NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS DEC 30 2020 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT
LOCAL JOINT EXECUTIVE BOARD OF No. 19-73322 LAS VEGAS, NLRB No. 28-CA-213783 Petitioner,
v. MEMORANDUM*
NATIONAL LABOR RELATIONS BOARD,
Respondent.
On Petition for Review of an Order of the National Labor Relations Board
Argued and Submitted December 10, 2020 Pasadena, California
Before: O’SCANNLAIN and OWENS, Circuit Judges, and KENNELLY,** District Judge.
Local Joint Executive Board of Las Vegas (“the Union”) petitions for review
of a final decision and order of the National Labor Relations Board (“NLRB” or
“the Board”). As the facts are known to the parties, we do not repeat them here
* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The Honorable Matthew F. Kennelly, United States District Judge for the Northern District of Illinois, sitting by designation. except as necessary to explain our decision.
I
The Union challenges the Board’s decision to depart from its only-recently-
adopted policy requiring employers in “right-to-work” jurisdictions to continue
collecting voluntary union dues from employees, and remitting those dues to the
union, beyond the expiration of a collective bargaining agreement giving rise to
such an arrangement, which is typically known as “dues checkoff.” Although we
have previously recognized that the Board is free to modify its approach to dues
checkoff, see Local Joint Exec. Bd. of Las Vegas v. NLRB (“LJEB III”), 657 F.3d
865, 876 (9th Cir. 2011), to withstand scrutiny, the Board’s explication of its
decision may not be inadequate, irrational, or arbitrary. See Local Joint Exec. Bd.
of Las Vegas v. NLRB (“LJEB I”), 309 F.3d 578, 583 (9th Cir. 2002). The Board
remains subject to the scheme of reasoned decisionmaking established by the
Administrative Procedure Act. See id.; see also Motor Vehicle Mfrs. Ass’n of U.S.,
Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 52 (1983) (agency action must
be the “product of reasoned decisionmaking”). “Under this standard, ‘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.’” LJEB I, 309
F.3d at 583 (quoting Allentown Mack Sales & Serv., Inc. v. NLRB, 522 U.S. 359,
374 (1998)).
2 For an agency’s decisionmaking to be rational, the agency must recognize
and explain any departures from precedent. “[A]n agency may not depart from a
prior policy sub silentio or simply disregard rules that are still on the books.”
Altera Corp. & Subsidiaries v. Comm’r of Internal Revenue, 926 F.3d 1061, 1085
(9th Cir. 2019) (quoting FCC v. Fox Television Stations, Inc., 556 U.S. 502, 515
(2009)) (internal quotation marks omitted); see also Modesto Irrigation Dist. v.
Gutierrez, 619 F.3d 1024, 1034 (9th Cir. 2010) (“Courts will not assume an agency
has engaged in reasoned decision making when it implicitly departs from its prior
precedent and provides no explanation for doing so.” (internal quotation marks
omitted)).
In the decision under review, the Board explained that the doctrine
articulated by the Supreme Court in NLRB v. Katz, 369 U.S. 736, 743 (1962)
prohibits employers from making unilateral changes to terms and conditions of
employment during the collective bargaining process. Under Katz, terms
pertaining to mandatory bargaining subjects that are contained in a collective
bargaining agreement are typically continued in effect by operation of law beyond
the contract’s expiration, until the parties have reached a formal impasse in
negotiations toward a new agreement. This doctrine is grounded in an
interpretation of § 8(a)(5) of the National Labor Relations Act (“NLRA”), which
codifies an employer’s obligation to bargain in good faith with the representative
3 selected by its employees. 29 U.S.C. § 158(a)(5).
The Board concluded in this case, however, that dues checkoff is a term of
employment that is “uniquely of a contractual nature” and therefore enforceable
“only for the duration of the contractual obligation created by the parties.” The
Board distinguished such terms of employment that are “rooted in the contract”
and “cannot exist in a bargaining relationship until the parties affirmatively
contract to be so bound” from aspects of employment that appear in a collective
bargaining agreement, but that may exist from the commencement of the
bargaining relationship and prior to the contract’s formation—such as “provisions
relating to wages, pension, and welfare benefits, hours, working conditions, and
numerous other mandatory bargaining subjects.” The Board reasoned that dues
checkoff belongs in the former category, and is therefore exempt from Katz’s
prohibition on post-contract unilateral changes, such that an employer does not
commit an unfair labor practice by suspending dues checkoff after the collective
bargaining agreement imposing that obligation has expired.
The Board’s dues checkoff rule, although reflecting a change in policy, is
not new, and previous iterations of the rule have been litigated before this court.
Nevertheless, the Board’s “contract creation” rationale for the rule had never been
explicitly adopted by a Board majority until this case.
The Union has identified several Board precedents that appear to conflict
4 with the “contract creation” rationale that the Board employed here. In multiple
prior cases, the Board has determined that the Katz doctrine applies to terms and
conditions of employment that are contained in a collective bargaining agreement
and that indisputably could not have existed until they were “created” by such an
agreement.
In particular, the Board has concluded in prior decisions that, under Katz,
each of the following obligations contained in a collective bargaining agreement
survived the expiration of that agreement: requiring an employer to process
grievances short of arbitration, Am. Gypsum Co., 285 N.L.R.B. 100, 100 (1987);
Bethlehem Steel Co., 136 N.L.R.B. 1500, 1503 (1962); granting union
representatives leave or time off for official union business, Am. Gypsum, 285
N.L.R.B. at 102; requiring an employer to hire workers through a union hiring hall,
Sage Dev. Co., 301 N.L.R.B. 1173, 1179 (1991); permitting union access to the
employer’s property, Frontier Hotel & Casino, 309 N.L.R.B. 761, 766 (1992);
recognizing stewards designated by a union at the employer’s workplace,
Frankline, Inc., 287 N.L.R.B. 263, 263–64 (1987); granting seniority rights to
union officials, id. at 264; Bethlehem Steel, 136 N.L.R.B.
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NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS DEC 30 2020 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT
LOCAL JOINT EXECUTIVE BOARD OF No. 19-73322 LAS VEGAS, NLRB No. 28-CA-213783 Petitioner,
v. MEMORANDUM*
NATIONAL LABOR RELATIONS BOARD,
Respondent.
On Petition for Review of an Order of the National Labor Relations Board
Argued and Submitted December 10, 2020 Pasadena, California
Before: O’SCANNLAIN and OWENS, Circuit Judges, and KENNELLY,** District Judge.
Local Joint Executive Board of Las Vegas (“the Union”) petitions for review
of a final decision and order of the National Labor Relations Board (“NLRB” or
“the Board”). As the facts are known to the parties, we do not repeat them here
* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The Honorable Matthew F. Kennelly, United States District Judge for the Northern District of Illinois, sitting by designation. except as necessary to explain our decision.
I
The Union challenges the Board’s decision to depart from its only-recently-
adopted policy requiring employers in “right-to-work” jurisdictions to continue
collecting voluntary union dues from employees, and remitting those dues to the
union, beyond the expiration of a collective bargaining agreement giving rise to
such an arrangement, which is typically known as “dues checkoff.” Although we
have previously recognized that the Board is free to modify its approach to dues
checkoff, see Local Joint Exec. Bd. of Las Vegas v. NLRB (“LJEB III”), 657 F.3d
865, 876 (9th Cir. 2011), to withstand scrutiny, the Board’s explication of its
decision may not be inadequate, irrational, or arbitrary. See Local Joint Exec. Bd.
of Las Vegas v. NLRB (“LJEB I”), 309 F.3d 578, 583 (9th Cir. 2002). The Board
remains subject to the scheme of reasoned decisionmaking established by the
Administrative Procedure Act. See id.; see also Motor Vehicle Mfrs. Ass’n of U.S.,
Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 52 (1983) (agency action must
be the “product of reasoned decisionmaking”). “Under this standard, ‘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.’” LJEB I, 309
F.3d at 583 (quoting Allentown Mack Sales & Serv., Inc. v. NLRB, 522 U.S. 359,
374 (1998)).
2 For an agency’s decisionmaking to be rational, the agency must recognize
and explain any departures from precedent. “[A]n agency may not depart from a
prior policy sub silentio or simply disregard rules that are still on the books.”
Altera Corp. & Subsidiaries v. Comm’r of Internal Revenue, 926 F.3d 1061, 1085
(9th Cir. 2019) (quoting FCC v. Fox Television Stations, Inc., 556 U.S. 502, 515
(2009)) (internal quotation marks omitted); see also Modesto Irrigation Dist. v.
Gutierrez, 619 F.3d 1024, 1034 (9th Cir. 2010) (“Courts will not assume an agency
has engaged in reasoned decision making when it implicitly departs from its prior
precedent and provides no explanation for doing so.” (internal quotation marks
omitted)).
In the decision under review, the Board explained that the doctrine
articulated by the Supreme Court in NLRB v. Katz, 369 U.S. 736, 743 (1962)
prohibits employers from making unilateral changes to terms and conditions of
employment during the collective bargaining process. Under Katz, terms
pertaining to mandatory bargaining subjects that are contained in a collective
bargaining agreement are typically continued in effect by operation of law beyond
the contract’s expiration, until the parties have reached a formal impasse in
negotiations toward a new agreement. This doctrine is grounded in an
interpretation of § 8(a)(5) of the National Labor Relations Act (“NLRA”), which
codifies an employer’s obligation to bargain in good faith with the representative
3 selected by its employees. 29 U.S.C. § 158(a)(5).
The Board concluded in this case, however, that dues checkoff is a term of
employment that is “uniquely of a contractual nature” and therefore enforceable
“only for the duration of the contractual obligation created by the parties.” The
Board distinguished such terms of employment that are “rooted in the contract”
and “cannot exist in a bargaining relationship until the parties affirmatively
contract to be so bound” from aspects of employment that appear in a collective
bargaining agreement, but that may exist from the commencement of the
bargaining relationship and prior to the contract’s formation—such as “provisions
relating to wages, pension, and welfare benefits, hours, working conditions, and
numerous other mandatory bargaining subjects.” The Board reasoned that dues
checkoff belongs in the former category, and is therefore exempt from Katz’s
prohibition on post-contract unilateral changes, such that an employer does not
commit an unfair labor practice by suspending dues checkoff after the collective
bargaining agreement imposing that obligation has expired.
The Board’s dues checkoff rule, although reflecting a change in policy, is
not new, and previous iterations of the rule have been litigated before this court.
Nevertheless, the Board’s “contract creation” rationale for the rule had never been
explicitly adopted by a Board majority until this case.
The Union has identified several Board precedents that appear to conflict
4 with the “contract creation” rationale that the Board employed here. In multiple
prior cases, the Board has determined that the Katz doctrine applies to terms and
conditions of employment that are contained in a collective bargaining agreement
and that indisputably could not have existed until they were “created” by such an
agreement.
In particular, the Board has concluded in prior decisions that, under Katz,
each of the following obligations contained in a collective bargaining agreement
survived the expiration of that agreement: requiring an employer to process
grievances short of arbitration, Am. Gypsum Co., 285 N.L.R.B. 100, 100 (1987);
Bethlehem Steel Co., 136 N.L.R.B. 1500, 1503 (1962); granting union
representatives leave or time off for official union business, Am. Gypsum, 285
N.L.R.B. at 102; requiring an employer to hire workers through a union hiring hall,
Sage Dev. Co., 301 N.L.R.B. 1173, 1179 (1991); permitting union access to the
employer’s property, Frontier Hotel & Casino, 309 N.L.R.B. 761, 766 (1992);
recognizing stewards designated by a union at the employer’s workplace,
Frankline, Inc., 287 N.L.R.B. 263, 263–64 (1987); granting seniority rights to
union officials, id. at 264; Bethlehem Steel, 136 N.L.R.B. at 1503; contributing to
collectively bargained multiemployer trust funds, such as health and welfare funds,
pension funds, vacation funds, and apprenticeship funds, PRC Recording Co., 280
N.L.R.B. 615, 618 (1986); KBMS, Inc., 278 N.L.R.B. 826, 849 (1986); Vin James
5 Plastering Co., 226 N.L.R.B. 125, 132 (1976); and, abiding by seniority provisions
when recalling workers from layoffs, Am. Gypsum Co., 285 N.L.R.B. at 102 & n.6,
PRC Recording, 280 N.L.R.B at 636.
The Board was required to grapple explicitly with these apparently contrary
precedents in its decision, but it failed do so. See Altera, 926 F.3d at 1085;
Modesto, 619 F.3d at 1034. For the Board’s decision to be a reasoned one, the
Board must recognize and explain any departure from precedent. It may not
simply ignore inconvenient precedents or dispense with them “sub silentio.”
Altera, 926 F.3d at 1085. The Board must explicitly address the prior decisions
identified by the Union and provide a coherent account of the relationship between
such precedents and the “contract creation” rationale employed in this case.
Accordingly, we remand this matter to the Board so that it may address this gap in
its decisionmaking process.
II
Although the reasoning underlying the Board’s rule in this case was
inadequate, and must be addressed by the Board upon remand, it does not
necessarily follow that the Board’s rule must be vacated. See Cal. Cmtys. Against
Toxics v. EPA, 688 F.3d 989, 992 (9th Cir. 2012) (“A flawed rule need not be
vacated.”). In deciding whether to remand without vacatur, we consider (1) the
seriousness of the errors in the agency’s decision and (2) the disruptive
6 consequences of vacatur. See id.
Here, the Board will likely be able to cure the identified flaw in its
decisionmaking process. The Board will need to grapple explicitly with the
contrary precedents that have been cited, to be sure, but the Board has discretion to
adopt its preferred rule regarding dues checkoff as long as it provides an
explanation for its apparent departure from those precedents. See LJEB III, 657
F.3d at 876 (“[T]he Board may adopt a different rule [regarding dues checkoff] in
the future provided, of course, that such a rule is rational and consistent with the
NLRA”).
Moreover, another judicial intervention in the Board’s policymaking process
with respect to dues check off in “right to work” jurisdictions may be needlessly
disruptive. We vacated a previous version of this rule three times, and, since then,
the Board has already changed its approach to the issue twice, based on legitimate
shifts in regulatory perspective. The Board may change direction yet again. For us
to insist here upon an “interim change that may itself be changed,” see Cal. Cmtys.,
688 F.3d at 992 (internal quotation marks omitted), would, under these specific
circumstances, gratuitously undermine the stability of collective bargaining
relationships, which the Board has repeatedly identified as an important interest in
its policymaking.
Accordingly, we remand to the Board so that it may have an opportunity to
7 provide an adequate explanation for its approach to dues checkoff by explicitly
addressing the precedents cited by the Union that appear to contradict the
“contract-creation” rationale used in this case. We do not vacate the Board’s dues
checkoff rule. The rule articulated by the Board may stand while it undertakes the
process of supplementing its reasoning. This panel retains jurisdiction over any
subsequent petition for relief.
PETITION GRANTED, and REMANDED.