Hard Rock Holdings, LLC v. National Labor Relations Board

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued February 21, 2012 Decided March 23, 2012

No. 11-1104

HARD ROCK HOLDINGS, LLC, DOING BUSINESS
AS HARD ROCK HOTEL AND CASINO,
PETITIONER

v.

NATIONAL LABOR RELATIONS BOARD,
RESPONDENT

Consolidated with No. 11-1133

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

James Michael Walters argued the cause for petitioner.
With him on the briefs was Brian Matthew Herman.

Barbara A. Sheehy, Attorney, National Labor Relations
Board, argued the cause for respondent. On the brief were John
H. Ferguson, Associate General Counsel, Linda Dreeben,
Deputy Associate General Counsel, Ruth E. Burdick,
Supervisory Attorney, and Richard A. Cohen, Senior Attorney.
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Before: ROGERS, Circuit Judge, and EDWARDS and
GINSBURG, Senior Circuit Judges.

Opinion for the Court by Circuit Judge ROGERS.

ROGERS, Circuit Judge: The National Labor Relations
Board seeks enforcement of its order directing Hard Rock
Holdings, LLC (“the Company”) to bargain in good faith with
Professional, Clerical and Miscellaneous Employees, Local 995,
(“the Union”) affiliated with the International Brotherhood of
Teamsters, Local 995. The Company, in its petition for review,
contests the Board’s certification of the election in which the
Union was named the bargaining representative of the
Company’s valet parking employees. In addressing the
Company’s objections, we clarify two points relating to
stipulated bargaining units and the absence of pristine laboratory
conditions during a representation election. First, the Board
established the record of its analysis under the three-prong test
of Associated Milk Producers, Inc. v. NLRB, 193 F.3d 539, 543
(D.C. Cir. 1999), necessary to support its conclusions regarding
the parties’ intent with regard to the stipulated bargaining unit.
Extrinsic evidence relied on by the Company fails to
demonstrate error. Second, the failure of the Board Agent to
provide identification badges to election observers did not result
in an unfair or invalid election in the absence of evidence that
the failure materially affected the result of the election, and the
Company offered no such evidence. The Board therefore acted
within its discretion in sustaining the Union’s challenges to the
eight ballots cast by dual-rated bell-desk employees and in
rejecting the Company’s objections alleging misconduct by the
Board’s Agent. The Board thus is entitled to enforcement of its
findings that the Company violated sections 8(a)(1) and (5) of
the National Labor Relations Act, 29 U.S.C. § 158(a)(1), (5)
(2006) (“the Act”), by refusing to bargain with the Union. See
C.J. Krehbiel Co. v. NLRB, 844 F.2d 880, 882 (D.C. Cir. 1988).
 3
I.

The Company owns and operates a hotel and casino in
Las Vegas, Nevada. In 2009, the Union sought to become the
bargaining representative of the Company’s parking valets. The
dispute animating this appeal relates to the scope of the
bargaining unit. Both parties agree that those employees
working in the Company’s valet-parking department are part of
the unit. Their disagreement concerns whether employees who
work primarily as bell-desk employees but who also work
occasionally as valets — so-called “dual-rated” employees —
are also members of the bargaining unit.

On September 25, 2009, the Union filed a representation
petition with the Board. As opposed to proceeding to a hearing,
the Company and the Union decided to stipulate certain issues,
including the scope of the proposed bargaining unit. The record
shows that Company and Union counsel had at least one brief
conversation prior to the signing of the final stipulation
agreement: counsel for the Company testified that he told
counsel for the Union that the Company “did not want anybody
excluded who parked cars.” Hearing Transcript, Hard Rock
Holdings LLC, Case No. 28-RC-6680, at 47 (Nov. 23, 2009).
The Board’s Agent faxed a proposed agreement to the
Company’s counsel on October 7, 2009, in which the voting unit
was described as including “[a]ll full-time and regular part-time
[v]alet [p]arking employees.” NLRB Form, Stipulated Election
Agreement, at 2. Company counsel telephoned the Agent to
advise him that the Company would not agree to inclusion of the
adjective “regular” and wanted all employees who ever parked
cars to be part of the unit. The Agent then faxed Company
counsel a revised agreement, already signed by the Union, in
which the term “regular” had been eliminated. The revised
description of the bargaining unit read: “All full-time and part-
time Valet Parking employees.” Id. Company counsel signed
the agreement and faxed it to the Agent. The agreement was
 4
approved the following day by the Board’s Regional Director,
and an election was scheduled for November 6, 2009.

Following the signing of the stipulation agreement, the
Company submitted to the Regional Director a list of the names
of those its viewed to be voting-eligible employees — the
Excelsior1 list. The Union did not object to the list, which
included the names of the eight dual-rated employees. Just prior
to the election, both Company and Union counsel signed the
Excelsior list at a conference held by the Agent. During the
election, the Union challenged the votes of the eight dual-rated
employees.

Also, just before the start of the election, the Agent
realized that he did not have enough identification badges for
both the Union and Company observers. Rather than provide a
badge to only one observer, the Agent testified that he decided
to give none of the observers a badge. Neither the Company nor
the Union contests the fact that the observers were not wearing
identification badges during the election. The record indicates
some dispute, however, about whether the Agent himself wore
a badge identifying him as a government official.

During the election, one of the voters, a dual-rated
employee (“the Voter”), engaged in a verbal exchange with the
Agent shortly after a Union observer challenged the Voter’s
voting eligibility due to his status as a dual-rated employee. The
level of altercation and nature of the words exchanged are
disputed. The record is clear, however, that during the
conversation, the Agent told the Voter to calm down or he might
risk losing his job. The Voter testified that he had not known
the Agent was a Board official until the end of the incident.
Upon learning that the Agent was a government official, the
Voter testified that he told the agent, “[t]hat’s probably why you

1
Excelsior Underwear, Inc., 156 NLRB 1236 (1966).
 5
and I got off to the wrong start.” Hearing Transcript at 110.
One voter was present during this incident and another was on
his way out of the polling area.

At the completion of voting, the tallied results showed
seventeen votes for and nine against Union representation with
eight additional votes against the Union that it had challenged.
The Company and the Union filed objections with the Board. A
hearing was held regarding these objections and the Union’s
challenges to the votes of the eight dual-rated employees. The
Hearing Officer recommended that the Board sustain the
Union’s ballot challenges, overrule the Company’s objections,
approve the Union’s withdrawal of its objections, and certify the
Union as the bargaining representative. Hearing Officer’s
Report on Objections & Challenged Ballots (“Hearing Report”),
Hard Rock Holdings LLC, Case No. 28-RC-6680, at 27 (Dec.
29, 2009). The Board adopted the Hearing Officer’s
recommendations. Decision & Certification of Representative
(“Certification Decision”), Hard Rock Holdings LLC, Case No.
28-RC-6680, at 1 (Sept. 28, 2010). To preserve its ability to
appeal the certification, the Company refused to bargain with the
Union. See Boire v. Greyhound Corp., 376 U.S. 473, 477–78
(1964). A complaint was issued against the Company alleging
its refusal to bargain violated the Act. On April 7, 2011, the
Board issued its decision and order, granting summary judgment
against the Company for violating section 8(a)(1) and (5) of the
Act.

II.

The Company petitions for review of the Board’s order
on two grounds: first, it objects to the Board’s sustaining of the
Union’s challenges to the eight ballots in view of the extrinsic
evidence, and second, it maintains that the Agent’s failure to
provide observer badges impermissibly disrupted the election.
In addressing these contentions, the court must determine
 6
whether the Board abused its discretion. See Serv. Corp. Int’l v.
NLRB, 495 F.3d 681, 684 (D.C. Cir. 2007); Schoolman Transp.
Sys., Inc. v. NLRB, 112 F.3d 519, 521 (D.C. Cir. 1997). Our
review of the Board’s determination that a stipulated election
agreement is ambiguous is de novo, see Entergy Servs., Inc. v .
FERC, 568 F.3d 978, 982 (D.C. Cir. 2009), but the Board’s
factual determinations are conclusive if supported by substantial
evidence on the record considered as a whole, 29 U.S.C.
§ 160(e); Universal Camera Corp. v. NLRB, 340 U.S. 474, 477,
488 (1951). And the court will not reverse the Board’s adoption
of an administrative law judge’s credibility determination unless
it is “hopelessly incredible,” “self-contradictory,” or “patently
unsupportable.” United Food & Commercial Workers Union
Local 204 v. NLRB, 447 F.3d 821, 824 (D.C. Cir. 2006) (quoting
Cadbury Beverages, Inc. v. NLRB, 160 F.3d 24, 28 (D.C. Cir.
1998)).

A.
In Associated Milk, the court clarified the analysis the
Board must apply when faced with a stipulated bargaining unit
agreement. First, the Board must determine whether or not the
agreement’s description of the bargaining unit is ambiguous.
Associated Milk, 193 F.3d at 543. If no ambiguity exists, the
Board must enforce the parties’ agreement. Id. If the stipulation
is ambiguous, however, the Board must apply ordinary
principles of contract law in an attempt to determine the parties’
intent. See id. at 543–44. At this stage, the Board may consider
extrinsic evidence. Id. at 544. If, following this review, the
Board concludes the parties’ intent is still unclear, it must apply
its traditional community-of-interests test. See id. at 543.

Here, the Board proceeded through each of these steps.
First, it found that the scope of the unit as stated in the stipulated
agreement was ambiguous: the wording was unclear as to
whether the Company and the Union intended dual-rated
employees to be included in the bargaining unit. The Board
 7
observed that the stipulation’s wording was “amenable to either
interpretation” advanced by the parties. Certification Decision
at 2. Second, the Board found that the extrinsic evidence failed
to resolve that ambiguity: the record showed that, prior to
entering into the stipulated agreement, Company and Union
counsel had had one brief telephone conversation about the
composition of the unit, a conversation in which they disagreed.
Third, the Board determined under its community-of-interests
standard that the dual-rated employees did not share a
community of interest with the unit employees and so did not
belong in the unit. In arriving at this conclusion, the Board
relied on the evidence that (1) only one of the four dual-rated
employees who testified had worked as a valet for more than a
handful of shifts during the three months proceeding the
election; (2) those four employee-witnesses could not recall any
of the other four dual-rated employees ever working as valets
more recently than two months prior to the election; and, (3) the
dual-rated employees worked mainly as bell-desk employees
and, as such, worked independently of valet-department
employees, were supervised separately, and did not share in the
valet tip pool (unless they worked as valets for an entire shift).

The Company does not specifically contest the Board’s
application of the first and third prongs of the Associated Milk
analysis. Instead, the Company contends that the parties’ intent
was “easily discernable from a reading of available extrinsic
evidence.” Pet’r’s Br. 11. The Company maintains that the
Board “completely ignored the import of [its counsel’s]
unrebutted testimony that he communicated [the Company’s]
intention that it did not ‘want anybody excluded who parked
cars.’” Pet’r’s Reply Br. 3. The Company next points to
evidence that the Union did not object to the inclusion of the
names of the eight dual-rated employees on the Excelsior list,
but rather examined and signed a copy of the list prior to the
election. In the Company’s view, this failure to object to the
Excelsior list was evidence of the Union’s approval of the
 8
named inclusions, for “[o]nly later did it become apparent that
[the Union representative] had surreptitiously instructed [its]
employee-observer to challenge any part-time valets who
appeared at the NLRB polls to vote.” Pet’r’s Br. 14. Invoking
sections 11084.2, 11095, and 11312.4 of the Board’s
Casehandling Manual, Part Two, Representation Proceedings
(“the Manual”), the Company suggests that the Board’s
Regional Director would or should have revoked his approval of
the stipulation agreement had he been aware that a substantial
number of listed voters would be challenged. In any event, the
Company concludes, the Union “should have been foreclosed
from raising such tardy challenges to such a large portion of the
electorate.” Pet’r’s Br. 15.

The Company fails to meet its burden to show that the
Board abused its discretion in applying the second prong of
Associated Milk. There was substantial evidence to support the
Board’s finding that the disagreement in the discussion of the
stipulated unit by Company and Union counsel did not remove
the ambiguity as to their intent regarding dual-rated employees.
The hearing transcript showed that Company counsel’s view of
the unit was not the same as Union counsel’s, and that during
their brief conversation, the issue was not resolved. The
Company also suggests that by agreeing to a revision of the
stipulated agreement with the word “regular” removed, the
Union assented to a definition of the bargaining unit that
included the eight dual-rated employees. As with the
conversations between the negotiators, however, this bargaining
history is ambiguous. For instance, it may be that the Union
interpreted the revised text as expanding the bargaining unit
merely to include the on-call attendants, whereas the Company’s
interpretation of the draft agreement already included the on-call
attendants and therefore removing the word “regular” from the
agreement had the effect of adding the dual-rated employees to
the unit. See Hearing Report at 13.
 9
Gala Food Processing, Inc., 310 NLRB 1193 (1993), on
which the Company relies, is distinguishable. In that case, the
employer claimed that the parties had intended to include some,
but not all, of the call-in employees in the stipulated bargaining
unit. Id. at 1193. The extrinsic evidence revealed just the
opposite, however: during the stipulation negotiations, the
employer proposed inclusion of the call-in employees in the unit
and, prior to signing the stipulation, provided the names of all
— not just some — of the call-in employees to the union. Id.
Thus, the extrinsic evidence of the employer’s own actions in
negotiations contradicted the position it later took when
challenging the election results. See id. The Board found this
evidence “resolve[d] the ambiguity in the stipulation” and
therefore rejected the employer’s claim that the parties had
intended anything else. Id. at 1193–94. No such extrinsic
evidence exists to resolve the ambiguity here. The record does
not suggest that either the Company or the Union switched its
position from that taken prior to the signing of the stipulation
agreement and the election; rather, the record shows
disagreement, and hence ambiguity, regarding the scope of the
bargaining unit throughout the negotiations and election. Desert
Palace, Inc., 337 NLRB 1096 (2002), on which the Company
also relies, provides no support for its contention. See id. at
1097–1101.

Nor did the Board err in its consideration of the evidence
regarding the Excelsior list. The Company’s suggestion that the
Union forfeited its right to challenge the ballots of the eight
dual-rated employees by not protesting their inclusion on the
Excelsior list is contrary to well-settled precedent: an
employer’s placing of a name on such a list does not establish
that the parties intended the employee to be included in a
stipulated unit. NLRB v. Speedway Petroleum, 768 F.2d 151,
157 (7th Cir. 1985); Groendyke Transport, Inc., 204 NLRB 96,
98 (1973), enforced 493 F.2d 17 (5th Cir. 1974), and overruled
on other grounds by Monte Vista Disposal Co., 307 NLRB 531
 10
(1992). Rather, an Excelsior list serves to advance the fair
choice of bargaining representatives through “encouraging an
informed employee electorate . . . by allowing unions the right
of access to employees that management already possesses.”
NLRB v. Wyman-Gordon Co., 394 U.S. 759, 767 (1969). As
such, the Union’s acknowledgment of the list was not
tantamount to approval of the bargaining unit as constituting the
employees whose names were on the list.

The Company’s related argument that the Manual
required the Union to object to the list or required the Regional
Director to have processed the parties’ stipulation differently
fails to overcome that, as the Company conceded during oral
argument, the Manual is staff guidance, not binding procedure,
Kwik Care Ltd. v. NLRB, 82 F.3d 1122, 1126 (D.C. Cir. 1996);
Oral Argument Tape at 8:12, and that the Manual itself states “it
is the Board’s decisional law, not the Manual, that is
controlling,” MANUAL, Purpose of the Manual. As noted, the
Board has explained that a union’s failure to object to an
Excelsior list until the election does not result in a forfeiture of
its right to challenge names appearing on the list. Groendyke
Transport, 204 NLRB at 98; see also Speedway Petroleum, 768
F.2d at 157.

The Company’s protest that had it known it would face
a community-of-interest analysis, it might not have waived its
right to a pre-election hearing, fails to show prejudice inasmuch
as it acknowledges it had an opportunity to preserve its rights to
a hearing and decided instead to forego that hearing as
(presumably, so far as the record shows) a matter of litigation
strategy. To the extent the Company suggests that it unfairly
lost the benefit of its invocation of the Board-approved practice
of stipulated bargaining unit agreements, it neglects to recognize
that successful application of such practice rests on the existence
of an unambiguous stipulation, an element found absent here.
See, e.g., Kim/Lou, Inc., 337 NLRB 191, 191 (2001).
 11

B.
The Company also contends that the Board erred in
refusing to rule that the Agent’s alleged misconduct — his
failure to provide election observers with identification badges
— tended to destroy the laboratory conditions necessary for a
Board-conducted election. Indeed, the Manual states that “[i]t
is required that all observers wear the official observer badge.”
MANUAL, § 11326.1. Deviations in election procedures
involving observer badges, however, do not necessarily affect,
much less undermine, the fairness of an election. See NLRB v.
First Union Mgmt., Inc., 777 F.2d 330, 335–36 (6th Cir. 1985);
L.C. Cassidy & Son, Inc. v. NLRB, 745 F.2d 1059, 1063 (7th Cir.
1984). A deviation such as occurred here is not a per se ground
for invalidation of an election. Nabisco, Inc. v. NLRB, 738 F.2d
955, 958 (8th Cir. 1984). Rather, the objecting party must show
that such a deviation had a material effect on the election such
as an impact on an individual vote. See Serv. Corp. Int’l, 495
F.3d at 684–85; C.J. Krehbiel, 844 F.2d at 882; Nabisco, 738
F.2d at 958. The Company offered no such evidence.

As an initial matter, the Board did not abuse its
discretion in adopting the Hearing Officer’s finding that the
Agent reasonably exercised his professional judgment in
deciding that neither the Company nor the Union observer
should wear a badge when only one badge was immediately
available. The Board could reasonably conclude that there was
no evidence the absence of observer badges had any effect on
the fairness and validity of the election. As to any confusion
regarding the Agent’s identity, the Board reasonably deferred to
the Hearing Officer’s conclusion that “[e]ven the witnesses who
testified that they initially believed that the Board Agent
represented the [Union] acknowledged that their doubts were
erased after the Board Agent identified himself to them,”
Hearing Report at 24. Certification Decision at 1 n.1; see also
Nabisco, 738 F.2d at 958. The Hearing Officer further found
 12
that the Board Agent wore a badge identifying him as a
“Government Official” during the entire election, a finding that
is supported by substantial evidence.

The Company’s challenge to the Board’s overruling of
its observer-badge objections is thus to no avail. The Company
suggests that the Board mis-characterized or never addressed
this argument, but the record is to the contrary. The Board
reviewed the Company’s challenges and the record and
concluded that there was no basis for reversing the Hearing
Officer’s credibility findings regarding the observer badges.
Certification Decision at 1 n.1. The Hearing Officer explained
his findings were “compiled based on a synthesis of the credited
testimony,” and that “[t]o the extent that the facts differ[ed]
from the testimony of a particular witness,” he “discredited
[that] testimony either because it was inherently inconsistent
with credited facts or explicitly contradicted by the testimony of
a credited witness or witnesses.” Hearing Report at 21. The
Company fails to show that the credibility determinations
adopted by the Board were “hopelessly incredible,” “self-
contradictory,” or “patently unsupportable,” as would be
required to overcome the deference otherwise owed to the
Board. See United Food & Commercial Workers Union, 447
F.3d at 824.

The Board also reasonably determined that the Agent’s
actions in responding to the Voter did not amount to agent
misconduct that tainted the election, as the Company contends.
The credited evidence failed to establish that the Agent was
responsible for the incident; rather, the Agent, upon identifying
himself verbally as a government official present to conduct the
election, “persuaded [the Voter] to calm down long enough to
vote.” Hearing Report at 24. After tensions eased, the Voter
remained seated until he voted and then apologized to the Agent
for his conduct as he was ushered out of the polling place. No
evidence was presented that this incident impacted any
 13
employee’s ability to vote or otherwise compromised election
results.

Accordingly, we deny the Company’s petition for review
and grant the Board’s cross-application for enforcement of its
order.