Colo. Fire Sprinkler, Inc. v. Nat'l Labor Relations Bd.
891 F.3d 1031 (2018)
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Rule of Law:
In the construction industry, to convert a Section 8(f) pre-hire agreement into a Section 9(a) collective bargaining relationship, the administrative record must contain clear, affirmative evidence demonstrating actual majority support by employees for the union, beyond mere boilerplate contractual language, especially if such language was demonstrably false at its inception.
Facts:
- In 1991, Ken Stringer founded Colorado Fire Sprinkler, Inc. (Company) and, having no employees at the time, entered into a Section 8(f) pre-hire agreement with Road Sprinkler Fitters Local Union No. 669 (Union), a national union.
- The 1991 agreement was a form agreement not negotiated by the Company and included a clause stating the Company had confirmed a clear majority of its non-existent sprinkler fitters had designated the Union as their Section 9(a) representative.
- The Company hired its first employees in 1994 and subsequently entered into successive multi-year agreements with the Union (in 1994, 1997, and 2000), each containing similar boilerplate language acknowledging the Union as the Section 9(a) exclusive bargaining representative.
- In 2005, the Company signed its fifth form agreement with the Union, which, along with the previous acknowledgements, added a statement that the Union had 'offered to provide the Employer with confirmation of its support by a majority of such employees.'
- Around 2010, Ken Stringer informed the Union that the Company was in serious financial difficulty and might be unable to continue meeting contractual obligations, particularly payments to the Union’s benefit funds, due to increased competition from non-union companies.
- After the contract expired in March 2013, and following several failed attempts to negotiate a new agreement, Stringer informed the Union in October 2013 that he had offered his employees a non-union health insurance plan.
Procedural Posture:
- The Road Sprinkler Fitters Local Union No. 669 filed two unfair labor practice charges with the National Labor Relations Board (NLRB) against Colorado Fire Sprinkler, Inc.
- An administrative law judge (ALJ) concluded that the Company was at fault for converting the Section 8(f) agreement into a Section 9(a) agreement, but also found that some of the Union’s unfair labor practice charges regarding the cessation of benefit fund payments were time-barred.
- The National Labor Relations Board affirmed the ALJ's finding that the relationship had become Section 9(a), but reversed the timeliness finding, ordering the Company to bargain, make outstanding contributions, and reimburse employees.
- Colorado Fire Sprinkler, Inc. filed a timely petition for review of the Board’s decision with the United States Court of Appeals for the District of Columbia Circuit.
- The National Labor Relations Board filed a cross-application for enforcement of its order.
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Issue:
Does a construction industry employer's and union's contractual language, which purports to acknowledge the union as an exclusive bargaining representative under Section 9(a) and includes an offer to provide proof of majority support, constitute sufficient evidence to overcome the Section 8(f) presumption and establish a Section 9(a) relationship, absent any affirmative evidence in the record of actual employee majority support?
Opinions:
Majority - Millett, Circuit Judge
No, such contractual language alone, particularly when previously demonstrably false and lacking any accompanying affirmative evidence of employee majority support in the administrative record, is insufficient to overcome the Section 8(f) presumption and establish a Section 9(a) relationship. The court reiterated that a construction-industry contract is presumed to be governed by Section 8(f) unless there is clear evidence that both the employer and union intended to create a Section 9(a) agreement. This burden falls on the General Counsel to prove a transition to Section 9(a) status with 'clear' evidence. The core principle of the National Labor Relations Act is employee freedom of choice and majority rule, which means employees, not the union or employer, choose their representatives. The court found that the boilerplate contract language in this case, including the initial declaration of majority support when the Company had no employees, was objectively false and thus unreliable. Relying solely on a mere offer of evidence within a form contract, especially one with a history of truth-challenged representations, would undermine the requirement of affirmative employee support and transform employee choice into a 'word game' controlled by the union and employer. Citing Nova Plumbing, Inc. v. NLRB and Allied Mechanical Services, Inc. v. NLRB, the court emphasized that actual evidence of employee support, such as authorization cards or votes, must exist in the record to rebut the Section 8(f) presumption. Since the Board failed to identify any such affirmative evidence of employee majority support, its conclusion was not supported by substantial evidence and was arbitrary and capricious.
Analysis:
This decision significantly reinforces the principle of employee free choice in labor representation, particularly within the unique context of the construction industry. It limits the National Labor Relations Board's ability to rely solely on boilerplate contractual language to establish a Section 9(a) relationship, thereby making it more difficult for unions and employers to unilaterally impose a 9(a) relationship without demonstrable employee consent. This ruling will likely compel the Board and parties to actively present and consider actual evidence of employee majority support, such as authorization cards or election results, to overcome the Section 8(f) presumption in future cases, ensuring greater fidelity to the National Labor Relations Act's core objective of majority rule.
