Children's Hospital & Research Center of Oakland, Inc. v. National Labor Relations Board

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued December 9, 2014 Decided July 7, 2015
No. 14-1032
CHILDREN’S HOSPITAL AND RESEARCH CENTER OF OAKLAND,
INC.,
DOING BUSINESS AS CHILDREN’S HOSPITAL OF OAKLAND,
PETITIONER
v.
NATIONAL LABOR RELATIONS BOARD,
RESPONDENT
SERVICE EMPLOYEES INTERNATIONAL UNION,
UNITED HEALTHCARE WORKERS – WEST,
INTERVENOR
Consolidated with 14-1064
On Petition for Review and Cross-Application
for Enforcement of an Order
of the National Labor Relations Board
Matthew J. Frankel argued the cause for the petitioner.
Bonnie Glatzer was with him on brief. Kenneth J. Nichols
entered an appearance.
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Joel A. Heller, Attorney, National Labor Relations Board,
argued the cause for the respondent. Richard F. Griffin, Jr.,
General Counsel, John H. Ferguson, Associate General
Counsel, Linda Dreeben, Deputy Associate General Counsel,
and Ruth E. Burdick, Deputy Assistant General Counsel, were
with him on brief.
David A. Rosenfeld and Bruce Harland were on brief for
the intervenor Service Employees International Union, United
Healthcare Workers – West in support of the respondent.
Before: HENDERSON, TATEL and GRIFFITH, Circuit
Judges.
Opinion for the Court filed by Circuit Judge HENDERSON.
KAREN LECRAFT HENDERSON, Circuit Judge: This case
presents an interesting and difficult question of statutory
interpretation regarding the interplay of two provisions of the
National Labor Relations Act (NLRA or Act), 29 U.S.C. §§
151 et seq. Unfortunately, the National Labor Relations
Board (NLRB or Board) does not see it that way. It has not
made a serious effort to grapple with the statutory text either in
its own order or on review before us. Because “[we] cannot
exercise [our] duty of review unless [we] are advised of the
considerations underlying [agency] action,” SEC v. Chenery
Corp., 318 U.S. 80, 94 (1943), we grant the petition for review
and deny the Board’s cross-petition for enforcement.
I.
A.
The NLRA has deep roots, dating back to 1935. See Act
of July 5, 1935, ch. 372, 49 Stat. 449. The Act regulates
collective bargaining to lessen “industrial strife” and to ensure
that labor disputes do not erect “substantial obstructions to the
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free flow of commerce.” 29 U.S.C. § 151. Two provisions
of the NLRA are at the center of this dispute. The first is
section 8(a)(5), which makes it unlawful “for an employer . . .
to refuse to bargain collectively with the representatives of his
employees.” Id. § 158(a)(5). The right “to bargain
collectively” includes the right to arbitrate labor grievances
pursuant to a collective bargaining agreement. See United
Steelworkers of Am. v. Warrior & Gulf Navigation Co., 363
U.S. 574, 578 (1960) (“[A]rbitration of labor disputes under
collective bargaining agreements is part and parcel of the
collective bargaining process itself.”); Fournelle v. NLRB, 670
F.2d 331, 344 (D.C. Cir. 1982) (“[A]rbitration is an essential
part of the collective bargaining process.”). Correspondingly,
an employer’s “refusal to arbitrate” can be an unfair labor
practice. Exxon Chem. Co. v. NLRB, 386 F.3d 1160, 1165
(D.C. Cir. 2004).
As section 8(a)(5) states, an employer’s duty to bargain
collectively is “subject to the provisions of section [9(a)] of
th[e NLRA].” 29 U.S.C. § 158(a)(5). Section 9(a), in turn,
provides that:
Representatives designated or selected for the
purposes of collective bargaining by the
majority of the employees in a unit appropriate
for such purposes, shall be the exclusive
representatives of all the employees in such unit
for the purposes of collective bargaining in
respect to rates of pay, wages, hours of
employment, or other conditions of
employment. . . .
Id. § 159(a) (emphasis added). According to the U.S.
Supreme Court, exclusive means exclusive: Once a majority
of employees in a bargaining unit chooses a union, section 9(a)
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imposes on the employer a “negative duty to treat with no
other.” Medo Photo Supply Corp. v. NLRB, 321 U.S. 678, 684
(1944). This is a consequence of the fact that “[t]he
majority-rule concept is today unquestionably at the center of
our federal labor policy.” NLRB v. Allis-Chalmers Mfg. Co.,
388 U.S. 175, 180 (1967). Obligating an employer to bargain
only with the majority union prevents “strife and deadlock” by
eliminating rival factions that can make demands on the
employer. See Emporium Capwell Co. v. W. Addition Cmty.
Org., 420 U.S. 50, 68 (1975).
B.
The Children’s Hospital and Research Center of Oakland
(Hospital) is a pediatric hospital that employs more than 2,800
people. Until May 2012, the Service Employees International
Union (SEIU) was the bargaining representative for most of
the Hospital’s service, maintenance and technical employees.
In early 2009, the National Union of Healthcare Workers
(NUHW) sought to replace SEIU at the Hospital. The NLRB
subsequently held an election and a majority of the Hospital’s
employees selected the NUHW as their bargaining
representative. On May 24, 2012, the NUHW was certified as
the exclusive bargaining representative for the aforementioned
employees.
At the time of the switch in unions, SEIU and the Hospital
had three outstanding employee grievances based on incidents
that occurred under their prior collective bargaining
agreement. A SEIU official asked the Hospital to arbitrate the
disputes. The Hospital declined because SEIU no longer
represented the employees. The parties reached an impasse
and SEIU filed an unfair labor practice charge with the NLRB.
The NLRB General Counsel issued a complaint against the
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Hospital some months later, charging it with violating sections
8(a)(5) and (1) of the NLRA. *
An Administrative Law Judge (ALJ) held that the Hospital
violated section 8(a)(5) because an employer has a duty to
arbitrate grievances even if the grievances “arose under an
expired contract.” Decision & Order (Order), 360 N.L.R.B.
No. 56, 2014 WL 808029, at *5 (2014). Arbitrating old
grievances, he mused, amounted to nothing more than
completing “unfinished business” and “sew[ing] up . . . loose
ends” and he cited three cases to this effect. Id. (citing Nolde
Bros. v. Bakery Workers Local 358, 430 U.S. 243 (1977), Mo.
Portland Cement Co., 291 N.L.R.B. 1043 (1988), and Ariz.
Portland Cement Co., 302 N.L.R.B. 36 (1991)). The ALJ
thought there was little risk that arbitrating past grievances
with SEIU would destabilize the Hospital’s new relationship
with the NUHW. See id.The NLRB adopted the ALJ’s order in full. The Hospital
timely petitioned this Court for review and the NLRB
cross-petitioned for enforcement.
II.
The question presented is whether an employer has a duty
to arbitrate grievances with the old union under an expired
*
Section 8(a)(1) provides that it is an “unfair labor practice for an
employer to interfere with, restrain, or coerce employees in the
exercise of the rights guaranteed in section 157 of this title.” 29
U.S.C. § 158(a)(1). A violation of section 8(a)(5) automatically
violates section 8(a)(1) as well. See Exxon Chem. Co., 386 F.3d at
1164 (“[A]n employer who violates section 8(a)(5) also,
derivatively, violates section 8(a)(1).”). For simplicity’s sake, we
treat these violations as one and the same and refer only to section
8(a)(5).
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collective bargaining agreement after a new union has been
certified. On the one hand, the Board is correct that section
8(a)(5) requires an employer to arbitrate unfinished business
with an old union even after their collective bargaining
agreement expires. See Nolde Bros., 430 U.S. at 255(“Union’s claim for severance pay under the expired
collective-bargaining agreement is subject to resolution under
the arbitration provisions of that contract.”); see also Litton
Fin. Printing Div. v. NLRB, 501 U.S. 190, 205–06 (1991). On
the other hand, section 9(a) requires an employer to “treat with
no other” union once a new union is certified. Medo Photo
Supply Corp., 321 U.S. at 684.
The interplay of section 8(a)(5) and section 9(a) is a
question of statutory interpretation—one that the NLRA does
not unambiguously resolve. The NLRA does not identify
where the duty to resolve unfinished business with the old
union ends and the duty to bargain exclusively with the new
union begins. This presents a classic scenario for which the
two-step framework from Chevron USA, Inc. v. NRDC, 467
U.S. 837, 842–43 (1984), was designed. See Lechmere, Inc.
v. NLRB, 502 U.S. 527, 536 (1992) (“Like other administrative
agencies, the NLRB is entitled to judicial deference when it
interprets an ambiguous provision of a statute that it
administers.”). Curiously, however, the Board never cites
Chevron in its briefs. Worse still, its order discussed only
section 8(a) of the Act. None of the precedent it cited dealt
with the precise situation here: a decertified union that has been
replaced by a new union. See Order, 2014 WL 808029, at *5.
In other words, it relied on cases that did not implicate the
exclusivity principle of section 9(a).
The resolution of any statutory ambiguity latent in the
NLRA is a task that the Congress, in the first instance, has
entrusted to the Board, not this Court. See Lechmere, 502
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U.S. at 536; see also NLRB v. Curtin Matheson Scientific, Inc.,
494 U.S. 775, 786 (1990) (“This Court has emphasized often
that the NLRB has the primary responsibility for developing
and applying national labor policy.”); Exxel/Atmos, Inc. v.
NLRB, 28 F.3d 1243, 1249 (D.C. Cir. 1994) (“It is up to the
Board, not the courts, to make labor policy.”). Granted, we
will set aside a Board order if the Board exercises its
interpretative authority in a manner that is “manifestly
contrary” to the NLRA or otherwise arbitrary and capricious.
Chevron, 467 U.S. at 844. But we cannot make that
determination yet because we are left wondering how the
Board in these circumstances interprets section 9(a). When an
agency fails to wrestle with the relevant statutory provisions,
we cannot do its work for it. “[T]he orderly functioning of the
process of review requires that the grounds upon which the
administrative agency acted be clearly disclosed and
adequately sustained.” Chenery, 318 U.S. at 94.
Accordingly, because the Board failed to address the
relevant statutory provisions, we grant the Hospital’s petition
for review, deny the Board’s cross-petition for enforcement
and remand to the Board for proceedings consistent herewith.
So ordered.