Mesa Verde Construction Co. v. Northern California District Council of Laborers

861 F.2d 1124

• Court: Court of Appeals for the Ninth Circuit
• Decided: November 15, 1988
• Docket: Nos. 85-1665, 85-2074
• Status: Published

Opinions

WIGGINS, Circuit Judge:

The Northern California District Council of Laborers and the Carpenters 46 Northern California Counties Conference Board (together Laborers) appeal from the district court’s declaratory judgment that Mesa Verde Construction Company (Mesa Verde) effectively repudiated pre-hire collective bargaining agreements between the parties. Mesa Verde Constr. Co. v. Northern Cal. Dist. Council of Laborers, 598 F.Supp. 1092 (N.D.Cal.1984). A panel of this court affirmed, 820 F.2d 1006 (9th Cir.1987), but the Laborers’ suggestion for rehearing en banc was subsequently granted. 832 F.2d 1164 (9th Cir.1987). We hold that the decision of the National Labor Relations Board (NLRB) in Deklewa v. International Ass’n of Bridge, Structural and Ornamental Ironworkers, Local 3, 282 N.L.R.B. No. 184, 1986-87 NLRB Dec. (CCH) 1118,549 (Feb. 20, 1987), enforced 843 F.2d 770 (3rd Cir.1988), determining that pre-hire collective bargaining agreements may not be unilaterally repudiated prior to a Board-certified election or termination of the contracts, applies in this circuit. We remand to the panel to determine whether to apply Deklewa retroactively under the principles of Chevron Oil Co. v. Huson, 404 U.S. 97, 106-07, 92 S.Ct. 349, 355-56, 30 L.Ed.2d 296 (1971).

FACTS

The panel summarized the facts of the case:

Mesa Verde is a general contractor, specializing primarily in constructing shopping centers in Arizona, California, and Colorado. Mesa Verde typically subcontracts out most of its work except for some carpentry and odd jobs. In 1979 it reached its first agreement with the Laborers, and on June 26,1980 it signed the contract with the Laborers that is here in dispute. The contract was to remain in effect until June 15, 1983 and would continue thereafter from year to year absent written notice by either party. By the contract’s terms Mesa Verde agreed to “comply with all wages, hours, and working conditions set forth in the Laborers’ Master Agreement for Northern California.” That agreement is a sixty-seven-page contract between the Laborers, the Associated General Contractors of California, Inc. and the Bay Counties General Contractors Association. It sets wage rates for numerous jobs and provides for arbitration, with certain exceptions, of “any dispute concerning the interpretation or application of the agreement.” On November 17, 1982 Mesa Verde and the Laborers agreed in writing that their 1980 contract would continue in effect until June 15, 1986.

Mesa Verde first entered into a collective bargaining agreement with the Carpenters in August 1979. Through a memorandum agreement Mesa Verde and the Carpenters accepted the Carpenters Master Agreement for Northern California, a forty-nine-page contract between the Carpenters, the Building Industry Association of Northern California, the California Contractors Council, Inc. and the Millwright Employers Association. That agreement sets rates for numerous jobs and provides for arbitration of “[a]ny dispute concerning the relationship of the parties, any application or interpretation of this Agreement.” Through a subsequent memorandum agreement executed in June 1980 the parties accepted the new June 16,1980 to June 15, 1983 Carpenters Master Agreement. On September 8, 1982 Mesa Verde and the Carpenters early extended the master agreement to June 15, 1986, with certain modifications limiting wage increases and providing more flexible working conditions for Mesa Verde.

Mesa Verde informed the unions of its intent to abrogate its agreements with them in May of 1984. At the time Mesa Verde was working on a project in Hercules, California, at which it employed members of both unions. Mesa Verde notified the Carpenters of its repudiation through a May 8,1984 letter and notified the Laborers through a May 15, 1984 letter. In late May or early June of 1984, after its notice to the unions, Mesa Verde started another project in Orland, California without union workers, in contravention of the collective bargaining agreements, if they were still in effect. Both unions gave Mesa Verde notice of grievance and requested arbitration regarding Mesa Verde’s contractual obligations for the Orland project.

Mesa Verde, 820 F.2d at 1007-08.

Mesa Verde sought a declaratory judgment that it was not obligated to arbitrate the grievances which arose after it gave notices of termination. The district court stayed arbitration of the grievances pending resolution of the declaratory judgment action. The court then granted Mesa Verde summary judgment against both the Carpenters and the Laborers. Mesa Verde, 598 F.Supp. at 1094. The court held that the collective bargaining agreements at issue were construction industry “pre-hire” agreements and that, therefore, under 29 U.S.C. § 158(f) (section 8(f) of the National Labor Relations Act (NLRA)), Mesa Verde’s May 1984 letters were sufficient to repudiate their agreements with respect to future projects. Mesa Verde, 598 F.Supp. at 1101. The court denied a subsequent motion by the Laborers to vacate the court’s judgment and to grant the Laborers additional discovery to demonstrate the existence of a core group of employees. Mesa Verde Constr. Co. v. Northern Cal. Dist. Council of Laborers, 602 F.Supp. 327, 330 (N.D.Cal.1985).

A panel of this court affirmed. It followed circuit precedent and held that unilateral repudiation by an employer of a pre-hire collective bargaining agreement was permitted. Mesa Verde, 820 F.2d at 1012; see also International Bhd. of Elec. Workers, Local 441 v. KBR Elec., 812 F.2d 495, 497-98 (9th Cir.1987); NLRB v. Pacific Erectors, Inc., 718 F.2d 1459, 1462-63 (9th Cir.1983). A majority of this court voted to rehear the Laborers’ appeal en banc. 832 F.2d 1164 (9th Cir.1987). En banc review was limited to: (1) whether Deklewa should be applied retroactively to this case, and (2) whether the rule of Royal Dev. Co., Ltd. v. NLRB, 703 F.2d 363, 369 (9th Cir.1983), that a panel may not overrule prior panels’ interpretations of the NLRA even when intervening NLRB cases decide differently, should be overruled.

Background — Judicial History of Section 8(f).

The NLRA generally requires that a union possess majority support before it may act as the bargaining representative for a group of employees. Sections 8(a)(1), (2) and 8(b)(1)(A), 29 U.S.C. § 158(a), (b), collectively require that a union possess majority support before a collective bargaining agreement can be negotiated. See ILGWU v. NLRB, 366 U.S. 731, 737, 81 S.Ct. 1603, 1607, 6 L.Ed.2d 762 (1961) [hereinafter Garment Workers ]. Historically, however, the construction industry had established its own unique collective bargaining practices. One such practice was the use of pre-hire agreements between construction unions and employers that allowed the industry’s employers to obtain a guaranteed work force before a particular job was begun. In 1948, the NLRB first asserted jurisdiction over the construction industry. See, e.g., Carpenters Local 74, 80 N.L.R.B. 533 (1948); Ozark Dam Constructors, 77 N.L.R.B. 1136 (1948); cf. In Re Johns Manville Corp., 61 N.L.R.B. 1 (1945). The Board refused to make any exceptions to its general rule that minority contracts were illegal and unenforceable. In a number of cases, the Board rejected the “general custom and practice in the construction industry” and held that pre-hire collective bargaining agreements were illegal and unenforceable. See, e.g., Daniel Hamm Drayage Co., 84 N.L.R.B. 458, 460 (1950) (“custom and practice” argument better directed to Congress than to the Board); Chicago Freight Car, 83 N.L.R.B. 1163 (1949). In response, Congress, recognizing the longstanding use of pre-hire agreements in the construction industry, added subsection (f) to section 8 of the NLRA. S.Rep. No. 187, 86th Cong., 1st Sess. 27 (1959), U.S.Code Cong. & Admin.News 1959, p. 2318, reprinted in I Legislative History of the Labor-Management Reporting and Disclosure Act of 1959, at 397, 423-24 1959) [hereinafter Leg.Hist.].1

Following the enactment of section 8(f), the Board first held that the majority status of a union executing a pre-hire agreement may not be challenged in an unfair labor practice proceeding. Bricklayers Local 3, 162 N.L.R.B. 476, 477-79 (1966), enforced 405 F.2d 469 (9th Cir.1968); Oilfield Maintenance Co., 141 N.L.R.B. 1384, 1387 and n. 10 (1963). See NLRB v. Local Union No. 103, Int’l Ass’n of Bridge Structural & Ornamental Ironworkers, 434 U.S. 335, 350-51, 98 S.Ct. 651, 660-61, 54 L.Ed.2d 586 (1978) [hereinafter Higdon ]. Thus, an employer could not unilaterally repudiate a pre-hire agreement with a union. The Board later switched its position regarding the repudiation issue and allowed unilateral repudiation of such pre-hire agreements. R.J. Smith Constr. Co., 191 N.L.R.B. 693 (1971), enforcement denied sub nom. Local 150, Int’l Union of Operating Eng’rs v. NLRB, 480 F.2d 1186 (D.C.Cir.1973); Ruttman Constr. Co., 191 N.L.R.B. 701 (1971) (companion case to R.J. Smith). In Ruttman, the Board stated:

[I]n enacting Section 8(f) to assist in resolving such problems, Congress merely permitted parties to enter into such pre-hire agreements without violating the Act. It does not mean that a failure to abide by such an agreement is automatically a refusal to bargain. In essence, therefore, this prehire agreement is merely a preliminary step that contemplates further action for the development of a full bargaining relationship....

Ruttman, 191 N.L.R.B. at 702.. The Board in Ruttman dismissed Oilfield Maintenance as being “primarily concerned” with “the right of a successor-employer to disavow contracts made by a predecessor” employer. Id. at 701 n. 5; see also Higdon, 434 U.S. at 350-51, 98 S.Ct. at 660-61.

DISCUSSION

As appears from our discussion of the history of section 8(f), the latest expression of opinion by the Board prior to Deklewa was that a pre-hire agreement could be terminated by the unilateral repudiation of it by either the employer or the union. We gave effect to that opinion in our circuit. See, e.g., KBR Elec., 812 F.2d at 497-98.

In Deklewa, the NLRB announced a new rule. The Board decided that section 8(f)² collective bargaining agreements may not be unilaterally repudiated by employers or unions. “When parties enter into an 8(f) agreement, they will be required ... to comply with that agreement unless the employees vote, in a Board-conducted election, to reject (decertify) or change their bargaining representative.” Deklewa, 1986-87 NLRB Dec. (CCH) If 18,549, at 31,708. The Board expressly rejected R.J. Smith and Ruttman. It decided that pre-hire collective bargaining agreements should confer on a union at least some section 9(a) exclusive bargaining agent status. Dekle-wa, NLRB Dec. (CCH) at 31,709.

The primary issues before the en banc panel are whether this court has the power in view of existing Supreme Court precedent to adopt the rule of Deklewa as the law of this circuit, and if that power exists, whether it best serves the interests of employers and employees to do so.

I. Supreme Court Precedent.

Deklewa’s non-repudiation rule seems to conflict with Supreme Court precedent set out in Jim McNeff, Inc. v. Todd, 461 U.S. 260,103 S.Ct. 1753, 75 L.Ed. 2d 830 (1983); NLRB v. Local Union No. 103, Int’l Ass’n of Bridge, Structural & Ornamental Iron Workers, 434 U.S. 335, 98 S.Ct. 651, 54 L.Ed.2d 586 (1978) [hereinafter Higdon ]. In Higdon, the Court reversed a decision of the D.C. Circuit and upheld the NLRB’s determination that an uncertified union with an 8(f) agreement with an employer committed an unfair labor practice under section 8(b)(7)(C), 29 U.S.C. § 158(b)(7)(C), by picketing the employer to force it to adhere to the agreement. Higdon, 434 U.S. at 341, 98 S.Ct. at 655. In McNeff, the Court held that despite the repudiation of an 8(f) agreement by the employer, monetary obligations incurred by the employer to an uncertified union prior to the repudiation survived the repudiation. McNeff, 461 U.S. at 271-72, 103 S.Ct. at 1759. The Court stated, however, that 8(f) agreements may be repudiated at will. Id. at 270, 103 S.Ct. at 1758. Thus, it would seem that Supreme Court precedent requires that we reject Deklewa ’s new rule. In neither case, however, did the Supreme Court definitively construe 8(f). Rather, the Court found that the Board’s interpretation of 8(f) was an acceptable interpretation of the statute and that it reasonably implemented the purposes of the Act. The Court, therefore, deferred to the NLRB’s interpretation of 8(f).

Specific language in both opinions supports our conclusion that the Supreme Court in Higdon and McNeff only deferred to the NLRB’s interpretation of 8(f) and we are not precluded from adopting the Board’s new interpretation. The Court in Higdon recognized that “ ‘[t]he function of striking that balance to effectuate national labor policy is often a difficult and delicate responsibility, which the Congress committed primarily to the National Labor Relations Board, subject to limited judicial review.’ ” Higdon, 434 U.S. at 350, 98 S.Ct. at 660 (quoting NLRB v. Truck Drivers Local Union No. 443, Int’l Bhd. of Teamsters, Chaffeurs, Warehousemen and Helpers of America, 353 U.S. 87, 96, 77 S.Ct. 643, 648, 1 L.Ed.2d 676 (1957)). The Court found that the Board’s then current construction of section 8(f) in R.J. Smith, 191 N.L.R.B. 693 (1971), enforcement denied sub nom. Local 150, Int’l Union of Operating Eng’rs v. NLRB, 480 F.2d 1186 (D.C.Cir.1973), was not fundamentally inconsistent with the Act nor had the Board moved into a new area of regulation that Congress had not committed to it. Higdon, 434 U.S. at 350, 98 S.Ct. at 660; accord NLRB v. Insurance Agents’ Int’l Union, 361 U.S. 477, 499, 80 S.Ct. 419, 432, 4 L.Ed.2d 454 (1960) (Court rejected Board’s policy decision because outside congressional mandate). The Court “concluded that the Board’s construction of the Act, although perhaps not the only tenable one, is an acceptable reading of the statutory language and a reasonable implementation of the purposes of the relevant statutory sections.” Higdon, 434 U.S. 341, 98 S.Ct. at 656. Thus, in Higdon, the Court did not independently construe the reach and scope of section 8(f). Rather, the Court recoge nized the expertise and experience of the Board in effectuating national labor policy as mandated by Congress and limited its review to whether the Board’s interpretation of 8(f) was reasonable.

McNeff similarly is not an independent construction of 8(f). The Court relied on Higdon’s affirmance of the Board’s view of the status of an 8(f) collective bargaining agreement. McNeff, 461 U.S. at 266-67, 103 S.Ct. at 1756-57. The Court noted that in Higdon it “approved the Board’s conclusion that a ‘pre-hire agreement is voidable.’ ” Id. at 269, 103 S.Ct. at 1758.³ Also, as the Higdon Court recognized, “[a]n administrative agency is not disqualified from changing its mind; and when it does, the courts still sit in review of the administrative decision and should not approach the statutory construction issue de novo and without regard to the administrative understanding of the statutes.” Higdon, 434 U.S. at 351, 98 S.Ct. at 660-61. We hold that neither Higdon nor McNeff preclude this court from adopting the view of the NLRB as expressed in Deklewa. Neither constitutes an independent construction of the statute.⁴ Rather, the Supreme Court looked to the Board’s interpretation, found it reasonable and consistent with the NLRA, and deferred to the Board’s interpretation. Accord NLRB v. Action Automotive, Inc., 469 U.S. 490, 496, 105 S.Ct. 984, 988, 83 L.Ed.2d 986 (1985) (“In reviewing Board decisions, we consistently yield to the Board’s reasonable interpretations and applications of the Act_”).⁵ We now turn to Deklewa to determine whether the Board’s new approach is a reasonable and tenable construction of section 8(f).

II. Deklewa.

A. Legislative History of Section 8(f).

Congress enacted 8(f) in response to the “serious problems” created by the assertion of jurisdiction by the Board over the building and construction industry. Leg. Hist., supra, at 423. (Report of Senator Kennedy). Congress also recognized that the industry had special needs which the NLRA did not otherwise address. For an employee, “[t]he occasional nature of the employment relationship makes this industry markedly different from manufacturing and other types of enterprise. An individual employee typically works for many employers and for none of them continuously. Jobs are frequently of short duration, depending upon various stages of construction.” Id. For the employer, “it is necessary for the employer to know his labor costs before making the estimate upon which his bid will be based. A second reason is that the employer must be able to have available a supply of skilled craftsmen ready for quick referral.” Id. at 424. Enactment of section 8(f) represented a recognition of the industry’s widespread use of pre-hire collective bargaining agreements designed to address these needs. Congress knew that these agreements were not entirely consistent with “rulings of the NLRB that exclusive bargaining contracts can lawfully be concluded only if the union makes its agreement after a representative number of employees have been hired.” Id.; see also H.R.Rep. No. 741, 86th Cong., 1st Sess. 19, U.S.Code Cong. & Admin.News 1959, pp. 2318, 2424, reprinted in Leg.Hist., supra, at 759, 777-78 (following Senate Report in discussing special problems of construction industry). In passing section 8(f), Congress intended to ratify the use of such prehire agreements. The R.J. Smith approach, allowing unilateral repudiation of these collective bargaining agreements, has not in the Board’s view advanced this evident congressional intent.

In refusing to enforce R.J. Smith, the D.C. Circuit noted that it could not “conceive of such an exercise in futility on the part of Congress as to validate a contract with a union having minority status, but to permit its abrogation because of the union’s minority status.” Local No. 150, Int’l Union of Operating Eng’rs v. NLRB, 480 F.2d 1186, 1190 (D.C.Cir.1973); see also NLRB v. Irvin, 475 F.2d 1265, 1271 (3d Cir.1973) (“[n]othing in either the text or the legislative history of § 8(f) suggests that it was intended to leave construction industry employers free to repudiate contracts at will”); but see Higdon, 434 U.S. at 349, 98 S.Ct. at 659. We agree with the D.C. Circuit. When a construction employer “hires a union” it should be held to its bargain and not be allowed to back out of the deal at the employer’s convenience. We find that the legislative history of 8(f) better supports Deklewa’s non-repudiation rule rather than the R.J. Smith approach.

B. Labor Stability and Employee Free Choice.

Now that we have examined 8(f)’s legislative history, we turn to the two major interests at issue controlling whether pre-hire agreements should be voidable at will. First, sections 7 and 9 of the NLRA, 29 U.S.C. §§ 157 & 159, grant employees complete “freedom of choice and majority rule in employee selection of representatives.” Garment Workers, 366 U.S. at 739, 81 S.Ct. at 1608. Second, the structure of the collective bargaining process itself and such provisions as the “contract bar” of the Act guarantee labor relations stability to both employees and employers. 29 U.S.C. § 159(c)(3) (“contract bar”).⁶ The balancing of these interests is certainly within the statutory mandate of the NLRB. Truck Drivers, 353 U.S. at 96, 77 S.Ct. at 647. In comparing R.J. Smith and Dekle-wa, it would seem that the former, by refusing to confer 9(a) status on a union that had not demonstrated majority support, serves the first interest while Dekle-wa serves the second.⁷ See Higdon, 434 U.S. 341, 98 S.Ct. at 655 (noting R.J. Smith’s focus on employee free choice). However, based on its “expertise and in light of [its] experience in administering Section 8(f)”, the Board in Deklewa perceived that the R.J. Smith voidability rule did not serve, but actually hindered effective expression of employee free choice while seriously damaging maintenance of labor stability in the construction trades. Deklewa, NLRB Dec. (CCH) at 31,706-07.

The appellee and amici here argue that by retaining the power to repudiate unilaterally a pre-hire agreement, employers have it in their power to protect their employees’ “free choice” rights. We are mindful, as was the Board in Deklewa, that an employer’s decision to repudiate is more likely based on “the employer’s own economic considerations, without reference to or concern for the employees’ desire to continue the status quo.” Id. at 31,706.⁸ Also, both the employer and the employees possess explicit statutory means by which to test employee support of a pre-hire bargaining representative.

By its terms, section 8(f) does not confer full 9(a) status on a union. The second proviso to the subsection states that the “contract bar” does not apply to an 8(f) agreement. R.J. Smith interpreted the second proviso to mean Congress intended to immunize only the preliminary contractual steps which precede an employer’s acquisition of a workforce. R.J. Smith, 191 N.L.R.B. at 694. In R.J. Smith, the Board determined that the proviso, by limiting the 9(a) status of unions entering into pre-hire agreements, was proof that Congress intended that pre-hire agreements not be mandatory subjects of bargaining and thus voidable at will. Id. No necessary connection exists, however, between the right to seek a certification election and the right to refuse to follow a freely negotiated contract. We conclude that Deklewa’s literal reading of the second proviso is a more likely reading of congressional intent than that given by R.J. Smith. An employer is not required to wait one year before seeking a representation election after he has entered into a pre-hire contract. An employer, who after a reasonable time perceives that he is bound by a contract with the union whose minority status seems permanent, may petition under section 9(c) for an election.⁹ Likewise, employees may petition at any time under 9(c) or 9(e) to either fully certify a union under 9(a) or to decertify their putative union.¹⁰ The Board’s prior rule, allowing repudiation of such agreements in addition to these explicit statutory protections, has proved unwise. We agree with the Board that it should be rejected. Neither the language of the section nor its legislative history support such an extra-statutory self-help remedy.

The R.J. Smith approach also spawned another species of extra-statutory remedies to unions. Under the “conversion” doctrine, an 8(f) relationship and agreement may “convert” to a full 9(a) relationship and agreement. Conversion requires a showing that the signatory union enjoyed majority support, during a relevant period, among an appropriate unit of the employer’s employees. Conversion may occur at any time during the working relationship, from several days to some years after the pre-hire agreement was negotiated. Conversion may occur without a majority of a unit’s employees ever voting to accept a bargaining representative. See Deklewa, NLRB Dec. (CCH) at 31,705-07.

Indicia of majority support have included diverse and often complex evidentiary proof. The courts and the Board have looked at such factors as union membership roles, Pacific Erectors, 256 N.L.R.B. 421, 424 (1981), enforced sub nom. NLRB v. Pacific Erectors, Inc., 718 F.2d 1459, 1463 (9th Cir.1983), presence of enforced union security clauses, Irvin, 475 F.2d at 1270, employer use of referrals from exclusive union hiring halls, Construction Erectors Inc., 265 N.L.R.B. 786, 788 (1982), union administered fringe benefit programs, Davis Indus., 232 N.L.R.B. 946, 952 (1977), and employee statements and actions. Amado Elec., 238 N.L.R.B. 37, 39 (1978). Proof of these complex and difficult evidentiary issues is often lacking. Deklewa, NLRB Dec. (CCH) at 31,707. The courts and the Board also have been inconsistent in their application of these factors. See, e.g., Precision Striping, Inc. v. NLRB, 642 F.2d 1144,1148 (9th Cir.1981) (existence of majority union membership insufficient); Authorized Air Conditioning Co. v. NLRB, 606 F.2d 899, 906 (9th Cir.1979) (union membership not necessarily proof of union support), cert. denied, 445 U.S. 950, 100 S.Ct. 1598, 63 L.Ed.2d 785 (1980); contra John Ascuaga’s Nugget, 230 N.L.R.B. 275 n. 1 (1977) {absence of union membership does not necessarily indicate lack of majority support).

Determining the appropriate bargaining unit under the conversion doctrine is particularly difficult due to the fragmented nature of the employment relationship in the construction industry. The examination must determine whether there is a single employer or multiple employers and whether the employer uses a permanent and stable workforce or hires on a job-to-job basis. The answers to these questions will determine how and in what fashion conversion takes place. See Mesa Verde, 820 F.2d at 1009-11; KBR Elec., 812 F.2d at 497-98.

In addition to the evidentiary problems created by the conversion doctrine, it does little to promote employee free choice or foster labor relations stability. Conversion of an 8(f) agreement into a full 9(a) agreement may take place without the employees ever voting for or against a proposed union. Conversion can take place almost immediately after negotiation of a pre-hire agreement. Pacific Intercom, 255 N.L. R.B. 184, 191 (1981); Wheeler Constr. Co., 219 N.L.R.B. 541, 542 (1975) (conversion occurred immediately on the parties' adoption of an 8(f) agreement); cf. Carrothers Constr. Co., 258 N.L.R.B. 175 n. 1 (1981) (conversion took place ten years before an attempted repudiation). Rather than protect the free choice of employees to choose or reject a union, R.J. Smith and its associated conversion doctrine may often prevent them from ever voting for or against a particular union.

The doctrine does not further industry stability. Its complex nature inevitably fosters litigation, as in Mesa Verde, to establish whether conversion ever took place, among whom, and at what time. Neither the union, the employer, nor the employees can ever know with real certainty what their rights and obligations are under the contract. Deklewa completely eliminates these problems. On the signing of the contract, both parties will be required to comply with the agreement, absent a Board-conducted election to reject or change a bargaining representative. In determining the appropriate unit for election purposes, the Board will no longer distinguish between “permanent and stable” and “project by project” workforces. Single unit employer units will be presumed appropriate. Deklewa, NLRB Dec. (CCH) at 31,709.

In summary, we find that the Deklewa non-repudiation rule appears consistent with the legislative history of section 8(f), as well as the dominant principles of employee free choice and labor relations stability. Accordingly, we adopt Deklewa’s non-repudiation rule as the law in this circuit. We now turn to the other issue presented for en banc review.

III. Royal Development.

On en banc review, we have also considered the “rule” of Royal Dev. Co., Ltd. v. NLRB, 703 F.2d 363, 369 (9th Cir.1983), that a panel of this court may not adopt a Board decision that conflicts with circuit precedent. The Mesa Verde panel stated that Royal Development precluded it from adopting Deklewa because circuit precedent had followed the R.J. Smith approach. Mesa Verde, 820 F.2d at 1013.

Both the Board and the circuit courts are charged with interpreting the NLRA and other labor laws. As noted, the Board’s interpretation of its statutory mandate is entitled to deference. Also, the Board is free to change its interpretation of the law if its interpretation is reasonable and not precluded by Supreme Court precedent. We should defer to its judgment if reasonable. See Higdon, 434 U.S. at 350-51, 98 S.Ct. at 660-61.

The Royal Development rule, however, would seem to preclude a three-judge panel of this court from adopting a reasonable interpretation of labor law even though our prior precedent was adopted out of deference to the Board. We note the inconsistency of such a rule with our treatment of Higdon and McNeff in this case. By holding that these Supreme Court cases are not binding constructions of section 8(f), we recognize the deferential nature of judicial review of administrative decision-making. To accord decisions of our own court greater deference than that given to the Supreme Court, would be anomalous indeed. We hold, therefore, that if prior decisions of this court constitute only deferential review of NLRB interpretations of labor law, and do not decide that a particular interpretation of statute is the only reasonable interpretation, see United Food, 108 S.Ct. at 421, subsequent panels of this court are free to adopt new and reasonable NLRB decisions without the requirement of en banc review.¹¹

Our holding is consistent with this and other circuits’ past adoption of NLRB deei-sions which conflicted with prior circuit case law. For example, in Blueflash Express, 109 N.L.R.B. 591, 592 (1954), the Board examined the issue of “interrogations” by employers of employees’ views about unions. The Board articulated an “all-the-circumstances” test to determine whether the interrogation restrained or interfered with employee rights under section 8(a)(1) of the NLRA, 29 U.S.C. § 158(a)(1). This court adopted this standard in numerous cases. See, e.g., NLRB v. Brooks Cameras, 691 F.2d 912, 919 (9th Cir.1982); Lippincott Indus, v. NLRB, 661 F.2d 112, 114 (9th Cir.1981); Penasquitos Village, Inc. v. NLRB, 565 F.2d 1074, 1080 (9th Cir.1977). Later, the Board moved away from the “all-the-circumstances” test and adopted a per se rule that any such interrogation was unlawful under the Act. See, e.g., PPG Indus., 251 N.L.R.B. 1146, 1147 (1980); Paceco, a Div. of Fruehauf Corp., 237 N.L.R.B. 399, 400 (1978), vacated in part and remanded in part, 601 F.2d 180 (5th Cir.1979). The Ninth Circuit in turn has applied the per se rule. See, e.g., J.M. Tanaka Constr., Inc. v. NLRB, 675 F.2d 1029, 1037 (9th Cir.1982); NLRB v. Fort Vancouver Plywood Co., 604 F.2d 596, 599 n. 1. (9th Cir.1979), cert. denied, 445 U.S. 915, 100 S.Ct. 1275, 63 L.Ed.2d 599 (1980). Despite this conflicting case law, a panel of this circuit in Hotel Employees and Restaurant Employees Union, Local 11 v. NLRB, 760 F.2d 1006, 1009 (9th Cir.1985), affirmed the Board’s return to the “all-the-circumstances” test.¹² The court found that the current approach was a consistent and reasonable interpretation of the Act and deferred to the Board’s deeision to change its standard. The court did not find that it was bound by the prior circuit precedents,

There are strong policy reasons why we should limit the Royal Development rule. First, Royal Development hinders the policy of judicial deference to “the Board’s reasonable interpretations and applications of the [National Labor Relations] Act.” Action Automotive, 469 U.S. at 496, 105 S.Ct. at 988. As the Supreme Court recently recognized in Chevron, “considerable weight should be accorded to an executive department’s construction of a statutory scheme it is entrusted to administer.” 467 U.S. at 844, 104 S.Ct. at 2782. This is especially true “ ‘whenever decision as to the meaning or reach of a statute has involved reconciling conflicting policies, and a full understanding of the force of the statutory policy in the given situation has depended upon more than ordinary knowledge respecting the matters subjected to agency regulations.’ ” Id. (quoting United States v. Shimer, 367 U.S. 374, 382, 81 S.Ct. 1554, 1560, 6 L.Ed.2d 908 (1961)). Deference is due even when the administrative agency changes its interpretation of statutes. See Higdon, 434 U.S. at 351, 98 S.Ct. at 660. Royal Development inhibits this court in affording the deference due to reasonable NLRB interpretations where the circuit has ruled on an earlier interpretation, therefore impeding the NLRB’s ability to change its interpretation in accord with its experience and altered objectives.

Second, Royal Development prevents the NLRB from enacting consistent, nationwide policies. Under the Royal Development rule, our circuit will be frozen on certain interpretations of NLRB statutes, whereas other circuits would not, depending on the random occurrence of cases within the circuits. For example, if all circuits were to follow Royal Development, the Ninth Circuit might be bound by the NLRB’s 1963 interpretation of a given statute, the Second Circuit might follow a completely different 1971 interpretation, and the Fifth Circuit might be bound by a third interpretation handed down in 1984. Conversely, in the absence of Royal Development the NLRB could gain simultaneous and timely application of its interpretation throughout the country, thereby acting with the flexibility and policymaking power granted to it by Congress.

Third, Royal Development is likely to encourage unjustified appeals and delay by increasing the uncertainty as to the law that ultimately will be applied in any case where the NLRB has changed its interpretation after a circuit precedent upholding a prior circuit interpretation. Under Royal Development, the appeals court initially will apply the circuit’s prior interpretation, but it is always possible that an en banc court will reconsider the issue and adopt the new interpretation if it is reasonable.

Fourth, it is likely that time constraints will preclude en banc review of most cases and Royal Development, therefore, will prevent the circuit from adopting the NLRB’s reasonable interpretations of the statutes that it is entrusted to administer. Even if we make the improbable assumption that en banc courts will be able to review every case presenting a new NLRB interpretation, the en banc procedures required by Royal Development would constitute an enormous, unnecessary waste of time. The determination in the first instance whether an NLRB interpretation is reasonable is entrusted to three-judge panels, and such panels may easily make this same determination in cases where another panel already has addressed a prior interpretation of the statute.¹³ For reasons of efficiency, en banc review concerning the reasonableness of an NLRB interpretation should be a matter of last resort, not the initial means of considering the new interpretation.

In summary, if a panel finds that a NLRB interpretation of the labor laws is reasonable and consistent with those laws, the panel may adopt that interpretation even if circuit precedent is to the contrary. This is so, however, only where the precedent constituted deferential review of NLRB decisionmaking. If the precedent held either that the NLRB decision was unreasonable or the only possible interpretation of the statute, then the Royal Development rule will apply.

We now turn to the final issue on en banc review — whether Deklewa should be applied retroactively to this case.

IV. Retroactivity.

In Chevron Oil Co. v. Huson, 404 U.S. 97, 92 S.Ct. 349, 30 L.Ed.2d 296 (1971), the Supreme Court articulated the three factors applicable to retroactivity analysis:

First, the decision to be applied nonretro-actively must establish a new principle of law, either by overruling clear past precedent on which litigants may have relied ... or by deciding an issue of first impression whose resolution was not clearly foreshadowed.... Second, it has been stressed that “we must ... weigh the merits and demerits in each case by looking to the prior history of the rule in question, its purpose and effect, and whether retrospective operation will further or retard its operation.” ... Finally, we have weighed the inequity imposed by retroactive application, for “[wjhere a decision of this Court could produce substantial inequitable results if applied retroactively, there is ample basis in our cases for avoiding the ‘injustice or hardship’ by a holding of nonretroactivity.”

Id. at 106-07, 92 S.Ct. at 355 (citations omitted).

We note that Deklewa overrules clear precedent that the employer in Mesa Verde obviously relied on in repudiating the pre-hire agreements. We remand to the Mesa Verde panel to apply the Chevron factors.

CONCLUSION

We adopt Deklewa as the law of this circuit and hold that pre-hire agreements may not be unilaterally repudiated by either a union or an employer prior to its termination or absent an election among the appropriate bargaining unit’s employees to reject the union. We find that Dek-lewa better advances the statutory objectives of the NLRA, better serves the goals of employee free choice and labor-management stability, and assists in reducing litigation fostered by prior precedent. We limit the Royal Development rule to cases where this circuit has found an NLRB interpretation unreasonable or the only possible construction of statute. We REMAND the issue of retroactivity to the Mesa Verde panel to consider that issue in light of Chevron Oil Co. v. Huson.

REMANDED.

1 . The history of the passage of the amendment to section 8 was protracted. In 1951, a bill was first introduced by Senators Taft and Humphrey to allow pre-hire agreements, but it failed to obtain approval in the 82nd Congress. Similar bills, supported by the Eisenhower administration, were introduced in every Congress after that. Finally, in 1958, Senators Kennedy and Ervin proposed an amendment substantially similar to the original bill and it was ultimately signed into law.

2 . Section 8(f), 29 U.S.C. § 158(f) (Agreement Covering Employees in the Building and Construction Industry), provides:

It shall not be an unfair labor practice under subsections (a) and (b) of this section for an employer engaged primarily in the building and construction industry to make an agreement covering employees engaged (or who, upon their employment, will be engaged) in the building and construction industry with a labor organization of which building and construction employees are members (not established, maintained, or assisted by any action defined in section 8(a) of this Act [subsec. (a) of this section] as an unfair labor practice) because (1) the majority status of such labor organization has not been established under the provisions of section 9 of this Act [29 USCS § 159] prior to the making of such agreement, or (2) such agreement requires as a condition of employment, membership in such labor organization after the seventh day following the beginning of such employment or the effective date of the agreement, whichever is later, or (3) such agreement requires the employer to notify such labor organization of opportunities for employment with such employer, or gives such labor organization an opportunity to refer qualified applicants for such employment, or (4) such agreement specifies minimum training or experience qualifications for employment or provides for priority in opportunities for employment based upon length of service with such employer, in the industry or in the particular geographical area: Provided, That nothing in this subsection shall set aside the final proviso to section 8(a)(3) of this Act [subsec. (a)(3) of this section]: Provided further, That any agreement which would be invalid, but for clause (1) of this subsection, shall not be a bar to a petition filed pursuant to section 9(c) or 9(e) [29 USCS § 159(c) or (e)].

3 . Even in McNeff, the Court noted that it did not decide that in every case a section 8(f) contract may be unilaterally repudiated. “We need not consider in this case whether considerations properly cognizable by a court under § 301 might prevent either party, in particular circumstances, from exercising its option under § 8(f) to repudiate a prehire agreement before the union demonstrates majority status.” McNeff, 461 U.S. at 271 n. 13, 103 S.Ct. at 1759 n. 13. The instant case is likewise a section 301, 29 U.S.C. § 185, contract enforcement case.

4 . The Third Circuit recently enforced the NLRB’s decision in Deklewa. 843 F.2d at 781-82. The court’s examination of Higdon and McNeff comports with our own:

In neither case has the Supreme Court adopted the Board’s RJ. Smith interpretation of § 8(f) as definitive and binding. Indeed, in Higdon, ... [t]he Supreme Court thus made clear that it was merely reviewing the Board’s interpretation of § 8(f) and not substituting its own judgment or prescribing its own interpretation of the statute....

While McNeff is not as explicit as Higdon in making it clear that the Supreme Court was merely reviewing the Board’s interpretation and not establishing one of its own, nowhere in the McNeff opinion does the Court hold that the statute requires § 8(f) agreements to be voidable. Furthermore, McNeff relies very heavily upon Higdon which did make it clear that the Court was doing no more than holding that the Board’s reading of the act was reasonable.

Id. at 776.

5 . The Supreme Court in Chevron U.S.A. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984), recently set out the proper scope of judicial review of an agency’s construction of statute:

When a court reviews an agency’s construction of the statute which it administers, it is confronted with two questions. First, always, is the question whether Congress has directly spoken to the precise question at issue. If the intent of Congress is clear, that is the end of the matter; for the court as well as the agency, must give effect to the unambiguously expressed intent of Congress. If, however, the court determines Congress has not directly addressed the precise question at issue, the court does not simply impose its own construction on the statute, as would be necessary in the absence of an administrative interpretation. Rather, if the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency’s answer is based on a permissible construction of the statute.

"The power of an administrative agency to administer a congressionally created ... program necessarily requires the formulation of policy and the making of rules to fill any gap left, implicitly or explicitly, by Congress." If Congress has explicitly left a gap for the agency to fill, there is an express delegation of authority to the agency to elucidate a specific provision of the statute by regulation. Such legislative regulations are given controlling weight unless they are arbitrary, capricious, or manifestly contrary to the statute. Sometimes the legislative delegation to an agency on a particular question is implicit rather than explicit. In such a case, a court may not substitute its own construction of a statutory provision for a reasonable interpretation made by the administrator of an agency.

We have long recognized that considerable weight should be accorded to an executive department’s construction of a statutory scheme it is entrusted to administer, and the principle of deference to administrative interpretations

"has been consistently followed by this Court whenever decision as to the meaning or reach of a statute has involved reconciling conflicting policies, and a full understanding of the force of the statutory policy in the given situation has depended upon more than ordinary knowledge respecting the matters subjected to agency regulations.

"If this choice represents a reasonable accommodation of conflicting policies that were committed to the agency’s care by the statute, we should not disturb it unless it appears from the statute or its legislative history that the accommodation is not one that Congress would have sanctioned.”

In light of these well-settled principles it is clear that the Court of Appeals misconceived the nature of its role in reviewing the regulations at issue. Once it determined, after its own examination of the legislation, that Congress did not actually have an intent regarding the applicability of the ... program, the question before it was not whether in its view the concept is "inappropriate" in the general context of a program ... but whether the Administrator’s view that it is appropriate in the context of this particular program is a reasonable one.

Id. at 842-45, 104 S.Ct. at 2781-83 (footnotes and citations omitted). See also, NLRB v. United Food and Commercial Workers Union Local 23, — U.S. -, 108 S.Ct. 413, 421, 426, 98 L.Ed.2d 429 (1987) (Scalia, J. concurring) (discussing Chevron).

6 . The “contract bar” provides that once a certification election is held within an appropriate bargaining unit, no other election may be held for twelve months.

7 . Section 8(f) confers only limited 9(a) status on unions that have pre-hire agreements with employers. The second proviso to section 8(f) allows for a certification or decertification election at any time during a contract period in contradiction to the normal presumption of majority support enjoyed by a full 9(a) bargaining representative. Deklewa also noted:

[e]ven absent an election, upon the contract's expiration, the signatory union will enjoy no majority presumption and either party may repudiate the 8(f) relationship. The signatory employer will be free at all times from any coercive union efforts, including strikes and picketing, to compel the negotiation and/or adoption of a successor agreement.

Deklewa, NLRB Dec. (CCH) at 31,709.

8 . Congress was also aware that:

ta] substantial majority of the skilled employees in this industry constitute a pool of such help centered about their appropriate craft union. If the employer relies upon this pool of skilled craftsmen, members of the union, there is no doubt under these circumstances that the union will in fact represent a majority of the employees eventually hired.

Leg.Hist., supra, at 424.

9 .Section 9(c), 29 U.S.C. § 159(c) (Hearings on questions affecting commerce — Rules and regulations), states:

(1) Whenever a petition shall have been filed, in accordance with such regulations as may be prescribed by the Board—

(B) by an employer, alleging that one or more individuals or labor organizations have presented to him a claim to be recognized as the representative defined in section 9(a) [subsec. (a) of this section];

the Board shall investigate such petition and if it has reasonable cause to believe that a question of representation affecting commerce exists shall provide for an appropriate hearing upon due notice. Such hearing may be conducted by an officer or employee of the regional office, who shall not make any recommendations with respect thereto. If the Board finds upon the record of such hearing that such a question of representation exists, it shall direct an election by secret ballot and shall certify the results thereof.

10 . Section 9(e), 29 U.S.C. § 159(e) (Secret ballot —Limitation of elections), states:

(1) Upon the filing with the Board, by 30 per centum or more of the employees in a bargaining unit covered by an agreement between their employer and a labor organization made pursuant to section 8(a)(3), of a petition alleging they desire that such authority be rescinded, the Board shall take a secret ballot of the employees in such unit and certify the results thereof to such labor organization and to the employer. (2) No election shall be conducted pursuant to this subsection in any bargaining unit or any subdivision within which, in the preceding twelve-month period, a valid election shall have been held.

In Deklewa, the Board set out its policy covering the results of such elections:

A vote to reject the signatory union will void the 8(f) agreement and will terminate the 8(f) relationship. In that event, the Board will prohibit the parties from reestablishing the 8(f) relationship covering unit employees for a 1-year period. The purpose of this general prohibition is to preclude an employer and a union both from ignoring the electorally expressed preference of a majority of unit employees and from maintaining an 8(f) relationship during a period when the Act precludes holding another election, the availability of which is the sine qua non safeguard to permitting and enforcing an 8(f) contract. Failure to terminate the 8(f) relationship or its premature reestablishment after an election will subject the parties to 8(a)(2) and 8(b)(1)(A) liability.

Deklewa, NLRB Dec. (CCH) at 31,709 (footnotes omitted).

11 . On a pure question of statutory construction, our first job is to try to determine congressional intent, using "traditional tools of statutory construction.” If we can do so, then that interpretation must be given effect ... however, where "the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency’s answer is based upon a permissible construction of the statute_ Under this principle, we have traditionally accorded the Board deference with regard to its interpretation of the NLRA as long as its interpretation is rational and consistent with the statute.”

Id. (citations omitted).

12 . Hotel Employees did not cite the Royal Development rule. The court noted that the “all-the-circumstances” test "conflict[ed] with a few Ninth Circuit cases” following a per se rule. Id. at 1008.

13 . As noted above, such cases do not merit en banc review because there exists no conflict with prior decisions.