base numbers fifteen twenty thirty one fifteen twenty one eighty three kellogg company versus national labor relations for oral argument not to exceed fifteen minutes per side mr david b day the petition david dave the law firm of miller johnson you represent the kellogg company i reserved two minutes rebuttal this case at its core is a simple straightforward contract interpretation case the board found the lockout cura to be unlawful based solely on a contract modification theory everyone agrees that absent a finding of a modification a lockout is lawful because the foundation of the board's order rest entirely on interpretation of a contract its conclusions are not entitled to any deference this court reviews the interpretations of contracts de novo to have its borders th order in force the board must establish must establish that the last best offer this document directly conflicts with the specific and exact language fails in the board's order should not be enforced well the reason the so call rule against spirit of cholera exist that if you're renegotiating an agreement such is the disagreement then it is problematic to it's problematic when that has implications for the master agreement or is not problematic the source of determining that is really bored precedent right know what is not in this case the board's decision rest on its interpretation of agreement modification implicitly validated the master agreement although it did not exist perhaps it was not explicit the source of the rules concerning that i mean certainly standard contract interpretation has something to do with that but the major source of the rules concerning that derives from the board's o precedence milwaukee spring in those cases your honor i agree that mark you spring has direct application to the board can't run away from here but i think in this case there's a whole nother layer of contractual protection section one hundred one of the master agreement the title the scope of the agreement in that if you read section one hundred one what they make clear is if something is going to be something's bargained in the  specifically included and only things that are specifically included go in the master book everything else as a matter of law and a matter of contract must be bargained in the local bucket and so as a matter of contract in addition to marquee springs and you layer that on top of it i think it makes this an easy case can i ask one more question which is not strictly necessary to the decision and then i'm going to say what happened during the renegotiation  the master agreement which would have expired in two thousand and fifteen and the parties reached an agreement on joining more detail on that not really i mean does it incorporate the provisions that  were i mean does it alter and any why the delineation between what was reserved for the local agreement and what was reserved for the master agreement under your theory that you want to want his remains unchanged around  e back up a little bit here in general what happened here kellogg proposed to expand the use of its second tier of bargaining unit for union production please at memphis an effort to save the plant and add jobs kellogg had had a long history bargaining in second tier union employee jobs at its other facilities and other facilities had used them to a greater extent giving them an economic advantage over the memphis facility during the two thousand and thirteen memphis negotiations the union it's fair to say didn't like it they thought it was a bad deal and when unions things there is a bad deal what they should be should do is bargain they should make proposals thirteen bargaining sessions zero written proposals by the union faced with this impasse kellogg utilize the economic weapon of would intervene five months after the charges are filed we end up with this theory that's in front of the court and the contract modification theory this theory must fail for two simple  stated earlier kellogg's proposals do not directly conflict with an explicit term of the master with an express term and because it doesn't do that well there's a matter of law walky springs and as a matter of contract section one point one of the master board's theory fails and the board's theory can't be saved here by creating implied terms because under both the master and under the law implication does not equal modification the master explicitly does not permit modification implication and even if it did the spring teaches that north to have a d modification there must be a direct conflict you can't do it by implication and then you have the waiver standard says when the party has a statutory right to bargain in all the terms of the mass in the kellogg's last best offer the issue covered mandatory topics of bargain in order for that statutory right of kellog to be waived it can't be by implication it's got a big clear and unmistakable terms the board say did not follow board the board is a decision by a month later didn't address it we filed a motion for reconsideration where we again put walker spring squarely in front of them and also include the transcript from the oral argument hearing from the sixth circuit and complete silence on the topic  negotiation it does significant violence to the core purpose of the act which is to promote collective bargaining look at the board's order in this case creates confusion uncertainty after three years of litigation one of the parties learned you can bargain about casuals at the local level to some point to some degree you can there's a queer work force term i don't know where that comes from don't know what it means general counsel in questioning from this cork represented that it was ok for kellogg to bargain to increase the cap from thirty percent to forty of casuals but was uncertain as to whether it could go to forty or fifty or sixty or where the line may be and the reason that the general counsel are floundered with that answer is because the master agreement does not contain any work preservation terms zero because if it had the general counsel could easily answer that question yet the board's decision requires that there be a direct modification of some type of an express preservation term in the master and that's one of the primary reasons this board three fails because there can be no direct modification undeniably in the master the board doesn't dispute this there is no express work preservation term the burrs decision is interesting in this respect because it is in conflict with itself master says explicitly what with regard to casual employee it says what they will be paid in relationship to the regular employee it says it would be paid six dollars less says correct me if i'm wrong here it says that there can be such  it does not it says actually says in the master under section one zero one d i think it is it states that the definition employees will be determined in the supplemental agreements and the only reference to the word casual in the wage appendix and it states that it will be paid six dollars less per hour than the regular employee that's it there's no other reference to the word casual in the entire master agreement so what is the  memphis green is modeled after they use them extensively in two thousand and thirteen and use eighty six thousand hours worth of casuals and chemicals work side by side with regular doing the exact same work in the exact same facilities get paid as much or have a about twenty three dollars an hour your honor in memphis as opposed to twenty nine that would have been the difference in kellogg was willing to bargain benefits of the union but the union would not park for informational purposes just any other lancaster memphis group local agreement did not have a cap and then they negotiated a twenty percent cap and think now they are forty i may have it backwards around or so currently like that now but they didn't always when was first bargained in there was absolutely no cap in those caps or bargained at the local level and you can see the internal conflict in the board's decision trying to grapple with this issue well the there's no work preservation term there's no cap and they find in one sentence they state is they that the master agreement does not provide any job any guarantee of hours of minimum hours for regular employees no work preservation two sentences later but a fine from the proper parties intent this core work force term core workforce by definition inherent is that some guarantee of hours decisions in conflict with itself well the argument is more general than that and more indirect in the argument as i understand it i'm sure you're adversarial to me if i doubt it is that bad eliminating any cap in the proposed mass between the regular workforce and casual and non regular employees if i can respond to that first the only distinction that we think i got the argument i think your other argument the  the first knowing distinction required of the master between regulars and not regulars is six dollars per hour that's preserved in the last best offer the idea that something is implied in creates a term in the master not only does it run afoul of the master's language board's the board's that's the way back in understand the argument is that the master agreement contemplates that there's going to be a regular work force and the casual employees will be something else that having the normal name apply to a casual employ because that does have some me ordinary meaning your honor that's again the board director has never said that kellogg's proposals would modify the master agreement provision regarding casual employees second the general council admits that they can bargain over casual employees to local offices they can do that third the definitional terms of casuals in this instance are included in the memphis agreement under section one hundred seven that agreement is open we can all agree when the contract is open the parties can propose remember that's what it was they were proposing a change they are proposing a change to the restrictions a change to the definition and that is absolutely appropriate and firth the party's past practice master agreement distinguishes between regular employees and casual employees and it has its master agreement doesn't specify how many of each there must be or can be how would that how would you ever get to that if that isn't can't be a subject bargaining because what killing was doing here was essentially a wage and benefit cuts for regular employees and they can do that they just have to do it at the correct time they can do it directly during master agreement negotiations rather than indirectly in this roundabout way during supplemental agreement negotiations with the master agreement provides for several places is the terms and conditions for regular employees as it give employees but the how would you get that the problem with kellogg's proposal why it's a modification of the master agreement is that it creates the entire complement of new hires would be labeled casual employees it would create this permanent full time workforce that is regular in all but name but receives different terms and conditions of employment that are set forth for such employees in the master agreement but there if there are any specific limits on how many of each kind of employee you can have or who under what terms can you employ a new employee how is is what kellogg wanted to do contrary to what's in the master because the and it lives all restrictions both in the number and in when they can be used for example they can now be used under talents proposal when you can hire a new casual employee when a regular employee is on temporary layoff that's a change you can bring back regularly employees as casual employees now that was that the practice that was gone before they started this bargaining or is that now it was part of the bargaining right to bad they were it was prohibited from bringing on new casual employees if a regular employee was on layoff so they couldn't bring in a casual to replace one that was right there had to bring in another record correct or offer they are not anybody were offered the laid off regular and where is that prohibition found that prohibition is in the supplemental agreement so that it must have been bargained for it was a bargain for ed at some point yes i'm not sure when that provision came through if that's a subject of bargaining and the master doesn't explicitly address it why is this the it's the confluence of all of kellogg's changes here this is an extreme proposal and it's when you kellogg's proposal privilege to refuse under section eighty of the n r a there was bargain there was not a counterproposal from the offer they certainly met many times but section eighty of the n r a says that a party of the recipient of a proposal that would modify a contract mid term does not have to agree to it does not have to discuss it so there is no right to bargain over a mid term modification and the recipient can simply refuse to do so you say that the company could do it all a good neighbor bargain there or have a talk with th can lock out and strike the terms and conditions for regular employees and that is what i was attempting to do here was attempting to make that change by eliminating any distinction between regular and casual employees the only these after calyx proposal these two types of employees would be indistinguishable except for the wages and benefits level and so what happens is we have a class of get we have this group of employees that do all the work of regular employees there's no restriction on them they're indistinguishable from regular employees but they receive different terms and conditions of employment they don't get a good deal they get paid less than they don't get the benefits are all that's certainly true but the question before the court is not decided that it wanted to pay the casual employees more than that wage differential sets would that be something that they wouldn't have any right to do or could even bargain over great thing in either of them that explicitly tells me that so i assume it has something to do with a rate previously determined and we have that relate to that rates for the different job classifications and i jumped educations i don't mean regular versus casual i mean mechanic and you had data those are set forth at the supplemental level where those particular classifications exist what's in the master agreement is these across the board policies such as the wage differentials such as the benefits that are set forth for regular employees and section six point zero one which these new relabeled casual employees would not receive not the effective job right for workers other than particular class right because that is determines on is dependent on which classifications are present and which plant because this master agreement covers all four plants so that's why it's this a court there's across the board policies and that has been the that has been the excuse me the past practice and the changes to across the board issues are negotiated at the master agreement level for example the wage progression schedule it sets out how many years it takes for an employee to get to the full rate that used to be three years now it's four years that was negotiated at the master level and that is something that the these newly hired casual is a mid term modification case but it doesn't set out the legal standard that is in section eighty of the act itself the walky spring the difference between that case and this one is that in milwaukee spring the employer moved one department from a unionized facility to a non unionized facility there was covered by a different contract here we have these new hires these relabeled casual employees they're still subject to the master agreement but they do not receive the terms and conditions set forth fair and so the more apt analogy is to strawman bakeries cited in our brief which is where an employer hired new relationship between the master agreement in the local one is that it's to some degree a matter of contract interpretation but it's also a matter of the n l r b precedent as to how these two kinds of agreements are to be interpreted it relation to each other right and isn't there a requirement that if the board departs from its precedent must explain it in order for us to review it under the typical standard more deferential standard yes as a general matter and any as a general matter yes the reason the board did not discuss i imagine the board did not discuss milwaukee spring here is for the reason i stated it's not doesn't set forth kind of a new rule of decision a new rule of law here the board is not required to address every prior decision that address i thought it was distinguishable well i don't think it doesn't have to just mean if it were if a case were obvious in terms of having nothing to do with it obviously it wouldn't have to talk about that it's a little hard for me to see why milwaukee spring doesn't have some some applications be given consideration but there are number of prior cases that deal with this mid term modification theory and the board does not board the board didn't just talk about some of them chesapeake plywood i believe it cites for example and the and so milwaukee spring is one of a number of those cases it doesn't involve the situation we have here where there is two collective bargaining agreements that govern labor relations at the at the memphis plant and that is the reason as i believe was discussed earlier that w disses been called an effective modification because there are these two contracts both of which are in effect milwaukee spring doesn't have anything like that and there's also the factual distinction that the employees work that the employees who were now conditions of employment for regular employees so the question of whether as a general matter terms really worried about regular employees or was it worried about it seems to me like a lot of what you're saying  refers to new employees who wouldn't be either one until they were actually hired in that would like to bring at least a greater percentage of new hires rather than regular but they're not regular yet you're correct the demography cation is as to new employees for them they are being brought in complement of new employees are being doing the work of regulars but are being paid as casuals and so the board does say several times that its new employees that there's been a modification and the board is found in the past that a modification is no less a modification just because there are some other employees that are still receiving the contractual terms that w the martin marietta case that this court enforced and so the idea that they are still some regular employees at the plant what deemed legacy employees does not change the analysis in which it collapses the distinctions between regular and casual employees these are employees regularly and all but name and yet received different terms and conditions of employment that are set forth in the master agreement that agreement has been modified and that is why the board found first as to the definition of casual employees in ordinary definition the parties practiced past practices applied to the other local facilities make clear and in memphis that is not the ordinary definition that controls and second even if there is this restriction in the master even if you assume there are some restrictions on kellogg's ability to use casuals catalogues last best offer incorporates those restrictions into the substance of its terms let me quote join a pin join appendix page four ninety two this is the actual term being proposed last best offer it says quote there shall be no restrictions on kellogg's right to hire use manager or direct casual employees and you hear the board in the union amplify that time and time again and then it states except as specifically set forth in any provision master agreement so if the board can imply these terms in if it can say that or by what use the word casual has its ordinary definition in somehow that's a restriction we don't agree with that at all but even if it does the board finding is a logical factual in legal impossibilities kellogg has made that argument repeatedly as an affirmative defense you won't find it addressed in the board's decision it's ignored but you can escape that extreme proposals what the general council said what does it go to the substance of the proposals that's exactly what the board didn't like you they didn't like the lockout they didn't like the substance of the bulls that's not their role the rule here is a look at the parties contract and where we get confused on is what's what is not unambiguous is how the parties in the master define where things should be bargained the parties said that the only things that we bargain to the master those things covered in the master and they use this language this is the language this agreement shall cover only those matters specifically included here it only and specifically exacting language that is the only thing is a matter of contract that can be bargained at the master level everything else is a matter of law because the local union is a section nine a representative that has an obligation to bargain over all mandatory topics at a little at the local level