National Labor Relations Board v. Whitesell Corp.

Citations: 638 F.3d 883; 190 L.R.R.M. (BNA) 2769; 2011 U.S. App. LEXIS 8302Docket: 10-2934

Court: Court of Appeals for the Eighth Circuit; April 22, 2011; Federal Appellate Court

Original Court Document: View Document

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The National Labor Relations Board (NLRB) seeks enforcement of its order against Whitesell Corporation for violations of the National Labor Relations Act (NLRA) during negotiations for a new collective-bargaining agreement (CBA) with the Glass, Molders, Pottery, Plastics, and Allied Workers International Union. Whitesell contests the NLRB's jurisdiction to issue a new decision following a prior denial by the court and challenges the NLRB's findings of insufficient evidence regarding its bargaining practices. Specifically, Whitesell is accused of failing to bargain in good faith to impasse, not providing timely notice to the Federal Mediation and Conciliation Service (FMCS), and not supplying requested information to the Union during negotiations.

Whitesell acquired Fansteel Washington Manufacturing, Inc. in January 2005, acknowledging the Union that had represented employees for over 40 years and adopting the existing CBA, which would expire on June 12, 2006. This CBA included provisions such as dues-checkoff, just cause for discipline, seniority-based layoffs and recalls, vacation entitlements, and various employee benefits. On March 2, 2006, Whitesell's HR manager announced the intent to terminate the CBA upon its expiration and submitted an F-7 form to the FMCS, which is required for modifications or terminations of CBAs. However, the FMCS did not engage with the dispute, and when the Union sought mediation after a claimed impasse, the FMCS was unaware of any notification from Whitesell, which only sent the F-7 form on August 11, long after the initial declaration.

On May 1, 2006, Whitesell negotiator Robert Janowitz presented the company’s initial proposal for a new collective bargaining agreement (CBA) to Jeter, emphasizing that negotiations would not continue past the current CBA's expiration on June 12, 2006. Whitesell aimed to negotiate comprehensively and align labor costs with non-union facilities. Key proposed changes included: eliminating the dues-checkoff provision; removing protections against discrimination for union members; substituting a "just cause" provision with a standard requiring the Union to prove arbitrary actions by Whitesell; restricting Union representation at disciplinary meetings; granting Whitesell unilateral rights to modify policies on overtime, holidays, vacations, and sick pay; extending the probationary period for new hires to 90 days; and considering additional factors beyond seniority for layoffs and recalls.

Negotiations began on May 26, with eight sessions held, though the first and last lacked substantive discussions. The Union's initial proposals included a $1 hourly wage increase, two extra holidays, and enhanced pension contributions and benefits. During the second meeting on June 6, Whitesell detailed company-wide policy changes, including replacing the Union's pension plan with a 401(k), significantly raising insurance premiums for employees with less than ten years of service, adjusting vacation benefits, and reducing paid holidays from ten to eight. Jeter expressed concerns about the vacation policy's impact but was met with disagreement from Whitesell, which also proposed eliminating overtime for weekend work.

At the third meeting on June 7, Whitesell suggested replacing annual wage increases with a merit-based system. By the fourth meeting on June 8, cost estimates for employee benefits were shared, and Whitesell requested a final offer from the Union. The fifth meeting on June 9 saw Whitesell propose a modified wage increase of $0.25 per hour for the first year and increased shift differentials, while allowing Union representation during performance evaluations. The Union sought an extension of the existing CBA until July 16 to better understand Whitesell's changes, particularly the vacation plan, but this request was denied. The sixth meeting on June 10 resulted in the Union lowering some wage demands and showing willingness to accept a modified merit-pay system, while still opposing certain Whitesell proposals.

The company proposed to replace the "just cause" standard for employee discipline with a prohibition on "arbitrary action," which the Union rejected as its final position. At the seventh bargaining meeting on June 11, the parties reached tentative agreements on several key issues, including the Union's dues-checkoff and Whitesell's proposals on holiday, vacation, and funeral leave. On June 12, the existing Collective Bargaining Agreement (CBA) expired, and Whitesell presented a final offer after the Union accepted a proposed health insurance plan. Jeter, representing the Union, refused to present the offer to Union members, leading to Whitesell declaring an impasse in negotiations. Despite tentative agreements on around 30 issues, Whitesell implemented portions of its final offer, ceased collecting Union dues, canceled a voluntary accident program, and prohibited posting Union meeting notices on bulletin boards during breaks. The Union filed a complaint, and an administrative law judge found multiple violations of the National Labor Relations Act (NLRA) by Whitesell. The NLRB, with only two members, upheld some of these findings, including violations of sections 8(a)(1) and 8(a)(5) of the NLRA related to the unilateral implementation of the final offer and failure to provide requested information. The NLRB ordered Whitesell to restore the previous CBA until a new agreement was signed or a valid impasse was reached. However, following the Supreme Court's ruling in New Process Steel, L.P. v. NLRB, the Court denied the NLRB's enforcement application due to the lack of a three-member quorum, also denying subsequent NLRB motions and Whitesell's petition for a writ of mandamus.

The NLRB, with a three-member panel, reviewed a case and adopted the conclusions of the ALJ, incorporating previous reasoning. The NLRB is now seeking enforcement of its order, which Whitesell opposes on several grounds: (1) the NLRB allegedly lacks jurisdiction to issue a new decision post this Court's previous denial of enforcement; (2) substantial evidence supposedly does not support the NLRB's finding of Whitesell's failure to bargain in good faith; (3) Whitesell claims it provided adequate notice to the FMCS, contesting the NLRB's order for reimbursement of Union dues; and (4) substantial evidence is argued to be lacking for the NLRB's finding regarding Whitesell's failure to provide information about its vacation proposal. Whitesell does not dispute the NLRB's findings that it violated the NLRA by restricting Union members from posting notices on company bulletin boards and failed to bargain in good faith regarding information on merit pay and employee relocations.

The NLRB’s reconsideration of the case is permissible despite the previous denial of enforcement, as the prior ruling was based on the New Process decision, which invalidated earlier actions taken by a two-member Board. The document references similar court decisions from other circuits that also denied enforcement while allowing for future reconsideration. The current decision marks the Court's first evaluation of the merits of the NLRB's actions since the Board is now properly constituted.

The document addresses whether there is substantial evidence supporting the NLRB's conclusion that Whitesell failed to negotiate to a valid impasse, which is deemed an unfair labor practice under Section 8(a)(5) of the NLRA for refusing to bargain collectively. Mandatory bargaining topics include wages, hours, and other employment terms. The duty to bargain in good faith encompasses both negotiating to impasse and providing necessary information to employee representatives. The NLRB's factual findings are reviewed under a "substantial evidence" standard, which requires more than a mere scintilla of evidence; it must be sufficient for a reasonable mind to accept as adequate, considering the entire record.

The evaluation of bargaining processes is generally better suited for the NLRB than for courts. An employer is found to have violated sections 8(a)(1) and (a)(5) if it unilaterally changes employment terms without reaching an impasse. An impasse is defined as a situation where good faith negotiations have been exhausted. The determination of whether an impasse exists is case-specific, taking into account factors such as bargaining history, the parties' good faith, negotiation duration, issue importance, and mutual understanding of the negotiation status.

The NLRB concluded that Whitesell did not negotiate to a valid impasse, supported by substantial evidence. Key factors included Whitesell's imposition of an arbitrary deadline for negotiations, limited bargaining sessions before declaring impasse, and the fact that proposals were exchanged just before the impasse declaration.

The record supports the National Labor Relations Board's (NLRB) findings regarding Whitesell's negotiation tactics. Whitesell's negotiator, Janowitz, communicated the company's intention not to negotiate beyond the current Collective Bargaining Agreement (CBA) at the outset and reiterated this during the first session. Whitesell aimed to implement significant changes to the existing CBA and sought to negotiate a new agreement entirely. Over eight bargaining sessions, much time was spent in caucus, with two sessions lacking substantive discussions. Whitesell first introduced its proposal to replace annual wage increases with a merit-based system at the third session.

Despite Whitesell's claims of an impasse, the parties agreed on 30 issues and continued to reach agreements up to the final meeting. Notable compromises included the Union reducing its wage increase demands and accepting a modified merit-pay system, while Whitesell agreed to the Union's dues-checkoff proposal and various leave provisions. On the final day, the Union accepted Whitesell's health insurance plan. Although Whitesell contended there were deadlocks on several key issues, only disciplinary action and overtime were clearly at an impasse. Disagreements regarding the retirement plan were not viewed as impassable, as discussions had not been fully exhausted. Additionally, Whitesell's assertion of a deadlock over wage increases contradicts the Union's prior concessions. Compromises were also reached concerning seniority and the less significant provisions on leaves of absence and sick leave were deemed relatively unimportant by Whitesell.

The determination of whether an impasse exists in negotiations is influenced by the significance of the disputed issues. In TruServ, the court reversed the NLRB's conclusion that no valid impasse was reached, noting the company demonstrated economic exigencies that warranted swift bargaining; however, Whitesell failed to provide similar evidence. Unlike the extensive prior negotiations in TruServ, Whitesell and the Union were negotiating for the first time. The AMF Bowling Co. case illustrated a genuine impasse where the union had rejected the company's final offer without counteroffers, but no such obstinacy was observed from the Union in this matter. The NLRB found that Whitesell did not fulfill its obligation to provide necessary information about the vacation plan, as required by section 8(a)(5) of the NLRA. Although the Union accepted Whitesell's vacation proposal, disagreements persisted regarding the potential loss of earned vacation benefits under the new plan, exacerbated by Whitesell's failure to supply requested information. Whitesell contested the NLRB’s finding, claiming it had provided adequate information; however, its disagreement with the Union’s estimates and refusal to engage further in discussions indicated a lack of good faith bargaining. Additionally, Whitesell unilaterally canceled a supplemental accident fund without prior negotiation, which is not permissible unless an impasse is reached. An employer can make unilateral changes to employment terms only in alignment with offers previously rejected by the union.

An employer may implement unilateral changes in working conditions after bargaining in good faith to an impasse, provided these changes fall within its prior proposals to the union. Substantial evidence supports the NLRB's conclusion that Whitesell did not bargain in good faith, violating sections 8(a)(1) and (a)(5) by terminating the existing collective bargaining agreement (CBA) and enacting proposals without reaching a valid impasse. Additionally, the NLRB determined that Whitesell failed to notify the FMCS as required by section 8(d)(3) of the NLRA, leading to the obligation for Whitesell to reimburse the Union for dues not collected from July 13, 2006, to September 30, 2006, which is 30 days after proper notice was given. The NLRB's findings referenced Petroleum Maintenance Co., asserting that the failure to provide the necessary notice constitutes a separate violation under section 8(a)(5), thus extending the dues-checkoff provision until the notice was eventually delivered. 

Whitesell disputes this ruling, claiming it provided timely notice to the FMCS and argues that the reimbursement period should end 30 days after the Union requested a federal mediator on July 10, asserting that this request put the FMCS on notice of the dispute. Additionally, Whitesell contends that extending the dues-checkoff provision is unjustified since a violation of the notice requirement does not extend the CBA beyond its expiration. The NLRB rejected these arguments, emphasizing that the burden is on Whitesell to prove that the FMCS received the notice of the dispute, and simply mailing the notice is insufficient. Because Whitesell sought to modify the CBA, it was responsible for notifying the FMCS, and the Union’s actions did not fulfill the requirements of section 8(d)(3). The NLRB maintained that dues-checkoff provisions do not automatically continue until a new agreement is reached or a genuine impasse is established. Thus, Whitesell is mandated to reimburse dues only for the period after it fulfills its notification obligation.

The termination of a dues-checkoff provision without proper notice to the FMCS is deemed a violation of the duty to bargain collectively under sections 8(a)(1) and (a)(5), requiring reimbursement of uncollected dues until 30 days after notice. If the dues-checkoff was a condition of employment, Whitesell must comply until reaching a bargain or impasse. Whitesell could have avoided this obligation by providing timely notice to the FMCS.

Additionally, Whitesell's failure to furnish information about changes to its proposed vacation plan, as requested by the Union during the negotiation of a new CBA, constitutes bad faith bargaining in violation of 29 U.S.C. 158(a)(1) and (a)(5). Employers are obligated to provide necessary information to bargaining representatives for effective performance of their duties, which extends beyond negotiation periods into the administration of collective bargaining agreements.

The NLRB found that Whitesell violated sections 8(a)(1) and (a)(5) by not disclosing how its vacation proposal would impact employees. Although Whitesell provided a seniority list, it did not adequately respond to the Union's concerns about the proposal's negative effects on one-third of the employees. Whitesell’s assertion that the Union could determine the effects based on the seniority list was undermined by its own admission that the Union's calculations were "close but not accurate." Therefore, the Union was entitled to the underlying data used by Whitesell for its calculations. The finding of the NLRB is supported by substantial evidence, leading to the enforcement of its order.