Court Opinion

ID: 4561182
Source: CourtListenerOpinion
Date Created: 2020-08-28 15:01:38.356495+00
Date Added: 2024-06-11T11:22:03.072203
License: Public Domain

United States Court of Appeals
         FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued January 25, 2019             Decided August 21, 2020

                        No. 18-1124

    INTERNATIONAL LONGSHORE & WAREHOUSE UNION,
                     PETITIONER

                              v.

           NATIONAL LABOR RELATIONS BOARD,
                     RESPONDENT

   EAST BAY AUTOMOTIVE MACHINISTS LODGE NO. 1546,
                      ET AL.,
                   INTERVENORS

                 Consolidated with 18-1168

       On Petition for Review and Cross-Application
               for Enforcement of Orders of
           the National Labor Relations Board

     Lindsay R. Nicholas argued the cause for petitioner. With
her on the briefs were Eleanor Morton and Emily M. Maglio.

    Gregoire Sauter, Attorney, National Labor Relations
Board, argued the cause for respondent. With him on the brief
were Peter B. Robb, General Counsel, John W. Kyle, Deputy
                                 2
General Counsel, Linda Dreeben, Deputy Associate General
Counsel, and Usha Dheenan, Supervisory Attorney.

     David A. Rosenfeld was on the brief for intervenors East
Bay Automotive Machinists Lodge No. 1546, et al. in support
of respondent/cross-petitioner.

   Before: GARLAND and KATSAS, Circuit Judges, and
WILLIAMS, Senior Circuit Judge.*

    Opinion for the Court filed by Circuit Judge KATSAS.

     KATSAS, Circuit Judge:          Under NLRB v. Burns
International Security Services, Inc., 406 U.S. 272 (1972), a
successor employer inherits the collective-bargaining
obligations of its predecessor only if the previously recognized
bargaining unit remains appropriate under the successor. In
determining whether the unit remains appropriate, the National
Labor Relations Board ignores workplace changes caused by
unfair labor practices of the successor. Here, the NLRB
extended that rule to ignore changes caused by unfair labor
practices of the predecessor. We hold that the Board did not
adequately explain its decision.

                                 I

     This case arises from a longstanding dispute about which
of two competing unions represents a group of several dozen

    *
         The late Senior Circuit Judge Stephen F. Williams was a
member of the panel at the time the case was argued and participated
in its consideration before his death on August 7, 2020. Because he
died before this opinion’s issuance, his vote was not counted. See
Yovino v. Rizo, 139 S. Ct. 706, 710 (2019). Judges Garland and
Katsas have acted as a quorum with respect to this opinion and
judgment. See 28 U.S.C. § 46(d).
                               3
mechanics who maintain and repair shipping equipment in the
Port of Oakland, California. The unions are the International
Association of Machinists and Aerospace Workers, AFL-
CIO/CLC (Machinists) and the International Longshore and
Warehouse Union (ILWU). As the mechanics came to work
for different companies, two related controversies developed.
One, centered around a change in employers that occurred in
2005, has been finally resolved by this Court. Another,
centered around a change in employers that occurred in 2013,
is directly at issue here.

                               A

    Before 2005, the mechanics at issue worked for the Pacific
Marine Maintenance Company, a contractor providing
maintenance and repair services to the shipping company A.P.
Moller-Maersk. At that time, the Machinists represented the
mechanics under a collective-bargaining agreement covering
non-crane mechanics employed by Pacific Marine at the Ports
of Oakland and Tacoma, Washington.

     In 2005, Maersk ended its contract with Pacific Marine
and engaged the Pacific Crane Maintenance Company to
provide maintenance and repair services for its Oakland and
Tacoma shipping operations. As a result, Pacific Marine shut
down and laid off the mechanics. Pacific Crane immediately
rehired most of them, but it refused to recognize the Machinists
as their bargaining representative. Instead, it recognized ILWU
under a collective-bargaining agreement encompassing a much
larger unit of some 15,000 employees performing various jobs
for various employers at various West Coast ports.

    These 2005 changes spawned over a decade of litigation.
The Machinists charged that Pacific Crane had committed
unfair labor practices by refusing to bargain with it and by
                               4
recognizing ILWU as the mechanics’ bargaining
representative. Likewise, the Machinists charged that ILWU
had committed unfair labor practices by accepting the
recognition and by applying its collective-bargaining
agreement to the mechanics. The NLRB agreed with the
Machinists on both points. PCMC/Pac. Crane Maint. Co., 359
N.L.R.B. 1206 (2013) (Pacific Crane I). The Board then
vacated its decision on procedural grounds, but later reached
the same conclusion. PCMC/Pac. Crane Maint. Co., 362
N.L.R.B. 988 (2015) (Pacific Crane II). After the Machinists
settled their claims against Pacific Crane, we upheld the
Board’s decision and enforced it against ILWU. Int’l
Longshore & Warehouse Union v. NLRB, 890 F.3d 1100 (D.C.
Cir. 2018) (Pacific Crane III). In doing so, we relied “heavily”
on a stipulation that Pacific Marine and Pacific Crane, which
were affiliated companies, should be treated as a single
employer. Id. at 1110.

                               B

     This case involves a third employer—Ports America Outer
Harbor—which came into the picture as the Pacific Crane
litigation unfolded. In 2010, Ports America acquired control of
Oakland berths 20–24 from Maersk. As Maersk had done,
Ports America used Pacific Crane to provide maintenance and
repair services at those berths. Ports America then acquired
berths 25–26 from the Transbay Container Terminal. Ports
America expanded its service contract with Pacific Crane to
cover these berths as well.

    In 2013, Ports America decided to bring its maintenance
and repair operations in-house. When its contract with Pacific
Crane expired, Ports America hired most of the mechanics who
previously had been working for Pacific Crane. In doing so,
Ports America refused to bargain with the Machinists and
                               5
instead recognized ILWU, which continued to apply its
collective-bargaining agreement to the mechanics.

     The Machinists charged Ports America and ILWU with
various unfair labor practices. They alleged that Ports America
committed unfair labor practices by failing to bargain with
them and by recognizing ILWU as the mechanics’ bargaining
representative. Further, they alleged that ILWU committed
unfair labor practices by accepting the recognition and by
applying its collective-bargaining agreement to the mechanics.
All these allegations rested on one central claim—that Ports
America had succeeded to Pacific Crane’s duty to bargain with
the Machinists.

    An administrative law judge agreed with the Machinists.
She reasoned that from 2005 to 2013, Pacific Crane had a
continuing obligation to recognize and bargain with the
Machinists. Ports Am. Outer Harbor, LLC, 366 N.L.R.B. No.
76, at 10–12 (May 2, 2018) (Ports America) (reprinting ALJ
recommendation). She then 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. Id.
at 14. In 2018, the Board substantially affirmed the ALJ’s
decision on similar reasoning. See id. at 3–4 & nn. 9–10.

     While the proceeding was still pending before the ALJ,
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. The Machinists then reached a partial
settlement covering all their claims against MTC Holdings and
their non-Burns claims against Ports America. Under the
settlement, Ports America and MTC Holdings agreed to pay the
Machinists $3 million for distribution to the mechanics. In
                                6
August 2016, the ALJ approved the settlement and dismissed
MTC Holdings from the case. ILWU objected to the settlement
and sought reconsideration. In September 2016, the ALJ
affirmed her August order. In November 2016, the Board
denied ILWU’s appeal from the settlement approval.

     ILWU now seeks our review of the NLRB’s merits order
and its order approving the partial settlement. The NLRB seeks
enforcement of the merits order. The Machinists have
intervened in support of the Board. Ports America, which has
ceased operations, did not appear before this Court.

                                II

     We first consider the Board’s ruling that ILWU committed
unfair labor practices by accepting recognition as the
mechanics’ bargaining representative in 2013 and by applying
its collective-bargaining agreement to them. ILWU argues that
the Board arbitrarily refused to consider its arguments that the
past bargaining unit was no longer appropriate. We agree.

     Our review of NLRB decisions is deferential but not
toothless. Among other things, we must consider whether the
Board’s findings of fact are supported by substantial evidence,
29 U.S.C. § 160(f), and whether its reasoning is arbitrary and
capricious, 5 U.S.C. § 706(2)(A). For the latter, the question is
whether the agency “examined the relevant considerations and
articulated a satisfactory explanation for its action, including a
rational connection between the facts found and the choice
made.” FERC v. Elec. Power Supply Ass’n, 136 S. Ct. 760,
782 (2016) (cleaned up). “[A]n agency’s unexplained
departure from precedent is arbitrary and capricious.” ABM
Onsite Servs.—West, Inc. v. NLRB, 849 F.3d 1137, 1142 (D.C.
Cir. 2017).       So too is an order resting on “clearly
distinguishable precedent.” Exxel/Atmos, Inc. v. NLRB, 147
F.3d 972, 976 (D.C. Cir. 1998).
                               7
     Section 7 of the National Labor Relations Act guarantees
the right of employees “to bargain collectively through
representatives of their own choosing.” 29 U.S.C. § 157.
Section 8(a) prohibits employers from engaging in unfair labor
practices, which include interfering with collective bargaining,
id. § 158(a)(1); supporting a union, id. § 158(a)(2); and
refusing to bargain with a union that enjoys majority support,
id. § 158(a)(5). Section 8(b) prohibits unions from engaging in
unfair labor practices, which include restraining collective
bargaining by employees, id. § 158(b)(1)(A), and causing an
employer to discriminate against an employee, id. § 158(b)(2).

     The unfair labor practices at issue follow from a premise
that Ports America had a duty to bargain with the Machinists
when it insourced the Oakland maintenance and repair work in
2013. If so, then its failure to bargain with the Machinists
violated sections 8(a)(1) and (5), and its recognizing ILWU
violated sections 8(a)(1) and (2). Likewise, ILWU violated
section 8(b)(1)(A) by accepting the recognition, and section
8(b)(2) by applying its collective-bargaining agreement to the
mechanics. ILWU does not dispute that these conclusions
follow from the premise.

    In finding that Ports America had a duty to bargain with
the Machinists, the Board reasoned in two steps. First, Pacific
Crane had such a duty. We previously held that Pacific Crane
had this duty as of 2005, Pacific Crane III, 890 F.3d at 1107–
13, and the Board held that it continued through 2013, Ports
America, 366 N.L.R.B. No. 76, at 2–4. Second, Ports America
succeeded to Pacific Crane’s bargaining obligation when it
hired the mechanics. In reaching this conclusion, the Board
summarized the test for successorship as follows:

    An employer is a successor employer obligated to
    recognize and bargain with the union representing the
                                8
    predecessor’s employees when (1) the successor
    acquires, and continues in substantially unchanged
    form, the business of a unionized predecessor (the
    “substantial continuity” requirement); (2) the
    successor hires, as a majority of its workforce at the
    acquired     facility,  union-represented      former
    employees of the predecessor (the “workforce
    majority” requirement); and (3) the unit remains
    appropriate for collective bargaining under the
    successor’s operations.

Id. at 2; see Burns, 406 U.S. at 277–81. ILWU accepts this
formulation of the governing legal test.

     Before the Board, ILWU sought to raise three arguments
why the historic bargaining unit was no longer appropriate
when Ports America hired the mechanics in 2013. First, the
historic bargaining unit had accreted into ILWU’s larger, coast-
wide bargaining unit—in other words, the historic unit had lost
its separate identity and acquired an “overwhelming
community of interest” with the ILWU unit, see Dean Transp.,
Inc. v. NLRB, 551 F.3d 1055, 1067 (D.C. Cir. 2009) (quotation
marks omitted). Second, a majority of mechanics in the
historic unit by then supported ILWU, not the Machinists.
Third, Ports America had at least a good-faith doubt whether a
majority of the unit still supported the Machinists.1

    1
       As of 2005, the recognized bargaining unit encompassed non-
crane mechanics employed by Pacific Marine in Oakland and
Tacoma. See Pacific Crane III, 890 F.3d at 1103–04 & n.2. In this
case, the Board expanded the historic unit to include mechanics at
Oakland berths 25 and 26, which Ports America took over in 2010,
and contracted it to exclude mechanics in Tacoma, who are not
employed by Ports America. See Ports America, 366 N.L.R.B. No.
                                 9
     The Board declined to consider ILWU’s arguments
because they invoked changes that were “a direct result of the
predecessor employers’ unlawful assistance to and recognition
of the ILWU.” 366 N.L.R.B. No. 76, at 3 (emphasis added);
see also id. at 3–4 nn. 9–10. In other words, if the historic
bargaining unit had become inappropriate by the time Ports
America took over, it was only because Pacific Crane had
improperly recognized ILWU, and had failed to recognize the
Machinists, during the eight prior years.

     To justify its ruling, the Board invoked our decision in
Pacific Crane III. But that case does not address whether an
incoming employer may contest successorship obligations by
citing workplace changes caused by unfair labor practices of
the outgoing employer. Pacific Crane III involved no
successorship issue because the parties there had stipulated that
the outgoing Pacific Mutual and the incoming Pacific Crane,
which were affiliated companies, should be treated as a single
employer. See 890 F.3d at 1110. It was thus undisputed that
Pacific Crane, when it took over in 2005, succeeded to the
bargaining obligations of Pacific Mutual. Pacific Crane
separately argued that the historic Machinists unit had accreted
into the larger ILWU unit because of changes that occurred
after 2005. In response, 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.
359 N.L.R.B. at 1211. Likewise, we explained that “the Board
should ignore any impermissible changes made unilaterally by
the employer,” because “to hold otherwise would allow the

76, at 3. ILWU contends that the historic unit was absorbed into its
unit, but does not otherwise challenge the Board’s adjustments to the
historic unit.
                                 10
employer to benefit from its own unlawful conduct.” 890 F.3d
at 1111 (cleaned up).2

     We can 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. Perhaps current employee choices should be
given effect, regardless of whether a former employer
committed unfair labor practices. Or, perhaps the need to
remedy past unfair labor practices is paramount. The Board
simply did not engage these questions. Instead, it relied on
inapposite precedent, as it virtually conceded at oral argument.
Oral Arg. 22:50–56 (“there is no clear case on point”); id.
25:22–24 (“there are no cases governing”). That was arbitrary.
See Exxel/Atmos, 147 F.3d at 976.

     Before this Court, the Board presses an alternative theory
that Ports America could not have claimed any good-faith
doubt that a majority of workers in the unit supported the
Machinists. According to the Board, this is so because Ports
America knew of Pacific Crane’s unremedied unfair labor
practices. See Proxy Commc’ns, 290 N.L.R.B. 540, 542
(1988), enforced, 873 F.2d 552 (2d Cir. 1989); Bay Diner, 279
N.L.R.B. 538, 546 (1986); Silver Spur Casino, 270 N.L.R.B.
1067, 1074 (1984). But neither the ALJ nor the Board
articulated this rationale below, and neither made findings on
whether Ports America knew of Pacific Crane’s unfair labor

    2
        The Board in this case also cited Pacific Telephone &
Telegraph Co., 80 N.L.R.B. 107 (1948), but it too has nothing to do
with successorship. There, the Board held that a union could not
seek a unit determination reflecting assistance that the employer had
unlawfully provided to it. Id. at 111–12. The case involved no
question of when bargaining obligations flow from a predecessor to
a successor.
                               11
practices in sufficient time. ILWU suggests no, because Ports
America had signed its contracts and made its hiring decisions
before the Board decided Pacific Crane I. The Board suggests
yes, because Pacific Crane I was decided before Ports America
took over the maintenance and repair work. Because the Board
did not address these issues below, much less make the findings
necessary to resolve them, we cannot uphold its rejection of the
good-faith defense on this ground. See SEC v. Chenery Corp.,
332 U.S. 194, 196 (1947).

     At oral argument, we asked the Board about another
possible rationale for upholding its order: Even if Ports
America could seek to benefit from the unfair labor practices
of Pacific Crane, ILWU could not seek to benefit from its own
past unfair labor practices. The Board wisely declined to press
that rationale here. In the proceedings below, the Board pegged
ILWU’s liability entirely to the proposition that Ports America
was a Burns successor and had violated its bargaining
obligations as such. See Ports America, 366 N.L.R.B. No. 76,
at 2. Under Chenery, we thus cannot uphold the Board’s order
on the theory that ILWU committed unfair labor practices even
if Ports America did not.

    As this analysis should make clear, our ruling is narrow.
We hold only that the Board did not engage in reasoned
decisionmaking in the order under review. On remand, the
Board remains free to consider the various open issues and
arguments in this case, unencumbered by its invocation of
inapposite precedent.3

    3
        The Board ordered Ports America to bargain with the
Machinists if it resumed operations, and it ordered ILWU to
reimburse fees and dues paid by the mechanics. Ports America, 366
N.L.R.B. No. 76, at 6. Because we have set aside the underlying
                               12
                               III

     ILWU also seeks review of the Board’s order refusing to
set aside the partial settlement among the Machinists, Ports
America, and MTC Holdings. The Machinists contend that we
lack jurisdiction to review that order for two reasons. First,
ILWU lacks Article III standing to challenge a settlement of
claims made against other parties, which in no way impaired
ILWU’s ability to defend the claims made against it. Second,
the intervening distribution of the settlement funds mooted
ILWU’s objections to the settlement. We must consider both
jurisdictional objections before reaching the merits, see Steel
Co. v. Citizens for a Better Env’t, 523 U.S. 83, 101 (1998), but
we may do so in either order, see Ruhrgas AG v. Marathon Oil
Co., 526 U.S. 574, 584 (1999). We begin—and end—with the
question of mootness.

     ILWU does not respond to the Machinists’ contention that
disbursement of the settlement funds mooted ILWU’s
challenge. By this silence, ILWU has forfeited any objection
to mootness. “Although a party cannot forfeit a claim that we
lack jurisdiction, it can forfeit a claim that we possess
jurisdiction.” Scenic Am., Inc. v. DOT, 836 F.3d 42, 53 n.4
(D.C. Cir. 2016). “[T]he ordinary rules of forfeiture apply” to
a claim that we have jurisdiction, Manitoba v. Bernhardt, 923
F.3d 173, 179 (D.C. Cir. 2019), so ILWU’s “failing to respond”
to an argument that we lack jurisdiction forfeited any
counterargument that we have it, Perry Capital LLC v.
Mnuchin, 864 F.3d 591, 618 (D.C. Cir. 2017); see, e.g., Reid v.
Hurwitz, 920 F.3d 828, 833 n.4 (D.C. Cir. 2019). This is
consistent with how ordinary forfeiture rules work in other

liability determinations, we need not consider ILWU’s challenge to
these two remedies. See Erie Brush & Mfg. Corp. v. NLRB, 700 F.3d
17, 19 (D.C. Cir. 2012).
                               13
contexts where one party has raised an argument and the other
has “offered nothing in opposition.” Tax Analysts v. IRS, 117
F.3d 607, 610 (D.C. Cir. 1997); see Clifton Power Corp. v.
FERC, 88 F.3d 1258, 1267 (D.C. Cir. 1996).

    Because ILWU forfeited any argument that this case is not
moot, we dismiss its petition to review the Board’s order
accepting the partial settlement.

                               IV

     We grant the petition for review of the Board’s final order,
set aside that order, deny the Board’s cross-application for
enforcement, and remand for further proceedings consistent
with this opinion. We dismiss as moot the petition for review
of the Board’s order refusing to set aside the partial settlement.

                                                     So ordered.