Teamsters Local Union No. 523 v. National Labor Relations Board

FILED
United States Court of Appeals
Tenth Circuit

December 22, 2009
PUBLISH Elisabeth A. Shumaker
Clerk of Court
UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

TEAMSTERS LOCAL UNION NO.
523, affiliated with the International
Brotherhood of Teamsters,

Petitioner,

v. Nos. 08-9568, 08-9577

NATIONAL LABOR RELATIONS
BOARD,

Respondent,
______________________________

KIRK RAMMAGE,

Intervenor.

PETITION FOR REVIEW AND CROSS-APPLICATION FOR
ENFORCEMENT OF AN ORDER OF THE NATIONAL LABOR
RELATIONS BOARD
(Nos. 17- CA- 23404 & 17- CB- 6146)

Steven R. Hickman, Frasier, Frasier & Hickman, LLP, Tulsa, Oklahoma,
appearing for Petitioner.

David A. Fleischer, Senior Attorney (Robert J. Englehart, Supervisory Attorney,
Ronald Meisburg, General Counsel, John E. Higgins, Jr., Deputy General
Counsel; John H. Ferguson, Associate General Counsel, and Linda Dreeben,
Deputy Associate General Counsel, with him on the brief), National Labor
Relations Board, Washington, D.C., appearing for Respondent.
John C. Scully, National Right to Work Legal Defense Foundation, Inc.,
Springfield, Virginia, appearing for Intervenor.

Before TACHA, HOLLOWAY, and KELLY, Circuit Judges.

TACHA, Circuit Judge.

This appeal arises from an unfair labor practice dispute initiated by Kirk

Rammage against the Teamsters Local Union No. 523 (“the Union”) and Mr.

Rammage’s employer, Interstate Brands (“the Employer”). After a hearing, the

National Labor Relations Board (“NLRB”), acting through its only two members,

determined that both the Employer and the Union committed unfair labor

practices in violation of 29 U.S.C. § 158. The Union brought this appeal 1 and the

NLRB cross-appealed for enforcement of its order. This case poses two

questions: (1) whether the NLRB has statutory authority to act with only two

members, both of whom were part of a three-member group to which the NLRB

delegated all of its authority; and (2) if the NLRB was authorized to act in this

case, whether it erred in concluding that the Union committed an unfair labor

practice when it insisted that Mr. Rammage lose his seniority for route bidding

purposes because of his prior lack of union participation. We have jurisdiction

under 29 U.S.C. § 160(e) and (f) and conclude that the NLRB has the authority to

1
The Employer did not appeal the NLRB’s order.

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act under the present circumstances. Furthermore, we AFFIRM the decision of

the NLRB and enter judgment enforcing its order in full.

I. The NLRB’s Authority to Act with Two Members

A. Standard of Review

Before we can reach the merits of the unfair labor practice dispute, we must

first determine whether 29 U.S.C. § 153(b) authorizes the NLRB to act with only

two members under the present circumstances. We apply the familiar Chevron

rule of deference to an agency’s interpretation of its own statutory authority. See

Mainstream Mktg. Servs., Inc. v. FTC, 358 F.3d 1228, 1250 (10th Cir. 2004)

(“The FTC’s conclusion that [statutory] language authorized it to enact the

national do-not-call registry is entitled to deference under the familiar test

outlined in Chevron.”); see also Miss. Power & Light Co. v. Miss. ex rel. Moore,

487 U.S. 354, 381 (1988) (Scalia, J., concurring) (“[I]t is settled law that the

[Chevron] rule of deference applies even to an agency’s interpretation of its own

statutory authority or jurisdiction.”); CFTC v. Schor, 478 U.S. 833, 844 (1986)

(citing Chevron U.S.A. Inc. v. Natural Resources Def. Council, Inc., 467 U.S. 837

(1984) for the proposition that “considerable weight must be accorded the CFTC’s

position” regarding its statutory authority to decide state law counterclaims in

reparations proceedings). Under Chevron, we begin by examining the statute’s

plain language, giving words their ordinary and natural meaning, to determine if

“Congress has directly spoken to the precise question at issue.” Rosillo-Puga v.

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Holder, 580 F.3d 1147, 1153 (10th Cir. 2009) (quotations omitted). “If

congressional intent is clear from the statutory language, the inquiry is over, and

both the court and the agency must give effect to the unambiguously expressed

intent of Congress.” Id. (quotations and internal citations omitted). If, however,

the statutory language is silent or ambiguous regarding the precise question at

issue, “the question for the court is whether the agency’s answer is based on a

permissible construction of the statute.” Id. (quotations and internal citations

omitted). “A statute is ambiguous when it is capable of being understood by

reasonably well-informed persons in two or more different senses.” McGraw v.

Barnhart, 450 F.3d 493, 498 (10th Cir. 2006).

B. Analysis

The National Labor Relations Act (“NLRA”) provides, in relevant part:

The Board is authorized to delegate to any group of three or more members
any or all of the powers which it may itself exercise . . . . A vacancy in the
Board shall not impair the right of the remaining members to exercise all of
the powers of the Board, and three members of the Board shall, at all times,
constitute a quorum of the Board, except that two members shall constitute
a quorum of any group designated pursuant to the first sentence hereof.

29 U.S.C. § 153(b).

In December 2007, the NLRB was comprised of four members: Liebman,

Schaumber, Kirsanow, and Walsh. On December 28, 2007, in anticipation of the

Board’s potential paralysis because of the approaching expiration of Kirsanow’s

and Walsh’s terms, the four members delegated all of the Board’s authority to

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Liebman, Schaumber, and Kirsanow pursuant to the first sentence of § 153(b).

On December 31, 2007, Kirsanow’s and Walsh’s terms expired. Their departures

left only two members on the Board, Liebman and Schaumber, both of whom

were part of the three-member group to which the Board delegated all of its

authority. The Board has continued to act with only these two members since that

time.

The NLRB’s construction of § 153(b) and its belief that it is authorized to

act under the present circumstances was derived, in part, from a Memorandum

Opinion issued by the Office of Legal Counsel of the U.S. Department of Justice.

In that opinion, the Office of Legal Counsel concluded that “[t]he provision for a

two-member quorum . . . is an express exception to the requirement that a quorum

of the Board shall be three members.” Quorum Requirements, 2003 WL

24166831 (Mar. 4, 2003).

We are mindful that we are now the sixth circuit court to examine the

NLRB’s statutory authority to act with two members under the present

circumstances. 2 The First, Second, Fourth and Seventh Circuits have all upheld

the NLRB’s construction of § 153(b) which authorizes the agency to act with only

two members if both members were part of a three-member group to which the

Board validly delegated all of its authority. See Northeastern Land Servs., Ltd. v.

2
We also recognize that the Supreme Court has granted certiorari on this
precise issue. New Process Steel, L.P. v. NLRB, 564 F.3d 840 (7th Cir. 2009),
cert granted, 130 S. Ct. 488 (2009).

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NLRB, 560 F.3d 36 (1st Cir. 2009); Snell Island SNF LLC v. NLRB, 568 F.3d 410

(2d Cir. 2009); Narricot Indus., L.P. v. NLRB, – F.3d –, 2009 WL 4016113 (4th

Cir. 2009); New Process Steel, L.P. v. NLRB, 564 F.3d 840 (7th Cir. 2009).

Although these courts have not followed identical analytical paths, the First,

Fourth, and Seventh Circuits all based their decisions on the plain language of §

153(b). See Northeastern Land Servs., 560 F.3d at 41 (“The Board’s delegation

of its institutional power . . . was lawful under the plain text of [§ 153(b)].”);

Narricot Indus., 2009 WL 4016113, at *3 (“Under the plain and unambiguous text

of §3(b) . . . the designated three-member group was empowered to act with a

two-member quorum.”); New Process Steel, 564 F.3d at 846 (“The plain meaning

of [§ 153(b)] thus supports the NLRB’s delegation procedure.”).

On the other hand, the District of Columbia Circuit has concluded that the

NLRB does not have the authority to act with only two members under the present

circumstances. Laurel Baye Healthcare of Lake Lanier, Inc. v. NLRB, 564 F.3d

469 (D.C. Cir. 2009). Significantly, the D.C. Circuit also based its decision

primarily on the plain language of § 153(b), focusing on the phrase “at all times”

in the middle of § 153(b)’s three-member quorum provision. See id. at 473 (“The

quorum provision clearly requires that a quorum of the Board is, ‘at all times,’

three members.” (quoting 29 U.S.C. § 153(b)).

We are hard-pressed in the wake of this split of opinion in our respected

sister circuits to find that the statutory language is clear on its face. Indeed, this

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very split “is evidence of [the statute’s] ambiguity.” In re So. Star Foods, Inc.,

144 F.3d 712, 715 (10th Cir. 1998). Accordingly, we proceed to Chevron’s

second step, under which we must uphold the NLRB’s interpretation of § 153(b)

if that interpretation is permissible. Although § 153(b) states that “three members

of the Board shall, at all times, constitute a quorum of the Board,” that clause is

immediately followed in the same sentence by the words, “except that two

members shall constitute a quorum of any group designated pursuant to [§

153(b)’s] first sentence. . . .” § 153(b). We find that the NLRB’s construction of

§ 153(b), which reads the phrase “except that” as modifying the three member

quorum provision, and which is consistent with the First, Fourth, and Seventh

Circuits’ constructions, is permissible. Therefore, we uphold the NLRB’s

authority, under § 153(b), to act with only two members, both of whom were part

of a three-member group to which the Board validly delegated all of its authority.

II. The Unfair Labor Practice Dispute

A. Factual Background

Having determined that the NLRB has the authority to act with only two

members under the present circumstances, we now turn to the merits of the unfair

labor practice dispute. The Employer makes and distributes bakery products

under several brand names including Dolly Madison, Hostess, and Wonder Bread.

Historically, the Employer distributed its Dolly Madison products separately from

its Hostess and Wonder Bread products. This meant that some sales

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representatives exclusively sold and delivered Dolly Madison products while

other sales representatives sold and delivered only Hostess and Wonder Bread

products. This bifurcated distribution system also produced bifurcated union

representation, with the Union representing both the Dolly Madison sales

representatives and the Hostess/Wonder Bread representatives in separate

bargaining units under separate collective bargaining agreements.

In late 2005, the Employer consolidated its distribution systems so that all

of its sales representatives would sell and deliver products under all of its brand

names. Pursuant to this consolidation plan, the Employer and the Union agreed

that the separate bargaining units would also be consolidated so that the Union

could represent all the Employer’s sales representatives as one unit under one

agreement. The Employer and the Union further agreed that: (1) the

Hostess/Wonder Bread contract would govern the future relationship between the

Union and the Employer; (2) the Dolly Madison contract would be allowed to

expire; (3) all employees covered by the Dolly Madison contract would be

dovetailed according to unit seniority with the employees covered by the

Hostess/Wonder Bread contract; and (4) the Employer would eliminate one of its

delivery routes in Ponca City, Oklahoma.

Mr. Rammage had been a Dolly Madison sales representative in Ponca City

for fifteen years prior to the Employer’s consolidation of its distribution

operations. He had never been represented by the Union, however, and he was

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not included in either the Dolly Madison or Hostess/Wonder Bread bargaining

units. When the Employer informed the Union of Mr. Rammage’s employment

and that he was not associated with either bargaining unit, both the Employer and

the Union agreed that he should become part of the consolidated unit under the

Hostess/Wonder Bread agreement.

Apparently, however, they disagreed about Mr. Rammage’s seniority. Mr.

Rammage had worked for the Employer longer than any other sales representative

in Ponca City, and the Employer considered him to be its best Ponca City

employee. Therefore, the Employer sought to dovetail Mr. Rammage in the

consolidated unit according to his years of employment rather than his years of

participation in the Union. The Union countered that it would breach its duty of

fair representation to the employees who were already in one of its two separate

bargaining units if it agreed to give Mr. Rammage the seniority the Employer

sought for him. Accordingly, the Union insisted that Mr. Rammage be endtailed

at the bottom of the consolidated bargaining unit’s seniority roster. Ultimately,

the Employer acquiesced to the Union’s position and endtailed Mr. Rammage.

Because Mr. Rammage’s endtailing made him the Employer’s least senior

employee for route bidding purposes, when the Employer eliminated one of its

Ponca City routes some time after its negotiations with the Union, the sales

representative who had worked that route was given the option to “bump” Mr.

Rammage, or in other words, take over his route. When that sales representative

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exercised his option, Mr. Rammage’s superior, Rodney Roberts, informed him

that he would lose his regular route. In a letter requested by Mr. Rammage, Mr.

Roberts attributed Mr. Rammage’s demotion to a Union/Employer agreement to

use “Union Seniority for Route Bidding.” Mr. Roberts also stated orally that Mr.

Rammage had been demoted because he “was not in the union.” Ultimately, the

Employer offered Mr. Rammage a position in its Bartlesville, Oklahoma terminal.

Additionally, one of Mr. Rammage’s superiors, Kirk Summers, repeatedly warned

him that he “would have to join the union.” Mr. Summers also stated that Mr.

Rammage was transferred “because he was not in the union.” Mr. Rammage

eventually accepted the Bartlesville position which requires him to make a daily

commute of more than seventy miles in each direction.

B. Analysis

We apply a deferential standard of review to NLRB orders. NLRB v.

Velocity Exp., Inc., 434 F.3d 1198, 1201 (10th Cir. 2006). Under this standard,

we will enforce NLRB orders if the agency’s legal conclusions are reasonable and

its factual findings are supported by substantial evidence in the administrative

record. Id.

The NLRA generally recognizes an employee’s right to freely participate or

not participate in union or labor organization activities. 29 U.S.C. § 157. To

provide meaningful protection of this right, the NLRA prohibits unions from

“caus[ing] or attempt[ing] to cause an employer to discriminate against an

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employee” in regard to any term of employment in a way that would encourage or

discourage union membership or participation. Id. § 158(b)(2). Indeed, the

Supreme Court has determined that “[t]he policy of the [NLRA] is to insulate

employees’ jobs from their organizational rights” so that employees may “freely

exercise their right to join unions, be good, bad, or indifferent members, or

abstain from joining any union without imperiling their livelihood.” Radio

Officers’ Union v. NLRB, 347 U.S. 17, 40 (1954). Moreover, “a loss of seniority

requested by a union and enforced by an employer” may constitute

“discrimination to encourage union membership.” NLRB v. Am. Can Co., 658

F.2d 746, 754 (10th Cir. 1981).

In this case, the NLRB concluded that “in the context of a unit merger, a

union and an employer are not lawfully permitted to dovetail the seniority of

represented employees while endtailing previously unrepresented employees.”

This conclusion reflects a reasonable application of the NLRA and the legal

principles articulated above. Indeed, the Union’s insistence on Mr. Rammage’s

endtailing coupled with the Employer’s acquiescence and its statements that Mr.

Rammage was demoted because he was not in the Union reasonably suggest that

the Union caused the Employer to discriminate against Mr. Rammage in a way

that encourages Union participation.

Furthermore, the NLRB reasonably rejected the Union’s defense that it was

bound by its duty of fair representation to insist on Mr. Rammage’s endtailing.

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As the NLRB pointed out, the Union clearly eschewed any duty to the

Hostess/Wonder Bread unit when it agreed to dovetail the seniority of the Dolly

Madison employees. Indeed, the integrity of the Hostess/Wonder Bread unit’s

seniority roster was no less compromised by dovetailing only the Dolly Madison

employees than it would have been if Mr. Rammage were also dovetailed. In

fact, in relation to the Hostess/Wonder Bread employees, the only discernable

difference between the dovetailed Dolly Madison employees and the endtailed

Mr. Rammage was that Mr. Rammage had not previously been represented by the

Union. Accordingly, we find that the NLRB reasonably concluded that the

Union’s insistence on Mr. Rammage’s endtailing and loss of seniority for route

bidding purposes caused the Employer to discriminate against Mr. Rammage in a

way that encouraged his union participation in violation of 29 U.S.C. § 158(b)(2).

III. CONCLUSION

It is permissible to conclude that 29 U.S.C. §153(b) authorizes the NLRB to

act through only two members under the present circumstances. Furthermore, the

NLRB’s decision in this case reflects a reasonable application of the law.

Accordingly, we uphold the NLRB’s authority to act in this case, AFFIRM its

decision, and enter judgment enforcing its order in full.

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