Pacific Maritime Association v. NLRB, 967 F.3d 878

Background:

Pacific Maritime Association (multi-employer rep.) and Long Beach Container Terminal employ watchmen (represented by ILWU Local 26) and marine clerks (represented by the International) under separate CBAs (Watchmen’s Agreement and Clerks’ Agreement).
On March 28, 2017 watchman Demetrius Pleas (Local 26) and a marine clerk had a racial name-calling dispute; the clerk filed a Section 13.2 discrimination grievance under the Clerks’ Agreement.
An arbitrator assigned under Section 13.2 (Clerks’ Agreement) found Pleas guilty and imposed a 28-day suspension plus training; Pacific/Long Beach participated in the Section 13.2 proceeding and notified members they would implement any discipline.
Local 26 filed unfair labor practice charges alleging (1) unlawful midterm modification of the Watchmen’s Agreement and (2) unlawful unilateral change in terms/conditions without bargaining; the NLRB (ALJ and Board) found violations on both theories and ordered rescission and make-whole relief.
The employers petitioned for review; the D.C. Circuit denied the petitions and enforced the Board’s Order, sustaining both the contract-modification and unilateral-change findings.

Issues:

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether employers unlawfully modified the Watchmen’s CBA by applying Section 13.2 and enforcing the arbitrator’s discipline	NLRB/Local 26: applying Clerks’ procedures to a Local 26 member breached and modified the Watchmen’s Agreement	Employers: they had a "sound arguable basis" to interpret Watchmen’s Agreement to permit discipline without an employer-filed Article 18 grievance	Court: upheld Board — Article 18’s plain text, exhaustion/exclusivity, bargaining history show no sound arguable basis; modification sustained
Whether employers unlawfully made a unilateral change to terms/conditions without bargaining	NLRB: applying Section 13.2 and imposing discipline altered established disciplinary practice without bargaining	Employers: no consistent prior practice; contract coverage or ambiguity precludes finding unilateral change	Court: affirmed Board — parties used Article 18 practices; the move to Section 13.2 was a material change made without bargaining
Proper scope and standard for the "sound arguable basis" defense (use of contract text vs. extrinsic evidence)	NLRB: plain contract text plus bargaining history/past practice disprove a reasonable alternative reading	Employers/dissent: Board overreached; where contract is ambiguous employer’s reasonable interpretation controls and extrinsic evidence cannot be used to defeat "sound arguable basis"	Court: sided with Board — plain language controls and bargaining history/past practice supported rejection of employers’ interpretation
Whether Board may rest on both contract-modification and unilateral-change theories for same facts	NLRB: found both violations in the alternative	Employers: cannot lawfully have both findings; remedy conflict	Court: did not resolve doctrinal exclusivity but enforced both findings because employers did not timely challenge the Board’s use of both theories

Key Cases Cited

NLRB v. Strong, 393 U.S. 357 (recognizes Board may proscribe conduct that is also a contract breach)
Universal Camera Corp. v. NLRB, 340 U.S. 474 (standard for substantial-evidence review of Board factfinding)
Ford Motor Co. v. NLRB, 441 U.S. 488 (Board has primary responsibility for scope of bargaining; deference principles)
Nolde Bros., Inc. v. Local No. 358, 430 U.S. 243 (definition of disputes that "arise under" a CBA for grievance coverage)
Katz v. NLRB, 369 U.S. 736 (unilateral change doctrine; need to bargain before making significant changes)
M&G Polymers USA, LLC v. Tackett, 574 U.S. 427 (courts apply ordinary contract-law principles to CBA interpretation)
First Nat. Maint. Corp. v. NLRB, 452 U.S. 666 (importance of adhering to collective-bargaining agreements)
Bath Iron Works Corp., 345 NLRB 499 (explains "sound arguable basis" defense to contract-modification charges)
Wilkes-Barre Hosp. Co. v. NLRB, 857 F.3d 364 (D.C. Cir. treatment of contract-coverage and waiver doctrines in unilateral-change context)