Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-95-01418/USCOURTS-caDC-95-01418-0/pdf.json

Parties Involved:
Acme Die Casting
Petitioner
National Labor Relations Board
Respondent

Document Text:

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued May 10, 1996 Decided August 27, 1996

No. 95-1418

ACME DIE CASTING, A DIVISION OF LOVEJOY INDUSTRIES, INC.,

PETITIONER

v.

NATIONAL LABOR RELATIONS BOARD,

RESPONDENT

Petition for Review and Cross-Application for

Enforcement of an Order of the

National Labor Relations Board

Christopher A. Johlie, with whom Larry G. Hall was on the briefs,

argued the cause for petitioner.

Paul J. Spielberg, Deputy Assistant General Counsel, National Labor

Relations Board ("NLRB"), with whom Linda R. Sher, Associate

General Counsel, and Aileen A. Armstrong, Deputy Associate General

Counsel, NLRB, were on the brief, argued the cause for respondent.

William A. Baudler, Attorney, NLRB, entered an appearance.

Before WALD, BUCKLEY, and SENTELLE, Circuit Judges.

Opinion for the court filed by Circuit Judge BUCKLEY.

Dissenting opinion filed by Circuit Judge WALD.

BUCKLEY, Circuit Judge: The National Labor Relations Board

("NLRB" or "Board") found that Acme Die Casting, a division of

Lovejoy Industries, Inc. ("Company"), committed various unfair

labor practices in violation of sections 8(a)(1), (3), and (5) of

the National Labor Relations Act ("Act"). When the case first came

before us, we affirmed the Board's decision and order in all

respects but one; namely, its conclusion that the Company's

failure to grant its employees wage increases in 1988 constituted

a unilateral change in the terms and conditions of employment in

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violation of section 8(a)(5). We remanded that question with the

request that the Board formulate a rule indicating when a pattern

of wage increases is sufficiently regular in timing and amount to

constitute a settled employment practice. On remand, the Board

merely reiterated its earlier conclusion and made no attempt to

comply with our instructions. Because a resolution of this

particular question will have no material effect on the remedies

the Board has petitioned us to enforce, we will not remand a second

time. Rather, we throw up our judicial hands and will enforce the

Board's remedial order only with respect to those findings of

unfair labor practices that we have already affirmed.

I. BACKGROUND

The facts relevant to this appeal are set forth in our

previous opinion, Acme Die Casting, A Division of Lovejoy

Industries, Inc. v. NLRB, 26 F.3d 162, 163-65 (D.C. Cir. 1994)

("Acme I"). Briefly, during the period from January 1980 through

February 1987, the Company granted its employees across-the-board

wage increases as follows:

January 4, 1980 - 20 cents

June 2, 1980 - 20 cents

January 5, 1981 - 23 cents

June 1, 1981 - 25 cents

November 9, 1981 - 22 cents

January 4, 1982 - 30 cents

September 13, 1982 - 25 cents

March 21, 1983 - 25 cents

October 17, 1983 - 25 cents

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April 30, 1984 - 25 cents

November 5, 1984 - 25 cents

May 12, 1985 - 20 cents

December 2, 1985 - 25 cents

June 30, 1986 - 20 cents

February 16, 1987 - 15 cents

On September 28, 1987, it granted raises ranging between 10 cents

and 40 cents an hour, which were intended to equalize salaries

among the employees.

In October 1987, the Company's production and maintenance

workers elected the United Electrical, Radio, and Machine Workers

of America ("Union") to be their bargaining agent. Despite

numerous complaints from its employees, the Company did not give

any wage increases in 1988. On January 2, 1989, the Company

awarded an across-the-board increase of 30 cents.

In 1992, the Board found that the Company had committed a

number of unfair labor practices, Acme Die Casting, a Division of

Lovejoy Industries, Inc., 309 N.L.R.B. 1085 (1992) ("Initial

Decision"), two of which were related to the Company's failure to

grant wage increases in 1988. The Board concluded that this

failure represented a unilateral change in the terms and conditions

of employment without affording the Union an opportunity to

negotiate, in violation of section 8(a)(5), and that it was

motivated by anti-union animus, in violation of section 8(a)(3).

Id. at 1086, 1159-60.

In Acme, we affirmed the Board's findings as to all but one of

the violations that it identified. We withheld judgment on whether

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the Company's failure to grant wage increases in 1988 represented

a departure from a settled practice without bargaining, in

violation of section 8(a)(5), noting that the Board's past cases

had failed to clarify when the timing and amount of the increases

is sufficiently consistent to constitute a "settled practice." 26

F.3d at 166. Accordingly, we remanded with instructions that the

Board "formulate a clearer standard for determining when granting

or withholding a wage increase violates ... § 8(a)(5)," and

observed that "[t]he Board needs to set comprehensible rules as to

when the frequency and quantity of wage increases constitute a

settled practice that the employer must continue." Id. at 168.

In a two-page supplemental decision and order on remand, the

Board reiterated the facts we have just related and repeated its

conclusion that the Company's wage increases from 1980 through 1987

were sufficiently regular in timing and amount to constitute a

settled practice. Acme Die Casting, Division of Lovejoy

Industries, Inc., 317 N.L.R.B. 1353 (1995) ("Supplemental

Decision"). Accordingly, the Board reaffirmed its "previous

finding that [Acme] violated Section 8(a)(5) by failing to give

wage increases in 1988 without providing the Union prior notice and

an opportunity to bargain." Id. at 1354.

II. DISCUSSION

A. Settled Practice

Section 8(a)(5) of the Act provides that "[i]t shall be an

unfair labor practice for an employer ... to refuse to bargain

collectively with the representatives of his employees," 29 U.S.C.

§ 158(a)(5); and section 8(d) identifies the subject matters of

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such bargaining as including "wages, hours, and other terms and

conditions of employment." Id. § 8(d). An employer violates the

Act when it unilaterally alters wages or other terms or conditions

of employment without first negotiating with the union representing

the employees. NLRB v. Katz, 369 U.S. 736, 743 (1962). Here, it

is undisputed that the Company did not bargain with the Union when

it refused to grant wage increases in 1988. Thus, the critical

inquiry is whether these increases were granted pursuant to Acme's

"terms and conditions of employment."

The 1980-1987 wage increases fall within the ambit of section

8(a)(5) " "if they are of such a fixed nature and have been paid

over a sufficient length of time to have become a reasonable

expectation of the employees and, therefore, part of their

anticipated remuneration.' " Phelps Dodge Mining Co., Tyrone

Branch v. NLRB, 22 F.3d 1493, 1496 (10th Cir. 1994) (quoting NLRB

v. Nello Pistoresi & Son, Inc., 500 F.2d 399, 400 (9th Cir. 1974)).

On the other hand, if an employer "retain[s] total discretion to

grant [wage] increases based on any factors it cho[oses], we doubt

that discontinuing the policy [will result] in a violation of

section 8(a)(5)." Daily News of Los Angeles v. NLRB, 73 F.3d 406,

412 n.3 (D.C. Cir. 1996). Indeed, wage increases that "are fixed

as to timing but discretionary in amount do not become part of the

employees' reasonable expectations and thus are not considered

"terms and conditions' of employment." Phelps Dodge, 22 F.3d at

1496. See also Daily News, 73 F.3d at 412 n.3 ("we do not believe

that fixed timing alone would be sufficient to bring the program

under Katz").

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In its Initial Decision, the Board adopted the finding of the

administrative law judge ("ALJ") that the wage increases awarded

Acme's employees were sufficiently regular in timing and amount to

constitute a settled practice within the ambit of section 8(a)(5).

309 N.L.R.B. at 1160. The ALJ acknowledged, however, that the case

"approache[d] the borderline" between a settled practice and a

sporadic one. Id. The Company maintained before the Board, and

continues to maintain, that the wage increases were not automatic,

but discretionary, as evidenced by their varying dates and amounts.

In Acme, we found it impossible to resolve this dispute. "The

Board," we stated, "has not demonstrated a comprehensible standard

for deciding whether a pattern of increases is sufficiently

consistent in timing and/or amount to constitute a settled

practice." 26 F.3d at 166. Observing that its precedent on this

issue was "all over the map," we remanded to allow the Board to

craft a rule that "set the parameters governing when the frequency

and the amount of wage increases is sufficiently consistent to

constitute a settled practice under § 8(a)(5)." Id. We noted that

any reasonable rule adopted by the Board would, under the familiar

principles of Chevron U.S.A. Inc. v. Natural Resources Defense

Council, Inc., 467 U.S. 837, 842-43 (1984), be afforded deference.

We now review the Board's Supplemental Decision to determine

whether it has complied with our instruction to formulate a

satisfactory standard.

In the introductory section of the Supplemental Decision, the

Board quotes that section of our Acme opinion in which we noted

that the Board had failed to establish a rule. 317 N.L.R.B. at

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1353. A four-paragraph "Discussion" follows. The first paragraph

notes that the Union was certified in 1987 and that the Company

then refused to bargain with it; the second and third paragraphs

list the dates and amounts of the Company's wage increases. Id. at

1354. The final paragraph begins with the observation that the

increases occurred at "relatively regular intervals," particularly

during the five-year period immediately preceding the Union

election. Id. at 1354. The Board concludes that

the limited discretionary aspects of the [Company's]

practice with respect to timing and amounts were not

sufficient to preclude a finding that the

across-the-board increases had become a term and

condition of employment. In these circumstances, the

unilateral refusal to continue the practice was unlawful

under Section 8(a)(5).

Id.

The Board apparently thought it sufficient to summarize the

dates and amounts of the wage increases, note their approximate

regularity, and conclude that the increases constituted an

established practice. When viewed from one perspective, there is

no question that the Company's wage increases were somewhat

regular: they usually occurred at intervals of from six to

seven-and-a-half months, and they generally fell between 20 and 30

cents an hour. When viewed from another perspective, however, the

increases appear somewhat irregular: one year there were three

raises, in another, just one; the across-the-board hourly raises

ranged from a high of 30 cents to a low of 15 cents.

The difficulty we noted in Acme is that the Board's

perspective seems to shift from case to case. Predicting whether

the Board will view a pattern of wage increases as established or

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discretionary has proven difficult not only for employers and

employees, but for the Board's own ALJs as well. In many of the

Board decisions cited in Acme, the Board overruled the ALJ's

findings that an employer's wage increases were sufficiently

regular to constitute an established practice. See Orval Kent Food

Co., 278 N.L.R.B. 402, 403 (1986); Ithaca Journal-News, Inc., 259

N.L.R.B. 394, 394-96 (1981); Great Atlantic & Pacific Tea Co., 192

N.L.R.B. 645, 645-46 (1971). It was precisely to allow the Board

to illuminate the "borderline" between a settled practice and a

discretionary one that we remanded the issue in Acme.

Where, then, is the rule that we requested of remand? At oral

argument, counsel for the Board was unable to identify a single

sentence in the Supplemental Decision that was responsive to our

instruction in Acme. The Board contends that it should not be

faulted for failing to provide "a numerical or other bright-line

test to determine when a pattern of general raises exhibits

sufficient attributes of duration and regularity to be deemed a

term of employment." Brief for Respondent at 18. It fails to

explain, however, why this particular pattern should constitute a

settled employment practice while others that are difficult to

distinguish from this one do not.

We did not expect the Board to state with mathematical

precision when a pattern of wage increases is sufficiently regular

to constitute a settled practice; we simply asked the Board to

"set the parameters." The rule we envisaged might have identified

the various criteria that are to be taken into consideration and

the appropriate weight to be accorded each. Had the Board been

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unable to comply with our request and explained, on remand, that it

had found it impossible to establish a workable rule, given the

numerous and imponderable variables to be weighed, we might have

been satisfied. The Board, however, not only failed to formulate

a rule, it failed even to explain why it was unable to do soif

that indeed was the case.

Taking a different tack, the Board argues that the "result

here may well be compelled by this Court's decision" in Daily News.

Brief for Respondent at 14. We are unpersuaded by this argument.

In Daily News, in which we found the existence of a settled

pattern, the employer granted wage increases "on or about the

employee's date of hire or last promotion." 73 F.3d at 408. We

observed that "the sole criterion for determining the amount of the

increases was merit," id., and that "the employer was constrained

both by the established procedures for evaluating employees and by

the fixed criteria for making each individual merit decision," id.

at 412. Here, the timing of the increases, while somewhat regular,

was by no means fixed; and, what is more important, there is no

evidence that the Company had "constrained" itself by "established

procedures" or "fixed criteria" for establishing the amounts of the

increases.

B. Remedy

In its Initial Decision, the Board affirmed the findings and

conclusions of the ALJ that are relevant here, 309 N.L.R.B. at

1085, but modified his proposed remedial order as it related to

Acme's failure to grant pay increases in 1988. The ALJ had found

that, but for the Company's unfair labor practices, it would have

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raised wages 25 cents an hour in February and July 1988, id. at

1160; he therefore recommended a corresponding award of backpay to

the affected employees, id. at 1161-62. The Board agreed that two

raises would have been given in 1988 but found that "the evidence

presented at trial was insufficient to determine the appropriate

amounts of these wage increases." Id. at 1086. Therefore, it

postponed the determination of the appropriate amount of the

backpay award to the compliance stage of the proceeding. Id.

At oral argument, counsel for the Company informed the court

that, in 1989, Acme resumed a pattern of across-the-board increases

in the course of its continuing negotiations with the Union. This

being so, the only year for which a remedy is at issue is 1988. As

Board Member Cohen notes in the Supplemental Decision, because the

discontinuance of wage increases in 1988 violated section 8(a)(3),

"[a] finding that such conduct also violated Sec. 8(a)(5) [does

not] add materially to the remedy." 317 N.L.R.B. at 1354 n.11.

Indeed, irrespective of whether the Company has violated section

8(a)(5), the employees are entitled to be made whole for the

monetary losses they suffered as a result of the Company's

discontinuance of wage increases in 1988.

Because the practical consequences of finding a section

8(a)(5) violation appear to be insignificant here, we decline to

remand yet again in order to determine whether, in light of a

yet-to-be-crafted Board rule, the Company's pattern of wage

increases was sufficiently regular to constitute an established

practice. We do, however, register our hope that the next time the

Board finds a pattern of increases to be a settled practice, it

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will take the opportunity to clarify this murky area of the law or

explain why this cannot be done.

III. CONCLUSION

Because the Board has failed to identify a rule as to when the

frequency and quantity of wage increases constitute a settled

practice, we deny its petition for enforcement insofar as its order

is designed to remedy the section 8(a)(5) violation. Enforcement

is granted, however, in all other respects.

So ordered.

WALD, Circuit Judge, dissenting: I agree with the majority

that the National Labor Relations Board ("NLRB" or "Board") might

have reasoned more explicitly on remand in determining that Acme

Die Casting ("Company") had violated section 8(a)(5) of the

National Labor Relations Act by unilaterally withholding pay

increases in 1988. I believe, however, that the Board's

supplemental decision and order does manage to set out a

"comprehensible standard for deciding whether a pattern of

increases is sufficiently consistent in timing and/or amount to

constitute a settled practice," thus honoring the instruction of

the prior panel. Acme Die Casting v. NLRB, 26 F.3d 162, 166 (D.C.

Cir. 1994) (Acme I).

As the majority opinion relates, the Board's supplemental

decision began with a description of the procedural history of the

dispute and related enforcement actions against the Company. The

Board then listed the dates of the sixteen pay increases that the

Company offered between 1980 and 1987, as well as the amounts of

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1The majority's opinion indicates that all but three of the

sixteen increases were between 20 to 25 cents per hour. See

Majority opinion ("Maj. op.") at 3. 

the increases. It indicated that all of the increases save one

were across-the-board raises in which every employee received the

same hourly wage increase, and explained the one exception as an

instance when the Company was attempting to equalize wages. The

Board also noted that increases ranged from 15 to 30 cents per

hour, with most falling between 20 to 25 cents per hour.1

The Board next turned to a discussion of the timing of the

increases. It concluded that they occurred at "relatively regular

intervals," and while not interspersed at precisely the same

intervals, they were by no means random either. In support of this

conclusion the Board noted that thirteen of the fifteen intervals

between pay increases fell within the range of five to

seven-and-a-half months. The Board also emphasized that the

Company had given raises over a seven-and-a-half year period and

that for the five most recent years, September 1982 to September

1987, the intervals were even more similar, ranging only from six

to seven-and-a-half months.

As this overview reveals, the supplemental decision pretty

clearly indicates the factors that the Board considers important in

determining whether a pay increase has become a settled practice.

The Board focused on the following: whether the increases were

given across-the-board or only to selected employees; whether the

amounts of the increases and the intervals between increases were

reasonably similar; whether the increases had been given over a

lengthy period; and whether the increases had become more regular

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2On review of the Board's supplemental decision in Daily

News we stated that "fixed timing alone" would not be sufficient

to create a settled practice of merit pay increases but held that

a settled practice could exist if a "merit-increase program is

fixed as to timing and criteria." Daily News of Los Angeles v.

NLRB, 73 F.3d 406, 412 & n.3 (D.C. Cir. 1996) (Daily News II). 

over time. While the Board did not state precisely what weight is

to be given to each of these factors, its discussion puts greatest

emphasis on the fact that the Company's pay increases occurred at

"regular intervals" and over a "significant period of time." This

emphasis on timing is consistent with the Board's statement that

its decision in this case is supported by its more elaborate

analysis of the law, on remand, in Daily News of Los Angeles, 315

N.L.R.B. 1236, 1994 WL 731261 (Dec. 30, 1994). In Daily News, the

Board reviewed its precedents and clarified its governing principle

that increases given "in a clearly established pattern" are to be

distinguished from those given at "random irregular intervals";

the former but not the latter become a settled term and condition

of employment. Id., at 1240-41.2

It is of course quite apparent from its supplemental decision

that the Board has eschewed the use of any bright-line rules, such

as an inflexible requirement that intervals between increases must

not vary in length more than two months, to define what is or is

not a settled practice of pay increases. The Board is justified in

this stance, given its traditional pattern of case-by-case

adjudication rather than rulemaking, so long as its parameters or

its criteria are reasonable and discernibleas they are here.

Moreover, as the majority acknowledges, our remanding order in Acme

I did not require that the Board adopt a bright-line rule but

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rather only that the Board "set the parameters" to be used in

determining that pay increases "constitute a settled practice."

Acme I, 26 F.3d at 166. The Board's clearly-evident concern is

simply that increases be characterized by "relative consistency" as

to timing and amount.

No doubt the Board could have spoken with greater clarity,

indicating in one formula which factors are relevant to determining

whether a pay increase has become a settled practice and which are

not, the weight assigned to each and explaining why it rejected a

more bright-line approach. But the majority unfairly ignores the

analysis that the Board does offer; for example, the majority

skips over much of the Board's discussion of the timing of the

increases and refuses to draw obvious inferences from the

supplemental opinion simply because these inferences are not

explicitly stated up front. In addition, the majority errs when it

claims that "there is no evidence that the Company had

"constrained' itself by "established procedures' or "fixed

criteria' for establishing the amounts of the increases." Maj. op.

at 8. Daily News II specifically held that a settled practice

could exist where an employer retained discretion over the pool of

money available for increases provided there be "fixed criteria" to

determine who qualifies for a pay increase and the amount each

individual employee receives. 73 F.3d at 408, 411-12. Here, the

Board's supplemental opinion makes clear that the increases were

given across-the-board in the same amount, and thus there is

evidence of fixed criteria used to determine who qualified for an

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3In addition, since our decision in Daily News II was issued

after the supplemental opinion here, the Board has not yet had

occasion to decide how the fixed criteria requirement should be

applied, if at all, where the increases are not based on merit or

where the increases are similar in amount. It is not immediately

apparent that Daily News II, which addressed merit-pay increases,

should also apply in other contexts. See, e.g., Acme I, 26 F.3d

at 166 ("We are aware that Daily News may be distinguishable

[because it] involved merit-based increases ... rather than the

across-the-board increases at issue here."). We should leave

this question for the Board to address in the first instance. 

4Given my view of the supplemental decision, I find the

inability of the Board's counsel at oral argument to identify the

ways in which the decision complied with our order on remand to

be quite inexplicable. But just as we do not countenance post

hoc rationalizations by litigation counsel to supplement an

inadequate Board rationale, neither should we discount an

adequate one because of deficiencies in counsel's argument. 

increase and how much each employee received.3

As I read the supplemental opinion, the Board has identified

which factors are relevant to deciding when pay increases have

become a settled practice, indicated the relative importance of

these factors and told us that it will apply a "relative

consistency" standard to determining when pay increases constitute

a settled practice; in my view that is enough to comply with our

prior order on remand.4 Chevron deference precludes us from

requiring that it do the job as professorially as we might prefer.

See Curtis-Matheson Scientific, Inc. v. NLRB, 494 U.S. 775, 786-87

(1990) (noting that NLRB deserves deference as it bears "primary

responsibility for developing and applying national labor policy");

Gilbert v. NLRB, 56 F.3d 1438, 1444 (D.C. Cir. 1995) (courts must

accept reasonable NLRB constructions of the NLRA under Chevron).

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