NATIONAL LABOR RELATIONS BOARD, PETITIONER V. FINANCIAL INSTITUTION EMPLOYEES OF AMERICA, LOCAL 1182, CHARTERED BY UNITED FOOD AND COMMERCIAL WORKERS INTERNATIONAL UNION, AFL-CIO, ET AL. No. 84-1493 In the Supreme Court of the United States October Term, 1984 The Solicitor General, on behalf of the National Labor Relations Board, petitions for a writ of certiorari to review the judgment of the United States Court of Appeals for the Ninth Circuit in this case. Petition for a Writ of Certiorari to the United States Court of Appeals for the Ninth Circuit PARTIES TO THE PROCEEDING In addition to the parties identified in the caption of the case in this Court, Seattle-First National Bank -- respondent before the Board -- intervened in the court of appeals and is accordingly a respondent in this Court. JURISDICTION The judgment of the court of appeals (App., infra, 59a) was entered on August 2, 1984. A petition for rehearing was denied on December 26, 1984. (App., infra, 60a). The jurisdiction of this cOurt is invoked under 28 U.S.C. 1254(1). TABLE OF CONTENTS Opinions below Jurisdiction Statutory provisions involved Statement Reasons for granting the petition Conclusion Appendix A Appendix B Appendix C Appendix D Appendix E Appendix F Appendix G Appendix H OPINIONS BELOW The opinion of the court of appeals (App., infra, la-28a) is reported at 752 F.2d 356. The decisions and orders of the National Labor Relations Board (App., infra, 27a, 34a, 45a) are reported at 241 N.L.R.B. 751, 245 N.L.R.B. 700, and 265 N.L.R.B. 426. STATUTORY PROVISIONS INVOLVED The relevant provisions of the National Labor Relations Act, 29 U.S.C. 151 et seq., are set forth at App., infra, 65a. QUESTION PRESENTED Whether the Board reasonably concluded that all bargaining unit employees, not just union members, must be afforded an opportunity to vote on the affiliation of their bargaining representative with an international union before the newly affiliated union has a right to continued recognition as the unit employees' exclusive bargaining representative. STATEMENT 1. The Firstbank Independent Employees Association (FIEA or the Union) was certified in 1970 as the exclusive bargaining representative of a unit consisting of the employees of Seattle-First National Bank (the Bank) in the State of Washington (App., infra, 27a). In 1977 the FIEA executive council decided to seek affiliation with the Retail Clerks International Union, and the union scheduled an affiliation election for February 1978. Prior to the election, all bargaining unit employees were informed of the proposed affiliation and told that only those who were FIEA members as of January 19, 1978, would be eligible to vote. App., infra, 28a-29a. At the time of the election, 2624 of the 4800 unit employees were FIEA members; 1206 voted for affiliation and 774 voted against (App., infra, 29a). FIEA was thereafter chartered by the international union as Financial Institution Employees of America, Local 1182, and the Union filed a petition with the Board, pursuant to Section 102.60(b) of the Board's Rules, 29 C.F.R. 102.60(b), seeking amendment of its certification to reflect its affiliation. /1/ 2. The Board initially granted the amendment, rejecting the Bank's contentions that the affiliation vote was invalid because only RIEA members were allowed to vote, and that the affiliation represented a substantial change in the certified bargaining representative which raised a doubt concerning the Union's continuing majority status that only a Board-conducted election could resolve. The Board relied on its then-recent decision in Amoco Production Co. (Amoco III), 239 N.L.R.B. 1195 (1979), in which the Board had held that the affiliation of an independent union with an international union was an internal union matter on which non-members were not entitled to vote and that it did not provide a reason for doubting the union's continued majority status. App., infra, 30a-32a. 3. The Bank subsequently refused to recognize and bargain with the Union. Declining to reconsider its certification decision, the Board found that the Bank violated Section 8(a)(5) and (1) of the Act, 29 U.S.C. 158(a)(5) and (1), and ordered the Bank to recognize and bargain with Local 1182. App., infra, 34a-42a. The bank petitioned for review of the Board's order in the Ninth Circuit and the Board cross-applied for enforcement. While the case was pending, the Fifth Circuit remanded the Board's decision in Amoco III for a statement of facts supporting the Board's conclusion in that case that there was substantial continuity between the pre- and post-affiliation labor organizations (Amoco Production Co. v. NLRB, 613 F.2d 107, 111-112 (5th Cir. 1980)). The Board requested remand of the instant case on the ground that it was analytically dependent on Amoco III, and the court of appeals granted the Board's request on June 27, 1980. App., infra, 3a. 4. On remand in the Amoco case, the Board, reversing its earlier position, concluded that affiliation is not a purely internal union matter but affects the right of all bargaining unit employees to choose their exclusive bargaining representative; thus, all unit employees must be allowed to vote on the affiliation. Amoco Production Co. (Amoco IV), 262 N.L.R.B. 1240 (1982) (App., infra, 49a, 52a-54a). /2/ The Board added that absent a unit-wide vote, it would not reach the issue of whether there was sufficient similarity between the old and newly affiliated union so that the latter could be deemed a continuation of the former (App., infra, 51a-52a). With respect to the requirement that all unit employees be permitted to vote, the Board in Amoco IV explained that it is "basic to the collective-bargaining process that the selection of a bargaining representative be made by the employees in the bargaining unit" (App., infra, 53a). The Board added that it was insufficient merely to afford unit members an opportunity to join the union and thereby participate in the affiliation vote -- as Amoco III had done -- because "Section 7 of the Act * * * gives employees the choice * * * to refrain from engaging in (union) activities" (App., infra, 53a-54a). On the basis of its decision in Amoco IV, the Board held that the affiliation election in the instant case was inadequate to justify amending the FIEA certification, and ordered that both the Union's certification petition and the refusal to bargain complaint against the Bank be dismissed (App., infra, 45a-48a). 5. Upon the Union's petition for review, the court of appeals, with Judge Wright dissenting, concluded that the Board's Amoco IV rule that all bargaining unit employees are entitled to vote in a union affiliation election was "irrational" and "inconsistent with * * * longstanding federal labor policy" (App., infra, 10a). It thus remanded the case to the Board for further proceedings. The court found that "three reasons compel(led its) conclusion": (1) the new rule "is inconsistent with the longstanding federal labor policy * * * to avoid unnecessary interference in internal union affairs"; (2) the rule "is inconsistent with the strong national labor policy of maintaining stability in the bargaining representative"; and (3) the rule is "irrational because the Board's existing * * * procedures adequately protect employee rights without imposing on union members' rights or otherwise being inconsistent with the (Act)" (App., infra, 10a-11a, 16a). The court found that the new rule unjustifiably interferes with the union's internal decision to affiliate because it "mandates that a continuity determination may not be conducted until after a unit-wide vote is taken." In the court's view "(t)his puts the cart before the horse" because the "interference" resulting from requiring such a unit-wide vote could be justified "(o)nly after" the Board finds an absence of continuity between the pre- and post-affiliation union. App., infra, 16a. The court further found that the Board's new rule "runs completely counter to the policy of promoting stability in the bargaining representative." The court's theory was that by allowing an employer to refuse to bargain with a post-affiliation union in the absence of a unit-wide vote, the Board "effectively decertifies (the) union before the Board can establish any basis for a union's loss of majority status." App., infra 19a. Finally, the court found that the new rule was "irrational" because it concluded that the Board's previously followed "due process" and "continuity" procedures were adequate to protect the rights of union members and employees. In the court's view, the existing "due process" requirement -- which permitted the affiliation vote to be restricted to union members but which required that vote to be conducted in accord with minimum democratic guarantees -- was designed, and in fact was adequate, to protect the rights of union members. And the "continuity requirement" was adequate to protect the rights of all bargaining unit employees (both union members and nonmembers) by requiring sufficient similarity between the pre- and post-affiliation unions to insure that a majority of the bargaining unit continued to desire representation by the post-affiliation union. App., infra, 19a-21a. Judge Wright, in dissent, noted that the Fifth Circuit had enforced the Board's order in Amoco IV, and agreed with that court that the new rule was a rational interpretation of the Act and within the Board's expertise and discretion in establishing procedures to ensure the fair and free choice of a bargaining representative by all employees (App., infra, 24a-25a). He stated that, by reaching the opposite conclusion, the majority "engage(d) in the balancing of interests that is the province of the Board, not the courts" (id. at 25a). The court denied the Bank's petition for rehearing and suggestion for rehearing en banc, although six judges dissented from the denial of en banc rehearing (App., infra, 60a-62a). REASONS FOR GRANTING THE PETITION 1. The decision of the Ninth Circuit rejecting the Board's requirement that all bargaining unit employees be allowed to vote on an affiliation of their bargaining representative with an international union, as a precondition of the newly affiliated union's right to continued recognition, is in direct conflict with the decision of the Fifth Circuit in Local No. 4-14, Oil Workers Int'l Union v. NLRB (Oil Workers), 721 F.2d 150 (1983). There, the court concluded that the Board's requirement was not "irrational or inconsistent with the Act, (and was not) beyond the wide discretion of the Board to establish procedures in an affiliation election that will ensure the fair and free choice of the bargaining representative of all the employees" (721 F.2d at 153). The conflict between the Fifth and Ninth Circuits concerns an important and recurring question in the administration of the National Labor Relations Act, 29 U.S.C. 151 et seq. /3/ Accordingly, it is appropriate for this Court to settle the issue. 2. a. Section 7 of the Act, 29 U.S.C. 157, guarantees employees the right "to bargain collectively through representatives of their own choosing." Section 8(a)(5) of the Act, 29 U.S.C. 158(a)(5), implements this right by requiring an employer to bargain in good faith with the representative of its employees, as defined in Section 9(a), 29 U.S.C. 159(a), which confers exclusive representative status upon the union selected by a majority of the employees in an appropriate bargaining unit. In administering these provisions the Board must determine the conditions under which a union maintains its status as statutory bargaining representative despite changes in its organization and structure, such as affiliation with an international union. Retail Clerks Local 428 v. NLRB, 528 F.2d 1225, 1227 (9th Cir. 1975). The Board faces this issue both in representation cases where the newly affiliated organization requests amendment of the certification issued to the pre-affiliation union, and in unfair labor practice cases where the employer refuses to recognize the newly affiliated organization as the statutory representative of its employees. The Board's concern is to insure that the organizational change reflected the desires of the employees in the bargaining unit and did not so alter the statutory representative that it could no longer be considered a continuation of the old union. Thus, the Board has long held that union affiliation votes must satisfy minimum demoncratic standards, called "due process" requirements, in order to insure that the vote accurately represents the desires of affected employees. Prior to Amoco IV, supra, however, the Board accepted an affiliation vote open only to union members as sufficient to indicate the desires of the unit as a whole, provided that nonmembers were free, if they chose, to join the union and participate in the election and the deliberations that preceded it. /4/ In Amoco IV, the Board concluded that this procedure was insufficient to assure that the affiliation vote reliably indicated the sentiments of the unit as a whole, and that it unduly infringed on the Section 7 rights of nonmembers by requiring them to join the union before they could vote on the change in their statutory representative. Accordingly, the Board ruled that all bargaining unit employees, regardless of union membership, must be afforded an opportunity to consent to the change before the newly affiliated entity has a right to continued recognition as the unit employee's exclusive bargaining representative. /5/ Even when the bargaining unit employees have approved the affiliation in a unit-wide vote, however, the Board will not enter a bargaining order or amend a certification if it finds that the structural changes have resulted in a completely new entity. /6/ For, while " '(t)he industrial stability sought by the Act would unnecessarily be disrupted if every union organizational adjustment were to result in displacement of the employer-bargaining representative relationship'" (NLRB v. Newspapers, Inc., 515 F.2d 334, 338 (5th Cir. 1975), quoting Canton Sign Co., 174 N.L.R.B. 906, 908-909 (1969), enforcement denied on other grounds, 457 F.2d 832 (6th Cir. 1972)). it would be equally disruptive to allow the ready substitution of an entirely new representative. See Independent Drug Store Owners, 211 N.L.R.B. 701 (1974), aff'd sub nom. Retail Clerks Local 428 v. NLRB, supra; Gulf Oil Corp., 135 N.L.R.B. 184 (1962). b. The Board's requirement that all bargaining unit employees, not just union members, be allowed to vote on the question of the affiliation of their bargaining representative with an international union, as a precondition of the newly affiliated union's right to continued recognition, constitutes a reasonable and principled construction of the Act, as the Fifth Circuit in Oil Workers, supra, and the dissenting judge on the panel below recognized. A change in affiliation is not purely an internal union affair, because it can affect the union's capacity to represent the bargaining unit. Since the union is obligated to represent all of the employees in the unit, nonunion as well as union (see NLRB v. Allis-Chalmers Mfg. Co., 388 U.S. 175, 180 (1967)), the change is of importance to the entire bargaining unit. As the Board pointed out in Amoco IV (App., infra, 53a), "it is inconsistent to permit all unit employees to vote in a representation election, but when the question is one of affiliation with another union, to permit only union members the right to vote." Moreover, the Board reasonably concluded that the option that Amoco III afforded nonunion members of the unit -- the opportunity to join the union and thus participate in the election -- "shut(s) one's eyes to Section 7 of the Act," which "clearly gives employees the choice of participating in union activities or * * * refrain(ing) from engaging in those activities" (App., infra, 53a-54a). The new rule, insofar as it "mandates that a continuity determination may not be conducted until after a unit-wide vote is taken," does not, as the court below asserted, "put( ) the cart before the horse" (App., infra, 16a). That assertion is based on the premise that a change in the union's structure or organization is an internal union matter, unless it is substantial enough to create a new entity and thus raise a question concerning representation that could invoke the Board's election machinery. This premise is erroneous; the Board reasonably concluded that, even where the change is not substantial enough to create a new entity, a union organizational change -- specifically, a change in affiliation -- may so affect the union's representation of the bargaining unit that all of the employees in the unit have a legitimate interest in voting on the change. Nor, contrary to the view of the court below, is the Board's new rule "unreasonably duplicative" (App., infra, 22a). As the court notes, it is possible that even after a majority of the unit employees have approved the affiliation in a union-conducted vote, "the Board would nonetheless call a formal unit-wide representation election if the Board found that the post-affiliation union was substantially different from the pre-affiliation union" (ibid.). But where there is a lack of continuity, a Board-conducted election is not simply another method of determining whether a majority of the unit employees want to be represented by the new entity. Rather, where the new entity is substantially different from the old entity, the old bargaining relationship has been so altered that the Board is justified in treating the situation as comparable to an initial recognition situation wherein the employer -- even though it may have no reason for doubting the union's majority status -- is entitled to have the representation question determined in a Board-conducted election, in which it will have an opportunity to express its views to the employees. See Linden Lumber Div. v. NLRB, 419 U.S. 301, 305-310 (1974) (employer that has not engaged in unfair labor practices impairing the electoral process may properly refuse to accept evidence of the union's majority status other than the results of a Board election). 3. The court below departed from established principles of judicial review in failing to sustain the rule enunciated by the Board in Amoco IV. The Board's construction of the Act is entitled to deference by the reviewing court where, as here, it "is reasonably defensible." Ford Motor Co. v. NLRB, 441 U.S. 488, 497 (1979). Accord: Charles D. Bonanno Linen Service, Inc. v. NLRB, 454 U.S. 404, 413 (1982); Beth Israel Hosp. v. NLRB, 437 U.S. 483, 501(1978); NLRB v. J. Weingarten, Inc., 420 U.S. 251, 260 (1975). Such deference is particularly appropriate where, as here, the Board is exercising its broad "discretion in establishing the procedure and safeguards necessary to insure the fair and free choice of bargaining representatives by employees" (NLRB v. A. J. Tower Co., 329 U.S. 324, 330 (1946)). Nor is the Board's new rule entitled to less deference simply because it constitutes a change from previous policy. As this Court recently observed in NLRB v. Action Automotive, Inc., No. 83-1416 (Feb. 19, 1985), slip op. 4 n.4: "(t)he Board's policy is not undermined by the fact that it has modified and refined its position; and agency's day-to-day experience with problems is bound to lead to adjustments." In short, "(a)n administrative agency is not disqualified from changing its mind" (NLRB v. Local 103, Iron Workers, 434 U.S. 335, 351 (1978)). When it does so, it is not the task of the reviewing court to construe the statute de novo; instead, the court must decide whether "the Board has reached a fair and reasoned balance upon a question within its special competence," and whether, in reaching "its newly arrived at construction" of the Act, "the Board has adequately explicated the basis of its interpretation." NLRB v. J. Weingarten, Inc., 420 U.S. at 267. Accord: Parkard Motor Car Co. v. NLRB, 330 U.S. 485, 492 (1947). The Board has done so here. CONCLUSION The petition for a writ of certiorari should be granted. Respectfully submitted. REX E. LEE Solicitor General ROSEMARY M. COLLYER General Counsel JOHN E. HIGGINS, JR. Deputy General Counsel ROBERT E. ALLEN Associate General Counsel NORTON J. COME Deputy Associate General Counsel LINDA SHER Assistant General Counsel PATRICK J. SZYMANSKI ROBERT C. BELL, JR. Attorneys National Labor Relations Board MARCH 1985 /1/ After the certification proceedings before the Board, the Retail Clerks merged with the Amalgamated Meat Cutters and Butcher Workmen of North America to form the United Food and Commercial Workers International Union (UFCW), and the affiliated local's designation changed accordingly (App., infra, 2a). No issue concerning that merger is presented here. /2/ The Fifth Circuit subsequently upheld the Board's decision in Amoco IV. Local No. 4-14, Oil Workers Int'l Union v. NLRB, 721 F.2d 150(1983). /3/ Union mergers and affiliations are a common occurrence, and in recent years the pace of such activities has accelerated. See Adams, Labor Organization Mergers 1979-84; Adapting to Change, 107 Monthly Lab. Rev., Sept. 1984, at 21-27; see also Report of AFL-CIO Committee on the Evolution of Work on the Changing Situation of Workers and Their Unions, reprinted in Daily Lab. Rep. (BNA) No. 37, at D-1, D-7 (Feb. 25, 1985) Moreover, the questions of voter eligibility and whether merger or affiliation elections reliably reflect the sentiments of unit employees arise frequently before the Board and the courts of appeals. See, e.g., NLRB v. Commercial Letter, Inc., 496 F.2d 35, 42 (8th Cir. 1974); NLRB v. Pearl Bookbinding Co., 517 F.2d 1108, 1111-1112 (1st Cir. 1975); St. Vincent Hospital, 238 N.L.R.B. 1525, 1526, 1527 (1978), enforced, 621 F.2d 1054, 1059 (10th Cir. 1980); Ocean Systems, Inc., 223 N.L.R.B. 857, 859-860 (1976), enforced sub nom. J. Ray McDermott & Co. v. NLRB, 571 F.2d 850, 856 (5th Cir.), cert. denied, 439 U.S. 893 (1978); Newspapers, Inc., 210 N.L.R.B. 8, 9 n.3, 10 n.13 (1974), enforced, 515 F.2d 334, 338 n.11 (5th Cir. 1975); Harris-Woodson Co., 85 N.L.R.B. 1215, 1216-1217 (1949), enforced, 179 F.2d 720, 722 (4th Cir. 1950); Jasper Seating Co., 231 N.L.R.B. 1025, 1026 (1977); Montgomery Ward & Co., 188 N.L.R.B. 551, 553 n.5 (1971); Equipment Mfg., Inc., 174 N.L.R.B. 419, 420 n.5(1969); North Electric Co., 165 N.L.R.B. 942, 943-944 (1967). /4/ In Amoco III, 239 N.L.R.B. at 1195 n.3, the Board reversed Jasper Seating Co., 231 N.L.R.B. 1025, 1026 (1977), in which the Board refused to recognize an affiliation where nonunion unit employees were not allowed to vote in the affiliation election. Jasper Seating, in turn, reversed the Board's previous policy that due process did not require that nonmembers vote in affiliation elections. See, e.g., Bear Archery, 223 N.L.R.B. 1169 (1976), enforcement denied, 587 F.2d 812 (6th Cir. 1977). /5/ The Board also applies its Amoco IV rule where two local unions of the same international union merge (F.W. Woolworth Co., 268 N.L.R.B. 850 (1984), petition for review pending, United Food & Commercial Workers Local 568 v. NLRB, No. 84-1243 (D.C. Cir.)), or where a local union splits into two separate unions (1820 Central Park Ave. Restaurant Corp., 116 L.R.R.M. 1393 (1984)). /6/ Determination of the question whether the newly-affiliated union is a new entity depends on such factors as: and whether the union continues to administer the contracts to which it is a party; whether it has retained its old officers; whether there is any change in its autonomy regarding such matters as contract negotiations, strikes, and grievances. See, e.g., J. Ray McDermott & Co. v. NLRB, 571 F.2d 850, 855-857 (5th Cir. 1978); NLRB v. Pearl Bookbinding Co., 517 F.2d 1108, 1111-1112 (1st Cir. 1975); NLRB v. Commercial Letter, Inc., 496 F.2d 35, 39-40 (8th Cir. 1974); Retail Clerks Local 428 v. NLRB, 528 F.2d 1225, 1227 (9th Cir. 1975). Compare American Bridge Div. v. NLRB, 457 F.2d 660, 663-664 (3d Cir. 1972). APPENDIX