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Parties Involved:
National Labor Relations Board
Respondent
Teamsters Local Union No. 293
Intervenor
TruServ Corporation
Petitioner

Document Text:

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued April 19, 2001 Decided July 6, 2001

No. 00-1356

TruServ Corporation, f/k/a Cotter & Company,

Petitioner

v.

National Labor Relations Board,

Respondent

Teamsters Local Union No. 293,

Intervenor

On Petition for Review and Cross-Application

for Enforcement of an Order of the

National Labor Relations Board

Frank W. Buck argued the cause for petitioner. On the

briefs were Mark V. Webber and Kenneth D. Schwartz.

Kathy B. Houlihan entered an appearance.

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Usha Dheenan, Attorney, National Labor Relations Board,

argued the cause for respondent. With her on the brief were

Leonard R. Page, Acting General Counsel, John H. Ferguson, Associate General Counsel, Aileen A. Armstrong, Deputy

Associate General Counsel, and Charles Donnelly, Supervisory Attorney.

Basil William Mangano and John M. Masters were on the

brief for intervenor Teamsters Local Union No. 293.

Before: Edwards, Chief Judge, Rogers and Garland,

Circuit Judges.

Opinion for the Court filed by Circuit Judge Rogers.

Rogers, Circuit Judge: TruServ Corporation (formerly

Cotter & Co.) petitions for review of a decision and order by

the National Labor Relations Board. See Cotter & Co., 331

N.L.R.B. No. 94 (July 19, 2000). TruServ challenges for lack

of substantial evidence the Board's findings that it violated

s 8(a)(5) and (1) of the National Labor Relations Act, 29

U.S.C. s 158(a)(1), (5) (1998), when it implemented terms and

conditions of employment prior to reaching a genuine bargaining impasse, disciplined unit employees pursuant to unilaterally implemented work rules, and refused to process

employee grievances. TruServ also seeks reversal or modification of the Board's remedial order, which it maintains

appears to be punitive because the order would provide a

windfall to the Union's health fund for healthcare claims paid

by the company. We grant the petition on the issue of

impasse because the Board's findings on that issue are not

supported by substantial evidence; hence we do not reach

TruServ's alternative contention that the Union had waived

the right to bargain on work rules. We deny the petition's

challenge to the processing of grievances. Because, however,

the Board did not address TruServ's argument that the

remedial order should allow for a set-off for health insurance

payments made by TruServ, we remand that issue to the

Board.

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I.

TruServ Corporation manufactures and distributes hardware to various True Value Hardware stores. Teamsters

Local 293 is the bargaining representative for the warehouse

unit employees at the Company's Westlake facility.1 A collective bargaining agreement, effective September 1, 1991, was

due to expire on August 31, 1995. On July 20, 1995, the

Company and the Union began negotiating for a successor

bargaining agreement. At the outset, the Company expressed its concerns with the facility's efficiency and productivity, namely, that sales from the Westlake facility had

decreased at a higher rate than sales for the Company as a

whole, and that errors in filling orders at the Westlake facility

had increased significantly.2 After the Company's opening

statement, the Union submitted a complete contract proposal

on both economic and non-economic issues. Consistent with

its past negotiations with the Union, the Company deferred

discussion of "economic" (wages) issues until the end of the

negotiations period, and on July 21, the parties agreed on a

three-year term for the new agreement and on language for

the employee grievance procedure. During the eight days of

__________

1 The warehouse unit includes order fillers, stock employees,

shippers, receivers, certain maintenance positions, and a janitor.

2 According to testimony before the Administrative Law Judge,

the Company anticipated that negotiations would be particularly

difficult because the Company sought significant changes to address

its concerns with efficiency and productivity; consequently, the

Company asked to commence negotiations earlier than usual. The

Company believed that it needed to expand the work week (thereby

minimizing overtime) and to change the holiday schedule in order to

respond to its members' demands for faster turnaround on orders.

This was necessary because the Company's members, if dissatisfied,

could buy products from another supplier. The Company also

expressed concern about rising health care costs and sought to

make its own health care program available. Prior to the commencement of negotiations, the Company set a "bottom line" for

wage increases, opposing a large pay increase in part because of

employees' sub-standard performance.

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negotiations,3 the key issues discussed were (1) holidays, (2)

the workweek, workday schedule, (3) healthcare, and (4)

wages.

A. Holidays. The Company initially proposed to convert

certain contractual holidays (especially the day after Thanksgiving) to "personal days," which the employees could use at

other times, so that the warehouse could remain open to

process the high volume of orders. The Union initially

proposed to add two holidays to the ten existing contractual

holidays, and to limit overtime on the days before and after a

holiday. The Union later reduced its demands to one additional declared holiday and proposed to abandon its overtime

proposal for working on holidays if the Company agreed to

make concessions on overtime. The Company rejected the

Union's proposal, offering instead to convert four declared

holidays to personal days. On August 29, the Company

further modified its proposal to require the conversion of only

one holiday--the day after Thanksgiving. The Union conditioned acceptance on the Company's agreement to declare an

additional holiday (Martin Luther King Day) a personal day.

The Company showed no willingness to accept this condition.

B. Workweek, Workday Schedule. The Company

sought to implement a workweek, workday schedule that

would shorten the turn-around time on receiving orders and

allow it to deliver merchandise to its members in one day.

The expiring agreement provided for a Monday through

Friday schedule of five eight-hour days, and for time and onehalf on Saturdays and double time on Sundays. The Company proposed either a four-day, ten-hour or a five-day, eighthour week, with Saturdays and Sundays included as part of

the regular work week (thus not requiring overtime). See

Cotter & Co., 331 N.L.R.B. No. 94, slip op. at 8. The Union

rejected this proposal; it opposed the idea of Saturdays and

Sundays as ordinary workdays. On August 28, the Company

modified its proposal; the new proposal called for a Sunday

to Saturday workweek with either four ten-hour workdays or

__________

3 The negotiations took place over a six week period, on July 20

and 21 and August 2, 3, 4, 23, 28, and 29.

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five eight-hour days; overtime would accrue after four tenhour days at 1.5 times the base rate for the fifth and sixth

days, and double time on the seventh day. The "four tens"

and "five eights" shifts would be filled first voluntarily and

then by shift in accordance with seniority and ability. In

response to the Company's modifications, the Union offered

the following proposal: For inbound work (i.e., receiving and

stocking merchandise), four ten-hour days or five eight-hour

days, with weekend work voluntary; for outbound work, five

eight-hour days or four ten-hour days, with weekend work at

straight time. The Company responded that it would pay

time and one-half beyond eight hours for the five eight-hour

days, and beyond ten hours for the four ten-hour days, but

refused to pay double time for the sixth day.

C. Health Care. The Company proposed that the Union

abandon the Teamsters Fund and instead adopt the Company's health plan. The Union proposed to maintain the Teamsters Fund exclusively, with the Company paying the entire

amount of cost increases to contributions to the Fund and

eliminating employee co-payments. On August 28, the Company modified its offer, proposing inclusion of its plan as an

option for employees. If employees chose the Company plan,

the Company would pay twenty-five percent of the cost; if

employees opted to stay in the Teamsters Fund, the Company would pay a predetermined monthly contribution per

employee in the first year, and 75% of the cost of the

Company's health plan in the second year. Although the

Company later increased this amount, the Union continued to

propose higher monthly contributions and elimination of employee copayments.

D. Wages. The Company had a two-tier, progressive

wage structure: The bottom tier consisted of employees hired

after August 27, 1985; the top tier was composed of employees hired before that date. The Union initially proposed a

general increase of 75 cents per hour during each year of the

contract; a merge of the two tiers by equalizing lower and

top tier wage levels over the 3 years of the contract; and

inclusion of employees in the Company's 401(k) program.

See Cotter & Co., 331 N.L.R.B. No. 94, slip op. at 8. On

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August 28, the Company proposed a continued two-tier system, with an increase in bottom tier rates of 20 cents in each

of the three years of the agreement, and an increase in top

tier rates of 20 cents, 10 cents, and 10 cents in each of the

three years, respectively. The Union counterproposed a

merge of the two tiers over four years; a general wage

increase of 65 cents in each year of the agreement; and

deferred employee participation in the Company's 401(k)

program until the second year of the agreement. The Union

also withdrew its earlier proposal for double-time payment for

overtime. The Company counteroffered an increase in bottom tier rates of 25 cents, 25 cents, and 20 cents, and in top

tier rates of 25 cents, 15 cents, and 10 cents in each year of

the agreement. On August 29, the parties again modified

their proposals. The Union proposed a top tier wage increase of 60 cents in the first year and 55 cents in the second

and third years; a merge of the two tiers over a five-year

period; a reduction in shift premium; and deferred employee

participation in the Company's 401(k) plan until the third year

of the agreement. The Union also abandoned its earlier

proposal to limit mandatory overtime. The Company counteroffered with wage increases of 30 cents, 30 cents, and 25

cents for the bottom tier, and 25 cents, 15 cents, and 10 cents

for the top tier for the three years of the agreement. In

response, the Union proposed maintaining the two-tier system in exchange for wage increases of 60 cents, 70 cents, and

80 cents over three years for the lower tier and 50 cents for

each of the three years for the top tier. The Union also

abandoned its request for employee participation in 401(k)

plans and reduced its shift premium demand to 30 cents per

hour, but its wage increase proposals remained over twice

what the Company proposed.

In retrospect, the parties present conflicting accounts of

the extent of progress in the negotiations, and of the degree

to which the parties had exhausted their willingness to make

further concessions. The Union points to statements by its

spokesman that negotiations had advanced on a number of

issues, including holidays, and to a statement by the Union's

attorney at the outset of the August 28 session that no

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impasse existed because both parties had made concessions

and there were a "lot of points the Union was willing to move

on." Cotter & Co., 331 N.L.R.B. No. 94, slip op. at 8. The

Company, on the other hand, points to statements indicating

impasse in the key areas of negotiation: (1) a statement on

August 4 by a member of the Union's negotiating committee

affirming that there was an impasse at least as to holidays;

(2) August 23 statements by both the Company and the Union

that the parties were at impasse on a number of "noneconomic" issues, including the Company's workweek, workday proposal; and (3) the Union's declaration upon receiving

the Final Offer that there was nothing in the Final Offer that

it could recommend to unit employees.

On August 29, the Company issued what it termed its "last,

best, and final offer." For outbound work, the Company

offered a workweek, workday schedule of four ten-hour or

five eight-hour days, Monday through Friday, staffed first on

a voluntary basis and then on a mandatory basis according to

seniority and ability. Overtime in a four-day week would be

paid at time and a half on the fifth and sixth days, and double

time on the seventh day; overtime for the five-day workweek

would be the same as under the expiring agreement. For

inbound work, the Final Offer required four ten-hour or five

eight-hour days Sunday through Saturday. Overtime for the

five-day schedule would be time and one-half for the sixth day

and double time on the seventh day. For the four-day week,

overtime would be the same as for outbound work. As to

health care, the Final Offer included the Company's health

plan as an option for unit employees, with monthly contributions by the Company of $252, $260, and $270 over the three

years of the agreement. As to wages, the Company presented its "bottom line" proposal: an increase of 30 cents, 30

cents, and 30 cents for the bottom tier, and 25 cents, 15 cents,

and 15 cents for the top tier. Prior proposals (other than

wages and health care payments) remained unchanged. The

Final Offer thus remained substantially similar to the Company's earlier proposals and its third wage proposal of August

29. The Final Offer provided that if the employees ratified

the contract by August 31, they would receive an extra 5

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cents in their wages for the third year. The Company stated

that it intended to implement its Final Offer if it was not

approved by August 31.

The Union objected to the Company's conclusion of impasse, stating through its attorney upon receipt of the Company's Final Offer that "no impasses existed and that [the

Company] would violate the Act if it implemented the offer."

Cotter & Co., 331 N.L.R.B. No. 94, slip op. at 9. The Union

further stated that the Company's Final Offer contained

nothing that the Union could recommend to the employees.

See id. at 1-2. On August 30, the unit employees unanimously voted not to vote on the Final Offer and to strike; however, a strike never took place. On August 31, the Union

informed the Company that its Final Offer was "not even

dignified with a vote," and requested further meetings to

continue bargaining.4 The Company declined further meetings, stating that the Union had the Company's final offer,

and the Union filed an unfair labor practice charge.5

On September 6, 1995 the Company implemented its Final

Offer, terminating the contractual grievance and arbitration

procedure and the automatic deduction of union dues and

initiation fees. On September 10, the Union sought to resume negotiations. On September 22, the Company implemented new work rules, and thereafter took disciplinary

action against four employees based, in part, on the new work

rules.6

__________

4 The record does not indicate that the Union representative

notified the Company of the areas in which the Union was willing to

grant further concessions.

5 The Union filed a second unfair labor practice charge on

March 21, 1996. After the Board consolidated the Union's unfair

labor practice charges, the Union filed an amended charge on April

3, 1996. A consolidated complaint was filed on May 30, 1996.

6 The four employees were Matthew Dillon, Alejandro Gonzalez, Richard Martin, and Adam Csongedi. Dillon received a verbal

warning on October 3, 1995, a written warning on November 2,

1995, and a one-week suspension on November 7, 1995, for refusing

to work scheduled overtime pursuant to amended Work Rule 5.

See infra note 11. After he filed a grievance over the suspension,

the Company informed Dillon, without the participation of the

Following a hearing, an Administrative Law Judge ("ALJ")

found that the Company "did not demonstrate that an impasse existed at the time it stopped bargaining on August 29"

because the parties' bargaining sessions "[did] not constitute

the type of exhaustive negotiations which might prompt a

finding of impasse." Cotter & Co., 331 N.L.R.B. No. 94, slip

op. at 10. The ALJ further found that the Company had

unlawfully disciplined and discharged employees pursuant to

unlawfully implemented work rules, bypassed the Union in

dealing directly with an employee, and refused to process

employee grievances. See id. at 9-12. The Board affirmed

the ALJ's findings that the Company violated s 8(a)(5) and

(1) "by refusing to meet and bargain with the Union, by

implementing its last offer, including new work rules, in the

absence of a valid bargaining impasse, by bypassing the

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Union and dealing directly with a unit employee, and by

refusing to process employees' grievances." Id. at 1.7

__________

Union, that the suspension was a mistake and paid him for the time

that he had lost. Dillon was subsquently fired for violating the

Company's no-fault attendance policy; the ALJ found that this

discharge was not improper. See Cotter & Co., 331 N.L.R.B. No.

94, slip op. at 11. Gonzalez, who was found to have violated

amended Work Rule 5, received a verbal warning on October 10,

1995, a third-step suspension on January 2, 1996, and was discharged for subsequent work rule violations on January 12, 1996.

Martin received a verbal warning in September 1995, and a written

warning in November 1995, for failing to work scheduled overtime

in violation of amended Work Rule 5. In December 1995, Martin

was suspended for being out of his work area pursuant to a preimpasse portion of Work Rule 5, and was discharged on February

20, 1996, for again being out of his work area. Csongedi was

suspended on March 29, 1996, for violating a quality standard under

the expiring agreement; the prior verbal and written warnings that

formed the basis of the suspension, however, were issued pursuant

to post-impasse quality standards.

7 The Board also affirmed the ALJ's finding that the Company's discipline of two employees (Gonzalez and Csongedi) was

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II.

Section 8(a)(5) of the Act makes it an unfair labor practice

for an employer "to refuse to bargain collectively with the

representatives of his employees." 29 U.S.C. s 158(a)(5).

Mandatory areas of collective bargaining include "wages,

hours, and other terms and conditions of employment." 29

U.S.C. s 158(d); see also Litton Fin. Printing Div. v. NLRB,

501 U.S. 190, 198 (1991); NLRB v. Katz, 369 U.S. 736, 742-43

(1962). An employer violates this duty to bargain if, absent a

final agreement or a bargaining impasse, he unilaterally

imposes changes in the terms and conditions of employment.

See 29 U.S.C. s 158(d); Katz, 369 U.S. at 742-43; Taft

Broad. Co., 163 N.L.R.B. 475, 478 (1967), petition for review

denied sub nom. American Fed'n of Television & Radio

Artists v. NLRB, 395 F.2d 622, 624 (D.C. Cir. 1968).

A bargaining impasse--which justifies an employer's unilateral implementation of new terms and conditions of employment--occurs when "good faith negotiations have exhausted

the prospects of concluding an agreement," Taft, 163

N.L.R.B. at 478, leading both parties to believe that they are

"at the end of their rope." PRC Recording Co., 280 N.L.R.B.

at 635; see also Teamsters Local 639 v. NLRB, 924 F.2d

1078, 1084 (D.C. Cir. 1991); American Fed'n of Television

and Radio Artists, 395 F.2d at 628. For an impasse to be

found, the parties must "have reached 'that point of time in

negotiations when [they] are warranted in assuming that

further bargaining would be futile.' " Wycoff Steel, Inc., 303

N.L.R.B. 517, 523 (1991) (quoting Patrick & Co., 248

N.L.R.B. 390, 393 (1980)). Whether the parties have reached

this point is a case-specific inquiry; "[t]here is no fixed

definition of an impasse or deadlock which can be applied

mechanically to all factual situations." Dallas Gen. Drivers,

Warehousemen and Helpers, Local 745 v. NLRB, 355 F.2d

__________

unlawful because "the [Company's] unlawfully imposed [work] rules

were a factor" in those disciplinary actions. Cotter & Co., 331

N.L.R.B. No. 94, slip op. at 3. The Board reversed the ALJ's

conclusion that the Company violated s 8(a)(5) and (1) by refusing

to deduct Union dues after expiration of the existing bargaining

agreement. See id., at 4.

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842, 845 (D.C. Cir. 1966). Among the factors that the Board

considers in evaluating the existence of an impasse are "the

bargaining history, the good faith of the parties in negotiations, the length of the negotiations, the importance of the

issue or issues as to which there is disagreement, [and] the

contemporaneous understanding of the parties as to the state

of negotiations." Taft, 163 N.L.R.B. at 478. After weighing

these factors, the Board will find an impasse if there is "no

realistic possibility that continuation of discussions ... would

have been fruitful."8 American Fed'n of Television and

Radio Artists, 395 F.2d at 628.

The Board concluded that "the parties had not bargained to

impasse before the [Company] unilaterally implemented

changes in the unit employees' terms and conditions of employment." Cotter & Co., 331 N.L.R.B. No. 94, slip op. at 1.

In so finding, the Board "emphasize[d] that, until the [Company] abruptly claimed that its 'last, best and final offer' was

on the table and would be implemented unilaterally if not

accepted, both the [Company] and the Union had demonstrated considerable flexibility and willingness to compromise their

positions." Id. This, the Board observed, was evidenced by

the parties' concessions in the immediately preceding bargaining sessions; the Union's statement, upon receiving the

Company's final proposal, that the parties were not at impasse; and the Union's subsequent request for additional

meetings.9 See id. at 1-2. In the Board's view, these circum-

__________

8 An impasse does not "permanently relieve[ ] [the parties] of

the duty to deal with each other." NLRB v. McClatchy Newspapers, 964 F.2d 1153, 1164 (D.C. Cir. 1992). As the court observed in

McClatchy Newspapers, an "impasse is only a temporary deadlock

or hiatus in negotiations, 'which in almost all cases is eventually

broken, through either a change of mind or the application of

economic force.' " Id. at 1165 (quoting Charles D. Bonanno Linen

Serv., Inc. v. NLRB, 454 U.S. 404 (1982) (internal citation omitted));

see also Serramonte Oldsmobile, Inc. v. NLRB, 86 F.3d 227, 232

(D.C. Cir. 1996).

9 On appeal, the Board does not rely on the ALJ's findings,

which the Company challenges, that the Company (1) rejected "outUSCA Case #00-1356 Document #608269 Filed: 07/06/2001 Page 11 of 39
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stances cast doubt on the Company's characterization of its

August 29 proposal as a "final offer" and indicated that "the

parties did not have a contemporaneous understanding that

they were at impasse." Id. at 2. The Board declined to

consider the Union's conduct upon receiving the Company's

August 29 proposal--specifically, the Union's statement that

the Company was not offering anything that the Union could

recommend to its employees--as indicative of the Union's

final bargaining position. Rather, the Board characterized

the Union's statement as "an understandable expression of

dissatisfaction" with the Company's "abrupt declaration that

its most recent offer was 'final' and would be implemented

unilaterally if rejected." Id.

The Company contends on appeal that the Board (and the

ALJ) erred in interpreting the Company's good-faith bargaining10 and consequent concessions immediately preceding its

Final Offer as an indication that the Final Offer was not truly

final. The Company maintains that the Board ignored the

record as a whole, which, in the Company's view, "would tell

any experienced negotiator that the parties were at impasse."

Br. for Petitioner at 32. The Board, on the other hand,

contends that "the parties had made significant progress and

demonstrated considerable flexibility on [key issues]," and

that "no contemporaneous understanding of impasse by both

sides existed, because the Union explicitly denied the existence of impasse and repeatedly requested the continuance of

bargaining, which the Company refused." Br. for Respondent at 16.

The court has long recognized that "[i]n the whole complex

of industrial relations few issues are less suited to appellate

__________

of-hand" "virtually all of the Union's proposals" during the first six

days of bargaining, (2) proposed language changes that were "radical departures" from the expiring agreement, (3) did not make an

economic proposal until the penultimate bargaining session, and (4)

did not give the Union information about its work week proposal

until later in negotiations. See id. at 10.

10 Neither the Board nor the ALJ found that the Company

negotiated in bad faith. See Cotter & Co., 331 N.L.R.B. No. 94, slip

op. at 1-2, 7-9.

judicial appraisal than evaluation of bargaining processes or

better suited to the expert experience of a board which deals

constantly with such problems." American Fed'n of Television and Radio Artists, 395 F.2d at 627 (quoting Dallas Gen.

Drivers, 355 F.2d at 844-45). Thus, the court ordinarily

defers to the Board's fact-finding as to the existence of a

bargaining impasse. See Teamsters Local 639, 924 F.2d at

1083; Dallas Gen. Drivers, 355 F.2d at 844-45. To do so,

however, the court must be satisfied that the Board's findings

are supported by substantial evidence on the record considered as a whole. See 29 U.S.C. s 160(e) (1998); Universal

Camera Corp. v. NLRB, 340 U.S. 474, 477 (1951); Serramonte Oldsmobile, Inc. v. NLRB, 86 F.3d 227, 233 (D.C. Cir.

1996); Teamsters Local 175 v. NLRB, 788 F.2d 27, 30 (D.C.

Cir. 1986); American Fed'n of Television and Radio Artists,

395 F.2d at 627. We hold that the Board's conclusion of no

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impasse fails to satisfy this standard because the Board's

findings that the Company's Final Offer was not truly "final"

and that neither party was at the end of its bargaining rope

are not supported by substantial evidence.

First, nothing in the record negates the Company's classification of its August 29 proposal as its "last, best, and final

offer." Indeed, the record demonstrates that the Company,

which was facing economic exigencies, bargained in good

faith, made substantial concessions, and ultimately reached a

point when it was simply unwilling to compromise further.

Although merely labeling an offer as "final" is not dispositive,

see Teamsters Local 175, 788 F.2d at 31; Chicago Typographical Union v. Chicago Sun-Times, 935 F.2d 1501, 1508 (7th

Cir. 1991), the circumstances here are telling. On August 4,

the Company advised the Union that when it had reached the

limits of its bargaining, it would call its final proposal its "last,

best, and final" offer. Thus, unlike Teamsters Local 175 and

Chicago Typographical Union, where the employer set forth

a number of offers, all of which it termed "final," the Company signaled to the Union that it would use this particular

language only when it had reached its bargaining limit.

Moreover, the Company's demonstrated good faith in bargaining--a Taft factor that the Board and the ALJ neglected

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to apply--leaves no grounds for rejecting the Company's

characterization of its August 29 proposal as its Final Offer.

The record evidence thus demonstrates that in the face of

eight days of what were uniformly perceived as difficult

negotiations, the Company engaged in the kind of good-faith,

hard bargaining that characterizes impasse. See GeorgiaPacific Corp., 305 N.L.R.B. 112, 121 (1991); Salinas Valley

Ford Sales, 279 N.L.R.B. 679, 690 (1986); Seattle-First Nat'l

Bank, 267 N.L.R.B. 897, 898-99 (1983), rev'd in part on other

grounds, Seattle-First Nat'l Bank, 270 N.L.R.B. 389 (1984).

The Board's refusal to accept the Company's Final Offer as

truly "final" was not based on the record evidence; rather,

the Board relied on its intuitive belief that, upon further

bargaining, each side would have made additional concessions.

The Board stated that "there had been movement on both

sides concerning important subjects such as wages, benefits,

and holidays, and the parties continued making concessions

until the [Company 'abruptly'] cut off that process." Cotter &

Co., 331 N.L.R.B. No. 94, slip op. at 1. This approach,

however, is impermissible, for it amounts to an intervention

by the Board in the parties' substantive negotiations. In

NLRB v. American National Insurance Co., 343 U.S. 395,

404 (1952), the Supreme Court observed that the Act's requirement of good faith bargaining "does not compel either

party to agree to a proposal or require the making of a

concession." Therefore, the Court held, "the Board may not,

either directly or indirectly, compel concessions or otherwise

sit in judgment upon the substantive terms of collective

bargaining agreements." Id.; see also H.K. Porter Co. v.

NLRB, 397 U.S. 99, 103 (1970). In short, the parties remain

in control of their negotiations, and each party, not the Board,

determines at what point it ceases to be willing to compromise. See H.K. Porter Co., 397 U.S. at 103-04; NLRB v.

McClatchy Newspapers, 964 F.2d 1153, 1163 (D.C. Cir. 1992).

This is especially appropriate where, as here, the negotiations

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mately familiar with the intricacies of the bargaining process

and whose relationship spanned more than a decade.

Second, the record does not support the Board's conclusion

that "the parties did not have a contemporaneous understanding that they were at impasse." Cotter & Co., 331 N.L.R.B.

No. 94, slip op. at 2. Taft identifies "the contemporaneous

understanding of the parties as to the state of the negotiations" as a "factor[ ] to be considered in deciding whether an

impasse in bargaining existed." Taft Broad. Co., 163

N.L.R.B. at 478. "If either negotiating party remains willing

to move further toward an agreement, an impasse cannot

exist: the parties' perception regarding the progress of the

negotiations is of central importance to the Board's impasse

inquiry." Teamsters Local 639, 924 F.2d at 1084. A "contemporaneous understanding" as to impasse does not, however, require the parties to reach mutual agreement "as to the

state of the negotiations"; rather, each party must independently, and in good faith, believe that it is "at the end of [its]

rope." PRC Recording Co., 280 N.L.R.B. at 635. An application of this Taft criterion, which the Board emphasized,

reinforces, rather than negates, the existence of an impasse,

because nothing in the record indicates that the Company had

not bargained to its fullest capacity. Furthermore, the Union's "conduct" on which the Board relies--the Union's selfserving statement on August 29 that the parties were not at

impasse and the Union's vacuous request on August 31 for

additional meetings--is insufficient to demonstrate the Union's desire to pursue further negotiations.

Absent conduct demonstrating a willingness to compromise

further, a bald statement of disagreement by one party to the

negotiations is insufficient to defeat an impasse. A contrary

result would render the "contemporaneous understanding"

Taft factor meaningless. Similarly, a vague request by one

party for additional meetings, if unaccompanied by an indication of the areas in which that party foresees future concessions, is equally insufficient to defeat an impasse where the

other party has clearly announced that its position is final.

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Indeed, as the court noted in addressing the breaking of an

impasse, "[t]he Board itself has indicated that a party's 'bare

assertions of flexibility on open issues and its generalized

promises of new proposals [do not clearly establish] any

change, much less a substantial change' in that party's negotiation position." Serramonte, 86 F.3d at 233 (quoting Civic

Motor Inns, 300 N.L.R.B. 774, 776 (1990)). Even if in the

pre-impasse context the Union does not have to offer "a

substantial change" in its position, the Union's immediate and

definitive rejection of the Company's Final Offer suggests

circumstances not unlike those relied upon by the Board in

Seattle-First National Bank in concluding that the contemporaneous understanding of the parties supported a finding of

impasse. See Seattle-First Nat'l Bank, 267 N.L.R.B. at 898-

99. In addition, the Union declined to submit the Final Offer

to a vote of the unit employees. See Cotter & Co., 331

N.L.R.B. No. 94, slip op. at 9. Furthermore, although on

notice as a result of the Company's earlier signal about the

language it would use to identify its final offer, the Union at

no time indicated that it was ready to move on any issue that

the parties had discussed. Rather, the parties remained far

apart on the issues of exceptional importance--wages, healthcare, holidays, and work week. See Taft Broad. Co., 163

N.L.R.B. at 478. Under the circumstances, the record evidence points to no conduct indicating the Union's belief that

further negotiations would be fruitful. Cf. Serramonte, 86

F.3d at 233.

The Board distinguished NLRB v. H & H Pretzel Co., 831

F.2d 650 (6th Cir. 1987), on the ground that both the Company and the Union had indicated flexibility in the last two days

of negotiations and thus were not "similarly committed to

maintaining plainly irreconcilable positions." Cotter & Co.

331 N.L.R.B. No. 94, slip op. at 2. In H & H Pretzel, the

employer had made clear to the union that it had to achieve

substantial labor cost savings in order to survive. After three

bargaining sessions, however, the union continued to insist on

wage increases. See 831 F.2d at 652, 656. Notwithstanding

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the brief period of negotiations, the Sixth Circuit affirmed the

Board's finding that "the union's expressed willingness to

continue talks was a mere token offer" made simply to delay

the inevitable imposition of wage reductions. Id. at 656-57.

This characterization of the union's efforts was reinforced by

the fact that "the union was on notice, prior to the last

negotiation session, of the company's commitment to cutting

labor costs [to address its financial concerns]." Id.

In distinguishing H&H Pretzel, the Board ignored two

marked similarities between the two cases. First, as in H&H

Pretzel, the Company from the outset put the Union on notice

that it sought to address significant concerns about competitiveness and productivity by substantially modifying the parties' bargaining agreement. See supra note 2. To this end,

the negotiations period was lengthier than usual. As in H&H

Pretzel, although the parties demonstrated flexibility in bargaining, they remained far apart on significant issues. See

H&H Pretzel, 831 F.2d at 656-57. Second, as in H&H

Pretzel, "while the [U]nion sought to continue talks, it did not

offer a new proposal or indicate a willingness to compromise

further on any specific issue." Id. at 656. Although bargaining proposals were exchanged, the Union resisted movement

in the Company's direction. On the eighth day of negotiations, for example, the Union was continuing to ask for twice

the wage increases that the Company was offering, despite

the Company's position that employee inefficiencies did not

warrant such increases. See supra note 2. Unlike H&H

Pretzel, the Union refused even to submit the Company's

Final Offer to the unit employees for a vote. See 831 F.2d at

652.

In view of this record evidence, the Board's focus on the

abruptness of the Company's Final Offer, on the Union's

surprise upon receiving it, and on possible future concessions

by both parties misses the mark. See Cotter & Co., 331

N.L.R.B. No. 94, slip op. at 1-2; see also Serramonte, 86 F.3d

at 233. The bargaining positions of the parties, as expressed

by their experienced negotiators, indicate that the parties

were at impasse.

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III.

The Company also challenges the Board's findings on employee discipline and the processing of grievances, and the

Board's remedial order. Regarding the implementation of

new work rules, the Company contends that the Union waived

its right to bargain on work rules when it conceded that, in

accord with the expired Agreement, the Company had the

authority to implement new rules, and that the Union's sole

remedy was to initiate grievance proceedings.11 See NLRB v.

United States Postal Service, 8 F.3d 832, 836-37 (D.C. Cir.

1993); Haddon Craftsman, 300 N.L.R.B. 789, 790-91 (1990);

Jim Walter Res., Inc., 289 N.L.R.B. 1441, 1442 (1988). Thus,

the Company contends, because the work rules allowed it to

determine the appropriate disciplinary measures for any violation, it lawfully disciplined employees Gonzalez, Martin, and

Csongedi. Although both parties raised before the Board the

issue of waiver concerning the implementation of new work

rules, the Board failed to address this argument in its decision. Instead, the Board focused on its finding of no impasse

and summarily concluded that the absence of an impasse

rendered unlawful the Company's modification of work rules

and any consequent employee disciplinary action. See Cotter

& Co., 331 N.L.R.B. No. 94, slip op. at 2-4. It follows from

our holding on impasse that the Company lawfully implemented its Final Offer, including the amended work rules

that led to the discipline of the employees. See Katz, 369

U.S. at 742-43; Taft Broad. Co., 163 N.L.R.B. at 478. There-

__________

11 Under the expiring agreement, the Company had the right to

implement work rules and quality and productivity standards unilaterally; the Union, in turn, had the right to grieve the reasonableness of the rules through an established grievance and arbitration

procedure. On September 22 (after implementing its Final Offer),

the Company amended its Work Rule 5 to classify a failure to work

overtime as a work rule violation, subject to immediate discipline

under the Company's progressive disciplinary system.

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fore, we grant the petition as to the work rules and subsequent disciplinary actions.

Regarding the grievance procedure, the Company concedes

that it abandoned the formal procedure established by the

Agreement, but maintains that its obligation to process grievances, see Hilton's Envt'l, Inc., 320 N.L.R.B. 437, 454 (1995),

was adequately satisfied by "the Company's willingness to

discuss grievances at the highest levels rather than rote

processing at each lower grievance step." Further, the Company maintains that a grievance form signed by the Union is

evidence that the Company did not bypass the Union in

settling a grievance with one employee. These contentions

are meritless. The Board's finding that the Company acted

unlawfully in refusing to process grievances is supported by

substantial evidence. Despite the Company's position that its

new approach was superior, the Company was not free to

replace unilaterally the contractual grievance procedure. See

NLRB v. United Nuclear Corp., 381 F.2d 972, 977-78 (10th

Cir. 1967); Hilton's Envt'l, Inc., 320 N.L.R.B. at 454. Furthermore, substantial evidence supports the Board's finding

that the Company's direct dealings with an employee violated

s 8(a)(1) and (5) of the Act. See Medo Photo Supply Corp. v.

NLRB, 321 U.S. 678, 684 (1944); Toledo Typographical Union No. 63 v. NLRB, 907 F.2d 1220, 1222 (D.C. Cir. 1990).

That the Union signed the grievance form in question indicates the Union's involvement in the filing of the grievance,

not the Union's participation in the resolution of the grievance. The Company's alternative contention for upholding its

unilaterally imposed grievance procedure, "no harm, no foul,"

was not presented to the Board, and hence is not properly

before the court. See 29 U.S.C. s 160(e); Woelke & Romero

Framing, Inc. v. NLRB, 456 U.S. 645, 665-66 (1982); Alwin

Mfg. Co., Inc. v. NLRB, 192 F.3d 133, 143 (D.C. Cir. 1999).

Finally, the Company maintains that the Board's remedial

order appears to be "penal" or "confiscatory" because by

requiring a return to the status quo ante it would require the

Company to make contributions on behalf of all employees to

the Teamsters Fund, despite the Final Offer's inclusion of the

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Company's health plan as an option for employees.12 See

Carpenter Sprinkler Corp. v. NLRB, 605 F.2d 60, 67 (2d Cir.

1979). Because a number of employees have selected the

Company's health plan, the Company contends that a mandatory contribution to the Teamsters Fund "would not serve the

remedial purposes of the Act, would be a windfall for the

Fund, and would be a penalty on the Company which has

already paid any health care claims for these individuals."

Consequently, the Company seeks modification of the Board's

order either to eliminate the requirement for payment of

contributions to the Teamsters Fund for employees who have

disclaimed interest in that Fund or at least to allow for a

proper set-off. We remand this issue for consideration by the

Board. See Grondorf, Field, Black & Co. v. NLRB, 107 F.3d

882, 888 (D.C. Cir. 1997); Manhattan Eye, Ear & Throat

Hospital v. NLRB, 942 F.2d 151, 160 (2d Cir. 1991).

Accordingly, we grant the petition in part, deny the petition

in part, and remand in part.

__________

12 The Board's remedial order required the Company, in relevant part, to (1) cease and desist from specified unfair labor

practices; (2) bargain in good faith with the Union; (3) rescind all

unilaterally implemented terms and conditions of employment upon

the Union's request; (4) cancel and rescind discipline issued pursuant to the new rules; and (5) make whole those employees who lost

wages as a result of the unlawful discipline, and offer reinstatement

to unlawfully discharged employees. See Cotter & Co., 331

N.L.R.B. No. 94, slip op. at 5, 19-20; see also 29 U.S.C. s 160(c).

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued April 19, 2001 Decided July 6, 2001

No. 00-1356

TruServ Corporation, f/k/a Cotter & Company,

Petitioner

v.

National Labor Relations Board,

Respondent

Teamsters Local Union No. 293,

Intervenor

On Petition for Review and Cross-Application

for Enforcement of an Order of the

National Labor Relations Board

Frank W. Buck argued the cause for petitioner. On the

briefs were Mark V. Webber and Kenneth D. Schwartz.

Kathy B. Houlihan entered an appearance.

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Usha Dheenan, Attorney, National Labor Relations Board,

argued the cause for respondent. With her on the brief were

Leonard R. Page, Acting General Counsel, John H. Ferguson, Associate General Counsel, Aileen A. Armstrong, Deputy

Associate General Counsel, and Charles Donnelly, Supervisory Attorney.

Basil William Mangano and John M. Masters were on the

brief for intervenor Teamsters Local Union No. 293.

Before: Edwards, Chief Judge, Rogers and Garland,

Circuit Judges.

Opinion for the Court filed by Circuit Judge Rogers.

Rogers, Circuit Judge: TruServ Corporation (formerly

Cotter & Co.) petitions for review of a decision and order by

the National Labor Relations Board. See Cotter & Co., 331

N.L.R.B. No. 94 (July 19, 2000). TruServ challenges for lack

of substantial evidence the Board's findings that it violated

s 8(a)(5) and (1) of the National Labor Relations Act, 29

U.S.C. s 158(a)(1), (5) (1998), when it implemented terms and

conditions of employment prior to reaching a genuine bargaining impasse, disciplined unit employees pursuant to unilaterally implemented work rules, and refused to process

employee grievances. TruServ also seeks reversal or modification of the Board's remedial order, which it maintains

appears to be punitive because the order would provide a

windfall to the Union's health fund for healthcare claims paid

by the company. We grant the petition on the issue of

impasse because the Board's findings on that issue are not

supported by substantial evidence; hence we do not reach

TruServ's alternative contention that the Union had waived

the right to bargain on work rules. We deny the petition's

challenge to the processing of grievances.

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I.

TruServ Corporation manufactures and distributes hardware to various True Value Hardware stores. Teamsters

Local 293 is the bargaining representative for the warehouse

unit employees at the Company's Westlake facility.1 A collective bargaining agreement, effective September 1, 1991, was

due to expire on August 31, 1995. On July 20, 1995, the

Company and the Union began negotiating for a successor

bargaining agreement. At the outset, the Company expressed its concerns with the facility's efficiency and productivity, namely, that sales from the Westlake facility had

decreased at a higher rate than sales for the Company as a

whole, and that errors in filling orders at the Westlake facility

had increased significantly.2 After the Company's opening

statement, the Union submitted a complete contract proposal

on both economic and non-economic issues. Consistent with

its past negotiations with the Union, the Company deferred

discussion of "economic" (wages) issues until the end of the

negotiations period, and on July 21, the parties agreed on a

three-year term for the new agreement and on language for

the employee grievance procedure. During the eight days of

__________

1 The warehouse unit includes order fillers, stock employees,

shippers, receivers, certain maintenance positions, and a janitor.

2 According to testimony before the Administrative Law Judge,

the Company anticipated that negotiations would be particularly

difficult because the Company sought significant changes to address

its concerns with efficiency and productivity; consequently, the

Company asked to commence negotiations earlier than usual. The

Company believed that it needed to expand the work week (thereby

minimizing overtime) and to change the holiday schedule in order to

respond to its members' demands for faster turnaround on orders.

This was necessary because the Company's members, if dissatisfied,

could buy products from another supplier. The Company also

expressed concern about rising health care costs and sought to

make its own health care program available. Prior to the commencement of negotiations, the Company set a "bottom line" for

wage increases, opposing a large pay increase in part because of

employees' sub-standard performance.

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negotiations,3 the key issues discussed were (1) holidays, (2)

the workweek, workday schedule, (3) healthcare, and (4)

wages.

A. Holidays. The Company initially proposed to convert

certain contractual holidays (especially the day after Thanksgiving) to "personal days," which the employees could use at

other times, so that the warehouse could remain open to

process the high volume of orders. The Union initially

proposed to add two holidays to the ten existing contractual

holidays, and to limit overtime on the days before and after a

holiday. The Union later reduced its demands to one additional declared holiday and proposed to abandon its overtime

proposal for working on holidays if the Company agreed to

make concessions on overtime. The Company rejected the

Union's proposal, offering instead to convert four declared

holidays to personal days. On August 29, the Company

further modified its proposal to require the conversion of only

one holiday--the day after Thanksgiving. The Union conditioned acceptance on the Company's agreement to declare an

additional holiday (Martin Luther King Day) a personal day.

The Company showed no willingness to accept this condition.

B. Workweek, Workday Schedule. The Company

sought to implement a workweek, workday schedule that

would shorten the turn-around time on receiving orders and

allow it to deliver merchandise to its members in one day.

The expiring agreement provided for a Monday through

Friday schedule of five eight-hour days, and for time and onehalf on Saturdays and double time on Sundays. The Company proposed either a four-day, ten-hour or a five-day, eighthour week, with Saturdays and Sundays included as part of

the regular work week (thus not requiring overtime). See

Cotter & Co., 331 N.L.R.B. No. 94, slip op. at 8. The Union

rejected this proposal; it opposed the idea of Saturdays and

Sundays as ordinary workdays. On August 28, the Company

modified its proposal; the new proposal called for a Sunday

to Saturday workweek with either four ten-hour workdays or

__________

3 The negotiations took place over a six week period, on July 20

and 21 and August 2, 3, 4, 23, 28, and 29.

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five eight-hour days; overtime would accrue after four tenhour days at 1.5 times the base rate for the fifth and sixth

days, and double time on the seventh day. The "four tens"

and "five eights" shifts would be filled first voluntarily and

then by shift in accordance with seniority and ability. In

response to the Company's modifications, the Union offered

the following proposal: For inbound work (i.e., receiving and

stocking merchandise), four ten-hour days or five eight-hour

days, with weekend work voluntary; for outbound work, five

eight-hour days or four ten-hour days, with weekend work at

straight time. The Company responded that it would pay

time and one-half beyond eight hours for the five eight-hour

days, and beyond ten hours for the four ten-hour days, but

refused to pay double time for the sixth day.

C. Health Care. The Company proposed that the Union

abandon the Teamsters Fund and instead adopt the Company's health plan. The Union proposed to maintain the Teamsters Fund exclusively, with the Company paying the entire

amount of cost increases to contributions to the Fund and

eliminating employee co-payments. On August 28, the Company modified its offer, proposing inclusion of its plan as an

option for employees. If employees chose the Company plan,

the Company would pay twenty-five percent of the cost; if

employees opted to stay in the Teamsters Fund, the Company would pay a predetermined monthly contribution per

employee in the first year, and 75% of the cost of the

Company's health plan in the second year. Although the

Company later increased this amount, the Union continued to

propose higher monthly contributions and elimination of employee copayments.

D. Wages. The Company had a two-tier, progressive

wage structure: The bottom tier consisted of employees hired

after August 27, 1985; the top tier was composed of employees hired before that date. The Union initially proposed a

general increase of 75 cents per hour during each year of the

contract; a merge of the two tiers by equalizing lower and

top tier wage levels over the 3 years of the contract; and

inclusion of employees in the Company's 401(k) program.

See Cotter & Co., 331 N.L.R.B. No. 94, slip op. at 8. On

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August 28, the Company proposed a continued two-tier system, with an increase in bottom tier rates of 20 cents in each

of the three years of the agreement, and an increase in top

tier rates of 20 cents, 10 cents, and 10 cents in each of the

three years, respectively. The Union counterproposed a

merge of the two tiers over four years; a general wage

increase of 65 cents in each year of the agreement; and

deferred employee participation in the Company's 401(k)

program until the second year of the agreement. The Union

also withdrew its earlier proposal for double-time payment for

overtime. The Company counteroffered an increase in bottom tier rates of 25 cents, 25 cents, and 20 cents, and in top

tier rates of 25 cents, 15 cents, and 10 cents in each year of

the agreement. On August 29, the parties again modified

their proposals. The Union proposed a top tier wage increase of 60 cents in the first year and 55 cents in the second

and third years; a merge of the two tiers over a five-year

period; a reduction in shift premium; and deferred employee

participation in the Company's 401(k) plan until the third year

of the agreement. The Union also abandoned its earlier

proposal to limit mandatory overtime. The Company counteroffered with wage increases of 30 cents, 30 cents, and 25

cents for the bottom tier, and 25 cents, 15 cents, and 10 cents

for the top tier for the three years of the agreement. In

response, the Union proposed maintaining the two-tier system in exchange for wage increases of 60 cents, 70 cents, and

80 cents over three years for the lower tier and 50 cents for

each of the three years for the top tier. The Union also

abandoned its request for employee participation in 401(k)

plans and reduced its shift premium demand to 30 cents per

hour, but its wage increase proposals remained over twice

what the Company proposed.

In retrospect, the parties present conflicting accounts of

the extent of progress in the negotiations, and of the degree

to which the parties had exhausted their willingness to make

further concessions. The Union points to statements by its

spokesman that negotiations had advanced on a number of

issues, including holidays, and to a statement by the Union's

attorney at the outset of the August 28 session that no

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impasse existed because both parties had made concessions

and there were a "lot of points the Union was willing to move

on." Cotter & Co., 331 N.L.R.B. No. 94, slip op. at 8. The

Company, on the other hand, points to statements indicating

impasse in the key areas of negotiation: (1) a statement on

August 4 by a member of the Union's negotiating committee

affirming that there was an impasse at least as to holidays;

(2) August 23 statements by both the Company and the Union

that the parties were at impasse on a number of "noneconomic" issues, including the Company's workweek, workday proposal; and (3) the Union's declaration upon receiving

the Final Offer that there was nothing in the Final Offer that

it could recommend to unit employees.

On August 29, the Company issued what it termed its "last,

best, and final offer." For outbound work, the Company

offered a workweek, workday schedule of four ten-hour or

five eight-hour days, Monday through Friday, staffed first on

a voluntary basis and then on a mandatory basis according to

seniority and ability. Overtime in a four-day week would be

paid at time and a half on the fifth and sixth days, and double

time on the seventh day; overtime for the five-day workweek

would be the same as under the expiring agreement. For

inbound work, the Final Offer required four ten-hour or five

eight-hour days Sunday through Saturday. Overtime for the

five-day schedule would be time and one-half for the sixth day

and double time on the seventh day. For the four-day week,

overtime would be the same as for outbound work. As to

health care, the Final Offer included the Company's health

plan as an option for unit employees, with monthly contributions by the Company of $252, $260, and $270 over the three

years of the agreement. As to wages, the Company presented its "bottom line" proposal: an increase of 30 cents, 30

cents, and 30 cents for the bottom tier, and 25 cents, 15 cents,

and 15 cents for the top tier. Prior proposals (other than

wages and health care payments) remained unchanged. The

Final Offer thus remained substantially similar to the Company's earlier proposals and its third wage proposal of August

29. The Final Offer provided that if the employees ratified

the contract by August 31, they would receive an extra 5

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cents in their wages for the third year. The Company stated

that it intended to implement its Final Offer if it was not

approved by August 31.

The Union objected to the Company's conclusion of impasse, stating through its attorney upon receipt of the Company's Final Offer that "no impasses existed and that [the

Company] would violate the Act if it implemented the offer."

Cotter & Co., 331 N.L.R.B. No. 94, slip op. at 9. The Union

further stated that the Company's Final Offer contained

nothing that the Union could recommend to the employees.

See id. at 1-2. On August 30, the unit employees unanimously voted not to vote on the Final Offer and to strike; however, a strike never took place. On August 31, the Union

informed the Company that its Final Offer was "not even

dignified with a vote," and requested further meetings to

continue bargaining.4 The Company declined further meetings, stating that the Union had the Company's final offer,

and the Union filed an unfair labor practice charge.5

On September 6, 1995 the Company implemented its Final

Offer, terminating the contractual grievance and arbitration

procedure and the automatic deduction of union dues and

initiation fees. On September 10, the Union sought to resume negotiations. On September 22, the Company implemented new work rules, and thereafter took disciplinary

action against four employees based, in part, on the new work

rules.6

__________

4 The record does not indicate that the Union representative

notified the Company of the areas in which the Union was willing to

grant further concessions.

5 The Union filed a second unfair labor practice charge on

March 21, 1996. After the Board consolidated the Union's unfair

labor practice charges, the Union filed an amended charge on April

3, 1996. A consolidated complaint was filed on May 30, 1996.

6 The four employees were Matthew Dillon, Alejandro Gonzalez, Richard Martin, and Adam Csongedi. Dillon received a verbal

warning on October 3, 1995, a written warning on November 2,

1995, and a one-week suspension on November 7, 1995, for refusing

to work scheduled overtime pursuant to amended Work Rule 5.

See infra note 11. After he filed a grievance over the suspension,

the Company informed Dillon, without the participation of the

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Following a hearing, an Administrative Law Judge ("ALJ")

found that the Company "did not demonstrate that an impasse existed at the time it stopped bargaining on August 29"

because the parties' bargaining sessions "[did] not constitute

the type of exhaustive negotiations which might prompt a

finding of impasse." Cotter & Co., 331 N.L.R.B. No. 94, slip

op. at 10. The ALJ further found that the Company had

unlawfully disciplined and discharged employees pursuant to

unlawfully implemented work rules, bypassed the Union in

dealing directly with an employee, and refused to process

employee grievances. See id. at 9-12. The Board affirmed

the ALJ's findings that the Company violated s 8(a)(5) and

(1) "by refusing to meet and bargain with the Union, by

implementing its last offer, including new work rules, in the

absence of a valid bargaining impasse, by bypassing the

Union and dealing directly with a unit employee, and by

refusing to process employees' grievances." Id. at 1.7

__________

Union, that the suspension was a mistake and paid him for the time

that he had lost. Dillon was subsquently fired for violating the

Company's no-fault attendance policy; the ALJ found that this

discharge was not improper. See Cotter & Co., 331 N.L.R.B. No.

94, slip op. at 11. Gonzalez, who was found to have violated

amended Work Rule 5, received a verbal warning on October 10,

1995, a third-step suspension on January 2, 1996, and was discharged for subsequent work rule violations on January 12, 1996.

Martin received a verbal warning in September 1995, and a written

warning in November 1995, for failing to work scheduled overtime

in violation of amended Work Rule 5. In December 1995, Martin

was suspended for being out of his work area pursuant to a preimpasse portion of Work Rule 5, and was discharged on February

20, 1996, for again being out of his work area. Csongedi was

suspended on March 29, 1996, for violating a quality standard under

the expiring agreement; the prior verbal and written warnings that

formed the basis of the suspension, however, were issued pursuant

to post-impasse quality standards.

7 The Board also affirmed the ALJ's finding that the Company's discipline of two employees (Gonzalez and Csongedi) was

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II.

Section 8(a)(5) of the Act makes it an unfair labor practice

for an employer "to refuse to bargain collectively with the

representatives of his employees." 29 U.S.C. s 158(a)(5).

Mandatory areas of collective bargaining include "wages,

hours, and other terms and conditions of employment." 29

U.S.C. s 158(d); see also Litton Fin. Printing Div. v. NLRB,

501 U.S. 190, 198 (1991); NLRB v. Katz, 369 U.S. 736, 742-43

(1962). An employer violates this duty to bargain if, absent a

final agreement or a bargaining impasse, he unilaterally

imposes changes in the terms and conditions of employment.

See 29 U.S.C. s 158(d); Katz, 369 U.S. at 742-43; Taft

Broad. Co., 163 N.L.R.B. 475, 478 (1967), petition for review

denied sub nom. American Fed'n of Television & Radio

Artists v. NLRB, 395 F.2d 622, 624 (D.C. Cir. 1968).

A bargaining impasse--which justifies an employer's unilateral implementation of new terms and conditions of employment--occurs when "good faith negotiations have exhausted

the prospects of concluding an agreement," Taft, 163

N.L.R.B. at 478, leading both parties to believe that they are

"at the end of their rope." PRC Recording Co., 280 N.L.R.B.

at 635; see also Teamsters Local 639 v. NLRB, 924 F.2d

1078, 1084 (D.C. Cir. 1991); American Fed'n of Television

and Radio Artists, 395 F.2d at 628. For an impasse to be

found, the parties must "have reached 'that point of time in

negotiations when [they] are warranted in assuming that

further bargaining would be futile.' " Wycoff Steel, Inc., 303

N.L.R.B. 517, 523 (1991) (quoting Patrick & Co., 248

N.L.R.B. 390, 393 (1980)). Whether the parties have reached

this point is a case-specific inquiry; "[t]here is no fixed

definition of an impasse or deadlock which can be applied

mechanically to all factual situations." Dallas Gen. Drivers,

Warehousemen and Helpers, Local 745 v. NLRB, 355 F.2d

__________

unlawful because "the [Company's] unlawfully imposed [work] rules

were a factor" in those disciplinary actions. Cotter & Co., 331

N.L.R.B. No. 94, slip op. at 3. The Board reversed the ALJ's

conclusion that the Company violated s 8(a)(5) and (1) by refusing

to deduct Union dues after expiration of the existing bargaining

agreement. See id., at 4.

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842, 845 (D.C. Cir. 1966). Among the factors that the Board

considers in evaluating the existence of an impasse are "the

bargaining history, the good faith of the parties in negotiations, the length of the negotiations, the importance of the

issue or issues as to which there is disagreement, [and] the

contemporaneous understanding of the parties as to the state

of negotiations." Taft, 163 N.L.R.B. at 478. After weighing

these factors, the Board will find an impasse if there is "no

realistic possibility that continuation of discussions ... would

have been fruitful."8 American Fed'n of Television and

Radio Artists, 395 F.2d at 628.

The Board concluded that "the parties had not bargained to

impasse before the [Company] unilaterally implemented

changes in the unit employees' terms and conditions of employment." Cotter & Co., 331 N.L.R.B. No. 94, slip op. at 1.

In so finding, the Board "emphasize[d] that, until the [Company] abruptly claimed that its 'last, best and final offer' was

on the table and would be implemented unilaterally if not

accepted, both the [Company] and the Union had demonstrated considerable flexibility and willingness to compromise their

positions." Id. This, the Board observed, was evidenced by

the parties' concessions in the immediately preceding bargaining sessions; the Union's statement, upon receiving the

Company's final proposal, that the parties were not at impasse; and the Union's subsequent request for additional

meetings.9 See id. at 1-2. In the Board's view, these circum-

__________

8 An impasse does not "permanently relieve[ ] [the parties] of

the duty to deal with each other." NLRB v. McClatchy Newspapers, 964 F.2d 1153, 1164 (D.C. Cir. 1992). As the court observed in

McClatchy Newspapers, an "impasse is only a temporary deadlock

or hiatus in negotiations, 'which in almost all cases is eventually

broken, through either a change of mind or the application of

economic force.' " Id. at 1165 (quoting Charles D. Bonanno Linen

Serv., Inc. v. NLRB, 454 U.S. 404 (1982) (internal citation omitted));

see also Serramonte Oldsmobile, Inc. v. NLRB, 86 F.3d 227, 232

(D.C. Cir. 1996).

9 On appeal, the Board does not rely on the ALJ's findings,

which the Company challenges, that the Company (1) rejected "outUSCA Case #00-1356 Document #608269 Filed: 07/06/2001 Page 31 of 39
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stances cast doubt on the Company's characterization of its

August 29 proposal as a "final offer" and indicated that "the

parties did not have a contemporaneous understanding that

they were at impasse." Id. at 2. The Board declined to

consider the Union's conduct upon receiving the Company's

August 29 proposal--specifically, the Union's statement that

the Company was not offering anything that the Union could

recommend to its employees--as indicative of the Union's

final bargaining position. Rather, the Board characterized

the Union's statement as "an understandable expression of

dissatisfaction" with the Company's "abrupt declaration that

its most recent offer was 'final' and would be implemented

unilaterally if rejected." Id.

The Company contends on appeal that the Board (and the

ALJ) erred in interpreting the Company's good-faith bargaining10 and consequent concessions immediately preceding its

Final Offer as an indication that the Final Offer was not truly

final. The Company maintains that the Board ignored the

record as a whole, which, in the Company's view, "would tell

any experienced negotiator that the parties were at impasse."

Br. for Petitioner at 32. The Board, on the other hand,

contends that "the parties had made significant progress and

demonstrated considerable flexibility on [key issues]," and

that "no contemporaneous understanding of impasse by both

sides existed, because the Union explicitly denied the existence of impasse and repeatedly requested the continuance of

bargaining, which the Company refused." Br. for Respondent at 16.

The court has long recognized that "[i]n the whole complex

of industrial relations few issues are less suited to appellate

__________

of-hand" "virtually all of the Union's proposals" during the first six

days of bargaining, (2) proposed language changes that were "radical departures" from the expiring agreement, (3) did not make an

economic proposal until the penultimate bargaining session, and (4)

did not give the Union information about its work week proposal

until later in negotiations. See id. at 10.

10 Neither the Board nor the ALJ found that the Company

negotiated in bad faith. See Cotter & Co., 331 N.L.R.B. No. 94, slip

op. at 1-2, 7-9.

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judicial appraisal than evaluation of bargaining processes or

better suited to the expert experience of a board which deals

constantly with such problems." American Fed'n of Television and Radio Artists, 395 F.2d at 627 (quoting Dallas Gen.

Drivers, 355 F.2d at 844-45). Thus, the court ordinarily

defers to the Board's fact-finding as to the existence of a

bargaining impasse. See Teamsters Local 639, 924 F.2d at

1083; Dallas Gen. Drivers, 355 F.2d at 844-45. To do so,

however, the court must be satisfied that the Board's findings

are supported by substantial evidence on the record considered as a whole. See 29 U.S.C. s 160(e) (1998); Universal

Camera Corp. v. NLRB, 340 U.S. 474, 477 (1951); Serramonte Oldsmobile, Inc. v. NLRB, 86 F.3d 227, 233 (D.C. Cir.

1996); Teamsters Local 175 v. NLRB, 788 F.2d 27, 30 (D.C.

Cir. 1986); American Fed'n of Television and Radio Artists,

395 F.2d at 627. We hold that the Board's conclusion of no

impasse fails to satisfy this standard because the Board's

findings that the Company's Final Offer was not truly "final"

and that neither party was at the end of its bargaining rope

are not supported by substantial evidence.

First, nothing in the record negates the Company's classification of its August 29 proposal as its "last, best, and final

offer." Indeed, the record demonstrates that the Company,

which was facing economic exigencies, bargained in good

faith, made substantial concessions, and ultimately reached a

point when it was simply unwilling to compromise further.

Although merely labeling an offer as "final" is not dispositive,

see Teamsters Local 175, 788 F.2d at 31; Chicago Typographical Union v. Chicago Sun-Times, 935 F.2d 1501, 1508 (7th

Cir. 1991), the circumstances here are telling. On August 4,

the Company advised the Union that when it had reached the

limits of its bargaining, it would call its final proposal its "last,

best, and final" offer. Thus, unlike Teamsters Local 175 and

Chicago Typographical Union, where the employer set forth

a number of offers, all of which it termed "final," the Company signaled to the Union that it would use this particular

language only when it had reached its bargaining limit.

Moreover, the Company's demonstrated good faith in bargaining--a Taft factor that the Board and the ALJ neglected

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to apply--leaves no grounds for rejecting the Company's

characterization of its August 29 proposal as its Final Offer.

The record evidence thus demonstrates that in the face of

eight days of what were uniformly perceived as difficult

negotiations, the Company engaged in the kind of good-faith,

hard bargaining that characterizes impasse. See GeorgiaPacific Corp., 305 N.L.R.B. 112, 121 (1991); Salinas Valley

Ford Sales, 279 N.L.R.B. 679, 690 (1986); Seattle-First Nat'l

Bank, 267 N.L.R.B. 897, 898-99 (1983), rev'd in part on other

grounds, Seattle-First Nat'l Bank, 270 N.L.R.B. 389 (1984).

The Board's refusal to accept the Company's Final Offer as

truly "final" was not based on the record evidence; rather,

the Board relied on its intuitive belief that, upon further

bargaining, each side would have made additional concessions.

The Board stated that "there had been movement on both

sides concerning important subjects such as wages, benefits,

and holidays, and the parties continued making concessions

until the [Company 'abruptly'] cut off that process." Cotter &

Co., 331 N.L.R.B. No. 94, slip op. at 1. This approach,

however, is impermissible, for it amounts to an intervention

by the Board in the parties' substantive negotiations. In

NLRB v. American National Insurance Co., 343 U.S. 395,

404 (1952), the Supreme Court observed that the Act's requirement of good faith bargaining "does not compel either

party to agree to a proposal or require the making of a

concession." Therefore, the Court held, "the Board may not,

either directly or indirectly, compel concessions or otherwise

sit in judgment upon the substantive terms of collective

bargaining agreements." Id.; see also H.K. Porter Co. v.

NLRB, 397 U.S. 99, 103 (1970). In short, the parties remain

in control of their negotiations, and each party, not the Board,

determines at what point it ceases to be willing to compromise. See H.K. Porter Co., 397 U.S. at 103-04; NLRB v.

McClatchy Newspapers, 964 F.2d 1153, 1163 (D.C. Cir. 1992).

This is especially appropriate where, as here, the negotiations

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mately familiar with the intricacies of the bargaining process

and whose relationship spanned more than a decade.

Second, the record does not support the Board's conclusion

that "the parties did not have a contemporaneous understanding that they were at impasse." Cotter & Co., 331 N.L.R.B.

No. 94, slip op. at 2. Taft identifies "the contemporaneous

understanding of the parties as to the state of the negotiations" as a "factor[ ] to be considered in deciding whether an

impasse in bargaining existed." Taft Broad. Co., 163

N.L.R.B. at 478. "If either negotiating party remains willing

to move further toward an agreement, an impasse cannot

exist: the parties' perception regarding the progress of the

negotiations is of central importance to the Board's impasse

inquiry." Teamsters Local 639, 924 F.2d at 1084. A "contemporaneous understanding" as to impasse does not, however, require the parties to reach mutual agreement "as to the

state of the negotiations"; rather, each party must independently, and in good faith, believe that it is "at the end of [its]

rope." PRC Recording Co., 280 N.L.R.B. at 635. An application of this Taft criterion, which the Board emphasized,

reinforces, rather than negates, the existence of an impasse,

because nothing in the record indicates that the Company had

not bargained to its fullest capacity. Furthermore, the Union's "conduct" on which the Board relies--the Union's selfserving statement on August 29 that the parties were not at

impasse and the Union's vacuous request on August 31 for

additional meetings--is insufficient to demonstrate the Union's desire to pursue further negotiations.

Absent conduct demonstrating a willingness to compromise

further, a bald statement of disagreement by one party to the

negotiations is insufficient to defeat an impasse. A contrary

result would render the "contemporaneous understanding"

Taft factor meaningless. Similarly, a vague request by one

party for additional meetings, if unaccompanied by an indication of the areas in which that party foresees future concessions, is equally insufficient to defeat an impasse where the

other party has clearly announced that its position is final.

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Indeed, as the court noted in addressing the breaking of an

impasse, "[t]he Board itself has indicated that a party's 'bare

assertions of flexibility on open issues and its generalized

promises of new proposals [do not clearly establish] any

change, much less a substantial change' in that party's negotiation position." Serramonte, 86 F.3d at 233 (quoting Civic

Motor Inns, 300 N.L.R.B. 774, 776 (1990)). Even if in the

pre-impasse context the Union does not have to offer "a

substantial change" in its position, the Union's immediate and

definitive rejection of the Company's Final Offer suggests

circumstances not unlike those relied upon by the Board in

Seattle-First National Bank in concluding that the contemporaneous understanding of the parties supported a finding of

impasse. See Seattle-First Nat'l Bank, 267 N.L.R.B. at 898-

99. In addition, the Union declined to submit the Final Offer

to a vote of the unit employees. See Cotter & Co., 331

N.L.R.B. No. 94, slip op. at 9. Furthermore, although on

notice as a result of the Company's earlier signal about the

language it would use to identify its final offer, the Union at

no time indicated that it was ready to move on any issue that

the parties had discussed. Rather, the parties remained far

apart on the issues of exceptional importance--wages, healthcare, holidays, and work week. See Taft Broad. Co., 163

N.L.R.B. at 478. Under the circumstances, the record evidence points to no conduct indicating the Union's belief that

further negotiations would be fruitful. Cf. Serramonte, 86

F.3d at 233.

The Board distinguished NLRB v. H & H Pretzel Co., 831

F.2d 650 (6th Cir. 1987), on the ground that both the Company and the Union had indicated flexibility in the last two days

of negotiations and thus were not "similarly committed to

maintaining plainly irreconcilable positions." Cotter & Co.

331 N.L.R.B. No. 94, slip op. at 2. In H & H Pretzel, the

employer had made clear to the union that it had to achieve

substantial labor cost savings in order to survive. After three

bargaining sessions, however, the union continued to insist on

wage increases. See 831 F.2d at 652, 656. Notwithstanding

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the brief period of negotiations, the Sixth Circuit affirmed the

Board's finding that "the union's expressed willingness to

continue talks was a mere token offer" made simply to delay

the inevitable imposition of wage reductions. Id. at 656-57.

This characterization of the union's efforts was reinforced by

the fact that "the union was on notice, prior to the last

negotiation session, of the company's commitment to cutting

labor costs [to address its financial concerns]." Id.

In distinguishing H&H Pretzel, the Board ignored two

marked similarities between the two cases. First, as in H&H

Pretzel, the Company from the outset put the Union on notice

that it sought to address significant concerns about competitiveness and productivity by substantially modifying the parties' bargaining agreement. See supra note 2. To this end,

the negotiations period was lengthier than usual. As in H&H

Pretzel, although the parties demonstrated flexibility in bargaining, they remained far apart on significant issues. See

H&H Pretzel, 831 F.2d at 656-57. Second, as in H&H

Pretzel, "while the [U]nion sought to continue talks, it did not

offer a new proposal or indicate a willingness to compromise

further on any specific issue." Id. at 656. Although bargaining proposals were exchanged, the Union resisted movement

in the Company's direction. On the eighth day of negotiations, for example, the Union was continuing to ask for twice

the wage increases that the Company was offering, despite

the Company's position that employee inefficiencies did not

warrant such increases. See supra note 2. Unlike H&H

Pretzel, the Union refused even to submit the Company's

Final Offer to the unit employees for a vote. See 831 F.2d at

652.

In view of this record evidence, the Board's focus on the

abruptness of the Company's Final Offer, on the Union's

surprise upon receiving it, and on possible future concessions

by both parties misses the mark. See Cotter & Co., 331

N.L.R.B. No. 94, slip op. at 1-2; see also Serramonte, 86 F.3d

at 233. The bargaining positions of the parties, as expressed

by their experienced negotiators, indicate that the parties

were at impasse.11

__________

11 Because we reverse the Board's finding that TruServ

unlawfully implemented its Final Offer, including the TruServ health

insurance plan option for employees, there is no occasion to address

TruServ's contention that the Board's remedial order should be modified

to provide that TruServ would owe no contributions to the union's Welfare

Fund for employees who had opted into the TruSrev plan, or, alternatively,

would receive a set off against claims it had paid for such employees.

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III.

The Company also challenges the Board's findings on employee discipline and the processing of grievances, and the

Board's remedial order. Regarding the implementation of

new work rules, the Company contends that the Union waived

its right to bargain on work rules when it conceded that, in

accord with the expired Agreement, the Company had the

authority to implement new rules, and that the Union's sole

remedy was to initiate grievance proceedings.12 See NLRB v.

United States Postal Service, 8 F.3d 832, 836-37 (D.C. Cir.

1993); Haddon Craftsman, 300 N.L.R.B. 789, 790-91 (1990);

Jim Walter Res., Inc., 289 N.L.R.B. 1441, 1442 (1988). Thus,

the Company contends, because the work rules allowed it to

determine the appropriate disciplinary measures for any violation, it lawfully disciplined employees Gonzalez, Martin, and

Csongedi. Although both parties raised before the Board the

issue of waiver concerning the implementation of new work

rules, the Board failed to address this argument in its decision. Instead, the Board focused on its finding of no impasse

and summarily concluded that the absence of an impasse

rendered unlawful the Company's modification of work rules

and any consequent employee disciplinary action. See Cotter

& Co., 331 N.L.R.B. No. 94, slip op. at 2-4. It follows from

our holding on impasse that the Company lawfully implemented its Final Offer, including the amended work rules

that led to the discipline of the employees. See Katz, 369

U.S. at 742-43; Taft Broad. Co., 163 N.L.R.B. at 478. There-

__________

12 Under the expiring agreement, the Company had the right to

implement work rules and quality and productivity standards unilaterally; the Union, in turn, had the right to grieve the reasonableness of the rules through an established grievance and arbitration

procedure. On September 22 (after implementing its Final Offer),

the Company amended its Work Rule 5 to classify a failure to work

overtime as a work rule violation, subject to immediate discipline

under the Company's progressive disciplinary system.

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fore, we grant the petition as to the work rules and subsequent disciplinary actions.

Regarding the grievance procedure, the Company concedes

that it abandoned the formal procedure established by the

Agreement, but maintains that its obligation to process grievances, see Hilton's Envt'l, Inc., 320 N.L.R.B. 437, 454 (1995),

was adequately satisfied by "the Company's willingness to

discuss grievances at the highest levels rather than rote

processing at each lower grievance step." Further, the Company maintains that a grievance form signed by the Union is

evidence that the Company did not bypass the Union in

settling a grievance with one employee. These contentions

are meritless. The Board's finding that the Company acted

unlawfully in refusing to process grievances is supported by

substantial evidence. Despite the Company's position that its

new approach was superior, the Company was not free to

replace unilaterally the contractual grievance procedure. See

NLRB v. United Nuclear Corp., 381 F.2d 972, 977-78 (10th

Cir. 1967); Hilton's Envt'l, Inc., 320 N.L.R.B. at 454. Furthermore, substantial evidence supports the Board's finding

that the Company's direct dealings with an employee violated

s 8(a)(1) and (5) of the Act. See Medo Photo Supply Corp. v.

NLRB, 321 U.S. 678, 684 (1944); Toledo Typographical Union No. 63 v. NLRB, 907 F.2d 1220, 1222 (D.C. Cir. 1990).

That the Union signed the grievance form in question indicates the Union's involvement in the filing of the grievance,

not the Union's participation in the resolution of the grievance. The Company's alternative contention for upholding its

unilaterally imposed grievance procedure, "no harm, no foul,"

was not presented to the Board, and hence is not properly

before the court. See 29 U.S.C. s 160(e); Woelke & Romero

Framing, Inc. v. NLRB, 456 U.S. 645, 665-66 (1982); Alwin

Mfg. Co., Inc. v. NLRB, 192 F.3d 133, 143 (D.C. Cir. 1999).

Accordingly, we grant the petition in part and deny the petition

in part.

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