NOT FOR PUBLICATION FILED

UNITED STATES COURT OF APPEALS MAR 19 2021

MOLLY C. DWYER, CLERK

U.S. COURT OF APPEALS

FOR THE NINTH CIRCUIT

LABORERS' INTERNATIONAL UNION No. 20-15318

OF NORTH AMERICA, LOCAL 169,

D.C. No. Petitioner-counter- 3:19-cv-00401-MMD-CLB respondent-Appellee,

v. MEMORANDUM*

THE PENTA BUILDING GROUP, INC.,

Respondent-counter- claimant-Appellant.

Appeal from the United States District Court for the District of Nevada Miranda M. Du, Chief District Judge, Presiding

Argued and Submitted February 11, 2021 San Francisco, California

Before: WARDLAW and BEA, Circuit Judges, and CAIN,** District Judge.

The Penta Building Group, Inc. (“Penta”) appeals from the district court’s

judgment affirming an arbitration award in favor of Laborers’ International Union

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The Honorable James David Cain, Jr., United States District Judge for the Western District of Louisiana, sitting by designation. of North America, Local 169 (“the union”). We have jurisdiction under 28 U.S.C.

§ 1291, and we affirm.

At issue here is the Laborers Master Agreement (“LMA”), a collective

bargaining agreement formed under § 9(a) of the National Labor Relations Act

(“NLRA”), 29 U.S.C. § 159. This agreement arose in 2015 between an association

of construction employers, including Penta, and the union, which represents

various types of construction workers in Northern Nevada. In May 2018, near the

end of the LMA’s term, Penta sent timely written notice of its intent to terminate

the agreement. The union responded that Penta’s notice was invalid under the

LMA’s terms because it had not offered to meet and confer with the union and that

Penta was therefore bound to any successor LMA that arose from its negotiations

with the rest of the association. Penta defended its notice under the LMA but also

notified the union that it was withdrawing recognition because it no longer had any

projects in the union’s jurisdiction or employed any bargaining unit employees.

The parties submitted their disagreement over the notice’s validity to

arbitration in accordance with the LMA, though Penta maintained that the issue

was moot because it had withdrawn recognition of the union. The arbitrator

disagreed that the issue was moot, finding that the notice was defective under the

LMA and therefore invalidated Penta’s attempted withdrawal of recognition.

Accordingly, the arbitrator determined that Penta was bound to the successor LMA

2 negotiated between other association members and the union. The union moved to

affirm the award in the district court, where Penta also moved for vacatur. The

district court affirmed the award, rejecting Penta’s arguments that its right

unilaterally to withdraw recognition of the union under NLRB precedent trumped

the termination requirements under the LMA. Penta now appeals that ruling.

1. We review the district court’s denial of a motion to vacate an arbitration

award de novo. Aramark Facility Svcs. v. Serv. Employee Int’l Union, Local 1877,

AFL CIO, 530 F.3d 817, 822 (9th Cir. 2008). The scope of our review of an

arbitrator’s decision in a labor dispute is narrow and the decision is usually upheld

as long as it represents a “plausible interpretation of the contract.” Id. at 822–23

(internal citation omitted). Exceptions to this general deference occur, however,

where (1) the “award does not draw its essence from the collective bargaining

agreement and the arbitrator is dispensing his own brand of industrial justice,” (2)

“the arbitrator exceeds the boundaries of the issues submitted to him,” or (3) “the

award is contrary to public policy.” United Food & Commercial Workers Int’l

Union, Local 588 v. Foster Poultry Farms, 74 F.3d 169, 173 (9th Cir. 1995)

(internal quotation marks and citations omitted).

The arbitrator had jurisdiction to decide the dispute even after Penta had

attempted to withdraw from the LMA and even though Penta no longer employed

any covered employees. The LMA confirmed Penta’s recognition of the union

3 under § 9(a) of the NLRA and set forth the terms under which such recognition

could be withdrawn. Following such recognition the union is entitled to a

conclusive presumption of majority status for the entire term of the CBA, which

can last up to three years. Auciello Iron Works, Inc. v. NLRB, 517 U.S. 781, 786

(1996) (internal citation omitted); see also Johnson Controls, Inc., 368 NLRB No.

20, at *4 (2019). Penta argues that under the “single employee rule,” a

longstanding NLRB precedent which provides that a bargaining unit must contain

at least two members, it was nonetheless entitled to withdraw recognition upon

belief that these circumstances existed. The cases on which it relies, however,

support an exception to the union’s presumption of majority status only under

unique circumstances not present here, such as a corporate reorganization, or have

emphasized that the rule applies only where the union lacks adequate

representation “at all material times.” See Foreign Car Ctr., Inc., 129 NLRB 319,

320 (1960); Kirkpatrick Electric Co., Inc., 314 NLRB 1047, 1053 (1994),

Here, on the other hand, the LMA prevents the employer from unilaterally

withdrawing recognition or otherwise attempting to terminate the LMA in the

middle of its term. Section 1, “Recognition,” provides that the employer will

recognize the union as exclusive collective bargaining agent for employees within

its jurisdiction “unless and until such time as the Union loses its status as the

employees’ exclusive representative as a result of an NLRB election requested by

4 the employees.” The same section provides that the employer will not request such

an election and “expressly waives any right to do so.” Meanwhile, Section 39 is

titled “Effective and Termination Date” and provides:

Except as set forth above, the Employer and each individual Employer bound to this agreement waives any right to terminate, abrogate, repudiate, or cancel this agreement during its term or during the terms of any future modifications, changes, amendments, supplements, [or] extensions, or to file or process any petition before the National Labor Relations Board seeking such termination, abrogation, repudiation or cancellation.

Under these terms there was no basis for Penta to repudiate the LMA in the

middle of its term—even under a good faith belief that the union no longer had

adequate representation—and nothing in NLRB precedent supporting its attempt to

do so in violation of the LMA. Additionally, we find no injustice in holding Penta

to the LMA’s terms even if it did not have any bargaining unit employees through

the entire term of the LMA. The agreement gives the union bargaining

representative status of employees on present and future projects only within the

union’s jurisdiction, meaning that the union would have no bargaining power to

use against Penta while Penta had no bargaining unit employees. See id. at 120.

Accordingly, Penta’s withdrawal of recognition did not void the LMA or deprive

the arbitrator of jurisdiction thereunder.

2. The arbitrator did not exceed his jurisdiction by determining that Penta

was bound to the successor LMA. Representational issues, including identification

5 of a bargaining unit under § 9 of the NLRA, fall within the NLRB’s primary

jurisdiction. Pace v. Honolulu Disposal Serv., Inc., 227 F.3d 1150, 1156–57 (9th

Cir. 2000). Arbitrators and federal courts alike must tread lightly around resolving

these issues, even when they are raised within the guise of contract interpretation.

Id.; see also Ziegler, Inc., 333 NLRB 949, 949–50 (2001). We “[draw] the

jurisdictional line by asking ‘whether the major issues to be decided . . . can be

characterized as primarily representational or primarily contractual.’” Pace, 227

F.3d at 1157 (quoting United Ass’n of Journeymen, etc. v. Valley Engineers, 975

F.2d 611, 614 (9th Cir. 1992)).

Here the grievance dealt with the terms of the LMA, but the arbitrator’s

decision had significant representational implications. While recognizing the

NLRB’s primary jurisdiction over representational matters, we have also held that

the parties may resolve such issues contractually. Hotel Emps., Restaurant Emps.

Union, Local 2 v. Marriott Corp., 961 F.2d 1464, 1468 (9th Cir. 1992); see also

Int’l Union of Painter & Allied Trades, Dist. 15, Local 159 v. J & R Flooring, Inc.,

656 F.3d 860, 869 (9th Cir. 2011). Here, the LMA set forth specific terms on

notice, termination, and the consequences of deficient notice. That the arbitrator

referenced these sections and used the LMA’s terms to address Penta’s contention

that the withdrawal of recognition negated any consequences for the deficient

notice does not show that he exceeded his jurisdiction. Instead, Penta’s

6 disagreements about the proper interpretation of these terms and their impact on its

ability to withdraw recognition remain a contractual issue within the scope of the

arbitrator’s jurisdiction.

3. The arbitrator did not exceed his authority under either the grievance or

the terms of the LMA by deciding a representational issue. One basis for vacating

an arbitrator’s award occurs when he exceeds the boundaries of the issue submitted

to him. Foster Poultry Farms, 74 F.3d at 173. However, there is a general

presumption in favor of arbitrability whenever a contract contains an arbitration

clause. Westinghouse Hanford Co. v. Hanford Atomic Metal Trades Council, 940

F.2d 513, 517 (9th Cir. 1991). Once a matter is submitted to arbitration, it is

presumed that the arbitrator should decide “procedural questions which grow out

of the dispute and bear on its final disposition” as well as “allegations of waiver,

delay, or a like defense to arbitrability.” Sw. Reg. Council of Carpenters v. Drywall

Dynamics, Inc., 823 F.3d 524, 531 (9th Cir. 2016) (cleaned up). Courts should

assume that the parties have agreed to arbitrate the issue of arbitrability only in the

face of clear and unmistakable evidence. PowerAgent Inc. v. Electronic Data Sys.

Corp., 358 F.3d 1187, 1191 (9th Cir. 2004). When this is the case, the court gives

the arbitrator’s conclusions the same deference accorded to other aspects of his

decision. Id.

7 The LMA authorized the arbitrator to decide disputes “over interpretations

and operations of this Agreement.” The union filed its grievance “over the failure

of Penta to comply with the terms of the LMA[, i]ncluding but not limited to

Section 39.” It specifically noted its “unequivocal position that Penta’s notice was

deficient and not in compliance with the terms of the [LMA].” Penta agreed to this

scope but maintained that any procedural defects were moot because it no longer

employed anyone in the bargaining unit. It also expressly reserved defenses,

including lack of jurisdiction, and argued to the arbitrator that he lacked authority

to determine the validity of the withdrawal of recognition.

The arbitrator defined the issue as: “Was Penta’s notice deficient and not in

compliance with the terms of the [LMA]? If not, what shall be the appropriate

remedy?” Within this scope he was required to—and did—address Penta’s

arguments regarding the withdrawal of recognition and its effect on notice

requirements by referencing the terms of the LMA. To the extent there was a

question of arbitrability before the arbitrator, Penta fails to call the arbitrator’s

interpretation of LMA terms and resolution of the issue into question. Accordingly,

this argument likewise shows no basis for vacatur.

4. The arbitrator’s decision does not violate public policy. Finally, Penta

argues that the arbitrator’s decision should be set aside because it violates public

policy by mandating collective bargaining with an improper union. Another

8 exception to the usual deference afforded to an arbitrator’s award occurs where the

award “actually violates . . . any explicit, well defined and dominant public

policy.” George Day Constr. Co., Inc. v. United Bhd. of Carpenters & Joiners of

Am., Local 354, 722 F.2d 1471, 1477 (9th Cir. 1984). This exception is narrow. E.

Assoc. Coal Corp. v. United Mine Workers of Am., Dist. 17, 531 U.S. 57, 63

(2000). The policy at issue must specifically militate against the relief ordered by

the arbitrator, and its existence must be drawn from “laws and legal precedents

[rather than] general considerations of supposed public interests.” Id. at 62. The

party seeking to vacate the award bears the burden of showing that it is contrary to

public policy. Foster Poultry Farms, 74 F.3d at 174.

Here Penta points to an “explicit, well-defined and dominant public policy

against collective bargaining with unions representing an inappropriate bargaining

unit,” in reliance on Sections 7, 8(a)(1), and 8(a)(2) of the NLRA. Section 7 speaks

to the employees’ right to self-determination. 29 U.S.C. § 157. Meanwhile,

Sections 8(a)(1) and 8(a)(2) make it an unfair labor practice for the employer (1)

“to interfere with, restrain, or coerce employees” in their exercise of rights under

Section 7 or (2) “to dominate or interfere with the formation or administration of

any labor organization or contribute financial or other support to it.” 29 U.S.C. §

158(a)(1)–(2). Accordingly, we have held that it is an unfair labor practice for an

employer to recognize a union that lacks majority support. See, e.g., Cascade Gen.

9 v. NLRB, 9 F.3d 731, 734 (9th Cir. 1993). Penta therefore maintains that the

arbitrator’s award—binding Penta to a successor LMA with the union, though

Penta employs no workers within the union’s jurisdiction—violates this policy

because it deprives any future workers hired within this jurisdiction of the right to

select a rival union or no union at all.

Here, however, Section 1 of the LMA expressly preserves the employees’

right to call an NLRB election in order to determine the union’s status. As long as

the successor LMA also contains this provision, then any future Penta workers

within the union’s jurisdiction also retain their right to self-determination.

Accordingly, this matter does not fall within the narrow public policy exception of

deference to arbitration awards.

AFFIRMED.

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