the new owner ordinarily has no
duty to recognize the union that represented the predecessors’
employees: unless rehired, they are not “his employees.” Id.
(emphasis added); see Burns, 406 U.S. at 280 n.5; cf. Howard
Johnson Co. v. Detroit Loc. Joint Exec. Bd., 417 U.S. 249, 261
(1974) (“[N]othing in the federal labor laws requires that an
employer who purchases the assets of a business … hire all of
the employees of the predecessor.”) (cleaned up). But “[i]f the
11
new employer makes a conscious decision to maintain
generally the same business and to hire a majority of its
employees from the predecessor,” the employer also inherits
his predecessor’s duty to bargain with the incumbent union.
Fall River Dyeing & Finishing Corp. v. NLRB, 482 U.S. 27, 41
(1987).
A new business owner inherits its predecessor’s duty to
bargain, in other words, if (1) its employees continue to
perform substantially the same work after the handover; (2) the
existing bargaining unit remains appropriate; and (3) “the
majority of its employees were employed by its predecessor.”
Id.; see also Trident Seafoods, Inc. v. NLRB, 101 F.3d 111, 114
(D.C. Cir. 1996). The third requirement can also be satisfied
even where the predecessor’s employees do not constitute a
majority of the successor’s employees. If the Board finds that
antiunion animus distorted its hiring process, “the Board
presumes that but for such discrimination, the successor would
have hired a majority of incumbent employees.” NLRB v. CNN
Am., Inc., 865 F.3d 740, 752 (D.C. Cir. 2017) (cleaned up). By
contrast, if the employer relies on “valid business reason[s]” in
hiring its new workforce, it does not inherit any bargaining
obligation. Love’s Barbeque, 245 NLRB at 81.
Here, the Board found that (1) the Terminal’s mechanics
continued to do substantially the same work after Everport
began directing the Terminal’s operations; (2) a mechanic-
specific bargaining unit remained appropriate; and (3)
Everport’s hiring process was marred by animus towards the
IAM. Everport therefore had a duty to bargain with the
incumbent union, and its refusal to do so was unlawful.
Everport and the ILWU do not contest the Board’s first finding,
but argue that the second and third were arbitrary and
capricious. We agree.
12
A.
In holding that a mechanic-specific bargaining unit
remained appropriate after Everport took over the Terminal’s
operation, the Board arbitrarily ignored its precedents and the
language of the Longshore Contract.
Before any unionization vote can take place, the Board
must determine “the unit appropriate for the purposes of
collective bargaining.” 29 U.S.C. § 159(b). Unit-
appropriateness determinations are fact specific, so we
generally defer to the “broad discretion” of the Board. United
Food & Com. Workers v. NLRB, 519 F.3d 490, 494 (D.C. Cir.
2008). But a “bargaining unit determination will not stand if
arbitrary.” Cleveland Constr., Inc. v. NLRB, 44 F.3d 1010,
1014 (D.C. Cir. 1995).
In successorship cases, the Board presumes that a “change
in ownership should not uproot bargaining units that have
enjoyed a history of collective bargaining unless the units no
longer conform reasonably well to other standards of
appropriateness.” Cadillac Asphalt Paving Co., 349 NLRB 6,
9 (2007) (cleaned up). To rebut that presumption, the new
owner must identify “compelling circumstances sufficient to
overcome the significance of bargaining history,” Cmty. Hosps.
of Cent. Cal. v. NLRB, 335 F.3d 1079, 1085 (D.C. Cir. 2003)
(cleaned up)—for instance, that the existing unit has become
“repugnant to Board policy,” Trident Seafoods, 101 F.3d at 118(cleaned up).
In this case, Everport told the Board that, as a PMA
member, it was bound by the Longshore Contract’s terms, and
that because the Terminal’s red-circle status had lapsed, it was
obligated to recognize the ILWU as the bargaining
representative of all its employees at the Terminal, mechanics
included. Under Everport’s reading of the Longshore Contract,
13
in other words, a mechanic-specific bargaining unit was
“inappropriate as a matter of law.”
If Everport’s interpretation of the Longshore Contract
were correct, the only unit appropriate for the Terminal’s
mechanic workforce was the coastwide one created in
Shipowners and reinforced in subsequent Board decisions. In
Shipowners, the Board determined that a coastwide unit was
appropriate for all longshoremen on the West Coast. See 7
NLRB at 1022–25. As a result of that decision, all PMA
members’ employees who come within the Longshore
Contract’s scope can be represented only by the ILWU.
Furthermore, in PMA, the Board found that, subject to narrow
exceptions, the Longshore Contract’s “clear” terms assign all
mechanic work at PMA-operated terminals to the ILWU. 256
NLRB at 770; cf. Kinder Morgan, 978 F.3d at 642 (concluding
that “the plain language of the [Longshore Contract]
unambiguously assigns to the [ILWU] all [mechanic] work, on
all present and future stevedore cargo handling equipment …
for all PMA members, at all West Coast ports,” subject to the
exceptions inserted in 1978 and 2008). On Everport’s
understanding that the Terminal’s red-circle status had lapsed,
if Everport had recognized a mechanic-specific unit and
continued to bargain with the IAM, it would have violated its
duty under the Longshore Contract to bargain only with the
ILWU’s coastwide unit.
Nevertheless, the Board found that a mechanic-specific
bargaining unit remained appropriate after Everport took over
Terminal operations. To explain this decision, it was necessary
for the Board to answer the objections of Everport and the
ILWU on the merits, particularly as the Board gives
“controlling weight” to the parties’ interpretation of their
collective bargaining agreement. Mining Specialists, Inc., 314
NLRB 268, 268 (1994). The Board, however, refused to
14
engage Everport’s reading of the Longshore Contract,
dismissing the question of whether the Terminal remained red-
circled as a “red herring.” Everport, slip op. at 43. Before this
court, the Board again represented that Everport’s obligations
as a PMA member were “irrelevant” to the successorship
question. The Board gave two reasons for this position, but
neither is persuasive.
First, the Board argued that Everport’s PMA membership
was irrelevant because the IAM was “not a party to the PMA-
ILWU Agreement, so it did not agree to [the red-circle]
provisions.” Id. But while the Board ordinarily seeks to keep
intact long-established bargaining units, its precedents require
it to ensure that any established unit “remains appropriate for
the successor employer.” Walden Sec., Inc., 366 NLRB No. 44,
slip op. at 11 (Mar. 23, 2018) (emphasis added). To determine
whether a mechanic-specific unit was appropriate for Everport,
the Board had to analyze whether bargaining with such a unit
would have been consistent with Everport’s obligations under
the Longshore Contract. The Board cannot simply label a
substantial contractual argument a “red herring” in order to
avoid addressing it. Everport, slip op. at 43.
Second, the Board intimated in its order that the Longshore
Contract actually permitted Everport to bargain with a
mechanic-specific unit, irrespective of whether the Terminal
remained red-circled. For instance, it claimed that “[t]he red-
circle language … recognizes that a number of [mechanic]
units were not historically represented by ILWU.” Id. at 41. But
the fact that a number of units were not historically represented
by the ILWU does not support the conclusion that Everport
could bargain with a mechanic-specific unit even if the
Terminal’s red-circle status lapsed. The Longshore Contract
clearly covers mechanics unless a relevant exception applies.
Therefore, only if the Terminal remained red-circled could
15
Everport bargain with a mechanic-specific unit, but that was
the question the Board refused to answer.
The Board also sought to rely on the fact that Everport
considered hiring a subcontractor that could retain Marine and
Miles’ mechanics, claiming that such actions were
“contradictory to Everport’s position that the red circle
language no longer applied” after it joined the PMA. Id. at 39.
Everport’s behavior, however, was entirely consistent with its
reading of the Longshore Contract. If Everport had found a
subcontractor to oversee mechanic work at the Terminal, and
if that subcontractor was not a PMA member, then the
subcontractor could potentially have rehired Marine and Miles’
workers and recognized the IAM as their representative. Here
again, the Board’s reason for ignoring Everport’s contractual
obligations was unfounded.
Finally, although PMA held the Longshore Contract
clearly assigns all mechanic work at PMA-operated terminals
to the ILWU, so long as no exception applies, the Board argued
that PMA was not controlling because that case “had no
successorship issues.” Everport, slip op. at 41. The Board
cannot evade its precedents so easily. That the Longshore
Contract’s “clear” terms require PMA members to hire their
mechanics from the ILWU, absent an applicable exception,
was central to the Board’s conclusion in PMA. 256 NLRB at
770. The Board also deflected by arguing that the version of
the Longshore Contract at issue in PMA was “superseded in
2008 with [the] red circle language.” Everport, slip op. at 41.
That is true, but it does not excuse the Board’s failure to assess
whether the Terminal in fact remained red-circled. If the red-
circle status had lapsed before Everport began operations,
Everport would have had a “clear” duty to bargain with the
coastwide ILWU unit. PMA, 256 NLRB at 770. In other words,
without showing why Everport’s reading of the Longshore
16
Contract was in error, the Board could not square its unit-
appropriateness finding with PMA.
In “certify[ing] appropriate bargaining units … the Board
cannot ignore its own relevant precedent but must explain why
it is not controlling.” LeMoyne-Owen Coll. v. NLRB, 357 F.3d
55, 60 (D.C. Cir. 2004) (cleaned up). Here, both Shipowners
and PMA required Everport to recognize the ILWU as the sole
representative of all employees that came within the Longshore
Contract’s scope. The Board could not find that a mechanic-
specific unit was appropriate, therefore, without determining
whether the Terminal’s mechanics were covered by the
Longshore Contract. Because the Board “entirely failed to
consider [that] important aspect of the problem,” its selection
of a mechanic-specific bargaining unit was unreasonable.
Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm Mut.
Auto. Ins. Co., 463 U.S. 29, 43 (1983).
B.
The Board also concluded that Everport’s hiring process
was distorted by animus towards the IAM. That too was
arbitrary.
As explained above, the third prong of the Burns
successorship test is satisfied if the Board finds that a new
employer’s hiring decisions were motivated by antiunion
animus. Love’s Barbeque, 245 NLRB at 82; Cap. Cleaning
Contractors, Inc. v. NLRB, 147 F.3d 999, 1005 (D.C. Cir.
1998). In other words, a new business owner cannot evade the
duty to bargain by refusing to hire its predecessors’ employees
because of their union affiliation. To establish whether a new
employer’s refusal to hire its predecessor’s employees was
driven by antiunion animus, the Board relies on the test set out
in Wright Line, 251 NLRB 1083 (1980). Under Wright Line,
“the General Counsel must [first] make a prima facie showing
17
sufficient to support the inference that protected [union]
conduct was a motivating factor behind the [employer’s
action].” Wendt Corp. v. NLRB, 26 F.4th 1002, 1010 (D.C. Cir.
2022) (cleaned up). “Once a prima facie case has been
established, the burden shifts to the company to show that it
would have taken the same action in the absence of the
unlawful motive.” Ozburn-Hessey Logistics, LLC v. NLRB,
833 F.3d 210, 218 (D.C. Cir. 2016) (cleaned up). If the
employer’s reasons are pretextual, they do not rebut the prima
facie showing of animus. See id. at 219–20.
As prima facie evidence of animus against the IAM, the
Board pointed to two sets of facts. First, it found Everport had
intentionally prioritized job applicants from the ILWU over
those from the IAM in various ways—telling the ILWU about
its vacant mechanic positions before the IAM; interviewing the
ILWU’s candidates before the IAM’s; hiring less experienced
ILWU applicants instead of better qualified IAM ones; and, on
at least one occasion, telling an IAM applicant he could not be
hired because of his union affiliation. Second, the Board found
that Everport had used a secret hiring quota. Based on the
testimony of three IAM-represented applicants, the Board
determined Everport had resolved to give fifty-one percent of
the available mechanic positions to ILWU-represented
applicants and forty-nine percent to Marine and Miles’
employees, so that a majority of its mechanics would be
ILWU-represented. Everport and the ILWU do not contest
these findings.
In response, Everport argued its hiring process was not
discriminatory when properly viewed in light of the Longshore
Contract. In staffing the Terminal, Everport’s “only duty” was
to hire its employees on “a basis other than hostility to a union,”
Sierra Realty Corp. v. NLRB, 82 F.3d 494, 496 (D.C. Cir.
1996), and it must be the case that the requirements of a Board-
18
sanctioned collective bargaining agreement can furnish a non-
discriminatory rationale for a company’s hiring decisions. The
Board did not find, and does not argue, that Everport’s initial
decision to join the PMA was motivated by animus against the
IAM. And as a general matter, the Board conceded that
Everport’s hiring process was “consistent” with the one
required by the Longshore Contract. Everport, slip op. at 18.
Therefore, if Everport’s interpretation of the Longshore
Contract were correct—if the Terminal’s red-circle status had
lapsed, requiring Everport to prioritize mechanic applicants
from the ILWU and fill remaining vacancies through the
Herman-Flynn process—it had a valid business reason for
preferring ILWU applicants over IAM-represented ones.
Nevertheless, the Board explicitly declined to engage with
Everport’s reading of the Longshore Contract. The Board
claimed Everport’s invocation of its contract obligations was
“pretextual,” since it “did not remain neutral” and its “actions
were pro-ILWU.” Id. at 36–37. As evidence of Everport’s bias,
however, the Board pointed to the fact that it followed the
hiring process required by the Longshore Contract. The
Board’s circular conclusion, in other words, was that
Everport’s asserted reason for prioritizing ILWU-represented
job applicants could not be credited because Everport had
prioritized ILWU-represented job applicants. That is not
reasoned decisionmaking.
That leaves the Board’s finding that Everport secretly
employed a hiring quota. Since the Longshore Contract does
not require quota-based hiring, Everport could not justify its
decision to use one by pointing to its PMA membership.3 The
3
The Longshore Contract does not require quotas for hiring
mechanics. Rather, as explained above, it simply obligates PMA
19
Board, however, failed to explain why a finding of animus
towards the IAM necessarily followed from its finding that
Everport used a quota. When viewed in context, it is possible
that Everport adopted the quota in order to discriminate against
the IAM’s applicants. But the opposite conclusion is plausible
too.
The record indicates that Everport more than once
declined to hire qualified ILWU applicants, instead hiring
better-qualified IAM ones.4 The record also shows that
“Everport’s internal documentation [indicated] a preference for
keeping the mechanic units as they existed” before the
handover. Id. at 37. In light of these facts, it is at least possible
that Everport used the hiring quota to hire more of the
Terminal’s incumbent mechanics than the Longshore
Contract’s terms allowed, but not so many as to trigger a clash
for recognition between the ILWU and the IAM. If that were
so, then Everport adopted the quota not from animus towards
the IAM, but to favor IAM applicants in the hiring process.
The Board was required to set out “a rational connection
between the facts found and the choice made.” State Farm, 463
U.S. at 43 (cleaned up). Here, it failed to reasonably explain
why Everport’s quota, viewed in light of the Longshore
Contract, supported an inference of animus against the IAM.
Instead, without explanation, it chose to ignore the substantial
evidence that undercut its conclusion. Cf. Lakeland Bus Lines,
Inc. v. NLRB, 347 F.3d 955, 963 (D.C. Cir. 2003) (holding that
members to exhaust all qualified ILWU applicants before offering
vacancies to any non-ILWU applicant.
4
Although the issue is not before us, we note the ILWU could have
raised a claim that Everport violated the Longshore Contract by
rejecting qualified ILWU applicants in order to hire Marine and
Miles’ former mechanics.
20
the Board’s “clipped view of the record” did not support its
finding that the employer had committed unfair labor
practices). We therefore conclude that “the process by which
the agency reached its judgment was neither logical nor
rational.” Fox v. Clinton, 684 F.3d 67, 80 (D.C. Cir. 2012)
(cleaned up); see also Allentown Mack Sales & Serv., Inc. v.
NLRB, 522 U.S. 359, 374 (1998) (“Not only must an agency’s
decreed result be within the scope of its lawful authority, but
the process by which it reaches that result must be logical and
rational.”).5
***
The Board did not reasonably explain its conclusion that
Everport was a Burns successor with a duty to bargain with the
IAM. Therefore, its finding that Everport unlawfully refused to
bargain with the IAM was arbitrary and must be vacated.
III.
We next address the Board’s finding that Everport
prematurely recognized the ILWU as its mechanics’
representative and that the ILWU unlawfully accepted its
recognition.
In most cases, an employer who recognizes a union before
it employs a “substantial and representative complement of its
projected work force” and is “engaged in normal business
operations” commits an unfair labor practice. Elmhurst Care
Ctr., 345 NLRB 1176, 1177 (2005); see generally Int’l Ladies
Garment Workers’ Union v. NLRB, 366 U.S. 731, 737–40
(1961). Here, the Board found that Everport recognized the
5
For the reasons given in this subsection, the Board’s conclusions
that Everport discriminated against the IAM, and that the ILWU
encouraged it to do so, must also be set aside.
21
ILWU repeatedly throughout the summer and fall of 2015,
before it “employ[ed] any mechanics at the Terminal” or was
“engaged in normal business operations.” Everport, slip op. at
39. Therefore, the Board found that Everport’s recognition of
the ILWU as its mechanics’ representative was premature.
Given the unique bargaining landscape in which Everport
was operating, however, the Board needed to explain its
decision to apply a rigid version of the premature recognition
test to Everport and the ILWU. The Board has long permitted
groups of employers to negotiate with their employees
collectively through multiemployer bargaining units. See
Arbor Constr. Pers., Inc., 343 NLRB 257, 257–58 (2004); cf.
Brown v. Pro Football, Inc., 518 U.S. 231, 240 (1996)
(“Multiemployer bargaining … is a well-established,
important, pervasive method of collective bargaining.”). The
Board has recognized the PMA as the “multiemployer
bargaining association” responsible for negotiating with the
ILWU. ILWU Loc. 19, 266 NLRB 193, 194 (1983). It is
undisputed that because of the Board’s decision in Shipowners,
it is not feasible to operate a West Coast port without joining
the PMA. Finally, all PMA members are required to recognize
the ILWU as their employees’ bargaining representative. See
PMA, 256 NLRB at 770 (“[E]mployers who join the PMA after
the execution of the bargaining agreement are subject to its
terms.”).
If the Board’s rigid view of the premature recognition test
applied in this context, then every employer who joins the
PMA—thereby committing to hire its longshoremen from the
ILWU and to recognize the ILWU as their representative—
commits an unfair labor practice the moment it joins. But that
would make the system of collective bargaining the Board
sanctioned in Shipowners nonsensical and unworkable: a port
operator could not lawfully join the PMA before hiring its
22
workforce and it could not hire a workforce before joining the
PMA. The Board neither acknowledged nor explained this
apparent Catch-22, which is a telltale sign of arbitrary and
capricious agency action. See Advanced Life Sys. Inc. v. NLRB,
898 F.3d 38, 49 (D.C. Cir. 2018) (vacating a Board order that
left the employer “in a Catch-22”).
IV.
Finally, the Board found that Everport committed an unfair
labor practice when it imposed the Longshore Contract’s terms
on the Terminal’s mechanics. For the reasons given above,
neither of the Board’s justifications for this conclusion was
reasonable. First, the Board claimed that Everport lost the right
to set its mechanics’ initial terms and conditions of
employment because it “used a general discriminatory hiring
plan, applicable to all applicants from the predecessor
workforce,” which made it a “perfectly clear” Burns successor.
Everport, slip op. 1 n.4. The Board’s successorship finding was
not reasonably supported, see supra Part II, so its ancillary
finding that Everport was a perfectly clear successor was
arbitrary a fortiori. Alternatively, the Board claimed that the
terms and conditions imposed on the Terminal’s mechanics
were unlawful because they stemmed from Everport’s
premature recognition of the ILWU. Because the Board’s
purported application of the premature recognition test was
unfounded and left Everport in an untenable Catch-22, the
Board’s alternative basis for its decision does not pass muster.
See FCC v. Fox Television Stations, Inc., 556 U.S. 502, 515
(2009) (holding that agencies may not change their policies
“sub silentio”).
23
***
For the foregoing reasons we grant the petitions for
review, deny the Board’s cross application for enforcement,
and vacate the Board’s order.
So ordered.