the next case we're going to hear this morning is the l r b versus steak on products and mr rosenberg whenever you're ready we'll hear from please the court my name is paul rosenberg and i represent a kind products company before the court this morning to ask that the court deny enforcement of an order and decision in the national labor relations board which reverse about contract modification not contract restoration and secondly why even under a contract modification framework the board simply missed the mark and the appropriate standard upon which to rely first and foremost however this is not a case about contract modification is a matter which asks whether the national labor relations act requires that a clerical error become sales sacred think that a contract an employer can potentially be bound to it indefinitely indeed from two thousand and four ask you about this generally because it sounds to me like we are involved to some your bank account you end up spending it usually the courts will give that money back even though it's been spent a lot on and the courts like to correct errors and where for purposes of the argument i think we have to assume it was we correct an error i mean here we're looking at five years we have three years under the original contract and the employees the same employees were paid the higher rate and they spent the money there on t budgets we're not talking about a lot of a big salaries we're talking about people who i get think the highest income on any of these employees was under twenty dollars an hour and it went down from there  they spend for years you go into a contract negotiation and the union asks you for a list of the amounts being paid the employees and you report the error you  you tell them that they are being paid at a higher rate than they really should have been paid according to you they say they rely on it but whether they do or not they enter into a new contract add fifty five cents an hour and everybody and  continue to pay these people now fifty five cents higher plus that error amount for another couple of years and now you're near the end of a second contract and use and holy mackerel we made a dollar a way back five years ago and there's some point we should be calling it quits i don't know what the principle is but there's a lot of intuition on that isn't there i think i think there is certainly intuition on that and i think you're talking about there's two there's two equitable principles of play here the first equitable principle is regarding the national labor relations act and the fundamental principle of the act is the promotion of industrial stability so as the board found in the foster transformer case in which i explained nothing and it's in our law requires the perpetuation of an air even if the employer you know went down a mistake of course now yes i think there is if the employer participated to some extent here and the reason i say this use your argument of course is meaningless but you're asked to give a list of the employees and their rates right and you provide that before the negotiations began and the union says they relied on that i'm not sure they did they it's very similar to the derek spores case in which case in that case the employer basically classified the individual wrong they were classified in their payroll system as a trucker when in reality they were a welder so employed was being paid for them and i did he do is if you discovered this two years after the first contract and you went to the union said hold it we've made a mistake in the way we're pain i'm not sure we have to come to you union but just be advised we're going to  just these people's pay to the correct amount i think that's a much more powerful case than running through that contract supplying the information again buyer and a second contract two thirds of the way through and now wanting to go back and correct everything these people have spent the money and if you're really right you're entitled to have them pay back that money which they paid you know for their electric bill in their rent and all but i think of course we this case not this case general is that as appropriate generally yes i mean equitable principles come into play when you're construing whether you should correct ok now address this case in this case we're only one contract removed from when the mistake took place i can concede that at some point a term can become embodied in the contract the binal case for example which the book which the general counsel cited to in that case there was a formula in place for eighteen years in that instance the well here we have climbed out of employees who got it every month or every two weeks or every week however they're paid and they spent the money and now you say oh we're not claiming that because it would be a hardship but the very fact that you recognise that you can't claim it reveals an end of that quibble principle it reveals a principle that in this context it's pretty hard to correct the error if you're really going to correct the error you have to go back and collect from every employee for five years and not only would be that ghoulish as a business matter but it's probably impossible  inform the equities if you can't really correct here because so much water's gone over the dam it's like maybe your eighteen year hypothetical where there's a lot of reliance and i don't think so ok i think i mean we could imagine for a second that the shoe hair was on the other foot in the union came to bacon and said you underpaid employees two plus think you're right i mean the buck stops with bacon they're issuing the checks but on the same token the union here could have recognized the era when those rates were given to the to the union if you looked at and page one twenty seven of the appendix they're out of whack for example one of the employees mr bridges he's only ten cents below at the time was the pathway yet son other employee who was hired just four months previous to him is fifty cents but with a top rate there's that in each instance there's an added lack of sick you're not a black man they should have been able to discover that if they could have discovered it you would have discovered even more clearly and since i'm suggesting that the vat is principled upon good faith of both parties employees could have seen that they were being paid over and above what the contract said the union could have seen that the seniority principles which they bargained and successfully have bargained for that are embodied in the contract they could have seen that those rates were out of sync we could have recognized the but that's the that's the very essence of the that's the very essence of the error that the the national labor relations act made then is that the board made by not permitting they can to correct the error that has elevated the issue to the tap negotiating point and the union according to the board certainly does not have to concede the point that  i don't think i followed that big con could have waited until the next bargaining right on which is which is which is the it still would be a top issue on the table so i guess i'm responding to your point that it was the board's decision against a con that somehow exacerbated the potential for difficult bargaining or industrial strike sure because if they can was permitted to correct the mistake the that issue of what the whether the employees it issue are overpaid or underpaid wouldn't the tap negotiating issue no they're still overpaid there's no dispute something the record from your perspective that they're overpaid right correct but that i think there's a difference from a framework if we go into negotiations and the board says to bake and there was a mistake you a clerical error you are able to correct those that start a new baseline from which to bargain at and the other hand if the when the board has no you cannot correct the the ear then the rates are starting off from elevated standpoint and that is a different that's a different baseline ok i see your point i'm not so sure i mean bargaining  bargaining there was a little bit of that in the last contract i know your position is there were not specific amounts put in there but there still was a list that was on the table the list you provided them was the amount it was paid and th t the collective bargaining agreement added fifty five cents not on those rates but on whatever was being paid right but that there's an implicit elevation at that point a little  they've been gone on for two years now into that but right i think and you mentioned our position i think to it i mean the rates are not in the contract right it's certainly lends certainly then that complaint here alleged eighty of the act as explained the bath and iris case anytime an eight the claim is made a sound arguable basis standers necessarily implicated that means all day kind  needed was a sound arguable basis for its interpretation of the contra and what would that mean in this in this context in this context it would mean that being creases should be added to an individual's correct rate one not and i'm sorry i think it's sound and it's sound because otherwise we then are in a system where the air in the room and i and i recognise judge your point your honor about the trying to collect the money collect the money but that the mother business the other point that is hinted at is errors should be corrected i mean that to me that is sound but that doesn't end the story because when there equitable principles such as you were in a position to discover their earlier and somebody who was looking at your list of payments could have understood some of these discrepancies why is he being paid almost the same amount as this guy and then you come up with a new list when you're specifically asked that again perpetuates the error there's a little bit of a not a stop all notion words it's a new way of life now i know when two countries get together and they disputed border and they go for fifty one hundred years they still disputed for some reason that you know that the time just doesn't he and maybe time doesn't fully heal this but yes i understand your argument fully and it's it's i think it's somewhat challenging it seems to me  far more difficult position with respect to bargaining than you are well i think they're not so sure i bet right but why not i mean if i'm a union member and i got this guy how are we going to fix this i think and so the company comes in and says ok union how we're going to fix this because you've got a problem because you've got dissension in the ranks because you've got people making more than they should i see my time's up and i at it now yes that's  demonstrate yes and in fact in the hearing and the transcript we walked through the exact math and it was clear that there was an error ok and i don't think the union would admit that until bargaining time right but i said i would advise them to admit it during the during the dropped it stops as a consequence of country did country bargaining over the boundary but we never bargained over i know you are now that's one point you continue to pay the mistaken rates through the end of the extant contract and now you're back to square one oh issues on the table but the union in that in your scenario has no obligation to agree in which case broke in which case read either i mean you're in good faith in trying to correct the error were in good faith and trying to correct the error but without being able to correct the error why you don't have to agree to what they demand to you you just have to negotiate we just have to negotiate in bad faith in good faith right but then if the two parties don't agree right we risk everything but i will say all the bad stuff that comes focuses the mind first agreement the predecessor agreement where the error allegedly happened and i do want to point out i don't know that it's entire i don't think the board's decision is entirely clear on whether or not there was an error so i just want to put that out there that the board says two different things the board says on the first page that you know that there was an error but then the board says on the second page of the d n o that if there were a mistake so i'm not sure that the record is as clear as sort of what will if they want to make a holding but i'm assuming that the company c the the really critical thing that i think is getting lost in a conversation when we're talking about an error and a mistake is that we're assuming that that mistake carried over without the ability to correct it or that  mistake in two thousand and five you get all those points i mean it could have been corrected but it looks like it wasn't sure but in two thousand and seven when the parties sat down to negotiate the contract and they entered into an agreement that said as of r gave you a list pursuant to a demand of the rates again submit information and then you negotiate your contract but it doesn't look like you addressed each individual employee and looks like you just gave across the board fifty five cents per percent and so their argument and it looks like it's readily supportable is that they just perpetuated the error in that mechanism had a list which had the  quit the board with the so the board has a two par analysis or two part step that it went through on its decision order it first finds that the current wage that they're what they specifically say there was no mistake as to the parties had on the table was a mistaken list that's the list they provide pre negotiation that was the list certainly provided during negotiations so i think my first response isn't pretty gaining much traction but the reverse response is that the board did not find that the most critical part of the analysis was whether there was a mistake and who was at fault in that mistake the board found that the parties offered that the parties entered into a contract knowing at the time what they entered into that they had the information on the table in two thousand and seven and that they entered into that contract and it was during those negotiations where sort of the right renewed well to correct we don't want to get too metaphysical but there is a difference between you know an intentional act which is  there's no mistake in trying to the entering into the contract but the mistake here was in the information it was mistaken erroneous information on the basis of which intentional knowing  were engaged it right i think from the horse for sort of the board i think is saying in their decision in order is that the but when the parties executed the agreement the wages that were reported in the two thousand and seven document that those wages that is what the parties agree to the parties agree are no way to pay the wages in the i'm sorry but that what the parties agreed that what they say is retroactive to february one and effective on march third two thousand and seven so the board read that as what were the wages on february one two thousand and seven and that is what the parties agreed and that's because the board doesn't do breach of contract cases right the political order does not appear labor practice charges and judge you or you might be more interested in is this equitable notion or lunches or sort of and i think it do i think it's not unusual in contract law where you have what i think both parties would agree are innocent parties to everything the employer produced the information the union relied on it they entered into an agreement so you don't have a party that knew something was up but something was wrong there's no suggestion the union acted with bad faith there's some suggestion the union could have discovered it but that boys are a little bit out of whack not a scale if we accept that and the question is what's the best mechanism to correct it and do the courts have to abdicate and yield to the next negotiating i think what they decided to do though was to say that has to be exempt and that the board talks about an error they say what i was starting to get to is that where neither party is to blame a basic premise i think in contract law is that where  the harmful consequences then flowing from that air assuming both parties are not at fault shouldn't flow to the victim of the air so i think it's that principle underline it where the board said or the beneficiary of  board's understanding that the contract when all of this was going on the contract i believe the correction was made in may of two thousand and nine that their contract was expiring eight months later in jack at the end of january in two thousand and ten so i think the board could reasonably consider that too that the best thing going forward is they viewed it as a contract offer acceptance execution and then moreover if there were an error we're not going to blame even that it was part of the negotiations in two thousand that's not in the kate a lot of pages to this bath iron concept that the board entered into on contract modification and what and then the board doesn't speak to that and so what we have here is then the board because they submitted it to the board was an argument that was in the briefs to the board so we have to assume the board considered the bath iron argument that if they offered anything about that incentive they want to because they disagree implicit in that right is that they disagreed that they either found that there were that the contract was clear that's really the holding of whether you agree or not based on whether there was an error and how the board treated that that's what the board found is that there was i mean that's clear in the d n o where they say there was no mistake as to what the wages were that they really find in position to be taking in this it and i did it and i do think the answer to this well not clear from the decision itself but i think in what they did in completely rejecting that argument and not addressing a sound arguable basis claim is that the board that either or that there was that on its face they say that it was clear they were talking two thousand and seven weighted and found that there was a sound argument what should the remedy i think the very least it has to be remanded to the board then to determine you don't think that's for in the first instance probably not in the first instance no because i think there's also some question whether the board because there's also a line of cases with board law that even where there is a claim as you have here of a contract modification that's requiring the sound arguable basis russia now that the board doesn't necessarily agree or the board has said this is clear on its face and to take this is an example of the case but for instance if the contract says fifty five cent raise every year and the employer paid forty five cents there isn't a set it's a contract modification they're not paying what's called for in the agreement you the board wouldn't consider a sound arguable basis to claim i paid forty five cents that's fine it's sound so there is a line of cases then where there is a contract modification but where the board finds that the contract language is clear and therefore they don't go down the road of a sound are you will basis so i think that that is what we have here where the board opted not to go that route because they said we find no mistake as to what the contract said two thousand and seven we did their mistake according to the company they they come is that in concluding that the in other words they could not reach the conclusion that the contract was clear in addressing that and providing a new agreement that i think i do understand the argument to be that too but i think the board again says i missed two thousand and seven wages clear i while we hear from is no outstanding contract there was no two thousand and ten contract we ask you to take judicial notice of another board decision involving de con where they committed massive unfair labor practices there was a two and a half year unfair labor practice strike the board found it was an unfair labor practice strike the d c circuit gest enforced that last november and the returning strikers went back to work after that decision that's why we're in bargaining now in terms of the equity issues that you raised judge me on there's a little bit is all the bottom line good faith i was assuming that the two if you could get them resolved mistakes like this that's almost impossible now will bargain oh i know you will you have to now they have to they have to they have to they have to under pain of the board's order complying them to comply with the court's order to bargain in good faith and cease and desist the massive one for labor practices and pay the millions of dollars to the strikers who are out for two and a half what it what that this dispute what was the connection between the breakdown and this dispute none some a little a whole lot this dispute involves wages wages are always part rose with this mistake this alleged mistake but let's put this and in that the right framework of this perceived and that's the board's decisions language mistake occurred sometime during the two thousand and four green right there was bargaining for the two thousand and seven agreement in which the union relied on the wages because the prior contract just used percentages and they have been implied all over the lot ok and the union business agent is negotiating this contract for the first time rather than any else so this so this piece in the way of what happened they bargain that they come up with a contract but it's not just wages that are part of that bargain if you take a look at the record and you will see that of variety of issues changed between the two thousand and four and two thousand and seven agreement the work week wages time clock issues leave it ok so the already has this been a killer glitch if you will had little to do with the broader well laps of two thousand and seven we had all of these issues that were discussed and during the course of the two thousand and seven agreement we have descant saying excuse me we think we made a mistake and we're going to unilaterally take that out of the deal we're not going to unwind the contract all the other things that we bargained back and forth over ten or fifteen sessions whatever it was though stay the same w pick and take that unilateral reduction sorry the union said no you can't do that you know this was a deal you're trying to undo part of the deal but not all of the deal the time to do that is you look at mr weber's letter and april two thousand and nine and think it's g c nine he says that the ship has sailed on two thousand and seven talk to us at the next collective bargaining agreement which was the next year so that brings us to what happened two thousand and ten and i want to be careful i stay within what the board so that you can take judicial notice of what happened in two thousand and ten by reason of the board's decision and the d curiam we didn't have a we didn't have oral argument the court scheduled oral argument and then cancelled all argue so that happened last night was the error one of the subjects of discussion two thousand and ten wages were part of the discussion was the we never conceded it's an air we were negotiating for higher wages for everybody but was was the two thousand and ten wage issue addressed like the two thousand and seven contract just certain not mine of dollars on top of what they're being paid i am not sure your honor because we never came to a conclusion of two thousand and ten bargain because they unilaterally implemented their terms and conditions which is what caused the strike and i frankly just don't recall the various issues that were outstanding at that time when they unilaterally implemented the union went on strike i just don't recall it's probably in the n l r b record of the j d from the other day common case but that's you know i deal in the real world cases and everything are nice but when we look at this through the prism of the real world collective bargain hunters you can't undo the deal you do it you fix it the next time all of the cases if you put them in an analytical framework can generally be put into cases that talk about contract formation or contract administration and a lot of the cases and there's plenty of cases that everybody cited about fixing the mistake those are almost always contracted ministration cases where you are returning people to what they negotiated for if i am getting paid as a welder and i'm a fork man during the term of the contract well i go back to what i should have ben that's that's what we talk about when we making it right but when we're talking about contract formation and that's where the board's equity principles to answer your question you raised earlier on the board doesn't recognize does recognize equity principles in all of eighty five is equity it's good faith well that is but i'm thinking in terms of contract law when you're construing a contract or you're applying the doctrine of in the lateral mistake and the n l r b specifically is would you in applying the doctrine of unilateral good faith consider equitable principles yes and the board the board does and the board did in this case on a seventy eight in the in the appendix page two of the board's decision it cites north hills and north hills says when there's a unilateral mistake and the other side doesn't know about that and good faith then the burden stays with the party who committed the mistake so the principles  are in the major premise category in the minor premises manifested in the line of cases like north hill and this case the burden of what the who bears the burden of the mistake in this go to court they bear the burden of it but the real question had the real remedy for a mistake you undo the mistake but in this case they couldn't really undo the mistake well they because you can't as a practical matter go back and collect from each one of these employees over those and so there really was a more pragmatic one which is well let's at least get the right structure in place for the next collective bargaining well i invite the court to read the record on this we're just want to collect perspectively because that first they said that then when the union said that's not right they said in that case we're coming after everybody for one hundred thousand dollars and we said ok this you're going to do that we'll pursue all of our legal remedies then they went back to ok we won't do that so it was never this gee we made a mistake let's all try to get along and whether you go to three zero one route rather than the or be well the not that that's particularly relevant but i'm just curious we were in two thousand and nine we were going to be negotiating a new contract in two thousand and ten we would have to gone through the grievance procedure can file three zero one directly we have to file a grievance would have to go through the arbitration we'd have to pay an arbitrator and by the time we got a ruling it we probably would then in bargaining with the next collective bargaining agreement i mean just that the timing of it doesn't make sense but in the real world as well the expense of it ok fair enough i mean it's you know these this is not a client with unlimited resources the n l r b we felt we had a good charge and so to the n l r b we think that the holding of the board is perfectly consistent with the rationale that has followed in other cases there's nothing unusual about this case that the remedy for the respondent is to negotiate in good faith and pay what they promise to pay in two thousand and seven till that happens ok thank you your honor we still as i think mr mooney skirted around some point their mistake and the mistake that was made here or was that what was called the employer in two thousand or two thousand and seven mistakenly paid quote unquote catch up raises two thousand and one contract had a catch up provision two thousand and four two thousand and seven did not but we pay that two thousand and seven had sort of a halfway of a catch up sure enough what do you all think was the most important issue in the negotiations that just broke down it was catch up so to say that the mistake did not turn into the key overriding issues in the negotiations that just occurred is disgracefully mischaracterizing the facts and i don't want to go into that so when you say catch  mean they were trying to bring the other thousand employees up to the that's exactly what they were doing with their proposal was that everyone catches up immediately to the top rate and guess who were the most impacted by that proposal the eight individuals whose wages we corrected so while the d c circuit may have spoken we of course respectfully disagree there is certainly no dispute about why those negotiations broke down and how the correcting correction of the ear indeed led to the breakdown in negotiations which i think is a very important point because it leads to the whole point of our original argument that this case the act is meant to promote industrial stability and by not allowing they can to correct error everything that the act is meant to protect didn't happen the foster transformer case to staff the perpetuation of mistakes that's the result that the board cautioned against the board took a completely  approach secondly i'd like to address what's the remedy that you would ask for that they can was permitted to correct the mistake and what is that what do you do now i mean we're we're big one agreement the current negotiations upcoming beyond right but i'm certain the remedy would be that employee's wage rates the eight individuals rates could stay at where they're at right now and they would not be increased to what they were had the not been corrected and i'd like why do we care about that i mean i know why we care about that but whether you're going to bargain or not but you're going to bargain that we're going to bargain but in ads has been shown it is very difficult to reach an agreement and is judge me or my or made the assumption that two reasonable minds can get together these two reasonable minds aren't getting together  you want our thumb on the other side of the scale to foster work not elaborate a bargain no i want i think the the board but it's the in the collective bargaining scale contract it inserted its interpretation maybe it's reasonable over a perfectly plausible alternative that you shouldn't have to pay increases over and above an mistaken way and i'd like to address the north hills case briefly so that case in our case are apples and oranges in north hills and in rep will steal which the charging party also relies upon those are cases of buyer's remorse hey in north ellsbury proposed to give you thirty error it could have been discovered it wasn't discovered but once that it was discovered they can was within its right under the foster transformer precedent to correct it not doing so transformer was the new contract it wasn't but but it was the most not controlled and only marginally persuasive well but the bargaining relationship between the parties doesn't emanate from the contract a contract expires you have to maintain the status quo so the equitable principles upon which foster transformer relied upon certainly apply here otherwise like i said we end up in a system where one party can always benefit from a chance there and in doing so that disturbs the collective bargaining in those facts unfortunately played out here from two thousand and seven to really the present thank you very much for your time