Opinions of the United 2005 Decisions States Court of Appeals for the Third Circuit

5-4-2005

NLRB v. DA Nolt Inc Precedential or Non-Precedential: Precedential

Docket No. 04-2321

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UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

Nos. 04-2321, 04-2681

NATIONAL LABOR RELATIONS BOARD

Petitioner/Cross-Respondent

v.

D.A. NOLT, INC.

Respondent/Cross-Petitioner

Application for Enforcement and Cross-Petition for Review of an Order of the National Labor Relations Board (Nos. 4-CA-30325-1, 4-CA-30325-2) Argued: February 14, 2005

Before: SLOVITER, AMBRO and ALDISERT, Circuit Judges

(Filed: May 4, 2005)

David Habenstreit (Argued) Kira D. Vol Aileen A. Armstrong National Labor Relations Board 1099 14th Street, NW Washington, D.C. 20570 Attorney for Petitioner/Cross-Respondent

Thomas C. Zipfel (Argued) Cohen, Seglias, Pallas, Greenhall & Furman, P.C. 1515 Market Street, Eleventh Floor Philadelphia, PA 19102

Attorney for Respondent/Cross-Petitioner

OPINION OF THE COURT ALDISERT, Circuit Judge.

We must evaluate an Application for Enforcement by

the National Labor Relations Board (“the Board”) and a

Cross-Petition for Review by D.A. Nolt, Inc. (“D.A. Nolt”).

In a split decision, the Board held that D.A. Nolt was bound

to a successor agreement negotiated by the Roofing

Contractors’ Association (the “RCA”) and United Union of

Roofers, Waterproofers and Allied Workers (“the Union”). It

concluded that there were no “unusual circumstances” to

justify D.A. Nolt’s withdrawal from the agreement because

the conduct at issue did not constitute “collusion or

conspiracy” as contemplated by the dicta in Chel LaCort,

(1994).

We must determine whether the following legal

conclusions of the Board are rational and consistent with the

National Labor Relations Act (“the Act”): (1) the conduct at issue did not constitute “unusual circumstances;” and (2) even

if “unusual circumstances” had existed, D.A. Nolt had

forfeited its opportunity to withdraw from the RCA. We have

jurisdiction over the Board’s Application for Enforcement

pursuant to

(e) and D.A. Nolt’s Cross-Petition

for Review pursuant to

(f). We will uphold a

Board rule as long as it is rational and consistent with the Act,

even if we would have formulated a different rule had we sat

on the Board. NLRB v. Curtin Matheson Scientific, Inc.,

(1990). Although judicial review of the Board’s

balancing of conflicting interests is limited, “the balance

struck by the Board is [not] immune from judicial

examination and reversal in proper cases.” NLRB v. Brown,

(1965). “When the Board’s decisions

create an artificial and unwarranted imbalance of economic

weapons, the courts are not bound to show abject deference to

4 the Board’s views.” Charles D. Bonanno Linen Serv., Inc. v.

NLRB,

(1982) (Burger, J., dissenting).

We will deny the Board’s Application for Enforcement

and grant D.A. Nolt’s Cross-Petition for Review. We

conclude that the Board’s holding is not rational or consistent

with the Act.

I.

D.A. Nolt is a corporation engaged in commercial,

industrial and residential roof repair and installation. David

Nolt (“Nolt”) is the president who incorporated the business

in 1990. The RCA is a multiemployer bargaining association

of contractors who perform commercial roofing work.

Richard Harvey is the executive director of the RCA. The

Union has historically entered into collective bargaining

agreements with the RCA. Tom Pedrick is vice-president of

the Union.

5 Since 1993, the RCA and the Union have entered into

collective bargaining agreements (“RCA agreements”)

covering commercial work. Historically, negotiations are

conducted between the Union and the RCA, and after an

agreement is reached, copies are sent to independent

employers for their acceptance and execution. Generally, a

new RCA agreement is negotiated approximately three

months before the expiration of the old RCA agreement.

Nolt signed assents binding D.A. Nolt to the terms of

the 1993-1997 and 1997-2001 RCA agreements. In June

1999, Nolt signed a Bargaining Agent Authorization (“BAA”)

with the RCA, allowing the RCA to negotiate a new

commercial roofing contract with the Union on behalf of D.A.

Nolt. Under the BAA, an employer may withdraw from the

RCA 90 days prior to the expiration of the contract in place at

that time.

6 In June, 2000, ten months before expiration of the

1997-2001 RCA agreement, Pedrick, vice-president of the

Union, initiated a discussion with Harvey, executive director

of the RCA, about beginning negotiations for the subsequent

RCA agreement. Negotiating committees for the Union and

the RCA began discussing the terms of a new, eight year

contract. Harvey testified that, in the course of negotiations,

Union officials told him that they did not want the Union

membership to become aware of the terms being discussed

and they asked if the RCA would keep the negotiations

confidential. Harvey testified that the Union and the RCA

agreed to keep the negotiations secret from their respective

memberships. Michael McCann, the Union’s business

manager, denied that the negotiations were kept secret from

the Union membership.

On July 5, 2000, Harvey faxed a memorandum of the

7 agreement to the Union and the eight employer-members of

the negotiating committee. Following their vote for

ratification, Harvey then faxed the agreement to the ten other

employer-members who were not included in the negotiating

committee, including D.A. Nolt. According to Harvey, there

was continued concern that the terms of the agreement would

reach the employee-members of the Union. To avoid that

possibility, Harvey testified that each owner was instructed to

stand by their fax machines to receive the memorandum of

agreement, ballot and cover letter.

The July 12, 2000, cover letter for the agreement

instructed each member that the ballot had to be returned by

July 14, 2000, and to vote for one of three options: (1)

acceptance; (2) rejection; or (3) withdrawal from the RCA.

Regarding the last option, the cover letter stated:

Members who wish to exercise their right to withdraw

8 their bargaining agent authorization from the Association . . . must do so at this time and should not vote to accept or reject the tentative agreement, but rather should use the ballot form to provide written notice to the Association of their decision to resign . . . .

Paradoxically, the cover letter also stated on the same page:

This authorization may only be revoked by written notice by the undersigned to the Association no less than 90 days prior to the expiration of the current labor agreement between the Association and Union. Upon the giving of such notice to the Association, this authorization will terminate for all purposes.

On July 18, 2000, Nolt voted to accept the terms of the

agreement. He gave several reasons for his action at that time:

(1) He did not understand the ballot and did not know what it

was; (2) He was pressured by Harvey to cast his ballot and he

did not have time to consult with an attorney; (3) He thought

he could withdraw from the RCA at a later time; and (4) He

feared that prematurely withdrawing from the RCA would

strain his relationship with the Union.

9 On January 30, 2001, approximately 90 days prior to

the expiration of the 1997-2001 RCA Agreement, Nolt

advised Harvey that D.A. Nolt was withdrawing from the

RCA. McCann then demanded that D.A. Nolt abide by the

terms of the 2001-2009 RCA agreement. The Union filed a

complaint charging unfair labor practice against D.A. Nolt

and a hearing was held before Administrative Law Judge

Margaret Kern (“ALJ”). She issued a decision in favor of

D.A. Nolt. The Union filed exceptions to the ALJ’s decision

and the RCA filed an amicus curiae brief in support of the

Union’s position. In a split decision, the Board reversed the

ALJ’s decision, holding that she erred in finding that D.A.

Nolt lawfully withdrew from the RCA and that D.A. Nolt was

bound to the 2001-2009 RCA Agreement. The Board filed an

Application for Enforcement of the Order and D.A. Nolt filed

a Cross-Petition for Review.

10 II.

In accordance with the Act’s fundamental purpose of

fostering and maintaining stability of bargaining relationships,

an employer or union may not withdraw from a

multiemployer bargaining unit after negotiations have begun

absent “unusual circumstances” or “mutual consent.” Retail

Associates,

, 395 (1958). Historically, the

“unusual circumstances” exception has been limited to

extreme situations, as where the employer is subject to

extreme financial pressure or where the multiemployer unit

has dissipated to the point where the unit is no longer a viable

bargaining entity. Bonanno,

.

In Chel LaCort, the Board refused to extend the

“unusual circumstances” exception to situations where the

multiemployer association fails, either deliberately or

otherwise, to inform its employer-members of the start of

11 negotiations. 315 NLRB at 1036. To extend the exception

would impose a notice requirement on the multiemployer

association and insert the Board into the association/member

relationship unnecessarily and with uncertain consequences.

Id. at 1037. The Board noted in dicta, however, that there was

no evidence of “collusion or conspiracy,” stating that “[w]e

leave to another case to decide whether or when such

evidence would be sufficient to show ‘unusual

circumstances.’” Id. at 1036 n.5. We now decide that this is a

such a case.

In Resort Nursing Home v. NLRB,

(D.C. Cir. 2004), the court held that there was no collusion or

conspiracy when a multiemployer association and union

began negotiations for a new agreement eight months prior to

the expiration of the old agreement,

, and that the

Chel La Cort rule is rational and consistent with the Act,

at

12 1269. There was, however, no evidence that the negotiations

were conducted in secret. See

.

III.

Although our review of the Board’s decision is limited,

we conclude that its decision is not rational or consistent with

the Act and that the ALJ and dissenting Board Chairman

Battista properly determined that “unusual circumstances”

justified D.A. Nolt’s withdrawal from the 2001-2009 RCA

agreement. The Board improperly valued stability over

freedom in the context of multiemployer bargaining. See

Bonnano,

(“The Board has recognized the

voluntary nature of multiemployer bargaining . . . . At the

same time, it has sought to further the utility of multiemployer

bargaining as an instrument of labor peace . . . .”).

Accordingly, the Board’s Application for Enforcement will be

13 denied and D.A. Nolt’s Cross-Petition for Review will be

granted.

A.

The Board first concluded that the RCA and Union’s

conduct did not constitute collusion or conspiracy as

contemplated under the Chel La Cort dicta because the effort

to have secrecy in the negotiations was directed at the Union’s

membership, not at D.A. Nolt or other employer-members of

the RCA. D.A. Nolt, Inc.,

,

, at *4 (Dec. 15, 2003). The Board defined

“collusion or conspiracy” as “actions by the union and the

employer association that are deliberately intended to prevent

an employer from exercising its right to withdraw.”

We are not satisfied that this restricted definition is

rational and consistent with the Act’s purpose of maintaining

industrial peace. It does not balance freedom in

14 multiemployer negotiations with stability because it impinges

upon an employer’s freedom to withdraw when it has been

intentionally kept in the dark about the negotiation process.

Whether the negotiating groups deliberately intended

to prevent D.A. Nolt from exercising its right to withdraw is

not as significant as whether the effect of their actions was to

prevent D.A. Nolt from exercising its right to withdraw.

Board Chairman Battista reasoned in his dissenting opinion:

My colleagues say that the Union and the employer association did not deliberately intend to prevent the Respondent from withdrawing from the association. However, they deliberately kept them in the dark about the start of negotiations and, under the Retails Associates rule, this interfered with Respondent’s right to withdraw from the association prior to the start of negotiations.

D.A. Nolt, Inc.,

, at *9 (Chairman Battista, dissenting).

15 In accordance with the purpose of the Act, it is not

necessary to show that the parties actually agreed to an illegal

plan to harm a specific person to prove “conspiracy” or that

they specifically intended to defraud a person of his rights to

prove “collusion.” It is enough to prove that there was a secret

agreement that resulted in harm to another. The proximate

cause of the harm to D.A. Nolt—the deprivation of his right

to withdraw from the multiemployer group prior to the

commencement of negotiations—was twofold: (1) the

agreement to negotiate in secret (the “conspiracy”); and (2)

the actual participation in the secret meetings (the

“collusion”). As Chairman Battista emphasized, the harm was

not the negotiating committee’s stated intention, but the

result that irrefragably followed.

Our conclusion encourages unions and bargaining

associations to be open and honest in their dealings. To be

16 sure, it may be counter-productive for negotiating committees

to broadcast the substance of offers and counter-offers made

during the negotiation process, but no precept of labor

management law mandates that negotiating committees keep

secret the fact that negotiations have begun when profound

deleterious effects may directly result from the secrecy. And

here we have such a case. D.A. Nolt was unable to withdraw

from the RCA after the start of contract negotiations in

accordance with the Retail Associates rule.

We are satisfied that “unusual circumstances” took

place here that constituted the proximate cause of injury to

D.A. Nolt. The record shows that: (1) the RCA and the Union

met secretly to negotiate a new agreement ten months before

the expiration of the old agreement; (2) the Union requested

that the RCA keep the negotiations secret from its members,

including D.A. Nolt; and (3) when Harvey faxed the

agreement to the employer-members of the RCA, owners

were instructed to stand by their fax machines to receive it so

17 that word would not get out to the employee-members of the

Union.

The facts here are distinguishable from those in Resort

Nursing Home. Although the multiemployer associations and

unions began their negotiations abnormally early in both

cases, there was no evidence that the negotiations were kept

secret in Resort Nursing Home. See

(“On January 9 [the day negotiations began], the Association

sent a letter to the Union ‘confirm[ing] the intent of the

Association . . . to enter into an extension of the current

collective bargaining agreements.’”). At any event, the

employer in Resort Nursing Home had notice of the ongoing

negotiations before an agreement was reached. In contrast, in

the case before us, Harvey testified that Union officials

specifically requested that the RCA keep the negotiations

confidential and there was no proof that D.A. Nolt had

knowledge of the secret talks.

18 Accordingly, the NLRB’s conclusion that the conduct

at issue did not constitute “conspiracy or collusion” is not

consistent with the Act because it impinges upon a single

employer’s freedom to make a timely withdrawal from

multiemployer negotiations.

B.

The Board held that “even assuming arguendo that the

conduct by the RCA and the Union constituted ‘unusual

circumstances,’ the Respondent by its own conduct forfeited

any right to withdraw.” D.A. Nolt, Inc.,

at *5. The Board reasoned that D.A. Nolt forfeited its

withdrawal right because it waited seven months instead of

taking action “promptly after it learned of the new agreement

in July 2000.”

The Board relied on Gary Jasper

Enterprises,

, 747 (1987), for the proposition

that employers are obligated to withdraw as soon as the

“unusual circumstances” are evident.

The Board also

19 emphasized the fact that Nolt voted to “accept” the 2001-2009

RCA agreement after careful deliberation.

We are not persuaded that the Board’s conclusion that

D.A. Nolt forfeited its right to withdraw is rational or

consistent with the Act. The Board has cited no case to

support the suggestion that an employer is obligated to

withdraw as soon as “unusual circumstances” become

manifest. Gary Gasper Enterprises merely held that an

employer acted as “expeditiously as possible” in withdrawing

from multiemployer bargaining two weeks after negotiations

commenced. 287 NLRB at 747. In that case, the NLRB stated

that the timing of withdrawal “must be evaluated in the

overall context of the parties’ bargaining history.” Id.

Here, D.A. Nolt’s withdrawal from the RCA seven

months after learning of the 2001-2009 RCA agreement was

done as “expeditiously as possible” in light of the “overall

context of the parties’ bargaining history.” Because of the

express 90 day provision in the cover letter to the 2001-2009

20 RCA Agreement, it was reasonable for Nolt to conclude that

he could withdraw within 90 days of the old agreement’s

expiration.

The Board erred in emphasizing the fact that Nolt

voted to “accept” the 2001-2009 RCA Agreement after

careful deliberation. This acceptance should not be given

controlling effect because of the internal inconsistency in the

July 12, 2000 cover letter accompanying the ballot sheet. The

cover letter included a provision stating that each employer

could withdraw from the RCA until 90 days before the

present contract’s expiration, i.e., until January 30, 2001. The

letter also stated, paradoxically, that if the employer wished to

withdraw from the RCA it must do so within two days. Both

the Union and the RCA are responsible for this glaring

inconsistency. As between those who are responsible for

creating this problem (the Union and the RCA) or D.A. Nolt,

an innocent party who elected to follow a course explicitly

21 provided for in the RCA’s written notification, we conclude

that D.A. Nolt’s Cross-Petition for review should be granted.

*****

We agree with the views set forth by the ALJ and

Chairman Battista in his dissenting opinion and reject the

analysis of the Board.

We will grant D.A. Nolt’s Cross-Petition for Review

and deny the NLRB’s Application for Enforcement.