United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued March 19, 2018 Decided May 29, 2018
No. 15-1336
INTERNATIONAL LONGSHORE & WAREHOUSE UNION,
PETITIONER
v.
NATIONAL LABOR RELATIONS BOARD,
RESPONDENT
INTERNATIONAL ASSOCIATION OF MACHINISTS AND
AEROSPACE WORKERS, AFL-CIO; DISTRICT LODGE 190;
LOCAL LODGE 1546; DISTRICT LODGE 160, ET AL.,
INTERVENORS
Consolidated with 16-1123
On Petition for Review and Cross-Application
for Enforcement of an Order of
the National Labor Relations Board
Robert S. Remar argued the cause for the Petitioner.
Eleanor Morton and Emily M. Maglio were with him on brief.
2
Amy H. Ginn, Attorney, National Labor Relations Board,
argued the cause for the Respondent. Richard F. Griffin, Jr.,
General Counsel at the time the brief was filed, John H.
Ferguson, Associate General Counsel, Linda Dreeben, Deputy
Associate General Counsel, and Usha Dheenan, Supervisory
Attorney, were with her on the brief.
David A. Rosenfeld was on the brief for Intervenors
International Association of Machinists and Aerospace
Workers, et al., in support of the Respondent and Cross-
Petitioner.
Before: HENDERSON, KAVANAUGH and KATSAS, Circuit
Judges.
Opinion for the Court filed by Circuit Judge HENDERSON.
KAREN LECRAFT HENDERSON, Circuit Judge: The post-
World War II growth in international maritime shipping has
spawned a history of labor disputes along the West Coast of the
United States between the Petitioner, the International
Longshore and Warehouse Union (ILWU), and the Intervenor,
the International Association of Machinists and Aerospace
Workers, AFL-CIO (IAM). The battles between the two
unions have played out in federal court, see Int’l Ass’n of
Machinists & Aerospace Workers v. NLRB, 253 F. App’x 625
(9th Cir. 2007), and before the National Labor Relations Board
(NLRB or Board), see Pac. Mar. Ass’n, 256 NLRB 769, 772
(1981). This case adds a chapter to the unions’ protracted
disputes.
3
In 2002, the Pacific Crane Maintenance Company
(PCMC) began using a subsidiary,1 the Pacific Marine
Maintenance Company (PMMC) (together, Employer or
PCMC/PMMC), to provide loading and unloading services to
Maersk, a large shipping company, at three West Coast ports:
Oakland and Long Beach, California and Tacoma,
Washington. PCMC created PMMC to perform the Maersk
contract because Maersk had purchased the terminal operations
from a company named Sealand, which, as a condition of sale,
required Maersk to recognize IAM as the union representative
for the employees performing maintenance and repair (M&R)
work at the three ports. Because PCMC was already bound by
a collective bargaining agreement (CBA) with ILWU, it could
not recognize IAM itself. Thus, from 2002 to 2006, PCMC
continued to recognize ILWU while its subsidiary, PMMC,
recognized IAM as the representative of the M&R employees
at the Oakland and Tacoma ports.2
In late 2004, in an effort to drive down costs, Maersk
requested bids from both PCMC and PMMC for M&R work at
the Oakland and Tacoma ports. PCMC responded with the
lower bid and Maersk accepted it. As a result of losing the
Oakland and Tacoma M&R work, on March 30, 2005, PMMC
terminated its 100 M&R employees and shut down its
operations completely. The next day, PCMC hired 76 of the
former PMMC mechanics to do the same M&R work and hired
1
PCMC joined with another company, Marine Terminals
Corporation, to create PMMC. As discussed infra, the parties have
stipulated that PCMC and PMMC are a “single employer” and,
accordingly, Marine Terminals Corporation has no relevance to the
case.
2
For reasons discussed infra, the Long Beach terminal is no
longer at issue.
4
six additional former PMMC mechanics shortly thereafter. As
a result of the change, however, PCMC ceased recognizing
IAM and began recognizing ILWU as the former PMMC M&R
employees’ union. IAM responded with claims of unfair labor
practices and the NLRB General Counsel brought charges
against ILWU, PMMC and PCMC under the National Labor
Relations Act, 29 U.S.C. §§ 151-169 (NLRA or Act). With a
few exceptions no longer at issue, the administrative law judge
(ALJ) recommended dismissing the charges. The Board
disagreed, concluding that the Employer was obligated to
bargain with IAM over the termination of PMMC’s unit
employees and that the Employer’s recognition of ILWU was
unlawful. Ultimately, PCMC and PMMC settled the claims,
leaving ILWU as the sole Petitioner.
ILWU raises three challenges to the Board’s Decision and
Order. First, it contends that the Board erred in concluding that
the Employer was obligated to bargain with IAM over its
decision to shut down PMMC and terminate its workforce.
Second, it argues that the Board improperly excluded evidence
that the M&R employees merged by accretion into the ILWU
West Coast-wide employee bargaining unit. Third, it disputes
the propriety of the Board remedy. For the following reasons,
we deny ILWU’s petition and grant the Board’s cross-
application for enforcement.
I. BACKGROUND
Maersk, and companies like it, transport goods around the
world in large container ships packed with 20-foot metal
containers. At port terminals, the shipping containers are
unloaded by cranes and transported to off-site locations where
they are “stripped” and distributed to their final destinations.
The inverse process includes “stuffing” containers off-site and
eventually loading them onto the cargo ships for export at the
5
terminals. See Joint Appendix (JA) 693, 1218-19. The
machinery and the containers used in this process periodically
need maintenance and repair. Port-terminal contract repair
companies, like the Employer, employ M&R mechanics to
ensure the process runs smoothly.
The Board has previously chronicled the history of ILWU
and IAM. See, e.g., Shipowners’ Ass’n of the Pac. Coast, 7
NLRB 1002 (1938); Pac. Mar. Ass’n, 256 NLRB 769, 772
(1981). We note, however, that the two unions have different
organizational models. In the port-terminal context, IAM
represents only M&R mechanics and it usually does so on a
local level, dividing its bargaining units either by terminal or
by company. This was the case from the 1960s to the early
2000s, when IAM operated as the exclusive union
representative for the single-employer, multi-terminal
bargaining unit of M&R mechanics at Long Beach, Oakland
and Tacoma.
ILWU is more inclusive. Its bargaining unit is composed
of a West Coast-wide group of longshoremen, stevedores,
marine clerks, planners and longshore mechanics. A single
CBA, the Pacific Coast Longshore and Clerks Agreement
(PCL&CA),3 binds ILWU, on one side, and the Pacific
Maritime Association (PMA), a collection of approximately 70
maritime employers along the Pacific Coast (including
PCMC), on the other. Pursuant to the PCL&CA, ILWU and
3
The PCL&CA CBA comprises multiple documents, including
(1) the Pacific Coast Clerks Contract Document (PCCCD), which
governs marine clerks and planners; (2) the Pacific Coast Longshore
Contract Document (PCLCD), which governs longshore workers,
including stevedores and longshore mechanics; and (3) the Safety
Code Contract. JA 479-82; 610-16. We refer to the documents
together as the PCL&CA.
6
PMA have established an employment dispatch system that is
in effect along the Pacific Coast. The system operates through
a series of “halls” that match employees to employers on a
flexible basis so that labor can flow to the terminals that need
it most. The Employer describes this system as its “lean
staffing model.” JA 412.
This chapter of the unions’ story began in 1999, when
Maersk purchased the Oakland, Tacoma and Long Beach port
operations4 from Sealand. As a condition of the sale, Sealand
required Maersk to recognize IAM as the M&R mechanics’
union in all three locations.
At that time, PCMC was performing M&R work for
Maersk in Los Angeles and it was interested in expanding its
work to the three newly acquired Maersk terminals.5 Because
PCMC was bound by the PCL&CA to recognize ILWU,
however, Sealand’s IAM-recognition requirement prevented
PCMC from performing the work. In order to get around this
obstacle, PCMC created PMMC. PMMC then bid on, and won,
the Maersk contract. Thereafter, PMMC recognized IAM and
4
Maersk leased terminals from the ports. For example, Maersk
leased berths 20-24 at the Port of Oakland and contracted with
PMMC to do its M&R work at those berths. See Ports Am. Outer
Harbor, LLC, 366 NLRB No. 76, 2018 WL 2086090 (May 2, 2018)
(deciding PCMC/PMMC successorship issues).
5
PMMC’s Oakland and Tacoma terminals served a second
shipping company, Horizon Lines, which accounted for a small
portion of PMMC’s work. Horizon received the same services as
Maersk through a contractual “me-too” relationship tied to Maersk’s
contract with PMMC. Maersk was the primary shipping company,
however, and Horizon Lines had no role in the contract negotiations
described herein.
7
began performing the M&R work at the former Sealand
terminals.
On March 31, 2002, the IAM-Sealand (now IAM-PMMC)
CBA was set to expire. Around the same time, Maersk
consolidated its Southern California operations by merging its
M&R workforce into a single terminal (Pier 400) in the Port of
Los Angeles. As a result of the consolidation, Maersk no
longer needed PMMC’s services at the Long Beach terminal
and instead contracted with PCMC to do its M&R work at the
new consolidated Los Angeles terminal. As for the Oakland
and Tacoma terminals, PMMC and IAM agreed to a CBA
extension from April 1, 2002 to March 31, 2005 but did so only
after more than a dozen bargaining sessions and a strike vote
of unit employees.
In late 2004, with the March 31, 2005 CBA expiration date
looming, Maersk solicited bids from both PCMC and PMMC
for work at the Oakland and Tacoma terminals. PCMC
submitted a bid of $64.46 per hour and PMMC submitted a bid
of $72.88 per hour. At the ALJ hearing, PCMC and PMMC
representatives explained the difference in price. PCMC
representative Joseph Gregorio testified that the discussion
regarding the different bid prices “always was focused upon the
concept that there was differences [sic] in labor costs,”
including “benefits and pensions.” JA 92. Similarly, PMMC
informed Maersk that its higher bid resulted from a “collection
of [employee] benefits.” JA 172.
Maersk selected PCMC to do the work. Accordingly, on
January 25, 2005, Maersk terminated its maintenance contract
with PMMC, effective March 31, 2005. On January 26,
8
PMMC notified IAM, informing it and its unit employees6 that
PMMC intended to terminate its operations on April 1. PMMC
also explained how the unit employees could apply for
employment with PCMC to continue working the same jobs.
In early February, IAM requested that PMMC bargain over its
decision to terminate work at the Oakland and Tacoma
terminals. PMMC agreed to bargain over the effects of the
terminations but asserted that it was Maersk’s decision—not
PMMC’s—to use PCMC to perform the M&R work. Thus,
PMMC refused to bargain about its decision to shut down
operations.
Effective April 1, 2005, PMMC permanently “laid off” all
of its M&R mechanics. JA 899-900 (Letter from Terry
Murphy, PMMC Vice President, to IAM representatives). On
March 31, PCMC hired 76 of the PMMC unit mechanics,
requiring them to accept ILWU as their bargaining
representative.7 PCMC hired six more former PMMC
mechanics shortly thereafter. For the most part, the mechanics
continued to perform the same work at the same locations with
the same tools and equipment. One difference was that PCMC
began to transfer mechanics temporarily between the former-
6
Although the January 26 letter was addressed to IAM
representatives, it was also “[p]osted and distributed to employees
covered by the 2002-2005 IAM/PMMC contract.” JA 900.
7
When PCMC extended employment offers to former PMMC
mechanics, it made clear that “[a]ll of our operations are covered by
our coast-wide contract with [ILWU].” JA 908. Specifically, the
PCL&CA contained a “union security” clause providing that “[a]ny
employee who becomes fully registered during the life of the
Agreement shall . . . become and remain a member of the [ILWU] in
good standing as a condition of employment.” JA 665. Thus, ILWU
membership was an explicit requirement of PCMC employment.
9
PMMC terminals of Oakland and Tacoma and other nearby
terminals in accordance with the PCL&CA hiring halls and its
“lean staffing model.”
In early 2005, IAM pressed unfair labor practice (ULP)
charges against PMMC and PCMC as “a single employer” and
alternatively as “alter egos” under sections 8(a)(1), (2), (3), and
(5) of the NLRA8; it subsequently filed ULP charges against
ILWU under sections 8(b)(1)(A)9 and (2).10 In 2007, the
8
Section 8(a) provides:
It shall be an unfair labor practice for an
employer . . . (1) to interfere with, restrain, or coerce
employees in the exercise of the rights guaranteed in
section 157 . . . (2) to dominate or interfere with the
formation or administration of any labor
organization or contribute financial or other support
to it . . . (3) by discrimination in regard to hire or
tenure of employment or any term or condition of
employment to encourage or discourage
membership in any labor organization . . . (5) to
refuse to bargain collectively with the
representatives of his employees . . . .
29 U.S.C. § 158(a).
9
Section 8(b)(1)(A) provides, in relevant part, that it “shall be
an unfair labor practice” for a union to “restrain or coerce . . .
employees in the exercise of the rights guaranteed in section 157,”
29 U.S.C. § 158(b)(1)(A), including, inter alia, the right to “self-
organization” and the right to “bargain collectively through
representatives of their own choosing,” id. § 157.
10
Section 8(b)(2) provides: “It shall be an unfair labor practice
for a labor organization or its agents . . . to cause or attempt to cause
an employer to discriminate against an employee in violation of
subsection (a)(3) or to discriminate against an employee with respect
10
NLRB General Counsel filed a complaint alleging similar
ULPs and moved to consolidate its charges with those filed by
IAM. An ALJ granted the General Counsel’s motion and heard
the consolidated case in a 41-day hearing between September
13, 2007 and June 20, 2008. During the hearing, the parties
narrowed the issues. First, PCMC and PMMC stipulated that
they were a single employer. JA 608. The General Counsel
disavowed any “successor” or “alter ego” theories of liability
and agreed that the Employer had properly engaged in “effects
bargaining.” On February 12, 2009, the ALJ issued his
opinion, recommending dismissal of all charges against ILWU
and dismissal of all but one11 charge against the Employer.
The Board rejected the ALJ’s dismissal recommendations.
It concluded that the Employer had violated sections 8(a)(5)
and (2) of the NLRA, based largely on “the parties’ stipulation
that PMMC and PCMC were at all times material a single
employer.” Pac. Crane Maint. Co., Inc. &/or Pac. Marine
Maint. Co., LLC, 359 NLRB 1206, 1207 (2013)
(PCMC/PMMC I). The Board also held that ILWU violated
sections 8(b)(1)(A) and (2) of the NLRA by accepting
assistance and recognition from the Employer as the exclusive
collective bargaining representative of the unit employees at a
time when ILWU did not represent an uncoerced majority of
unit employees. Id. at 1213.
to whom membership in such organization has been denied or
terminated . . . .” 29 U.S.C. § 158(b)(2).
11
The ALJ found that the Employer violated sections 8(a)(1)
and (5) of the NLRA by removing IAM material posted on a bulletin
board at the Maersk terminal before March 31, 2005. That finding
is not challenged here.
11
The Employer and ILWU originally sought review in the
United States Court of Appeals for the Ninth Circuit. Pac.
Crane Maint. Co. v. NLRB, No. 13-72463 (9th Cir. July 12,
2013). While that appeal was pending, the United States
Supreme Court decided NLRB v. Noel Canning, 134 S. Ct.
2550 (2014), which led to the vacatur and remand of the
original Board decision. On June 17, 2015, the Board reviewed
the ALJ’s opinion de novo and issued the Order sub judice in
which it reached the same conclusions it had reached in its 2013
decision. Pac. Crane Maint. Co., Inc. &/or Pac. Marine Maint.
Co., LLC, 362 NLRB No. 120, 2015 WL 3791632 (June 17,
2015) (PCMC/PMMC II). The Board Order requires ILWU,
inter alia: (1) to cease and desist from the unfair labor practices
found and from interfering with or coercing employees in the
exercise of rights under section 7 of the Act; (2) to decline
recognition as the exclusive bargaining representative unless
and until it is certified by the Board; and (3) along with the
Employer, to reimburse unit employees for all initiation fees,
dues and other moneys paid to ILWU or withheld from their
wages by the Employer. Id. at *8-9. PCMC/PMMC
subsequently settled the claims against it for approximately
$130,000 per employee. ILWU petitions this Court for review
and the Board cross-applies for enforcement of its Order.
II. EMPLOYER’S DUTY TO BARGAIN
“We will uphold a decision of the Board unless it relied
upon findings that are not supported by substantial evidence,
failed to apply the proper legal standard, or departed from its
precedent without providing a reasoned justification for doing
so.” E.I. Du Pont De Nemours & Co. v. NLRB, 682 F.3d 65,
67 (D.C. Cir. 2012). The Board’s findings of fact are
“conclusive” if supported by substantial evidence. 29 U.S.C.
§ 160(e).
12
This case comes to us in an unusual posture. Because
PCMC/PMMC settled its dispute with the Board and IAM, we
are called upon to review only the Board’s conclusion that
ILWU violated sections 8(b)(1)(A) and (2) of the NLRA by
accepting the Employer’s recognition as the union
representative of the M&R mechanics at the Oakland and
Tacoma ports. To review that determination, however, we
must first determine whether the Employer had an obligation to
bargain with IAM under sections 8(a)(5) and (d) before it shut
down PMMC’s operations. As we discuss infra, we conclude
that the Employer had such an obligation—and violated it.
A union violates section 8(b)(1)(A) by exercising
exclusive bargaining authority when it does not, in fact, have
the support of an uncoerced majority of the employees in the
relevant bargaining unit. Int’l Ladies’ Garment Workers’
Union v. NLRB, 366 U.S. 731, 733 (1961) (applying 29 U.S.C.
§ 158(b)(1)(A)). Section 8(b)(2) prohibits a union from
causing or attempting to cause “an employer to discriminate
against an employee” by requiring the employee to adhere to a
union-security clause imposed on behalf of a union that does
not represent a majority of the employees in the appropriate
bargaining unit. 29 U.S.C. § 158(b)(2); Local Lodge No. 1424
v. NLRB, 362 U.S. 411, 413-14 (1960). The purpose of both
provisions is clear: neither an employer nor a union may
unilaterally override the employees’ organizational rights,
including the right to select bargaining representatives of their
choosing. See 29 U.S.C. § 157; see also Radio Officers’ Union
of Commercial Telegraphers Union v. NLRB, 347 U.S. 17, 40
(1954).
Key to our ultimate decision is whether IAM—rather than
ILWU—continued as the appropriate representative of the
M&R mechanics at the Oakland and Tacoma terminals once
PMMC ceased operations. Put simply, if IAM remained the
13
appropriate union for the unit employees, ILWU was not
permitted to accept the Employer’s recognition. On this issue,
ILWU has two arguments. First, it argues that the Employer
properly terminated its relationship with IAM when it shut
down PMMC’s operations without bargaining and therefore
PCMC—as a separate corporate entity—could hire employees
without regard to their past IAM representation. Second,
ILWU asserts that the employees formerly represented by IAM
merged by accretion into the existing ILWU West Coast-wide
bargaining unit. We address these arguments in turn.
A. Employer’s Termination Decision
Under section 8(a)(5), an employer commits an unfair
labor practice if it “refuse[s] to bargain collectively with the
representatives of [its] employees.” 29 U.S.C. § 158(a)(5).
Under the NLRA, collective bargaining consists of a “mutual
obligation of the employer and the representative of the
employees to meet at reasonable times and confer in good faith
with respect to wages, hours, and other terms and conditions of
employment . . . .” Id. § 158(d). The subjects of mandatory
bargaining are broad and the Supreme Court has explained that
“Congress deliberately left the words ‘wages, hours, and other
terms and conditions of employment’ without further
definition, for it did not intend to deprive the Board of the
power further to define those terms in light of specific
industrial practices.” First Nat’l Maint. Corp. v. NLRB, 452
U.S. 666, 675 (1981) (quoting 29 U.S.C. § 158(d)).
Under section 8(d), an employer’s decision to replace
employees in an “existing bargaining unit with those of an
independent contractor to do the same work under similar
conditions of employment” is a subject of mandatory
bargaining. Fibreboard Paper Prods. Corp. v. NLRB, 379 U.S.
203, 215 (1964). Put differently, an employer may not
14
“unilaterally attempt to divert work away from a bargaining
unit without fulfilling [its] statutory duty to bargain.” Rd.
Sprinkler Fitters Local Union No. 669 v. NLRB, 676 F.2d 826,
831 (D.C. Cir. 1982) (“double-breasted” employer has duty to
bargain before diverting work from its union employees to its
non-union employees). Accordingly, we have held that a
movie theater employer had a duty to bargain with the union
representing its movie-reel operators before transferring that
work to its assistant managers. Regal Cinemas, Inc. v. NLRB,
317 F.3d 300, 307 (D.C. Cir. 2003). Our decision was based,
in large part, on the fact that the employer “continued to operate
the same business at the same locations and the only change
[was] in the identity of the employees doing the work.” Id. at
310 (quoting ALJ decision below). In other words, the nature
of the theater’s business itself was unchanged. Id. Thus,
finding “no link” between a non-labor-cost reason for the
change—e.g., technological advances in the movie-projector
business—and the theater’s decision to reallocate work to
assistant managers, we upheld the Board’s conclusion that the
reallocation of employee duties was based primarily on labor
costs and therefore the subject of mandatory bargaining. Id. at
307.
At the same time, an employer’s duty to bargain is not
limitless and the NLRA does not prohibit a business from
making independent economic decisions unrelated to labor
relations. First Nat’l Maint., 452 U.S. at 676-77. The duty to
bargain “includes only issues that settle an aspect of the
relationship between the employer and the employees.” Id. at
676 (quoting Chemical & Alkali Workers v. Pittsburgh Plate
Glass Co., 404 U.S. 157, 178 (1971)). Bargaining is therefore
mandatory “only if the benefit, for labor-management relations
and the collective-bargaining process, outweighs the burden
placed on the conduct of the business.” Id. at 679. In First
National, the Supreme Court held that the employer was not
15
required to bargain over its decision to shut down a portion of
its maintenance business—and terminate many of its
employees in the process—after the employer reduced its
weekly rate from $500 to $250. 452 U.S. at 668. There, the
employer made its strategic business decision “purely for
economic reasons”—the reduced rate was not profitable and
the client was not willing to pay the $500 rate—not in order to
reduce labor costs or alter employee relations. Id. at 686.
When one company buys another, the transaction can
qualify as a “core business decision” that falls outside the
“terms and conditions” of employment contemplated by
section 8(d). See AG Comm’ns Sys. Corp., 350 NLRB 168
(2007), pet. for review denied sub nom., Int’l Brotherhood of
Elec. Workers, Local 21 v. NLRB, 563 F.3d 418 (9th Cir. 2009)
(AG Communications). AG Communications involved the
merger of two telecommunication installation companies: AG
and Lucent. AG Comm’ns, 563 F.3d at 421. Before the merger,
the companies had CBAs with different unions: Lucent
bargained with the Communications Workers of America
(CWA) and AG bargained with the International Brotherhood
of Electrical Workers, Local 21, AFL-CIO (Local 21). Id.
After Lucent purchased AG, however, “Lucent began to merge
AG into Lucent to streamline operations and to increase
efficiency and profitability.” Id. Following a period of
integration, Lucent declared its intent to recognize only CWA.
Id. Local 21 protested and demanded collective bargaining but
the companies refused. Id. The Board sided with the merging
companies, holding that the two companies became a single
employer only after the merger took place and that the decision
to merge was a “core business decision” motivated by
operational efficiencies rather than labor costs. Id. at 422. The
Ninth Circuit agreed with the Board. Id. at 421.
16
We conclude that the Employer was required to bargain
over its decision to shut down PMMC’s operations and transfer
them to PCMC. First, the record makes clear that the difference
in bid prices was based almost exclusively on labor-related
costs, which are “peculiarly suitable for resolution within the
collective bargaining framework.” First Nat’l Maint., 452 U.S.
at 680 (quoting Fibreboard, 379 U.S. at 214). During the ALJ
hearing, the Employer’s representative, Joseph Gregorio,
testified that the difference between PCMC’s and PMMC’s
respective bid prices was attributable to the wages and benefits
the companies provided to their respective M&R employees.
JA 92 (explaining that negotiations regarding the difference
between bid prices “always was focused upon the concept that
there was differences [sic] in labor costs”). Similarly, PMMC
informed Maersk that its higher costs resulted from a
“collection of [employee] benefits.” JA 172. Driving this point
home, Maersk representative Wayne Pighin testified that
Maersk selected PCMC’s bid principally on the basis of its
lower bid price. JA 161, 172.
In arguing that the transition from PMMC to PCMC was a
“core entrepreneurial decision” rather than a term or condition
of employment, ILWU attempts to attribute PCMC’s lower bid
to its “lean staffing model.” Pet’r’s Br. 20-24. This argument
ignores the fact that PCMC’s “lean staffing model” is tied to its
membership in the PMA and the PMA’s CBA with ILWU’s
West Coast-wide bargaining unit. If PCMC had not recognized
ILWU as the union representing the former PMMC employees,
it would not have had access to the hiring hall or the flexible
transfer policies of the PCL&CA. Accordingly, we do not view
the “lean staffing model” as an independent business construct
unique to PCMC but instead as a provision of the PCL&CA
applicable to every PMA employer. See Sw. Steel & Supply,
Inc. v. NLRB, 806 F.2d 1111, 1113 (D.C. Cir. 1986) (CBA’s
hiring hall provision is subject of mandatory bargaining).
17
Our conclusion turns heavily on PMMC and PCMC’s
single-employer stipulation. See Farmers Co-op. Elevator
Ass’n Non-Stock of Big Springs, Neb. v. Strand, 382 F.2d 224,
231 (8th Cir. 1967) (“The general rule is that parties are bound
by stipulations voluntarily made . . . .”). By virtue of their
stipulation, both PCMC and PMMC effectively conceded that
they (together) were required to bargain with IAM about the
“terms and conditions” of its members’ employment at the
Oakland and Tacoma terminals. See RC Aluminum Indus., Inc.
v. NLRB, 326 F.3d 235, 239-40 (D.C. Cir. 2003) (explaining
features of single-employer status in context of mandatory
bargaining). The Employer’s stipulation further distinguishes
this case from AG Communications, where the merging
companies became a single employer only after the two
companies merged. 563 F.3d at 421. In light of the companies’
single-employer status, ILWU’s argument that PMMC simply
made “a decision to close operations for economic reasons” on
March 30, 2005 fails. Pet’r’s Br. 20. As a single employer,
PCMC/PMMC did not “close” its operations. Like the
employer that reassigned duties in Regal Cinemas, 317 F.3d at
307, and the double-breasted employer that redistributed
contract work from its union division to its non-union division
in Sprinkler Fitters, 676 F.2d at 831, PCMC/PMMC
unilaterally transferred work from one segment of its business
to another, achieving its goal of lowered labor costs.
Nor did PMMC lose Maersk as a client, as was the case in
First National. 452 U.S. at 669-70. Instead, the Employer’s
M&R work at the Maersk terminals continued uninterrupted
the day after PMMC “closed.” Except for a handful of
employees, it was business as usual for the M&R mechanics at
the Oakland and Tacoma terminals on March 31, 2005. The
same M&R mechanics continued to work the same jobs in the
same locations with the same equipment. See Regal Cinemas,
317 F.3d at 307. Indeed, the mechanics had the same customer
18
(Maersk). The only changes were their uniforms, JA 129-30,
and the union representing them, JA 125-26. In every material
sense, PCMC (as a single employer with PMMC) retained
Maersk’s business. Accordingly, we conclude that the
Employer’s decision to close PMMC was based primarily on
labor costs and that it therefore had an obligation to bargain
under sections 8(a)(5) and (d). When PCMC/PMMC refused
IAM’s bargaining request and unilaterally terminated its
recognition of the Union, it breached that obligation.
B. Employees’ Bargaining Unit
Having concluded that PCMC/PMMC had an obligation
to bargain with IAM, we turn to ILWU’s “accretion” argument
and the Board’s determination of the appropriate bargaining
unit. See S. Prairie Constr. Co. v. Local No. 627, 425 U.S. 800,
805 (1976) (employee bargaining unit must be analyzed apart
from single-employer determination).
Under section 9(b) of the NLRA, the Board has authority
to delineate employee bargaining units. Serramonte
Oldsmobile, Inc. v. NLRB, 86 F.3d 227, 236 (D.C. Cir. 1996).
In doing so, it looks to the “community of interest” among
employees, which includes factors such as “skills and duties;
wages and benefits; interchange between sites; functional
integration; geographic proximity; centralized control of
management, supervision, and labor relations; and bargaining
history.” RC Aluminum Indus., Inc., 326 F.3d at 239-40.
Although no single factor is controlling, “a group of employees
with a significant history of representation by a particular union
presumptively constitute[s] an appropriate bargaining unit.”
Cmty. Hosps. of Cent. Cal. v. NLRB, 335 F.3d 1079, 1085 (D.C.
Cir. 2003). The Board therefore demands that “a party
challenging a historical unit show that ‘compelling
circumstances’ warrant modification of the unit.” Dodge of
19
Naperville, Inc. v. NLRB, 796 F.3d 31, 39 (D.C. Cir. 2015)
(citations omitted). Moreover, “[b]ecause the assessment
requires a fact-intensive inquiry and a balancing of various
factors, the Board has broad discretion in making the
determination.” United Food & Commercial Workers v.
NLRB, 519 F.3d 490, 494 (D.C. Cir. 2008).
In weighing the “community of interest” of a merged
workforce, the Board sometimes applies the doctrine of
“accretion.” Dean Transp., Inc. v. NLRB, 551 F.3d 1055, 1067
(D.C. Cir. 2009). “Accretion is the addition of a group of
employees to an existing union-represented bargaining unit
without a Board election.” Id. “[B]ecause accretion essentially
deprives employees of their statutory right to choose their
bargaining representative, the Board has historically followed
a restrictive policy in applying the accretion doctrine.” Id. The
Board will not find accretion unless “the employees sought to
be added to an existing bargaining unit have little or no separate
identity and share an overwhelming community of interest with
the preexisting unit to which they are accreted.” Id. (internal
quotation marks and citations omitted). Importantly, when
evaluating “community of interest” factors—whether in the
context of accretion or otherwise—we have held that the Board
should ignore “any impermissible changes made unilaterally
by the employer.” Dodge of Naperville, 796 F.3d at 39. “To
hold otherwise would allow [the employer] to benefit from its
own unlawful conduct.” In re Comar, Inc., 339 NLRB 903,
911 (2003), enfd., 111 F. App’x 1 (D.C. Cir. 2004).
The history of IAM’s multi-terminal bargaining unit is
plain. It covers a 40-year period with the M&R employees at
the Oakland and Tacoma terminals. ILWU does not contest
that IAM was the legitimate union representative of the M&R
mechanics at those locations before March 31, 2005. Nor could
it, as Sealand’s insistence on the continuity of IAM as the
20
mechanics’ union prompted PCMC to create PMMC to
perform the Maersk contract in the first place. JA 23
(PCMC/PMMC co-owner Steve McLeod testifying that
“purpose of creating [PMMC] was to have an entity to respond
to a proposal to do maintenance work for [Maersk]”). Indeed,
PCMC/PMMC was required to recognize the IAM bargaining
unit as a condition of the Sealand contract.
Moreover, the Board found as a fact that, “[a]s of March
31 . . . the unit employees generally continued to perform the
same work at the same location, with the same tools and
equipment as they had before the merger, working under
separate immediate supervision from the ILWU-represented
employees.” PCMC/PMMC I, 359 NLRB at 1211. In other
words, PCMC did not hire new M&R employees to handle its
new business; nor did PCMC use its “lean staffing model” to
hire outside mechanics to staff the newly acquired terminals.
Instead, on the date the change in ownership took place, the
very same group of employees continued their daily work. See
JA 73 (Joseph Gregorio testifying that PCMC “decided [to]
hire only the former IAM mechanics”). In the face of the
unchallenged bargaining history and the evident employee
continuity, we uphold the Board’s determination that the M&R
mechanics at Tacoma and Oakland constituted a proper
bargaining unit represented by IAM. See Cmty. Hosps. of Cent.
Cal., 335 F.3d at 1085.
We reject the argument that the PMMC M&R employees
were merged by accretion into the West Coast-wide ILWU
workforce. Moreover, we decline ILWU’s invitation to look
past March 31 at all for our “community of interest” assessment
because any post-March 31 “accretion” necessarily occurred
after the Employer violated section 8(a)(5) by failing to bargain
over its decision to switch operations from PMMC to PCMC.
In these circumstances, the Board correctly discounted any
21
evidence tied to “impermissible changes made unilaterally by
the employer.” Dodge of Naperville, 796 F.3d at 39.
In sum, we hold that substantial evidence supports the
Board’s conclusion that the M&R employees at the Oakland
and Tacoma ports were not part of ILWU’s West Coast-wide
bargaining unit and the Employer’s duty to bargain with the
existing IAM bargaining unit was not extinguished by virtue of
the accretion doctrine. Because IAM continued as the
appropriate bargaining representative for the M&R mechanics
at the Oakland and Tacoma terminals after March 31, 2005,
ILWU violated sections 8(b)(1)(A) and (2) of the NLRA when
it accepted recognition from the Employer.12
III. BOARD REMEDY
Finally, ILWU challenges the Board remedy. Specifically,
ILWU points out that PCMC has ceased operations and paid
roughly $130,000 to each of the approximately 100 unit
employees formerly represented by IAM at the Oakland and
Tacoma terminals as part of its settlement. Accordingly, it
12
It is undisputed that the PCMC-ILWU CBA contains a
“union-security” clause that requires membership in ILWU as a
condition of PCMC employment, JA 665, and that PCMC enforced
the clause when it hired the former PMMC mechanics, see
PCMC/PMMC I, 359 NLRB at 1207; see also JA 908 (PCMC
employment offer letter). Because the Board correctly determined
that IAM—not ILWU—was the proper union representative of the
M&R employees at the Oakland and Tacoma terminals, it also
correctly concluded that ILWU had violated section 8(b)(2) by
applying its CBA—including the “union-security” clause—to those
employees. PCMC/PMMC I, 359 NLRB at 1207; see Local Lodge
No. 1424 v. NLRB, 362 U.S. 411, 413-14 (1960).
22
argues that the Board remedy improperly provides a
“windfall,” or double recovery, to IAM. Pet’r’s Br. 58.
Under section 10(e) of the NLRA, our review of Board
decisions is limited to issues the parties in fact raised before the
Board. 29 U.S.C. § 160(e) (“No objection that has not been
urged before the Board . . . shall be considered by the court . . .
[absent] extraordinary circumstances.”). “Application of
section 10(e) is mandatory, not discretionary.” Oldwick
Materials, Inc. v. NLRB, 732 F.2d 339, 341 (3d Cir. 1984).
Accordingly, if a party wishes to challenge an issue first raised
in a Board decision, it must move for reconsideration so that
the Board—not this Court—can address the question in the first
instance. See Nova Se. Univ. v. NLRB, 807 F.3d 308, 316 (D.C.
Cir. 2015).
Before the Board, ILWU did not challenge the Board
remedy in light of the Employer’s settlement with IAM and its
members. Nor did ILWU move for reconsideration once it
learned of the Employer’s settlement.13 Therefore, under
section 10(e), we cannot modify the relief granted absent
“extraordinary circumstances.” See NLRB v. Ochoa Fertilizer
Corp., 368 U.S. 318, 322 (1961) (“[I]n the absence of a
showing within the statutory exception of ‘extraordinary
circumstances’ the failure or neglect of the respondent to urge
an objection in the Board’s proceedings forecloses judicial
consideration of the objection in enforcement proceedings.”).
Finding nothing “extraordinary” about ILWU’s unexcused
failure to raise its arguments before the Board, we conclude
13
The Employer moved for reconsideration regarding the
merits of the Board Order. JA 1372. The Board denied the motion.
Id. at 1376.
23
that ILWU’s remedial challenge is not properly before us and
we decline to address it.
That said, ILWU has an opportunity to make its objection
known at the compliance stage of the Board proceedings. See
Sure-Tan, Inc. v. NLRB, 467 U.S. 883, 902 (1984). The Board
acknowledged as much in declaring that ILWU “may, in
compliance proceedings, present evidence showing that
particular remedial provisions are no longer appropriate. . . .”
JA 1376 n.5 (March 1, 2016 Board Order Denying
Reconsideration). This evidence will likely include, inter alia,
the details of the Employer’s settlement, which are not included
in the record. See JA 1546-48 (letter explaining that ILWU
does not have access to settlement documents). Thus, in any
compliance proceeding, ILWU may make—and the Board may
consider—the argument that the Employer’s post-hearing
settlement constitutes an offset of any amount the Board has
determined ILWU owes.
For the foregoing reasons, we deny ILWU’s petition for
review and grant the Board’s cross-application for enforcement
against ILWU.
So ordered.