American Backflow & Fire Prevention, Inc. v. NLRB

Opinion

In the

United States Court of Appeals For the Seventh Circuit

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Nos. 24-2155 & 24-2434 AMERICAN BACKFLOW & FIRE PREVENTION, INC., Petitioner/Cross-Respondent, v.

NATIONAL LABOR RELATIONS BOARD, Respondent/Cross-Petitioner.

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Petition for Review and Cross-Application for Enforcement of an Order of the National Labor Relations Board.

No. 13-CA-288185

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ARGUED FEBRUARY 10, 2025 — DECIDED SEPTEMBER 8, 2026

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Before EASTERBROOK, ROVNER, and LEE, Circuit Judges. LEE, Circuit Judge. The National Labor Relations Board entered an order requiring American Backflow & Fire Prevention , Inc., to bargain in good faith with Plumbers Local 130, United Association of Journeymen and Apprentices of the Plumbing and Pipe Fitting Industry of the United States and Canada, AFL-CIO (“the Union”). The Board reasoned that the company had defaulted on a prior settlement agreement with the Union by withdrawing its recognition of the Union 2 Nos. 24-2155 & 24-2434

without a showing of good cause. American Backflow petitions for review of the order, and the Board asks us to enforce it. Because the Board has correctly applied the law and its factual findings are supported by substantial evidence, we deny the petition for review and grant the petition to enforce the order.

I. Background

A. Facts American Backflow employs plumbers who install and repair backflow, plumbing, and fire line safety inspection equipment. In June 2021, the company’s plumbers voted to unionize. Id. at 30.

Six months later, the Union filed charges against American Backflow with the Board, alleging that the company had engaged in numerous unfair labor practices. These practices included posting a petition to decertify the Union on the employer ’s bulletin board; emailing employees to encourage them to sign the decertification petition; expressing its desire to replace the Union; threatening not to negotiate with the Union in good faith; failing to provide the Union with requested information; and refusing to meet with Union representatives at reasonable times for bargaining sessions.

To resolve these allegations, the parties entered into a settlement agreement in April 2022 (“the Agreement”). Among other things, American Backflow agreed to “meet at reasonable times and intervals and bargain in good faith with the Union as employees’ recognized bargaining representative” upon the Union’s request. The company also acknowledged that, if it breached the Agreement and failed to cure the breach within fourteen days, the Board’s Regional Director could file

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a complaint with the Board recounting the company’s prior unfair labor practices that had spurred the settlement.

Furthermore, the Agreement provided that, in such circumstances , the Board’s General Counsel could file a second complaint with the Board to remedy American Backflow’s breach of the Agreement itself, as well as a motion for default judgment as to the breach. Salient here, American Backflow also agreed that, if such a motion were filed:

The [employer] understands and agrees that all of the allegations of the Complaint will be deemed admitted and that it will have waived its right to file an Answer to such Complaint. The only issue that the [employer] may raise before the Board will be whether it defaulted on the terms of this Settlement Agreement. Moreover, the company acknowledged that, in the event of default, the Board could impose a remedy for each prior unfair labor practice that had led to the Agreement.

In March 2023, the parties held one bargaining session and scheduled another. Shortly thereafter, American Backflow canceled the scheduled session and notified the Union that it was immediately withdrawing recognition of the Union as the exclusive bargaining representative of its plumbers. In its notice to the Union, the company cited “documentary evidence that [the Union] no longer enjoys the support of an uncoerced majority of the employees.”

About a month later, a field attorney for the Board notified American Backflow that its denial of the Union’s authority and refusal to bargain in good faith constituted a breach of the Agreement. The notice cautioned that, if the company did not cure its default within fourteen days, the Regional Director 4 Nos. 24-2155 & 24-2434

would issue two complaints: one alleging unfair labor practices , and another seeking default judgment as to the company ’s breach of the Agreement. American Backflow’s representative responded, “Take whatever action you believe is appropriate .” B. Procedural History As warned, the Regional Director filed a complaint with the Board in case 13-CA-313981, claiming that American Backflow had engaged in unfair labor practices. In its answer, the company admitted that the Union had requested a second negotiation session in March 2023 and that it had refused to participate in that session because it had withdrawn its recognition of the Union. 1 The Regional Director issued another complaint in case 13-

CA-288185, alleging that American Backflow’s actions breached the Agreement. This second action is what has led to the present appeal.

In accordance with the Agreement, the General Counsel filed a motion for default judgment in the second action. In support, the General Counsel argued that, by withdrawing recognition and canceling any future bargaining sessions, American Backflow had violated its obligations to recognize the Union as “the exclusive bargaining representative” and to “meet with the Union at reasonable times and intervals to

1 On February 27, 2025, the administrative law judge assigned to the matter concluded, among other things, that American Backflow’s withdrawal of recognition and refusal to bargain was unlawful. The Board recently affirmed this decision. See Am. Backflow & Fire Prevention, 375 NLRB No. 31 (Aug. 25, 2026).

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bargain for a collective-bargaining agreement” as the company had agreed to do. What is more, according to the General Counsel, the company’s notice of withdrawal improperly relied on decertification petitions from employees that were either from the prior certification period (and, thus, could not be grounds for withdrawal of recognition) or were otherwise tainted by the company’s unfair labor practices.

The Board transferred the matter to a three-member panel of the Board and issued a notice to show cause why the motion for default judgment should not be granted. In opposition , American Backflow admitted it had canceled the second bargaining session but denied that documents supporting decerti fication were the reason for its withdrawal of recognition.

In response, the Union pointed out that the sole reason the company gave for its withdrawal of recognition was the decerti fication petitions it had received from employees. Rather than responding substantively, the company’s only reply was that “its withdrawal of recognition was lawful.”

In its decision, a divided Board panel explained that an employer may withdraw recognition only if it has an objective basis for believing that the union has lost majority support.2 The panel majority noted that American Backflow had disavowed relying on the decertification documents and had “made no effort … to explain how its conduct was consistent with the settlement agreement by having had a lawful basis to withdraw recognition.” Citing its own precedent, the

2 One panel member dissented. But, because American Backflow’s petition for review does not rest on any issue the dissent raised, we need not discuss it.

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majority held that American Backflow’s general denial of culpability failed to create a material issue of fact to justify a hearing and was insufficient to survive the motion for default judgment. Thus, the Board ordered American Backflow to bargain collectively and in good faith with the Union, and, if the parties came to an understanding, to embody the understanding in a signed agreement.

II. Discussion

We review the Board’s decision with deference. Capitol St. Surgery Ctr., LLC v. NLRB, 123 F.4th 841, 848 (7th Cir. 2024). Our task is to determine “whether substantial evidence supports the Board’s factual findings and whether legal conclusions have a reasonable basis in law.” Id. (internal quotation marks and citation omitted); see 29 U.S.C. § 160(e).

To this end, we ask “whether the record contains evidence in support of the outcome that would satisfy a reasonable fact finder.” Capitol St. Surgery Ctr., 123 F.4th at 848 (internal quotation marks omitted). “When reviewing the record, we defer to the Board’s inferences and conclusions drawn from facts, but we ensure that its findings fairly and accurately represent the record.” Nat’l Steel Corp. v. NLRB, 324 F.3d 928, 931 (7th Cir. 2003) (internal citations omitted).

Applying this standard, we must determine whether the Board’s entry of default judgment is supported by substantial evidence. We conclude that it is.

When faced with a charge of unfair labor practices, an employer has a choice: litigate the dispute or settle. In 2022, American Backflow chose the latter, and its decision had consequences .

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For one, as part of the settlement, American Backflow agreed that the Board’s General Counsel could file a motion for default judgment after the agency filed a complaint alleging the company’s breach of the Agreement. To boot, the company agreed that the allegations in such a complaint would be deemed admitted and the only issue it could raise before the Board is whether it had defaulted on the terms of the Agreement.

And yet, here, American Backflow maintains that entry of default judgment was improper because, in its view, it had sufficiently placed at issue before the Board whether the company had breached its obligation to bargain in good faith when it refused to attend the second negotiation session with the Union. But the Board’s conclusion to the contrary is soundly based on the record.

Upon certification by the NLRB, “a union enjoys an irrebuttable presumption of majority support” for one year. NLRB v. Curtin Matheson Sci., Inc., 494 U.S. 775, 777–78 (1990). After that period, “the union is entitled to a rebuttable presumption of majority support.” Fall River Dyeing & Finishing Corp. v. NLRB, 482 U.S. 27, 38 (1987). “An employer may rebut that presumption by showing that, at the time of the refusal to bargain, either (1) the union did not in fact enjoy majority support, or (2) the employer had a good-faith doubt, founded on a sufficient objective basis, of the union’s majority support .” Curtin Matheson, 494 U.S. at 778 (citation modified); see Levitz v. Furniture Co. of the Pac., 333 NLRB 717, 725 (2001) (holding that an employer may withdraw recognition of an incumbent union only when it has objective evidence to support that the union has, in fact, lost majority support, such as a signed petition or letter supporting decertification), 8 Nos. 24-2155 & 24-2434

overruled on other grounds by Johnson Controls, Inc., 368 NLRB No. 20, 2019 WL 2893706, at *2 (July 3, 2019); Valley Health Sys., LLC, 369 NLRB No. 16, 2020 WL 526131, at *13 (Jan. 30, 2020) (holding that Levitz “articulated the current standard regarding withdrawal of recognition”).

Here, in support of the motion for default judgment, the Union asserted that American Backflow could not rely on decertification petitions from employees that were dated prior to the close of the certification period (which was January 24, 2023) to justify its decision to withdraw recognition. As for employee petitions dated after that date, the Union contended that they too could not form the basis of the company’s withdrawal because they were filed at a time when the company was employing unfair labor practices, which tended to cause employee dissatisfaction.

Rather than engaging with these arguments, American Backflow baldly denied that it had relied on the very decerti- fication documents it had referenced in the notification of withdrawal. What’s more, after abandoning the only reason it had given for withdrawing recognition, American Backflow insisted without explanation or elaboration that its withdrawal of recognition was “lawful.”

As the Board saw it, this conclusory assertion was nothing more than a general denial. And this finding is supported by substantial evidence in the record.

But that is not all. The Board also relied on precedent requiring a party to present more than a general denial to contest a motion for default judgment. For example, the Board leaned on Alaris at Hamilton Park Health Care Center, where an employer replied to a default judgment motion by broadly

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asserting that it provided documents responsive to the union ’s request, without stating that it had provided all of the requested information required under the settlement agreement . 366 NLRB No. 90, 2018 WL 2229395, at *1–2 & n.2 (May 14, 2018). The Board granted the motion for default judgment without a hearing because the employer’s “general denial that it breached the settlement agreement offered nothing that would specifically refute the … detailed account of [its] breach.” Id. at *2.

Additionally, the Board pointed to Williamsville Suburban, LLC, where an employer opposed a default judgment motion by asserting “upon information and belief” that it had provided information responsive to the union’s request as the settlement agreement prescribed. 365 NLRB 114, 115 (2017). There too, the Board held that such a general denial was insu fficient to raise a material issue of fact warranting a hearing and granted the motion for default judgment. Id. at 115 n.1.

As in Alaris and Williamsville Suburban, American Back-

flow offered nothing to specifically refute the Union’s detailed account of the company’s breach of the settlement agreement. Moreover, it has not suggested, nor have we found, any reason that would call into question the Board’s cited precedent. As such, the Board’s decision to grant the motion for default judgment not only finds substantial evidence in the record but also has a reasonable basis in law.

Lastly, American Backflow contends that the National Labor Relations Act, 29 U.S.C. § 160(b), guarantees the right to a hearing in every instance and that a denial of that right violates fundamental principles of due process. The problem is that it did not present these arguments before the Board.

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The Act provides: “No objection that has not been urged before the Board … shall be considered by the court, unless the failure or neglect to urge such objection shall be excused because of extraordinary circumstances.” 29 U.S.C. § 160(e). Section 160(e) serves “the salutary policy ... of affording the Board opportunity to consider on the merits questions to be urged upon review of its order.” Marshall Field & Co. v. NLRB, 318 U.S. 253, 256 (1943).

American Backflow’s perfunctory request to deny the motion for default was patently insufficient to apprise the Board of the statutory and due process arguments it presses before us. The company had ample opportunity to advance these and whatever other arguments it may have had before the Board but elected not to do so. This dooms its effort to raise them for the first time on appeal.

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For the foregoing reasons, we deny the petition for review and grant the cross-application to enforce the Board’s final order .