In a narrow ruling, the appeals court held that the Board did not engage in reasoned decisionmaking and relied on inapposite precedent.
In a case arising from a longstanding dispute about which of two competing unions—the Machinists or ILWU—represents a group of Port of Oakland mechanics, the D.C. Circuit found that the NLRB did not engage in reasoned decisionmaking when it ruled that the ILWU committed unfair labor practices by accepting recognition as the mechanics’ bargaining representative and by applying its collective bargaining agreement to them. In a narrow ruling setting aside the Board’s order, the court explained that on remand, the Board remained “free to consider the various open issues and arguments in this case, unencumbered by its invocation of inapposite precedent” (International Longshore & Warehouse Union v. NLRB, August 21, 2020, Katsas, G.).
Mechanics. Prior to 2005, the mechanics, who maintain and repair shipping equipment, worked for Pacific Marine Maintenance Company, a contractor providing maintenance and repair services to a shipping company. At that time, they were represented by the International Association of Machinists. In 2005, however, the shipping company ended its contract with Pacific Marine and instead engaged Pacific Crane Maintenance Company to provide the maintenance and repair services.
ILWU. Pacific Marine then shut down and laid off the mechanics and Pacific Crane immediately rehired most of them. Instead of recognizing the Machinists, however, as their bargaining representative, Pacific Crane recognized the International Longshore and Warehouse Union under a collective-bargaining agreement encompassing a much larger unit of employees performing various jobs for various employers at various West Coast ports.
Litigation history. In response, the Machinists charged that Pacific Crane had committed unfair labor practices by refusing to bargain with it and by recognizing ILWU as the mechanics’ bargaining representative. They also charged that ILWU committed unfair labor practices by accepting the recognition and applying its CBA to the mechanics. The NLRB agreed with the Machinists and the appeals court, in 2018, ultimately upheld the decision and enforced it against ILWU. In doing so, it pointed out, it relied “heavily” on a stipulation that Pacific Marine and Pacific Crane, which were affiliated companies, should be treated as a single employer.
Ports America. During the course of the litigation, Ports America Outer Harbor, in 2010, acquired control of some of the Oakland berths from the shipping company and used Pacific Crane to provide maintenance and repair services at those berths. In 2013, however, Ports America decided to bring its maintenance and repair operations in-house and when its contract with Pacific Crane expired, it hired most of the mechanics who previously had been working for Pacific Crane, refused to bargain with the Machinists, and instead recognized ILWU, which continued to apply its CBA to the mechanics.
Successor. The Machinists then alleged that Ports America committed unfair labor practices by failing to bargain with them and by recognizing ILWU as the mechanics’ bargaining representative and that ILWU committed unfair labor practices by accepting the recognition and by applying its CBA to the mechanics. These allegations rested on the claim that Ports America had succeeded to Pacific Crane’s duty to bargain with the Machinists.
Agreeing with the Machinists, an ALJ found that from 2005 to 2013, Pacific Crane had a continuing obligation to recognize and bargain with the Machinists. The ALJ concluded that Ports America succeeded to that obligation under Burns, in part by refusing to consider any counterarguments “built on unremedied unfair labor practices” committed by Pacific Crane before 2013. In 2018, the Board substantially affirmed the ALJ’s decision on similar reasoning.
Settlement. During the proceedings, Ports America filed for bankruptcy, so the Machinists added new claims against MTC Holdings, another terminal services company, which the Machinists alleged was a single employer with Ports America. They then reached a partial settlement covering all their claims against MTC Holdings and their non-Burns claims against Ports America, which was approved by an ALJ. ILWU objected and sought reconsideration but the ALJ affirmed the order and the Board denied ILWU’s appeal from the settlement approval. ILWU then sought review of the NLRB’s merit’s order and its order approving the partial settlement.
Arbitrary refusal. On appeal, the D.C. Circuit first considered the Board’s ruling that ILWU committed unfair labor practices by accepting recognition as the mechanics’ bargaining representative in 2013 and by applying its CBA to them. Agreeing with ILWU, the court found that the Board arbitrarily refused to consider ILWU’s arguments that the past bargaining unit was no longer appropriate.
The unfair labor practices at issue, observed the court, follow from a premise that Ports America had a duty to bargain with the Machinists when it insourced the maintenance and repair work in 2013. In finding that Ports America had such a duty, the Board reasoned that Pacific Crane had such a duty and Ports America succeeded to Pacific Crane’s bargaining obligation when it hired the mechanics.
Refused to consider. ILWU sought to raise three arguments before the Board as to why the historic bargaining unit was no longer appropriate when Ports America hired the mechanics in 2013—the historic bargaining unit had accreted into ILWU’s larger, coast-wide bargaining unit; a majority of mechanics in the historic unit by then supported ILWU, not the Machinists; and Ports America had at least a good-faith doubt whether a majority of the unit still supported the Machinists. The Board, however, refused to consider these arguments because they invoked changes that were “a direct result of the predecessor employers’ unlawful assistance to and recognition of the ILWU.”
To justify its ruling, the Board relied on the D.C. Circuit’s 2018 decision in the litigation between the parties but that case, the court pointed out, “does not address whether an incoming employer may contest successorship obligations by citing workplace changes caused by unfair labor practices of the outgoing employer.” Rather, because the parties had stipulated that the outgoing Pacific Mutual and the incoming Pacific Crane, which were affiliated companies, should be treated as a single employer, the case did not involve a successorship issue. Thus, it was undisputed that when it took over, Pacific Crane succeeded to the bargaining obligations of Pacific Mutual.
In response to Pacific Crane’s assertion that the historic Machinists unit had accreted into the larger ILWU unit because of changes that occurred after 2005, the Board held that Pacific Crane could not seek to benefit from its own unfair labor practices in recognizing ILWU and failing to recognize the Machinists. Likewise, the court noted, it explained that “the Board should ignore any impermissible changes made unilaterally by the employer,” because “to hold otherwise would allow the employer to benefit from its own unlawful conduct.”
While the court could “imagine reasonable arguments either way on the question whether a successor employer should be barred from citing changes caused by the unfair labor practices of a predecessor,” it pointed out that the “Board simply did not engage these questions. Instead, it relied on inapposite precedent, as it virtually conceded at oral argument. That was arbitrary.”
Refusal to set aside partial settlement. Next, ILWU sought review of the Board’s order refusing to set aside the partial settlement among the Machinists, Ports America, and MTC Holdings. However, the court observed, it did not respond to the Machinists’ contention that disbursement of the settlement funds mooted this challenge. “By this silence, ILWU has forfeited any objection to mootness,” the court stated, dismissing its petition to review the Board’s order accepting the partial settlement.
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