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Hawaiian Dredging Construction Co., Inc. v. National Labor Relations Board

United States Court of Appeals, District of Columbia Circuit

May 26, 2017

Hawaiian Dredging Construction Company, Inc., Petitioner
National Labor Relations Board, Respondent International Brotherhood of Boilermakers Local 627, Intervenor

          Argued February 10, 2017

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

          Barry W. Marr argued the cause for petitioner. With him on the briefs was Megumi Sakae.

          David Casserly, Attorney, National Labor Relations Board, argued the cause for respondent. On the brief were Richard F. Griffin, Jr., General Counsel, John H. Ferguson, Associate General Counsel, Linda Dreeben, Deputy Associate General Counsel, Usha Dheenan, Supervisory Attorney, and Marci J. Finkelstein, Attorney.

          David A. Rosenfeld argued the cause and filed the brief for intervenor International Brotherhood of Boilermakers Local 627 in support of respondent. Caren P. Sencer entered an appearance.

          Before: Rogers and Millett, Circuit Judges, and Sentelle, Senior Circuit Judge.



         Section 8(f) of the National Labor Relations Act, 29 U.S.C. § 158(f), allows employers in the construction industry to enter into pre-hire agreements with unions without a showing that a majority of their employees support the union. M&M Backhoe Serv., Inc. v. NLRB, 469 F.3d 1047, 1048 (D.C. Cir. 2006); Nova Plumbing, Inc. v. NLRB, 330 F.3d 531, 534 (D.C. Cir. 2003). Absent the usual statutory obligation of the parties to maintain the status quo upon expiration of their collective bargaining agreement, until impasse or a new agreement is reached, the Board had to determine whether the Hawaiian Dredging Construction Company's discharge of its welders, after their Section 8(f) agreement had expired, was motivated by an intent to discriminate in violation of the employees' statutory rights, or reflected the company's long-standing business practice to rely on union hiring halls under Section 8(f) agreements for craft employees. The Board ruled the company violated Sections 8(a)(3) and (1) of the Act by terminating the welders because of their union membership. The company petitions for review, contending that the Board's analysis under its own precedent is flawed and unsupported by substantial evidence. Because the Board failed to adequately address record evidence regarding the company's understanding of its twenty-year practice and appears to have strayed from its precedent, we grant the petition for review, deny the Board's cross-application for enforcement of its Order, and remand the case to the Board.


         In 1959, Congress amended the National Labor Relations Act, to address specific needs of the construction industry. The Act had been "developed without reference to the construction industry, " NLRB v. Local Union No. 103, Int'l Ass'n of Bridge, Structural and Ornamental Iron Workers, AFL-CIO, 434 U.S. 335, 348 (1978) (quoting H.R. Rep. No. 741, 86th Cong., 1stSess., at 19 (1959)), and yet "[r]epresentation elections in a large segment of the industry [were] not feasible to demonstrate . . . majority status due to the short periods of actual employment by specific employers." Id. at 349 (quoting S. Rep. No. 187, 86thCong., 1st Sess., at 55 (1959)). In order to allow an employer primarily engaged in construction work to "know his labor costs before making the estimate upon which his bid [for a project] will be based, " and to ensure employers in the construction industry "have available a supply of skilled craftsmen ready for quick referral, " id. at 348 (quoting H.R. Rep. 741 at 19), Congress provided, subject to exceptions not at issue here:

It shall not be an unfair labor practice . . . for an employer engaged primarily in the building and construction industry to make an agreement covering employees engaged . . . in the building and construction industry with a labor organization of which building and construction employees are members . . . because (1) the majority status of such labor organization has not been established . . . or (2) such agreement requires as a condition of employment, membership in such labor organization . . . or (3) such agreement requires the employer to notify such labor organization of opportunities for employment with such employer, or gives such labor organization an opportunity to refer qualified applicants for such employment, or (4) such agreement specifies minimum training or experience qualifications for employment[.]

29 U.S.C. § 158(f). By contrast, under typical collective bargaining agreements, the parties have an obligation, upon expiration of their agreement, to bargain in good faith and to maintain the status quo as to all mandatory subjects of bargaining until they reach a new agreement or an impasse. See Oak Harbor Freight Lines, Inc. v. NLRB, No. 14-1226, 2017 WL 1556126, at *1 (D.C. Cir. May 2, 2017) (citing, inter alia, NLRB v. Katz, 369 U.S. 736, 743 (1962)); see also M&M Backhoe Serv., 469 F.3d at 1048.

         Hawaiian Dredging is the largest general contractor in the State of Hawaii, employing around 375 craft labor employees to work on renovation, foundation, power, and industrial projects. As a member of the Association of Boilermakers Employers of Hawaii, the company has performed its craft work pursuant to Section 8(f) pre-hire collective bargaining agreements. As of 2010, such agreements had existed for at least twenty years with the International Brotherhood of Boilermakers, Iron Ship Builders, Blacksmiths, Forgers, and Helpers, Local 627 ("Boilermakers"). The parties' latest agreement expired on September 30, 2010.

         On October 1, the Boilermakers notified the company of availability to continue negotiation, attaching a letter from counsel that because the parties' Section 8(f) agreement had expired its members were free to cease working without notice. Some members of the Boilermakers refused to work that day, but resumed work on Monday, October 4. On October 8, the parties reached an interim agreement to extend the terms of the expired agreement through October 29 and to make the new collective bargaining agreement retroactive to September 30, 2010. Negotiations for a new collective bargaining agreement continued after October 29, however, with the parties disagreeing over inclusion of certain benefits. On November 1, 2010, the Boilermakers sent the company the terms of a ...

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