NOT FOR PUBLICATION

UNITED STATES COURT OF APPEALS FILED

FOR THE NINTH CIRCUIT OCT 16 2014

MOLLY C. DWYER, CLERK

CORNELE A. OVERSTREET, No. 14-15713 U.S. COURT OF APPEALS

Regional Director of the Twenty-Eighth Region of the National Labor Relations D.C. No. 4:14-cv-01323-FRZ Board on behalf of the National Labor Relations Board,

Petitioner - Appellee,

v. MEMORANDUM*

GUNDERSON RAIL SERVICES, LLC,

doing business as Greenbrier Rail Services,

Respondent - Appellant.

Appeal from the United States District Court for the District of Arizona Frank R. Zapata, Senior District Judge, Presiding

Argued and Submitted September 8, 2014 San Francisco, California

Before: BEA, IKUTA, and HURWITZ, Circuit Judges.

Gunderson Rail Services (“GRS”) appeals the district court’s grant of a

* This disposition is not appropriate for publication and is not precedent except as provided by 9th Cir. R. 36-3.

-1- preliminary injunction pursuant to Section 10(j), 29 U.S.C. § 160(j), of the

National Labor Relations Act, requiring GRS to reopen its Tucson repair facility,

reinstate employees, and bargain in good faith with a union on behalf of the

employees. We have jurisdiction over this appeal under 28 U.S.C. §§ 1291,

1292(a)(1). We review the grant of a preliminary injunction for an abuse of

discretion. McDermott v. Ampersand Publ’g, LLC, 593 F.3d 950, 957 (9th Cir.

2010).

“A plaintiff seeking a preliminary injunction must establish that he is likely

to succeed on the merits, that he is likely to suffer irreparable harm in the absence

of preliminary relief, that the balance of equities tips in his favor, and that an

injunction is in the public interest.” Winter v. Natural Res. Def. Council, Inc., 555

U.S. 7, 20 (2008); see also Frankl v. HTH Corp., 650 F.3d 1334, 1355 (9th Cir.

2011) (applying the preliminary injunction standard in connection with a petition

for relief under Section 10(j)). In considering the balance of equities, a district

court has a duty to “balance the interests of all parties and weigh the damage to

each.” L.A. Mem’l Coliseum Comm’n v. Nat’l Football League, 634 F.2d 1197,

1203 (9th Cir. 1980).

Here the district court abused its discretion in issuing the preliminary

injunction. The district court made both an error of law and a clear error of fact by

-2- failing to give serious consideration to GRS’s equities and by improperly weighing

the burden on GRS against the burden on the Regional Director of the National

Labor Relations Board (“Director”). Specifically, GRS claimed that an order

requiring it to reopen the Tucson facility would be disruptive to the employees

formerly located at the Tucson facility, because the majority had already accepted

relocation options or severance packages. GRS also claimed that an order to

reopen would require it to operate a facility that was (and would continue to be)

wholly unprofitable due to the loss of its major customer, TTX. GRS’s claims

were amply supported by the record. Because the district court did not

meaningfully evaluate these claims or explain its reasons for concluding that the

order would not impose significant financial losses on GRS, the court failed to

discharge its burden of fairly weighing the equities of both parties. See Winter,

555 U.S. at 20. Further, the district court’s conclusion that GRS could reopen and

support full-time employees by repairing GRS’s own railcars and those of non-

TTX customers is unsupported by the record and thus is a clear factual error.

In addition to these errors, the court abused its discretion in determining that

the Director’s equities outweighed GRS’s equities. The district court correctly

identified the Director’s equities, namely the need “to protect the integrity of the

collective bargaining process and to preserve the Board’s remedial power,” Frankl,

-3- 650 F.3d at 1355, but such equities have less weight in this context because they

can be vindicated after a final judgment. If it is determined that GRS’s November

2012 layoffs and closure of the Tucson facility constitute an unfair labor practice,

then an order for reinstatement, back pay, and bargaining regarding the layoffs and

effects of the closure may issue following final judgment. These equities are

outweighed by the potential economic harm caused by a reopening order under the

circumstances of this case. See, e.g., First Nat’l Maint. Corp. v. NLRB, 452 U.S.

666, 686 (1981) (holding that an employer has no duty to bargain over a decision

to shut down part of its business purely for economic reasons); Great Chinese Am.

Sewing Co. v. NLRB, 578 F.2d 251, 256 (9th Cir. 1978) (per curiam) (emphasizing

the burden of a reopening order when a plant has already been dismantled and its

equipment sold).

Because the district court erred in concluding that the balance of equities

tipped in favor of the Director, the court abused its discretion in issuing a

preliminary injunction requiring reopening of the Tucson facility. The Board has

not argued on appeal that, in the absence of an order requiring reopening, it is

entitled to preliminary injunctive relief requiring GRS to engage in bargaining with

the union regarding issues applicable to employees who were formerly working at

the now closed facility. Nor has the Board identified harms that will be caused by

-4- GRS’s failure to bargain with the union regarding such employees, and that cannot

be remedied after final judgment. Accordingly, the Board is not entitled to a

preliminary injunction ordering GRS to bargain with the union. See L.A. Mem’l

Coliseum Comm’n, 634 F.2d at 1202. The judgment of the district court is

reversed, and the preliminary injunction is vacated.

REVERSED AND VACATED.

-5-

FILED

Overstreet v. Gunderson Rail Services, LLC, No. 14-15713 OCT 16 2014 HURWITZ, Circuit Judge, with whom BEA, Circuit Judge, joins, concurring:

MOLLY C. DWYER, CLERK

U.S. COURT OF APPEALS

I concur in the memorandum disposition, but write separately to identify

what I find the most compelling reason to vacate the preliminary injunction.

“On a § 10(j) petition, likelihood of success is a function of the probability

that the Board will issue an order determining that the unfair labor practices

alleged by the Regional Director occurred and that this Court would grant a

petition enforcing that order, if such enforcement were sought.” Frankl v. HTH

Corp., 650 F.3d 1334, 1355 (9th Cir. 2011) (citation omitted).

The district court concluded that the Director was likely to succeed in

establishing that GRS’s economic justification for closing the Tucson facility was a

pretext and that the closure had in fact been motivated by anti-union animus. This

case arrived at the district court after an administrative law judge (“ALJ”) held a

hearing on the merits of the Director’s claims, but before the ALJ made findings of

fact or conclusions of law. Thus, the district judge made his findings on the basis

of the transcript of the administrative hearing. We now have the benefit of the

ALJ’s findings, and we may take judicial notice of them and treat them as part of

the record on appeal. See Small v. Avanti Health Sys., LLC, 661 F.3d 1180, 1186

(9th Cir. 2011); Bloedorn v. Francisco Foods, Inc., 276 F.3d 270, 288 (7th Cir.

2001). The ALJ found that GRS’s economic justification for closing the Tucson

facility was not a pretext. We must determine today whether a decision by the

Board that the Tucson closing was an unfair labor practice would be enforced by

this Court in light of the ALJ’s findings. “[A] reviewing court will review more

critically the Board’s findings of fact if they are contrary to the administrative law

judge’s factual conclusions.” Penasquitos Vill., Inc. v. NLRB, 565 F.2d 1074, 1078

(9th Cir. 1977) (citation omitted). This is particularly true where, as here, the

ALJ’s findings are based on credibility determinations. See Universal Camera

Corp. v NLRB, 340 U.S. 474, 496-97 (1951).

The linchpin of the reopening order was the district court’s conclusion, on

the paper record before it, that GRS likely acted out of anti-union animus in

closing the Tucson facility. Whatever the merits of the district court’s decision

when made, it cannot stand in light of the ALJ’s findings. I therefore agree that the

preliminary injunction should be vacated.

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