Oil, Chemical and Atomic Workers International Union, Local 1-547 v. National Labor Relations Board, Chevron, Usa, Respondent-Intervenor

Citations: 842 F.2d 1141; 127 L.R.R.M. (BNA) 3164; 1988 U.S. App. LEXIS 3669Docket: 85-7574

Court: Court of Appeals for the Ninth Circuit; March 28, 1988; Federal Appellate Court

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The case involves a dispute between the Oil, Chemical and Atomic Workers International Union, Local 1-547 (the Union), and Chevron U.S.A. Inc. regarding a no-strike clause in their collective bargaining agreement and its implications for a sympathy strike. Chevron suspended approximately 240 Union members for one day for refusing to cross a picket line established by another union at Chevron's plant, asserting that this action violated the no-strike clause of the agreement, which prohibits strikes and work stoppages during its term. 

The Union filed an unfair labor practice complaint with the National Labor Relations Board (NLRB), alleging violations of sections 8(a)(1) and 8(a)(3) of the National Labor Relations Act (NLRA). Historically, the no-strike clause, present since at least 1959, had been a point of contention during negotiations, specifically when the Union attempted to include a clause permitting sympathy strikes but later withdrew it. 

An earlier arbitration had concluded that the no-strike clause waived the Union's right to sympathy strikes, but the NLRB had previously ruled that such broad no-strike language does not automatically waive this statutory right, placing the burden on the employer to demonstrate a clear intention to waive it. In the current case, an administrative law judge (ALJ) ruled that the no-strike clause did not waive the Union's right to engage in sympathy strikes, finding Chevron's suspension of Union members to be a violation of the NLRA. The ALJ rejected deferring to the earlier arbitration decision, deeming it inconsistent with current labor law.

Chevron filed exceptions to a decision while the Union filed cross-exceptions. Nearly four years later, the NLRB reversed the ALJ's decision, siding with a 1978 arbitrator's interpretation of the no-strike clause as a waiver of sympathy strike rights. The Board referenced its ruling in Indianapolis Power & Light, which overruled Davis-McKee, establishing that a broad no-strike clause prohibits all strikes, including sympathy strikes, unless there is clear evidence indicating otherwise. Sympathy strike rights are protected under section 7 of the NLRA, but can be waived through a collective bargaining agreement if the waiver is "clear and unmistakable."

The interpretation of the contract is critical; it must be considered in its entirety and within the legal context at the time of its formation. The contract's no-strike clause does not explicitly include or exclude sympathy strikes. The Union argued that the term "intentional" in "other intentional interferences with production" implies that a sympathy strike, intended for solidarity rather than production interference, is not covered. However, the analysis concludes that the essence of a sympathy strike is to disrupt production for solidarity, thus not excluding it from the no-strike clause.

To ascertain the parties' intent, one must examine extrinsic evidence, including bargaining history and party conduct. The doctrine of coterminous interpretation limits no-strike obligations to arbitrable issues, suggesting that a functional link between the no-strike and arbitration clauses indicates no intention to waive sympathy strike rights. The Indianapolis ruling established that while a general no-strike clause typically waives sympathy strike rights, this can be contested with extrinsic evidence showing otherwise. The failure to consider such evidence led to a reversal of the Board's decision, shifting the burden to employers to demonstrate a clear waiver of sympathy strike rights—contrary to previous precedent where the burden rested with the union.

An examination of intent is crucial due to the ambiguous language of the clause in question. The Board's decision is deemed insufficient and similar to prior cases where the courts reversed and remanded decisions based on the Indianapolis standard. The retroactive application of this new standard is inappropriate as it was unforeseen by the parties at the time of the contract, undermining their intent. The Ninth Circuit's five-part analysis for retroactive application includes: (1) whether the case is one of first impression; (2) if the new rule deviates from established practices or fills a legal void; (3) the reliance of the affected party on the former rule; (4) the burden imposed by retroactive application; and (5) the statutory interest in applying the new rule despite reliance on the old standard. The Indianapolis decision reversed the presumption regarding no-strike clauses and shifted the burden of proof onto the Union, which now must demonstrate that the clause did not waive sympathy strikes, contrary to previous interpretations that placed this burden on the employer. This change significantly impacts the Union's ability to negotiate, as they may have pursued explicit exclusions of sympathy strikes had they known about this burden. The interest in applying the new standard retroactively is minimal, as the goal of contractual interpretation is to ascertain the parties' intent, not to disregard the law at the contract's inception. Additionally, the case's lengthy pending status before the NLRB suggests it would have been resolved under the earlier presumption. Consequently, the retroactive application of the Indianapolis standard is found inappropriate, necessitating a reassessment of extrinsic evidence of intent, particularly the bargaining history and actions of the parties involved. The relevant contracts from 1977-79 and 1979-81 maintained the same no-strike clause, despite the Union's earlier proposal to explicitly allow sympathy strikes, which they later retracted, believing it merely recognized an existing right.

Chevron had not disciplined sympathy strikers for several years, but in 1977, after negotiations, it did impose discipline, which was upheld by an arbitrator as the no-strike clause was interpreted to include sympathy strikes. In 1978, the NLRB's decision in Davis-McKee established that broad no-strike clauses do not inherently prohibit sympathy strikes unless indicated by bargaining history. This conflicting legal backdrop influenced the parties' entry into the 1979-81 agreement without additional negotiation. The intent of the parties is assessed in light of the law at the time of contract formation.

The D.C. Circuit criticized the presumption of incorporating existing law into contracts, while the Seventh Circuit had rejected the Davis-McKee standard. The analysis is complicated by differing interpretations of the law, where current NLRB guidance suggested the Union could engage in sympathy strikes, while the 1977 arbitration suggested discipline was permissible for honoring picket lines. The Board’s deference to the arbitrator's decision under Olin Corp. was deemed inappropriate due to the complexities of the evidence and the need for a more thorough examination of intent.

Consequently, it was unnecessary to address the validity of the Olin deferral standard or the adequacy of the Board's explanations regarding contract and statutory claims. The Board is instructed to reconsider the case, taking into account relevant extrinsic evidence of intent. The decision is reversed and remanded for further consideration, with the stipulation that the NLRB's order must be enforced if it correctly applies the law, and its interpretations of the NLRA are upheld if reasonable.

The Board's interpretation of contract terms is generally afforded deference if reasonable, per NLRB v. Southern California Edison Co. However, it does not receive particular deference to prevent conflicting standards of interpretation between the Board and courts under Section 301 of the Labor Management Relations Act. Courts should scrutinize any agency departures from established standards for consistency with its mandate and may refrain from deferring if the Board fails to adhere to its own criteria. The retroactive application of new standards is a legal question reviewed de novo, as such decisions do not fall within the agency’s special competence.

The NLRB claims the Union cannot contest the retroactive application of a ruling since it did not raise this issue before the Board, a position countered by the Seventh and D.C. Circuits. These courts assert that the Union had indicated concerns about maintaining existing standards, and retroactivity is an inherent issue whenever a new legal rule is established. The Board should have anticipated the Union's objections, given its experience with retroactivity issues.

The NLRB incorrectly references cases (Woelke and Garment Workers) that addressed different circumstances where issues were not presented to the Board. In the current matter, while the specific retroactivity issue was not formally raised, the Board was aware it would likely be contested if any legal changes occurred. The ALJ characterized the collective bargaining agreement as a four-year contract, a classification the NLRB argues should be upheld due to the Union's lack of objection. However, pursuant to section 10(e) of the NLRA, courts cannot consider objections not previously raised unless extraordinary circumstances exist. This limitation aims to give the Board an opportunity to address all pertinent issues.

Despite the Union's failure to object to the ALJ's finding regarding the agreement's duration, the court is not precluded from examining the existence of two separate contracts. Chevron's request to disregard evidence from the ALJ proceedings contradicts the record, prompting the court to acknowledge the existence of two distinct collective bargaining agreements.