United States: National Labor Relations Board Declines To Order Make-Whole Remedy In Twenty Year Old Dues Check-Off Dispute

Last Updated: September 22 2015
Article by Igor Babichenko

On September 10, 2015, the National Labor Relations Board (the "Board") ended a twenty (20) year old dispute over union dues deductions. Hacienda Hotel, Inc. Gaming Corp., 363 NLRB No. 7 (Sept. 10, 2015). The Board adopted the Ninth Circuit Court of Appeals' (the "Ninth Circuit") ruling that the employer violated the National Labor Relations Act (the "NLRA") by unilaterally terminating dues check-offs in 1995 after the expiration of union contracts but, citing "the unique circumstances of this case," declined requiring the employer to reimburse the unions for any dues it failed to check-off (with compound interest).

The collective bargaining agreements at issue expired in 1994; and, in June 1995, the employer ceased the automatic deduction of union dues from employees' paychecks. The unions filed charges with the Board alleging that the employer violated the NLRA by acting unilaterally without first bargaining to an impasse. In July 2000, relying on Bethlehem Steel Co., 136 NLRB 1500 (1962) (which the Board recently overruled), the Board concluded that the employer did not violate the NLRA. On appeal, the Ninth Circuit vacated the Board's decision and remanded the case to the Board either to "articulate a reasoned explanation for its [Bethlehem Steel] rule or adopt a different rule with a reasoned explanation to support it." The second time around, the Board again held that the employer did not violate the NLRA but on different grounds. The Board reasoned that the collective bargaining agreements between the employer and the unions contained explicit language through which the unions waived any right to the continuation of dues check-offs after the expiration of the agreements. The unions appealed to the Ninth Circuit, which once more vacated the Board's decision. On remand, the Board dismissed the unions' charges for a third time, "unanimously agree[ing] that its decisionmaking practices required it to apply existing precedent in Bethlehem Steel...." On September 13, 2011, the Ninth Circuit yet again vacated the Board's decision. This time, the appellate court concluded "that a third remand would be futile" and ruled on the merits that the employer violated the NLRA by ceasing dues check-off unilaterally without bargaining to impasse. The Ninth Circuit remanded the case to the Board to determine the appropriate relief.

The Board unanimously adopted the Ninth Circuit's ruling on the merits and ordered the employer to cease and desist "the activity found unlawful by the court and to post a remedial notice." Acting through Members Miscimarra and McFerran, the Board majority, however, declined to order the employer to make the unions whole through reimbursement of any dues it failed to check-off. The majority concluded that, although "[i]n cases involving [an employer's] failure to honor a dues-checkoff arrangement, the Board has ordered [the employer] to reimburse the union for any dues [the employer] failed to check off[,]" the unusual circumstances of this case did not warrant this remedy. Specifically, the majority reasoned that the employer rightfully relied on Bethlehem Steel in unilaterally ceasing dues check-offs in 1995 and "could not have foreseen the protracted litigation of this issue before the Board and the Ninth Circuit, culminating in a decision by the court finding, contrary to Bethlehem Steel," that the employer violated the NLRA.

Member Hirozawa concurred in the Board's adoption of the Ninth Circuit's ruling but dissented from the majority's decision not to order the make-whole remedy. According to Member Hirozawa, in fashioning its remedy, the majority failed to 1) "determine what relief is warranted" as the Ninth Circuit instructed and 2) consider the effects of the employer's unlawful conduct on the unions and their members. Member Hirozawa concluded his dissent stating:

"It is one thing to fashion relief to remedy the effects of a violation. It is another to substitute our judgment for the court's as to whether the violation should have been found in the first place. In my view, the Board should just answer the question that the court of appeals has posed and order the standard [make-whole] remedy found first by the court, and now by the Board."

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