           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT  United States Court of Appeals
                                                    Fifth Circuit

                                                 FILED
                                                                             April 9, 2009

                                       No. 08-60347                    Charles R. Fulbruge III
                                                                               Clerk

COASTAL INTERNATIONAL SECURITY INC

                                                   Petitioner - Cross-Respondent
v.

NATIONAL LABOR RELATIONS BOARD

                                                   Respondent - Cross-Petitioner




     Petition for Review and Cross-Petition for Enforcement of an Order of
                       the National Labor Relations Board
                             Case No. 16-CA-23864


Before KING, BENAVIDES, and CLEMENT, Circuit Judges.
PER CURIAM:*
       Coastal International Security, Inc. petitions for review of the National
Labor Relations Board’s decision and order finding that it violated Sections
8 (a)(1) and (5) of the National Labor Relations Act by unilaterally changing the
training-period wage of newly hired employees under the predecessor-employer’s
collective bargaining agreement and by not providing the employees’ union the
opportunity to bargain. Coastal International Security, Inc. claims that these
trainees were never part of the bargaining unit or, if they were, that it exercised

       *
         Pursuant to 5TH CIR . R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR .
R. 47.5.4.
its right to set the initial terms of employment by immediately paying the new
trainees a lower wage than had the predecessor employer. For the reasons
stated below, we deny the petition for review and grant enforcement of the order.
             I. FACTUAL AND PROCEDURAL BACKGROUND
        Pursuant to a 2003 government contract, Coastal International Security,
Inc. (“CIS”) provided security services to several federal buildings in northern
Texas. Prior to CIS, the contract for these securities services was held by
Security Consultants Group, Inc. (“SCG”), and prior to that by Sooner Process
and Investigation (“Sooner”). Both Sooner and SCG paid their trainees the same
wage during their training period as fully credentialed security guards were
paid.
        In September 2001, SCG and the International Union of United
Government Security Officers of America and its Local 203 (the “Union”)
entered into a new collective bargaining agreement (the “CBA”). Article III,
Section 1 of the CBA (the “recognition clause”) defined the bargaining unit as:
        [A]ll security officers as defined in Section 9(b)(3) of the National
        Labor Relations Act, as amended, employed by the Company under
        the GSA security services contract #GS-07P-00-HHD-0035, or any
        successor contracts, in Ft. Worth, TX and surrounding areas.
That same provision expressly excluded the following employees from the
bargaining unit: “all office clerical employees, professional employees, and
supervisors as defined in the Act.”
        After successfully bidding on the contract, CIS hired a majority of the
former SCG security guards. It admits that it was a successor employer for
purposes of NLRB v. Burns International Security Services, Inc., 406 U.S. 272
(1972). CIS expressly adopted the CBA between SCG and the Union in two
separate letters of understanding without any changes to the employment terms
of guards.



                                         2
       Starting with the first class of trainees hired prior to beginning work on
the contract, CIS paid trainees minimum wage rather than the rate provided for
guards in the CBA.            This practice directly contradicted the predecessor
employers’ practice. CIS gave the Union no notice of this change.
       On September 9, 2004, the Union filed an unfair labor practice charge with
the National Labor Relations Board (“NLRB”). This charge was deferred to the
CBA’s grievance and arbitration procedures pursuant to the NLRB’s long-
standing policy of deferring unfair labor practice claims until the end of the
grievance process. CIS took the position that it would not process this claim as
a grievance because the trainees were not part of the bargaining unit
represented by the Union.
       On May 29, 2007, the Regional Director of the NLRB revoked the deferral
and issued a complaint against CIS for unilaterally changing the wage rate of
the trainees in violation of Sections 8(a)(1) and (5) of the National Labor
Relations Act (“NLRA”).1 The case was referred to an administrative law judge
(“ALJ”) who found that the trainees were part of the bargaining unit under the
language of the recognition clause and also based on their “historical inclusion
in the unit” by Sooner and SCG. The ALJ concluded that CIS had violated
Sections 8(a)(1) and (5) “[b]y unilaterally, without notice to or bargaining with
[the Union], paying newly hired employees $5.15 per hour rather than the
contractual wage rate.” CIS appealed this decision to the NLRB. On March 28,
2008, the NLRB issued its Decision and Order (the “Order”) affirming the ALJ’s




       1
           Section 8(a)(5) states that it is an unfair labor practice “to refuse to bargain
collectively with the representatives of [the employer’s] employees.” 29 U.S.C. § 158(a)(5).
Section 8(a)(1) reinforces this obligation by making it an unfair labor practice to “interfere
with, restrain, or coerce employees in the exercise of the rights guaranteed in section 157 of
this title.” Id. § 158(a)(1). Collectively, “Sections 8(a)(5) and (1) of the Act oblige an employer
to notify and consult with the Union concerning changes in wages, hours and conditions of
employment.” NLRB v. Pinkston-Hollar Constr. Servs., Inc., 954 F.2d 306, 310 (5th Cir. 1992).

                                                3
findings. On April 21, 2008, CIS filed a timely petition for review of the Order
with this court.
                        II. STANDARD OF REVIEW
      “This court’s review of [an] NLRB[] decision is more than a mere rubber
stamp of the decision; however, a certain degree of deference is accorded.”
Asarco, Inc. v. NLRB, 86 F.3d 1401, 1406 (5th Cir. 1996). We uphold an NLRB
decision “if it is reasonable and supported by substantial evidence on the record
considered as a whole.” Strand Theatre of Shreveport Corp. v. NLRB, 493 F.3d
515, 518 (5th Cir. 2007) (quotation marks omitted); see also Brown & Root, Inc.
v. NLRB, 333 F.3d 628, 633 (5th Cir. 2003) (“Because the Court is not left merely
to accept the Board’s conclusions, the Court must be able to conscientiously
conclude that the evidence supporting the Board’s determination is substantial.”
(quotation marks omitted)). “Substantial evidence is such relevant evidence as
a reasonable mind would accept to support a conclusion.” J. Vallery Elec., Inc.
v. NLRB, 337 F.3d 446, 450 (5th Cir. 2003) (quotation marks omitted).
      With respect for the NLRB’s expertise in labor law, we “will defer to
plausible inferences it draws from the evidence, even if we might reach a
contrary result were we deciding the case de novo.” Valmont Indus., Inc. v.
NLRB, 244 F.3d 454, 463 (5th Cir. 2001) (quotation marks omitted). This
deference applies to both the NLRB’s findings of fact and application of the law.
Strand, 493 F.3d at 518; see also 29 U.S.C. § 160(e) and (f). However, this court
conducts a de novo review of the NLRB’s legal conclusions, “including its
interpretation of a collective-bargaining agreement.” Strand, 493 F.3d at 518.
Although we remain “mindful of the [NLRB’s] considerable expertise in
interpreting collective bargaining agreements,” J. Vallery, 337 F.3d at 450
(quotation marks omitted), “we need accord no deference to the Board’s”
construction of a labor contract. Miss. Power Co. v. NLRB, 284 F.3d 605, 619



                                       4
(5th Cir. 2002); see also BP Amoco Corp. v. NLRB, 217 F.3d 869, 873 (D.C. Cir.
2000).
                                    III. DISCUSSION
       CIS advances three arguments:                (1) the plain language of the CBA
excluded the trainees from the bargaining unit; (2) the predecessor employers
did not have a past practice of including the trainees as members of the
bargaining unit; and (3) assuming the trainees were part of the bargaining unit,
CIS exercised its right to unilaterally set the initial terms of employment after
taking over from the predecessor employer.2 Although we conclude that, if we
look only to the plain language of the CBA, the trainees are not included in the
bargaining unit, we also conclude that substantial evidence supports the NLRB’s
determination that the predecessor employers’ past practices establish a course
of dealing that included the trainees in the bargaining unit. Additionally, the



       2
         CIS also argued that the NLRB was not an appropriate forum to adjudicate this
dispute because it was solely a contract interpretation issue that should have been filed in
federal court under Section 301 of the Labor Management Relations Act, 29 U.S.C. § 185,
rather than as an unfair labor practice claim. This argument is undermined by CIS’s
acknowledgment that there could be no determination of whether there was a Section 8(a)(1)
and (5) violation for failure to bargain without a foundational finding that the trainees were
part of the bargaining unit under the CBA. Thus, CIS admits that this is a mixed case that
requires a contract interpretation in order to determine whether a successor employer’s failure
to bargain violated the NLRA. In such cases, the NLRB remains an appropriate forum to
adjudicate both questions—the interpretation of the CBA and whether there was a violation
of the NLRA. See Litton Fin. Printing Div. v. NLRB, 501 U.S. 190, 202 (1991) (noting that the
NLRB “has occasion to interpret collective-bargaining agreements in the context of unfair
labor practice adjudication”); see also NLRB v. C&C Plywood Corp., 385 U.S. 421, 428 (1967)
(holding that the NLRB “in necessarily construing a labor agreement to decide this unfair
labor practice case, has not exceeded the jurisdiction laid out for it by Congress”); D.E.W., Inc.
v. Local 93, Laborers’ Int’l Union of N. Am., 957 F.2d 196, 202 (5th Cir. 1992) (stating that
“‘the authority of the [National Labor Relations] Board to deal with an unfair labor practice
which also violates a collective bargaining contract is not displaced by § 301, but it is not
exclusive and does not destroy the jurisdiction of the courts in suits under § 301’” (quoting
Smith v. Evening News Ass’n, 371 U.S. 195, 197 (1962))); NLRB v. BASF Wyandotte Corp., 798
F.2d 849, 857 (5th Cir. 1986) (“Where the contract violation is also a unilateral change by the
employer in working conditions subject to mandatory bargaining . . . there can be both a
contract violation and a § 8(a)(5) violation.”).

                                                5
NLRB correctly held that CIS lost its right to set the initial terms of employment
by agreeing to be bound by the terms of the predecessor employer’s CBA.
       First, CIS argues that the trainees are not part of the bargaining unit
under the plain language of the CBA’s recognition clause. The recognition clause
contains two requirements for membership in the bargaining unit: the employee
must (1) meet the statutory definition of a security officer under Section 9(b)(3)
of the NLRA and (2) be employed under the specified government contract. The
trainees in this case do not satisfy either requirement.
       Regarding the first requirement, Section 9(b)(3) of the NLRA states that
a security guard is “any individual employed as a guard to enforce against
employees and other persons rules to protect property of the employer or to
protect the safety of persons on the employer’s premises.” It further states that
no unit shall consist of both guards and non-guards. 3 In determining whether
an employee qualifies as a guard, the NLRB looks to “the nature of the duties of
guards and not the percentage of time which they spend in such duties.” Rhode
Island Hosp., 313 NLRB 343, 346 (1993). However, in order to be a guard under
Section 9(b)(3), the employee’s guard responsibilities must be “not a minor or
incidental part of their overall responsibilities.” Id. at 347; see also Boeing, 328
NLRB at 130; J.C. Penney Co., Inc., 312 NLRB 32, 33 (1993). More than “minor
or incidental” means that guards cannot be employees “who carry out no security
functions at all.” Burns Sec. Servs., 300 NLRB 298, 301 (1990).




       3
        The policy behind Section 9(b)(3) is to avoid any potential conflicts from having guards
enforcing rules against non-guards within the same bargaining unit. See Boeing Co., 328
NLRB 128, 130 (1999); see also Wackenhunt Corp. v. NLRB, 178 F.3d 543, 546 (D.C. Cir. 1999).
Under the particular circumstances of this case, where the employer effectively recognized a
mixed guard and non-guard (i.e., trainees) unit, that policy would not be threatened.

                                               6
       The trainees in this case do not satisfy Section 9(b)(3)’s definition of a
security guard.4 Until they completed the training and received their GSA
certification, the trainees were not permitted to perform any guard or security
duties. The trainees received classroom instruction at an off-site location and
did not work side-by-side with guards conducting security functions. Their only
duty was to attend class and receive instruction.
       The NLRB suggests that guard responsibilities include “training in
security procedures [and] weapons training and possession.” Boeing, 328 NLRB
at 130. Thus, rather than having no security function at all, the NLRB argues
that 100% of the training time qualifies as a security function.                While the
NLRB’s quotation from Boeing standing alone may appear to have this broad
meaning, the cases cited in support of the quotation reveal that the NLRB has
misinterpreted its context. In the cases cited in Boeing, a lack of security
training was used to show that a certain type of employee could not qualify as
a guard. Wolverine Dispatch, Inc., 321 NLRB 796, 798 (1996) (receptionists); 55
Liberty Owners Corp., 318 NLRB 308, 308–09 (1995) (doorpersons and elevator
operators); Burns, 300 NLRB at 300–01 (firefighters were not security guards
despite receiving security training).         Boeing never implies that the act of
receiving training is itself a security guard responsibility.
       The trainees in this case also fail to meet the second requirement of the
recognition clause because they were not employed under the specified
government contract.        The contract required employees to complete their


       4
         The Order cites Old Dominion Security, 289 NLRB 81 (1988), for the proposition that
the Board considers guards-in-training to be guards for purpose of Section 9(b)(3). The
employer in that case created two classes of guards. Class I guards were guards-in-training
and received $3.85 an hour; Class II guards had completed training and received $5.49 an
hour. Unlike Old Dominion, there is only one class of guards in the CBA in this case.
Although Old Dominion may show that there is not necessarily a Section 9(b)(3) conflict
between having guards and guards-in-training in the same bargaining unit, it does not go so
far as to hold that guards-in-training are no different than regular guards.

                                             7
training and receive GSA certification prior to performing any services on the
contract. Thus, it is undisputed that the trainees were not performing actual
security services under the contract. However, the Order concluded that this
requirement was satisfied because the trainees were hired in contemplation of
staffing this specific contract. Being hired “in contemplation” of a contract is not
the equivalent of being employed “under” the contract, particularly in light of the
fact that many of the trainees would never complete the training or would be
posted at other locations under different contracts. Furthermore, the Vice-
President of Human Resources for CIS’s parent company testified that the
training hours are not billed directly to the government in connection with this
contract because the trainees are not performing any contracted-for services
while being trained.      Since the trainees were not performing any services
required by the contract and lacked the certification to perform those services,
the trainees could not be employed “under” the contract as required by the
recognition clause.5
      The NLRB claims that several terms other than the recognition clause
support its interpretation of the CBA that the trainees were members of the
bargaining unit. First, it notes that the trainees do not appear on the list of
categories of employees who are excluded from the bargaining unit.                  This
argument is unpersuasive because not being included on such a list cannot
default to guard status when the plain language of the recognition clause would
not include the trainees in the unit. The single case cited in support of this
argument is distinguishable. In Branson v. Greyhound Lines, Inc., 126 F.3d 747,
758 (5th Cir. 1997), there was only a single list of circumstances, rather than one



      5
         Although we recognize that the Department of Labor may have made a preliminary
finding in 2005 that 14 pre-contract trainees were entitled to payment under the CBA, that
finding was made pursuant to the rules for the awarding of contracts under the Service
Contract Act, 41 U.S.C. § 351, and is not binding here.

                                            8
clause providing a definition and one clause creating exclusions to that defined
group. The court concluded that by not appearing on that single list, the subject
circumstance was intended to be excluded. Here, the trainees were omitted from
both the inclusive and the exclusive list. The NLRB’s argument fails because,
ultimately, the trainees can never meet the two explicit requirements to be
members of the bargaining unit.
      Next, the NLRB argues that the seniority provisions of the CBA require
the trainees to be included in the bargaining unit. The CBA creates two classes
of seniority, government seniority and bargaining unit seniority. Government
seniority is “[t]he total length of time spent by an employee in any capacity in
the continuous service of the present (successor) contractor, including both the
time spent in performing on regular commercial work and the time spent in
performing on the Government contract itself.” Bargaining unit seniority is
“[a]n employee’s date of hire into the bargaining unit.” The CBA also states that
“the Bargaining Unit Seniority and Government Seniority of employees will
usually be the same date in most circumstances.” Based on these definitions, the
NLRB asserts that in order for these two dates to be the same in most
circumstances, they must start running at the first date of hire and not at the
completion of training. Indeed, there was testimony that this was the practice
of the predecessor employers. While this argument may favor the NLRB’s
interpretation, it is still outweighed by the plain language of the more specific
recognition clause. Instead, this argument is more strongly supportive of the
NLRB as course of dealing evidence as discussed below.
      In sum, based upon a de novo review of the NLRB’s interpretation of the
CBA, the trainees were not members of the bargaining unit under the plain
language of the CBA.
      Next, we consider whether there is substantial evidence to support the
NLRB’s finding that the predecessor employers had a past practice of including

                                       9
trainees in the bargaining unit. CIS admits that it was a successor employer
under NLRB v. Burns International Security Services, Inc., 406 U.S. 272 (1972).
“A successor employer is required to recognize and negotiate with the bargaining
agent of the predecessor’s employees if the bargaining unit remains appropriate
and the successor does not have a good faith doubt of the union’s continuing
majority support.” Trident Seafoods, Inc. v. NLRB, 101 F.3d 111, 114 (D.C. Cir.
1996). “Where a collective bargaining agreement embodies a particular working
condition and past practice demonstrates that an employer had administered
that working condition in a particular manner, the employer is forbidden from
changing that condition unilaterally.” BASF Wyandotte, 798 F.2d at 853; see
also Blitz Maint., 297 NLRB 1005, 1008–09 (1990) (noting that the predecessor’s
past practices “are kept in place by virtue of Section 8(a)(5) of the Act rather
than by force of contract”). Additionally, “there is a strong presumption favoring
the maintenance of historically recognized bargaining units.       The Board is
reluctant to disturb units established by collective bargaining so long as those
units are not repugnant to Board policy or so constituted as to hamper
employees in fully exercising rights guaranteed by the Act.” Trident Seafoods,
101 F.3d at 114 (quotation marks omitted). Thus, if Sooner and SCG established
a practice of including trainees in the bargaining unit, the trainees were still
members of the unit after CIS became the successor employer and CIS would
have had a duty to bargain with the Union over changing their wage.
      The Order states that “[t]he payment of the contractual rate to newly hired
guard employees in training by the predecessors established a past practice.” It
cites no other evidence in support of this finding. CIS argues that this single
fact only establishes a practice of paying a specific salary, not a practice of
including the trainees as members of the bargaining unit. While equal pay is
strong evidence supporting an inference that the predecessor employers included
trainees in the bargaining unit, we need not decide whether that fact alone

                                       10
constitutes substantial evidence because the record contains other examples—
not mentioned in the Order—of the predecessor employers treating the trainees
as members of the bargaining unit.
      Aside from equal pay, the NLRB points to other course of dealing evidence
indicating that the trainees were treated as members of the bargaining unit by
Sooner and SCG. There was testimony that the predecessor employers paid
trainees a wage supplement for health and welfare benefits during their training
period and they began calculating the trainees’ seniority date from the date they
started training, not the date they completed training. Both of these practices
are consistent with including the trainees as members of the bargaining unit
under the terms of the CBA.
      Unable to dispute these facts, CIS is forced to rely on the absence of what
might be more compelling evidence of including the trainees in the bargaining
unit, such as rosters identifying trainees as members of the unit, authorization
cards signed by trainees, or dues payments by trainees. The absence of these
more conclusive forms of evidence does not detract from the evidence presented.
Based on the fact that the predecessor employers paid the trainees the same
wage as guards, paid them the health and welfare benefit supplement, and
calculated their seniority date based on their hiring date rather than the date
of the completion of their training, we determine that the NLRB’s conclusion
that the predecessor employers had a practice of including the trainees in the
bargaining unit was supported by substantial evidence.
      Finally, as we have now concluded that the trainees were members of the
bargaining unit, CIS argues that it exercised its right under Burns to
unilaterally set the initial terms of employment after taking over from a
predecessor employer when it started paying the trainees at a lower wage. The
NLRB argues that CIS lost the right to change the initial terms of employment
after it adopted the CBA.

                                       11
      In Burns, the successor employer retained a majority of the predecessor
employer’s employees, giving rise to a duty to bargain with the employees’ union.
406 U.S. at 275, 278, 281. But merely having a duty to bargain does not mean
that the successor employer is “bound to observe the substantive terms of the
collective-bargaining contract the union had negotiated with” the predecessor
employer. Id. at 281–82, 284. The Supreme Court recognized that, under
certain circumstances, it would be beneficial for the employer to voluntarily
adopt the predecessor’s CBA: “In many cases, of course, successor employers will
find it advantageous not only to recognize and bargain with the union but also
to observe the pre-existing contract rather than to face uncertainty and turmoil.”
Id. at 291.
      The successor employer in Burns made it “perfectly clear” that it did not
intend to assume the terms of the predecessor’s CBA. Id. at 285. The NLRB
argues that CIS was not free to unilaterally change a term in the CBA because
it was “perfectly clear” that it would assume the terms of the predecessor’s CBA.
Id. at 294–95 (“Although a successor employer is ordinarily free to set initial
terms on which it will hire the employees of a predecessor, there will be
instances in which it is perfectly clear that the new employer plans to retain all
of the employees in the unit and in which it will be appropriate to have him
initially consult with the employees’ bargaining representative before he fixes
terms.”).
      Shortly after Burns, the NLRB interpreted this exception:
      We believe the caveat in Burns, therefore, should be restricted to
      circumstances in which the new employer has either actively or, by
      tacit inference, misled employees into believing they would all be
      retained without change in their wages, hours, or conditions of
      employment, or at least to circumstances where the new employer
      . . . has failed to clearly announce its intent to establish a new set of
      conditions prior to inviting former employees to accept employment.
Spruce Up Corp., 209 NLRB 194, 195 (1974) (footnote omitted).

                                         12
      This Court previously summarized the holdings in Burns and Spruce Up
as follows:
      Generally, a successor employer is not bound by its predecessor’s
      CBA. However, certain rules govern an employer’s successorship.
      When a successor employer takes over for its predecessor it has
      certain recognized rights and duties. The employer can institute its
      own initial terms and conditions of employment by giving the
      employees prior notice of its intention. NLRB v. Burns Int’l Security
      Serv., 406 U.S. 272, 294 (1972). If not, and the employer holds itself
      as if it will adhere to the terms of the previous CBA, then in order
      for the employer to change terms of that agreement, it must bargain
      for those changes. Spruce-Up Corp., 209 NLRB 194, 195 (1974),
      enforced without op., 529 F.2d 516 (4th Cir. 1975). Moreover, any
      unilateral changes to the predecessor’s CBA may take place only
      after bargaining to an impasse. NLRB v. Edjo, Inc., 631 F.2d 604,
      606–08 (9th Cir. 1980). Failure to negotiate or negotiate to an
      impasse will result in a violation of § 8(a)(5) of the Act.
NLRB v. Houston Bldg. Servs., Inc., 128 F.3d 860, 864 n.6 (5th Cir. 1997).
      In this case, CIS made it perfectly clear that it wanted to adopt the terms
of the CBA without change when it executed the Letter of Understanding stating
that “All other provisions, terms, and conditions of the [CBA], except as provided
herein, shall continue in full force and effect.” CIS agreed to be bound by the
terms of the CBA in the letters of understanding and it informed the former SCG
employees that the terms and conditions of their employment would not be
changed. Thus, it is precisely the type of successor employer described in Spruce
Up as fitting within the Burns exception requiring initial terms to be bargained
for with the Union.    After agreeing to hire a majority of the predecessor’s
employees and to be bound by the terms of the CBA, CIS lost its right to
unilaterally set the initial terms of employment pursuant to Burns and Spruce
Up. Instead, it was obligated to bargain with the Union about its proposed
changes. Cf. SFX Target Ctr. Arena Mgmt., 342 NLRB 725, 725 n.3 (2004)
(noting that the scope of the bargaining unit is not something that can be



                                       13
unilaterally set as an initial term or condition of employment). The fact that
individual trainees were new hires and their identities were likely unknown to
the Union at their start is of no moment. The duty is to bargain with the
representative of a unit that has been determined by job category or categories
rather than by the individuals that happen to hold the job or jobs at issue. See
NLRB v. Saint Francis Coll., 562 F.2d 246, 248 (3d Cir. 1977).
      In sum, the plain language of the CBA did not include the trainees as
members of the bargaining unit, but, as the NLRB correctly held, the past
practice of the predecessor employers was to include them in the bargaining
unit. CIS lost its right to set the initial terms of employment as a successor
employer under Burns when it agreed to be bound by the terms of the CBA.
Accordingly, as the NLRB held, CIS had an obligation to bargain with the Union
before it changed the pay of the trainees.
                             IV. CONCLUSION
      For the reasons stated above, we DENY CIS’s petition for review and
GRANT enforcement of the NLRB’s Order.
      Petition for review DENIED. Order ENFORCED.




                                      14
