Williamhouse-Regency of Delaware, Inc. v. National Labor Relations Board

Citations: 915 F.2d 631; 135 L.R.R.M. (BNA) 2641; 1990 U.S. App. LEXIS 18298Docket: 89-8917

Court: Court of Appeals for the Eleventh Circuit; October 19, 1990; Federal Appellate Court

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Williamhouse-Regency of Delaware, Inc. was found to have violated Section 8(a)(5) and (1) of the National Labor Relations Act (NLRA) by the National Labor Relations Board (NLRB) for not executing a contract after reaching an agreement with the Aluminum Brick and Glass Workers International Union, Local 198. The Union filed charges against the Company in 1988, alleging the Company failed to finalize a written contract and withheld employees' dues. An administrative law judge confirmed that the Company had presented a final offer to the Union, which the Union accepted on June 8, 1988.

The Company manufactures paper products and had been under Union representation since the 1960s. The prior collective bargaining agreement expired on April 30, 1988. Negotiations took place from April 18 to 29, 1988, with the Union seeking to eliminate a two-tier wage structure and improve wages and fringe benefits. The Company's initial proposal lacked wage provisions and reduced benefits. During the final meeting, the Union proposed a wage increase of 60 cents per hour over three years, which the Company countered with a final offer of a 20-cent increase per hour over the same period. Despite dissatisfaction with the Company's proposal, the Union agreed to present it to their membership for consideration.

The Company requested a caucus and subsequently presented an expanded final offer labeled "Williamhouse Final Offer Conditioned Upon Ratification." Attorney Ladov clarified that the offer would be void if employees did not vote in favor. Board Chairman Lewis reinforced this message to the Union's negotiator, Logsdon. On May 1, Union members voted to reject the offer and decided to strike, which lasted until May 26. During the strike, there were threats of violence, prompting the Company to obtain a state court order limiting picketing activities, which the Union consented to. Some Union members crossed the picket line to return to work, while others expressed a desire to return but were hindered by the strike.

On May 10, Regional Director Roy Albert contacted Ladov seeking a better wage offer, but no new proposal emerged. Albert later suggested that a minor wage increase could settle the strike, leading to a conversation with Lewis on May 19. Lewis maintained that the existing offer was reasonable and refused to increase it, although he claimed he mentioned new non-economic terms. 

On May 24, Ladov informed Logsdon that the Company planned to implement its final offer due to a bargaining impasse and intended to resume operations by May 31, potentially hiring permanent replacements. The next day, McSwiney sent a similar letter to unit employees reiterating the Company's position on the April 29 offer and urging employees to consider its fairness. 

On May 26, the Union held a meeting where employees voted to return to work after the Memorial Day holiday. Logsdon communicated to Ladov that the strike was over and requested a meeting to finalize the agreement, with no indication from the Company negotiator that the final offer was no longer open for acceptance.

The last meeting of the bargaining agents took place on June 8, where Logsdon requested amnesty for picket line misconduct during the strike. McSwiney confirmed the Company's intention to grant "general amnesty," which would have been offered regardless of the Union's request. Logsdon accepted the April 29 offer and proposed to sign a contract immediately. However, Ladov indicated that the strike had altered the relationship between the Union and the Company, leading the Company to modify its proposal by removing sections on Union security and dues checkoff that had been in place for 30 years. The Company also sought to introduce clauses on the "purpose of agreement" and "grievance/arbitration" procedures, which were not part of the April 29 offer. Logsdon objected, accusing the Company of attempting to undermine the Union.

The Company continued to deduct Union dues from employees' paychecks but began depositing them into an escrow account instead of transferring the funds to the Union, as required by the expired contract. The legal issue at hand is whether substantial evidence supports the NLRB's finding that the April 29 offer remained open for acceptance until July 8. The parties agree that the legal standard is governed by Georgia Kraft Co. Woodcraft Division v. NLRB, which establishes that a contract offer is not automatically terminated by rejection or counterproposal and may remain open unless expressly withdrawn or contingent on specific conditions.

There was no express withdrawal of the final offer, and discussions continued to reference its terms. The Company communicated its hope that the Union would find the offer fair, indicating it was still available for acceptance. Furthermore, McSwiney's use of present tense in a May 25 letter suggested that the Company considered the offer viable. The issue of whether the offer was conditioned upon ratification by the Union membership is also addressed, noting that while a labor organization is not obligated to submit an employer's proposal for ratification, it may self-impose such a duty.

An obligation can be established through constitutional provisions, ad hoc agreements, or local policy decisions. The Board views self-imposed ratification requirements as limitations on negotiators’ authority to finalize agreements without member approval. Employers can similarly impose such limitations, but these ratification requirements do not equate to contract acceptance. Therefore, employers cannot use these gratuitous requirements to justify refusing to sign agreements. A recent decision confirms that an employer cannot demand member ratification before a binding agreement is formed, meaning that negotiations were ongoing during a strike.

The company’s belief that employees were resigning from the union and wanting to return to work does not constitute reliable evidence for good faith doubt about the union's representation. The judge found no material change in the labor relationship due to the strike. The union's notification of acceptance of the final offer was still subject to the self-imposed condition of ratification, which could be waived by the negotiating team. The Board concluded that pending non-economic issues, including a union amnesty request, were distinct from contract negotiations. The company continued to deduct union dues from employees’ wages and must remit these funds to the union. The Board's decision is affirmed in full, addressing the union's charges of bad faith bargaining and refusal to sign a contract.