## Facts

- Steamfitters Local Union No. 342 operated an exclusive hiring hall controlling referrals for construction work at a California refinery jobsite.
- Joe Jacoby, a union member for 27 years, registered for referrals and was placed on the highest-priority “A” list based on his qualifications.
- For a period, the union mistakenly dispatched lower-priority workers ahead of Jacoby; the parties agreed the mistake was negligent, not intentional or discriminatory.
- After discovering the error, the union resumed dispatching Jacoby in proper priority order.
- Jacoby filed unfair-labor-practice charges alleging the union’s negligent departure from referral rules breached the duty of fair representation and violated NLRA § 8(b)(1)(A) and § 8(b)(2).
- An ALJ found the negligent deviation from hiring-hall procedures violated the duty of fair representation and the NLRA provisions.
- The NLRB reversed, holding that negligence alone in hiring-hall referrals does not breach the duty of fair representation and therefore is not an unfair labor practice.

## Issues

1. Whether the NLRB could treat negligent misapplication of exclusive hiring-hall referral rules as categorically insufficient to breach the union’s duty of fair representation under NLRA § 8(b)(1)(A) and § 8(b)(2).
2. Whether, in exclusive hiring-hall cases, the duty of fair representation requires application of a heightened fair-dealing standard beyond the generally deferential “arbitrary, discriminatory, or bad faith” formulation.
3. Whether the NLRB, while generally entitled to Chevron deference when enforcing the duty of fair representation through unfair-labor-practice adjudication, must follow binding circuit precedent governing the standard for exclusive hiring halls.

## Decision

- The D.C. Circuit granted Jacoby’s petition for review.
- The court vacated the NLRB’s order to the extent it relied on an incorrect legal standard.
- The court held the Board misapplied governing law by failing to apply a heightened duty of fair dealing for unions operating exclusive hiring halls.
- The court remanded to the NLRB to evaluate the union’s conduct under the heightened standard rather than a rule effectively exempting negligent referral errors.
- The court did not decide whether the union’s negligence actually breached the duty of fair representation; it required the Board to conduct that analysis in the first instance.

## Legal Principles

- A union’s duty of fair representation is commonly described as prohibiting conduct that is arbitrary, discriminatory, or in bad faith, but that general formulation does not necessarily control the hiring-hall context.
- When a union operates an exclusive hiring hall and controls access to employment opportunities, it is subject to a heightened duty of fair dealing in administering referral rules.
- The NLRB’s interpretation of the duty of fair representation, when used to identify and remedy unfair labor practices, may receive Chevron deference, but the Board cannot disregard controlling circuit precedent on the applicable standard.
- In exclusive hiring-hall administration, departures from referral rules must be assessed under the heightened fair-dealing standard, rather than dismissed solely because they are negligent.

## Conclusion

The D.C. Circuit required the NLRB to apply a heightened duty of fair dealing to a union’s operation of an exclusive hiring hall and remanded for reconsideration because the Board had treated negligence in referrals as categorically insufficient to establish a duty-of-fair-representation breach and related NLRA violations.


Jacoby v. Nat'l Labor Relations Bd., 233 F.3d 611 (D.C. Cir. 2000)