PAEZ, Circuit Judge:
We review a petition by the Local Joint Executive Board of Las Vegas, Culinary Workers Union Local 226 and Bartenders Union Local 165 (the "Union") from an order of the National Labor Relations Board ("NLRB" or the "Board") dismissing a complaint alleging unfair labor practices by Hacienda Resort Hotel and Casino and Sahara Hotel and Casino (the "Employers"). This dispute between the Union and the Employers is now more than 15 years old, and this is the third petition brought by the Union challenging a ruling by the Board. The Union alleges that the Employers violated sections 8(a)(1) and 8(a)(5) of the National Labor Relations Act ("NLRA"), 29 U.S.C. §§ 151-169, when the Employers unilaterally terminated union dues-checkoff before bargaining to agreement or impasse.
On remand from this court for the second time, the Board deadlocked on the merits with one of five members recused. Hacienda Hotel, Inc. Gaming Corp. (Hacienda III), ___ N.L.R.B. ___, 355 NLRB No. 154, 2010 WL 3446120, at *1 (Aug. 27, 2010). Unable to form a majority in support of a different rule, the Board followed its prior rulings in Bethlehem Steel Co., 136 N.L.R.B. 1500 (1962), and Tampa Sheet Metal Co., 288 N.L.R.B. 322 (1988), in concluding that termination of dues-checkoff is an exception to the rule articulated in NLRB v. Katz, 369 U.S. 736, 82 S.Ct. 1107, 8 L.Ed.2d 230 (1962), that unilateral changes to mandatory subjects of bargaining violate the duty to bargain collectively under the NLRA. Hacienda III, 2010 WL 3446120, at *1. The Board affirmed the ruling of an administrative law judge (ALJ) dismissing the Union's complaint.
We have jurisdiction under 29 U.S.C. § 160(f) to review the Board's ruling. As we explain below, we conclude that the Board's decision in Hacienda III is arbitrary and capricious because the Board provides no explanation for the rule it follows in dismissing the Union's complaint. We further conclude that, although we must show deference to the Board in its promulgation of labor policy, a third open remand is inappropriate in this case because the Board, after more than fifteen years, has reached a deadlock on the merits and continues to be unable to form a reasoned analysis in support of its ruling. Last, upon consideration of the merits, we conclude that the Employers violated section 8(a)(5) of the NLRA when they unilaterally
The Employers operate resorts and casinos in the state of Nevada. The Union maintained collective bargaining relationships with the Employers for more than thirty years, and each union had a substantially identical collective bargaining agreement ("CBA") in place with the Employers. Nevada is a "right-to-work" state where union security clauses conditioning employment upon membership in a union are prohibited. Nev.Rev.Stat. § 613.250;
Under the dues-checkoff provision, the Employers, upon written authorization by a union-member employee, were required to deduct union dues automatically from the worker's paycheck and submit that amount directly to the Union.
The CBAs expired in May 1994, and the parties unsuccessfully negotiated for new agreements through the end of 1994. Despite the expiration of the CBAs, the Employers initially continued to deduct union dues from workers' paychecks under the dues-checkoff clause in the expired CBAs. In June 1995, however, the Employers informed the Union that they intended to cease checking off dues, and they in fact stopped deducting dues from employees' paychecks shortly thereafter.
In response to the Employers' unilateral cessation of dues-checkoffs, the Union filed unfair labor practice charges against the Employers. The Union alleged that the Employers' cessation of dues-checkoffs violated the unilateral change doctrine affirmed by the Supreme Court in Katz. Under that doctrine, "an employer's unilateral
General Counsel for the NLRB consolidated the charges and issued complaints against the Employers. An ALJ dismissed the complaints. Upon review of the ALJ's decision, the NLRB affirmed the dismissal in a 3-2 decision,
The Union filed a petition for review of the Board's decision with this court, and we granted the petition, vacated the Board's ruling, and remanded for further proceedings. Local Joint Exec. Bd. of Las Vegas v. NLRB (LJEB I), 309 F.3d 578, 580 (9th Cir.2002). We explained that "[w]e are unable to discern the Board's rationale for excluding dues-checkoff from the unilateral change doctrine in the absence of union security." Id. at 582. We rejected as inadequate the Board's conclusion that the rule of Bethlehem Steel, a case concerning dues-checkoff in the context of a union security agreement, was equally valid in right-to-work states merely because such a rule had been assumed without explanation in Tampa Sheet Metal and was subsequently repeated in several prior NLRB decisions. Id. We remanded the case "so that the Board c[ould] either articulate a reasoned explanation for its rule or adopt a different rule with a reasoned explanation to support it." Id.
On remand, the Board abandoned its reliance on Bethlehem Steel but again affirmed the ALJ's dismissal, in another split decision, on the ground that the CBAs contained an express waiver of the right to continued dues-checkoff past the expiration of the CBA. Hacienda Hotel, Inc. Gaming Corp. (Hacienda II), 351 N.L.R.B. 504, 505 (2007).
On the second remand, the Board deadlocked on the merits of the Union's claim. Hacienda III, 2010 WL 3446120, at *1. Two members of the Board, Liebman and Pearce, voted in favor of overturning the Board's rule in Bethlehem Steel and argued that the Hotel had engaged in an unfair labor practice. Id. at *2 (Liebman & Pearce, concurring). Two other members, Schaumber and Hayes, voted in favor of upholding the ALJ's decision and dismissing the Union's complaints. Id. at *6 (Schaumber & Hayes, concurring). Member Becker recused himself, a decision that we are not called on to review.
Despite their split on the merits, the Board unanimously agreed that existing NLRB precedent established in Bethlehem Steel and Tampa Sheet Metal compelled the conclusion that the Employers did not violate the NLRA by unilaterally ceasing dues-checkoff. Hacienda III, 2010 WL 3446120, at *1. The Board also unanimously agreed that Board tradition required a three-member majority to overrule existing precedent. Id. at *3, *6. Purportedly following its precedent and tradition, the Board therefore dismissed the Union's complaint. Id. at *1.
The Union again petitioned for review of the Board's ruling.
The unilateral change doctrine— and the exclusion of dues-checkoff from that doctrine under Bethlehem Steel— "represent[s] the Board's interpretation of the NLRA requirement that parties bargain in good faith." Litton Fin. Printing Div., Inc. v. NLRB, 501 U.S. 190, 200, 111 S.Ct. 2215, 115 L.Ed.2d 177 (1991). Under the Administrative Procedure Act, we may hold unlawful and set aside only "agency action, findings, and conclusions found to be ... arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." 5 U.S.C. § 706(2)(A). Under Chevron USA, Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984), we defer to the Board's interpretation of the NLRA if its interpretation is rational and consistent with the Act. United Food & Commercial Workers Union, Local 1036 v. NLRB, 307 F.3d 760, 766 (9th Cir.2002) (en banc). "Where the statute is ambiguous, Chevron dictates that `a court may not substitute its own construction of [the] statutory provision for a reasonable interpretation made by ... an agency.'" Id. at 767 (alteration in original) (quoting Chevron, 467 U.S. at 844, 104 S.Ct. 2778). We may ignore the views of the Board only where the intent of Congress is clear on the face of the statute. Id.
We also review the Board's decision-making process, and "[i]t is well-established that an agency's action must be upheld, if at all, on the basis articulated by the agency itself." Motor Vehicle Mfrs. Ass'n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 50, 103 S.Ct. 2856, 77 L.Ed.2d 443 (1983). We therefore
In LJEB I, we vacated the Board's order in Hacienda I because we were not able to discern the Board's rationale for the exclusion of dues-checkoff from the unilateral change doctrine in the absence of a union security agreement. 309 F.3d at 585. We concluded that nothing in Bethlehem Steel or Tampa Sheet Metal provided a reasoned explanation for such a rule. Id. On this point, the four voting members of the Board who participated in Hacienda III agree. See Hacienda III, 2010 WL 3446120, at *2 (Liebman & Pearce, concurring) ("[T]he Board has never provided a reasoned analysis for applying the holding in Bethlehem Steel in a right-to-work context where dues checkoff could not lawfully be linked with union-security arrangements."); id. at *6 (Schaumber & Hayes, concurring) (conceding that "we may have failed to adequately explain previously" the reasons for the rule of Bethlehem Steel and Tampa Sheet Metal).
Hacienda III, however, does not respond to our direction that the Board either offer a reasoned explanation for its rule or abandon it. Instead, the Board perfunctorily ruled that the dismissal of the Union's complaint "was compelled by [its] decisions in Bethlehem Steel ... and Tampa Sheet Metal." Hacienda III, 2010 WL 3446120, at *1. The Board characterized its conclusory ruling as "follow[ing] existing precedent." Id. at *2.
The Board's most recent ruling in Hacienda III rests on essentially the same reasoning it provided in Hacienda I. Namely, the Board insists that the exception to the unilateral change doctrine for dues-checkoff, even in right-to-work states, is the rule the Board must follow in this case simply because it is the rule that the Board has followed in the past. We rejected this very reasoning in LJEB I, 309 F.3d at 583, and we reject it again here. As we have explained, "Although a Board rule may become `well-established' through repetition, it may `come to stand for' a legal rule only through reasoned decisionmaking." Id. (quoting Allentown Mack, 522 U.S. at 374, 118 S.Ct. 818).
We also reject the Board's attempt to veil its familiar argument in procedural formalities. The Board asks us to leave its ruling in place out of deference to an NLRB tradition that requires a three-member majority to overturn existing precedent. The Board cites Vermont Yankee Nuclear Power Corp. v. Natural Resources Defense Council, Inc., 435 U.S. 519, 98 S.Ct. 1197, 55 L.Ed.2d 460 (1978),
The question presented here is not whether the NLRB's chosen procedures are adequate, but rather whether the explication of its ruling is adequate. See LJEB I, 309 F.3d at 583 (citing NLRB v. Erie Resistor Corp., 373 U.S. at 236, 83 S.Ct. 1139). Pottsville and Vermont Yankee do not hold that the Board's adherence to its traditional practices eliminates the Board's responsibility to provide an adequate, rational, non-arbitrary rule that is consistent with the NLRA. The fact that the Board offers only a procedural justification for its substantive ruling only highlights that the ruling is substantively arbitrary. We will not defer to an agency's procedures or traditional practices when they result in arbitrary substantive rules.
We recognize the Board's interest in protecting the stability of its legal precedent. Unlike other federal agencies, the NLRB promulgates nearly all of its legal rules through adjudication rather than rulemaking. Allentown Mack, 522 U.S. at 374, 118 S.Ct. 818. Under such a scheme, the Board's rules would be of little assistance to employers and unions in following the NLRA if the Board's rules interpreting the Act were subject to routine, frequent change. The Board reasonably has decided that requiring a three-member majority to overturn precedent provides for the necessary stability of its rules, and we defer to that judgment.
Reasoned decisionmaking, however, is paramount to consistent decisionmaking. Where the Board breaches its duty to provide any rational and logical explanation for its rules, "the consistent repetition of that breach can hardly mend it." Id. In their concurrence to Hacienda III, Members Schaumber and Hayes argue that abandoning the rule of Bethlehem Steel and Tampa Sheet Metal "would have a destabilizing impact on bargaining relationships" because "[t]he rule is well-known, well-understood, and practitioners have relied upon it in doing business on behalf of their clients." 2010 WL 3446120 at *8. A pattern of obedience to an arbitrary rule, however, does not by itself support the rule's continued application. Our responsibility is to ensure that the Board's rules are consistent with the NLRA. Stability in labor relations must arise from reasoned rules promulgated by the Board, not from our willful ignorance of the Board's arbitrary decision-making in an effort to avoid rocking the boat.
We conclude, as we did in Hacienda I, that the Board has yet to provide a reasoned explanation for its rule excluding dues-checkoff from the unilateral change doctrine in right-to-work states. The Board's purported adherence to its procedural rules does nothing to correct this inadequacy, and we therefore vacate the ruling in Hacienda III as arbitrary and capricious.
Next, we must decide how we should proceed, taking into account that this controversy is more than fifteen years old and that the Board is deadlocked on the merits. Were we to remand this case with the same instructions that we have given to the Board twice before, it would likely mean that a case long overdue for a final decision on the merits would continue to remain without one. Without a change in the composition of the Board,
Despite these concerns, we also remain mindful of the deference due the NLRB. The Board "has the primary responsibility for developing and applying national labor policy." NLRB v. Curtin Matheson Scientific, Inc., 494 U.S. 775, 786, 110 S.Ct. 1542, 108 L.Ed.2d 801 (1990). Indeed, the Supreme Court has cautioned:
Fla. Power & Light Co. v. Lorion, 470 U.S. 729, 744, 105 S.Ct. 1598, 84 L.Ed.2d 643 (1985) (emphasis added). The court of appeals' role is thus normally limited to evaluating whether the Board's rules are rational and consistent with the Act. See United Food & Commercial Workers Union, 307 F.3d at 766.
Accordingly, only in rare circumstances will we address the merits of a case where the agency has failed to do so. See Earth Island Inst. v. Hogarth, 494 F.3d 757 (9th Cir.2007) (vacating a finding of "no adverse impact" by the National Oceanic and Atmospheric Administration ("NOAA") where the agency had failed twice to perform statutorily required environmental studies); Sierra Club v. EPA, 346 F.3d 955 (9th Cir.2003) (vacating an order by the Environmental Protection Agency and ordering a specific finding where the administrative record was fully developed and conclusions following from the record were clear); Ariz. Electric Power Coop., Inc. v. United States, 816 F.2d 1366, 1376 (9th Cir.1987) (vacating a decision of the Interstate Commerce Commission ("ICC") and remanding with specific instructions "[b]ecause of the history of recalcitrance displayed by the ICC").
Our cases directing agency action have often responded to an agency's stubborn refusal to follow our mandate or statutory provisions. For instance, in Earth Island, we vacated an environmental finding by the NOAA rather than remand for further study because of the agency's "intransigence" in twice failing to conduct statutorily required studies. 494 F.3d at 770. Similarly, in Arizona Electric Power Cooperative, we ordered the ICC to review
Weighing the Board's consistent failure to provide a reasoned disposition against the deference we owe the NLRB in dictating labor policy, we conclude that this case presents the "rare circumstance" in which another remand would be inappropriate. Fla. Power & Light, 470 U.S. at 744, 105 S.Ct. 1598. The Board conceded at oral argument that we can only speculate whether the Board would be able to break its deadlock and reach a different decision were we to remand the case for a third time. Therefore, given the amount of time that this case has been pending before the Board and the Board's continued inability to provide a rational justification for the rule it proposes, we are convinced that a third remand would be futile, or at least that the likelihood of continued deadlock outweighs the speculative benefit of providing the Board with one more opportunity to comply with our prior orders.
We therefore turn finally to the question we put to the Board in LJEB II, namely, "whether dues-checkoff in right-to-work states is subject to unilateral change, or whether, under such circumstances, dues-checkoff is a mandatory subject of bargaining." 540 F.3d at 1082. We note first that section 8(a)(5) of the NLRA, providing that it is an unfair labor practice for an employer to refuse to bargain collectively with a union, is silent regarding the treatment of dues-checkoff in right-to-work states after the expiration of a CBA. Section 8(d), governing the obligation to bargain collectively "in good faith with respect to wages, hours, and other terms and conditions of employment" is also silent as to dues-checkoff. The text of the statute is therefore ambiguous regarding whether dues-checkoff is a mandatory subject of bargaining in right-to-work states.
As we have said, when a statute is ambiguous, we may not substitute our own interpretation of the statute for that of the Board. See United Food & Commercial Workers Union, 307 F.3d at 767. Therefore, had the Board provided a reasoned analysis for a rule excluding dues-checkoff from the unilateral change doctrine in the absence of union security, we would be required to defer to that rule so long as it was rational and consistent with the NLRA. Id. Because the Board was unable to provide a reasoned explanation for the rule, however, we are forced to interpret the statute as if the Board had not spoken at all.
In comparing this case to the facts of Bethlehem Steel, we conclude that there is no justification for carving out an exception
This distinction is crucial. In Bethlehem Steel, the dues-checkoff arrangement was compelled under the terms of the CBA just as the employees' membership in the union had been compelled pursuant to the union security agreement in the CBA. In this case, however, union membership was not a condition of employment, and each employee whose dues were being checked off signed a request that the Employers deduct dues from their pay and submit the dues to the Union. Thus, unlike in Bethlehem Steel, where the unilateral cessation of dues-checkoff merely terminated a contractual arrangement that individual employees and employers alike were compelled to accept, the unilateral cessation of check-off by the Employers in this case stripped employees of a contractual right that they had expressly exercised by requesting dues-checkoff.
Without expressing an opinion on the wisdom of the rule of Bethlehem Steel, we see why the Board would treat dues-checkoff in the same manner as union security where both are present. As the Board has stated, "[t]he exception ... permitting unilateral abandonment of union-security and checkoff arrangements after contract expiration is based on the fact, noted in Bethlehem Steel, that `[t]he acquisition and maintenance of union membership cannot be made a condition of employment except under a contract which conforms to the [NLRA].'" Ind. & Mich. Electric Co., 284 N.L.R.B. 53, 55 (1987) (quoting Bethlehem Steel, 136 N.L.R.B. at 1502). In other words, if union security provisions are limited by statute to the duration of an existing CBA, dues-checkoff provisions that "implement[] the union-security provisions" are limited in the same manner. Bethlehem Steel, 136 N.L.R.B. at 1502.
Where the dues-checkoff provisions do not implement union security, however, but instead exist as a free-standing, independent convenience to willingly participating employees, the reasoning of Bethlehem Steel loses its force. We see nothing in the NLRA that limits the duration of dues-checkoffs to the duration of a CBA in the absence of union security. Moreover, other statutory provisions suggest the opposite. For instance, the Labor-Management Relations Act provides that "a written assignment [for dues-checkoff] shall not be irrevocable ... beyond the termination date of the applicable collective agreement." 29 U.S.C. § 186(c)(4). This provision would be surplusage if Congress believed that dues-checkoff automatically terminated upon the expiration of a CBA. See Nw. Forest Res. v. Glickman, 82 F.3d 825, 834 (9th Cir.1996) ("We have long
Accordingly, we conclude that in a right-to-work state, where dues-checkoff does not exist to implement union security, dues-checkoff is akin to any other term of employment that is a mandatory subject of bargaining. Because each affected employee individually requested dues-checkoff, the Employers' actions in this case were an unlawful termination of a bargained benefit to employees, not merely the cessation of a provision that automatically terminated along with the CBA and union security. The Employers' unilateral termination of dues-checkoff in this case was thus "in effect a refusal to negotiate... which reflect[ed] a cast of mind against reaching agreement." Katz, 369 U.S. at 747, 82 S.Ct. 1107. In ceasing dues-checkoff without bargaining to impasse, the Employers therefore violated section 8(a)(5) of the NLRA.
In light of this violation, we remand to the Board to determine what relief is warranted. We stress that, because the NLRA is ambiguous on this issue, the Board may adopt a different rule in the future provided, of course, that such a rule is rational and consistent with the NLRA. See Nat'l Cable & Telecom. Ass'n v. Brand X Internet Servs., 545 U.S. 967, 982-83, 125 S.Ct. 2688, 162 L.Ed.2d 820 (2005) ("Only a judicial precedent holding that the statute unambiguously forecloses the agency's interpretation, and therefore contains no gap for the agency to fill, displaces a conflicting agency construction."); see also N. Cal. River Watch v. Wilcox, 633 F.3d 766, 781 (9th Cir.2011) (interpreting an ambiguous provision of the Endangered Species Act, but recognizing that the Forest and Wildlife Service could adopt a different rule in the future). With regard to this case, however, the Board has three times failed to provide a workable rule, and the parties cannot be expected to wait any longer.
PETITION GRANTED, and REMANDED.
Costs on appeal awarded to Petitioners.
Exhibit 2 reads: