Court Opinion

ID: 9486126
Source: CourtListenerOpinion
Date Created: 2023-08-05 11:38:23.104824+00
Date Added: 2024-06-11T17:51:32.177872
License: Public Domain

RYMER, Circuit Judge,
concurring in part and dissenting in part:
I agree with my colleagues that there is substantial evidence in the record to support the National Labor Relations Board’s conclusion that Cascade General’s recognition of Local 1-369 of the Oil, Chemical & Atomic Workers (OCAW) violated the National Labor Relations Act. Therefore, I join Parts I and II of the majority opinion. However, because I believe that the dues reimbursement remedy imposed by the NLRB is a punitive measure that is beyond the Board’s remedial powers, I dissent.
I
The petitioner, Cascade General, is in the business of ship repair. Because this business depends on relatively short-term contracts for work on individual ships, employment levels in the industry fluctuate frequently. During the year prior to September 1, 1987, Cascade’s payroll ranged from a low of three employees in September 1986 to a high of 118 employees in May 1987.
Before September 1, 1987, Cascade was a division of a Washington clothing store and was located in Vancouver, Washington, across the Columbia river from Portland, Oregon. Cascade did a substantial amount of work at the Port of Portland facility on *738Swan Island. In mid-1987, a much larger competitor of Cascade located on Swan Island, Dillingham Ship Repair (DSR), went out of business. DSR’s work force had fluctuated like that of Cascade, with an average of about 600 employees. During the last months of DSR’s existence, it was involved in a dispute over the renewal of a labor contract with the Pacific Coast Metal Trades District Council (MTC), the union which represented its employees. The inability of DSR to resolve this dispute apparently contributed to its decision to cease operations.
The assets and inventory of DSR were put on sale, and in July 1987 Cascade learned that it had submitted the winning bid of $1.6 million. Cascade with some difficulties obtained financing for the purchase and negotiated a lease from the Port of Portland of most of DSR’s former facilities on Swan Island. During the summer of 1987, Cascade hired several DSR management personnel, including Loy Kahler, who became president of Cascade in May 1988. On September 1, 1987, Cascade formally moved its operations to Swan Island in Portland and incorporated in Oregon.
After learning of its successful bid for the assets of DSR, Cascade applied on July 31, 1987 to be on the list of ship repair bidders of the Pacific Military Sealift Command of the United States Navy. Cascade’s business increased substantially in size after the move to Swan Island on September 1, 1987. Cascade had its highest employment total ever of 193 employees during the week of September 6, 1987. Employment dropped to 63 by the end of September but increased to 285 by late October and 471 by the end of 1987. Kahler testified at the hearing in the present case that Cascade projected hiring 600 to 800 employees after purchasing the assets of DSR and that if Cascade’s employment levels had not increased substantially, it would have had to liquidate the DSR assets.
Meanwhile, during the summer of 1987, Michael Fahey, executive secretary-treasurer of MTC, had several contacts with Cascade. In late June, Fahey met with Stephen Anderson, president of Cascade, and another Cascade official, William Lundmark. Anderson asked Fahey to provide a letter stating that MTC and Cascade had met, because such a letter would aid Cascade in obtaining work. On July 9, Fahey sent a letter to Anderson which stated that MTC would “continue to meet with Cascade General to pursue a mutual acceptable labor agreement between both parties.” Fahey subsequently continued to maintain contact with Anderson.
On July 27, 1987, James Watts, president of the OCAW local, conducted a meeting with Cascade employees. At the end of the meeting, all ten employees present signed authorization cards selecting OCAW as their collective bargaining representative. On July 31, 1987, after a retired NLRB official conducted a card check and certified that the authorization cards represented a majority of Cascade’s employees, Cascade recognized OCAW as the collective bargaining representative for its employees. There were sixteen employees on the Cascade payroll at the time the authorization cards were signed and eleven names were listed by management as “regular employees” at the time of the card check.
Cascade and OCAW reached a collective bargaining agreement which was unanimously ratified at a meeting of employees on September 24, 1987. The agreement contained a union security clause with a checkoff provision, pursuant to which Cascade automatically deducted OCAW dues and initiation fees from employee paychecks and forwarded the funds to OCAW.
Anderson informed Fahey in late July 1987 that Cascade could no longer legally continue discussions with MTC. On August 28, 1987, Boilermakers Local 72 in Portland filed a representation petition with the NLRB to counter the recognition of OCAW. MTC filed a similar petition on September 1, 1987. On September 9, 1987, MTC initiated the instant litigation by filing a charge of unfair labor practices with the NLRB. The NLRB has pursued this litigation only against Cascade, and not against OCAW. Action on the two representation petitions has been delayed pending the resolution of the present case.
*739Since MTC and OCAW are both affiliated with the AFL-CIO, MTC also initiated proceedings under Article XX of the AFL-CIO Constitution. On April 28, 1988, the president of the AFL-CIO advised OCAW that its ■ representation of the Cascade employees violated the AFL-CIO Constitution. After some efforts by OCAW to overturn this determination, OCAW on February 14, 1990 informed Cascade of its intention to cease acting as the bargaining representative of Cascade’s employees.
II
Cascade argues that it should not be required to reimburse OCAW dues and initiation fees to its employees because these dues were passed through to OCAW. Cascade points out that MTC could have filed an unfair labor practices charge against OCAW, but chose not to do so.
The authority of the NLRB to impose a dues reimbursement remedy was recognized by the Supreme Court in Virginia Electric & Power Co. v. N.L.R.B., 319 U.S. 533, 63 S.Ct. 1214, 87 L.Ed. 1568 (1943). We set out a standard for imposing such a remedy in Industrial, Technical & Professional Employees Div., Nat’l Maritime Union v. N.L.R.B. [National Maritime Union], 683 F.2d 305 (9th Cir.1982):
The Board has broad discretion in fashioning remedies to effectuate the policies of the Act in light of the circumstances of each case. This discretionary power is subject only to limited judicial review. This court will overturn the Board’s choice of a dues reimbursement remedy only where the reimbursement is shown to be punitive rather than compensatory or where the Board orders reimbursement absent a showing that employees were coerced in their choice of a bargaining representative.
Id. at 308 (citations omitted); see also Morrison-Knudsen Co. v. N.L.R.B., 276 F.2d 63, 73-76 (9th Cir.1960), cert. denied, 366 U.S. 910, 81 S.Ct. 1082, 6 L.Ed.2d 233 (1961).
A
A dues reimbursement remedy must be overturned under National Maritime Union if the remedy “is shown to be punitive rather than compensatory.” 683 F.2d at 308. Courts have denied dues reimbursement where it will result in a windfall for employees and an unfair penalty for an employer which has passed the dues on to a union.
In Kinney Nat’l Maintenance Serv. v. N.L.R.B., 81 L.R.R.M. 2733, 1972 WL 3066 (9th Cir.1972), we rejected “reimbursement by the company of the past checkoffs of dues for the reason that we do not believe the purposes of the act would be served by compelling the company to, in effect, pay dues twice.” 81 L.R.R.M. at 2733. The Third Circuit stated in N.L.R.B. v. Mears, 437 F.2d 502 (3d Cir.1970) that where
the general counsel [of the N.L.R.B.] has chosen not to make the [union] a respondent, ... the effect of enforcement of the reimbursement order will be to require a second payment by the employer-respondent! ] while the beneficiary of ... assistance gets a windfall.
Id. at 513; see also Hughes & Hatcher, Inc. v. N.L.R.B., 393 F.2d 557, 568 (6th Cir.1968) (“If [the employer] has paid the moneys to [the union], then the Board’s order should be directed against that union and not against [the employer].”).
Similarly, in the present case the remedy directed solely against Cascade is punitive. First, Cascade paid the dues which it collected to OCAW. As in Kinney and Mears, the NLRB would require Cascade to reimburse funds which it did not retain. The NLRB argues that Kinney, Mears, and Hughes & Hatcher are distinguishable on the ground that the NLRB had no authority to file a complaint against OCAW under § 10(b) of the NLRA, 29 U.S.C. § 160(b), because no unfair labor practices charge was ever filed against OCAW- See Radio Officers’ Union v. N.L.R.B., 347 U.S. 17, 53, 74 S.Ct. 323, 342, 98 L.Ed. 455 (1954). However, contrary to the NLRB’s argument, this distinguishing factor provides an additional basis for denying dues reimbursement in this case. The fact that it was MTC, rather than the NLRB, which chose not to pursue the present litiga*740tion against OCAW1 makes it doubly unfair for the employees on whose behalf MTC was acting to recover dues which had been paid to OCAW.
Second, there is no evidence that Cascade employees received ineffective representation from OCAW and were thus unfairly deprived of their dues. This case is unlike Virginia Electric, where the union in question was “an illegal organization which foreclosed [employees’] rights to freedom of organization and collective bargaining.” 319 U.S. at 540, 63 S.Ct. at 1218-19. Cascade employees unanimously approved the collective bargaining agreement negotiated by OCAW.
Finally, there is no evidence in the record of knowingly culpable conduct by Cascade in the recognition of OCAW. The demand for recognition of OCAW was initiated not by Cascade but by Watts, the president of the OCAW local. Although Cascade had been dealing with Fahey, the executive secretary-treasurer of MTC, at the time of the OCAW recognition and was thus aware of MTC’s interest in organizing at Cascade, there is no evidence that Cascade did anything to impede recognition of MTC. The ALJ found that Stephen Anderson, the president of Cascade, “executed a recognition statement to OCAW without having any particular reason to do so.” However, this evidence shows at most that Cascade preferred OCAW as a bargaining representative to MTC, which is certainly not illegal. Moreover, although Cascade had plans of expansion, it was engaged in substantially normal operations and its job classifications were substantially filled when it recognized OCAW, making it a close call whether Cascade’s actions were illegal at all. See Premium Foods, Inc. v. N.L.R.B., 709 F.2d 623, 628 (9th Cir.1983).
A lack of culpable conduct by Cascade is entirely consistent with our decision today that Cascade engaged in an unfair labor practice. Recognition of a non-majority union, including premature recognition in a growing bargaining unit, is illegal “even though done in the good-faith belief that the union had the consent of a majority of employees....” International Ladies’ Garment Workers’ Union v. N.L.R.B., 366 U.S. 731, 732, 81 S.Ct. 1603, 1604, 6 L.Ed.2d 762 (1961). Under the present circumstances, the NLRB’s remedial order does not right any wrong or compensate any loss, but merely punishes Cascade for its mistakenly improper conduct.
B
The decisions on which the majority relies, N.L.R.B. v. Forest City/Dillon-Tecon Pacific, 522 F.2d 1107 (9th Cir.1975) and Fraser & Johnston Co. v. N.L.R.B., 469 F.2d 1259 (9th Cir.1972), are not persuasive that dues reimbursement is permitted merely because there is a union security clause. . The majority is correct that a union security clause may constitute the coercion which is required for dues reimbursement. See Forest City, 522 F.2d at 1109; Sheraton-Kauai Corp. v. N.L.R.B., 429 F.2d 1352, 1357 (9th Cir.1970); N.L.R.B. v. Jan Power, Inc., 421 F.2d 1058, 1063-64 (9th Cir.1970). However, our decision in National Maritime Union specifies both coercion by the employer and a remedial purpose on behalf of the .NLRB as prerequisites for dues reimbursement. 683 F.2d at 308.
In Intalco Aluminum Corp. v. N.L.R.B., 417 F.2d 36 (9th Cir.1969), we rejected an order of dues reimbursement where “there [was] no suggestion of company domination of the union or evidence of any act of coercion of the employees, except through the contract provisions for dues check-off.” Id. at 42. Subsequently, in Kinney, we again rejected a dues reimbursement remedy imposed in a case involving a contract with a check-off provision. 81 L.R.R.M. at 2733. In the present case, the NLRB’s dues reimbursement order is likewise improper because it is punitive in nature.
In both of the decisions cited by the majority, there was a basis for finding a remedial purpose for the Board’s dues reimbursement order. The parties in Forest City did not contest that the employer’s conduct violated *741the NLRA. 522 F.2d at 1108.2 The present ease is a much closer call, and the record fails to disclose any knowingly culpable conduct by Cascade. In Fraser & Johnston, the employer failed to bargain in good faith. 469 F.2d at 1262-63. There is no evidence of such knowingly improper conduct in the present case.
Ill
I am mindful of the broad remedial powers of the NLRB. The Supreme Court has interpreted the NLRA “as vesting in the Board the primary responsibility and broad discretion to devise remedies that effectuate the policy of the Act, subject only to limited judicial review.” Sure-Tan, Inc. v. N.L.R.B., 467 U.S. 883, 898-99, 104 S.Ct. 2803, 2812-13, 81 L.Ed.2d 732 (1984). However, in 'Premium Foods we explicitly held that the NLRB exceeds its broad remedial powers when it chooses a dues reimbursement remedy that is punitive rather than compensatory. Therefore, I respectfully dissent.

. MTC did proceed against OCAW under the AFL-CIO Constitution. This separate proceeding suggests that MTC’s decision not to file tin NLRB charge against OCAW was not unintentional.

. The employer contended only that it fell within an exception to the NLRA. Forest City, 522 F.2d at 1108. The court rejected that contention. Id. at 1109.