Opinion ID: 613557
Heading Depth: 3
Heading Rank: 1

Heading: The Board's ruling in Hacienda III is arbitrary and capricious

Text: The Board's most recent ruling in Hacienda III rests on essentially the same reasoning it provided in Hacienda I. Namely, the Board insists that the exception to the unilateral change doctrine for dues-checkoff, even in right-to-work states, is the rule the Board must follow in this case simply because it is the rule that the Board has followed in the past. We rejected this very reasoning in LJEB I, 309 F.3d at 583, and we reject it again here. As we have explained, Although a Board rule may become `well-established' through repetition, it may `come to stand for' a legal rule only through reasoned decisionmaking. Id. (quoting Allentown Mack, 522 U.S. at 374, 118 S.Ct. 818). We also reject the Board's attempt to veil its familiar argument in procedural formalities. The Board asks us to leave its ruling in place out of deference to an NLRB tradition that requires a three-member majority to overturn existing precedent. The Board cites Vermont Yankee Nuclear Power Corp. v. Natural Resources Defense Council, Inc., 435 U.S. 519, 98 S.Ct. 1197, 55 L.Ed.2d 460 (1978), and FCC v. Pottsville Broadcasting Co., 309 U.S. 134, 60 S.Ct. 437, 84 L.Ed. 656 (1940), in support of its argument that agencies are entitled to independence and deference in developing their procedures. In Pottsville, the Supreme Court ruled that agencies should be free to fashion their own rules of procedure and to pursue methods of inquiry capable of permitting them to discharge their multitudinous duties. 309 U.S. at 143, 60 S.Ct. 437. In Vermont Yankee, the Court reaffirmed that the formulation of procedures [is] basically to be left within the discretion of the agencies to which Congress had confided the responsibility for substantive judgments. 435 U.S. at 524, 98 S.Ct. 1197. We agree that we generally must defer to the Board's choice of particular procedures that it has decided are best suited to the adjudication of labor disputes, but this deference does not free the Board to ignore our mandate to explain the rule it chooses to adopt. The question presented here is not whether the NLRB's chosen procedures are adequate, but rather whether the explication of its ruling is adequate. See LJEB I, 309 F.3d at 583 (citing NLRB v. Erie Resistor Corp., 373 U.S. at 236, 83 S.Ct. 1139). Pottsville and Vermont Yankee do not hold that the Board's adherence to its traditional practices eliminates the Board's responsibility to provide an adequate, rational, non-arbitrary rule that is consistent with the NLRA. The fact that the Board offers only a procedural justification for its substantive ruling only highlights that the ruling is substantively arbitrary. We will not defer to an agency's procedures or traditional practices when they result in arbitrary substantive rules. We recognize the Board's interest in protecting the stability of its legal precedent. Unlike other federal agencies, the NLRB promulgates nearly all of its legal rules through adjudication rather than rulemaking. Allentown Mack, 522 U.S. at 374, 118 S.Ct. 818. Under such a scheme, the Board's rules would be of little assistance to employers and unions in following the NLRA if the Board's rules interpreting the Act were subject to routine, frequent change. The Board reasonably has decided that requiring a three-member majority to overturn precedent provides for the necessary stability of its rules, and we defer to that judgment. Reasoned decisionmaking, however, is paramount to consistent decisionmaking. Where the Board breaches its duty to provide any rational and logical explanation for its rules, the consistent repetition of that breach can hardly mend it. Id. In their concurrence to Hacienda III, Members Schaumber and Hayes argue that abandoning the rule of Bethlehem Steel and Tampa Sheet Metal would have a destabilizing impact on bargaining relationships because [t]he rule is well-known, well-understood, and practitioners have relied upon it in doing business on behalf of their clients. 2010 WL 3446120 at . A pattern of obedience to an arbitrary rule, however, does not by itself support the rule's continued application. Our responsibility is to ensure that the Board's rules are consistent with the NLRA. Stability in labor relations must arise from reasoned rules promulgated by the Board, not from our willful ignorance of the Board's arbitrary decision-making in an effort to avoid rocking the boat. We conclude, as we did in Hacienda I, that the Board has yet to provide a reasoned explanation for its rule excluding dues-checkoff from the unilateral change doctrine in right-to-work states. The Board's purported adherence to its procedural rules does nothing to correct this inadequacy, and we therefore vacate the ruling in Hacienda III as arbitrary and capricious.