Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-06-01168/USCOURTS-caDC-06-01168-0/pdf.json

Parties Involved:
E.I. Du Pont De Nemours and Company
Respondent
National Labor Relations Board
Petitioner

Document Text:

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued May 11, 2007 Decided June 15, 2007

No. 06-1089

E.I. DU PONT DE NEMOURS AND COMPANY,

PETITIONER

v.

NATIONAL LABOR RELATIONS BOARD,

RESPONDENT

UNITED STEEL, PAPER AND FORESTRY, RUBBER,

MANUFACTURING, ENERGY, ALLIED INDUSTRIAL AND

SERVICE WORKERS INTERNATIONAL UNION, ET AL.

INTERVENORS

Consolidated with

06-1163, 06-1168

On Petitions for Review and Cross-Application for

Enforcement of an Order of the

National Labor Relations Board

Steven W. Suflas argued the cause for petitioner E.I. du Pont

de Nemours and Company. With him on the briefs were

Jennifer L. Sova and James D. Donathen.

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James B. Coppess argued the cause for petitioners United

Steel, Paper and Forestry, Rubber, Manufacturing, Energy,

Allied Industrial and Service Workers International Union, et al.

On the brief was Daniel M. Kovalik. Peter Herman entered an

appearance.

Philip A. Hostak, Attorney, National Labor Relations

Board, argued the cause for respondent. With him on the brief

were Ronald E. Meisburg, General Counsel, John H. Ferguson,

Associate General Counsel, Aileen A. Armstrong, Deputy

Associate General Counsel, and David S. Habenstreit,

Supervisory Attorney.

Steven W. Suflas, Jennifer L. Sova, and James D. Donathen

were on the brief for intervenor E.I. du Pont de Nemours and

Company.

Daniel M. Kovalik was on the brief for intervenors United

Steel, Paper and Forestry, Rubber, Manufacturing, Energy,

Allied Industrial and Service Workers International Union, et al.

Before: SENTELLE, GARLAND and KAVANAUGH, Circuit

Judges.

Opinion for the Court filed by Circuit Judge KAVANAUGH.

KAVANAUGH, Circuit Judge: This case arises out of

negotiations between E.I. du Pont de Nemours and Company

and the Union that represents employees at one of the

Company’s factories in New York. In 2001, the Company

declared impasses with respect to two sets of negotiations, one

concerning the subcontracting of certain positions and one

concerning the parties’ overall collective bargaining agreement.

The National Labor Relations Board determined that the

Company had permissibly declared an impasse with respect to

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the overall collective bargaining agreement but had wrongfully

declared an impasse with respect to the subcontracting

negotiations. Both the Company and the Union filed petitions

for review in this Court. The Union contends that the Company

impermissibly bifurcated the subcontracting issue and the

overall collective bargaining agreement issues into two separate

sets of negotiations, and that because the subcontracting impasse

was unlawful, so too the collective bargaining agreement

impasse was unlawful. The Company argues, contrary to the

conclusion of the Board, that there was a lawful impasse on the

subcontracting issue. For the reasons set forth below, we deny

the petitions for review and grant the Board’s cross-petition for

enforcement.

I

1. At its facility in Tonawanda, New York, E.I. du Pont de

Nemours and Company manufactures Corian “shapes.” Corian

is a “solid surface” material used to make countertops in

kitchens and other areas. At the Tonawanda facility, liquid

Corian is poured into molds in the shapes of bowls and sinks.

Employees called “millers” then remove the outer layer from the

shapes and drill drain holes. After that, employees called

“finishers” sand the shapes to smooth them out and remove

blemishes. Along with the rest of the employees at the

Tonawanda facility (approximately 400 in all), these millers and

finishers are represented by the Union.

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* The employees at the Tonawanda facility were represented

by the Buffalo Yerkes Union until 1999. At that point, the Buffalo

Yerkes Union affiliated with the Paper, Allied Industrial, Chemical

and Energy Workers International Union, the predecessor to the

United Steel, Paper and Forestry, Rubber, Manufacturing, Energy,

Allied Industrial and Service Workers International Union, one of the

petitioners in this case. For ease of reference, we refer simply to “the

Union.”

In 1977, the Company and the Union signed a collective

bargaining agreement.* The CBA included an “evergreen”

clause, which permitted either party to terminate or propose

alterations to the agreement at any time. Sixteen years later, in

1993, the Company invoked that clause and notified the Union

that it intended to terminate the CBA and negotiate a new

agreement. After a year of unfruitful negotiations over a new

CBA, the Company declared an impasse in 1994 and

implemented its final offer.

Two features of that final offer are relevant to this case.

First, the Company eliminated “pyramiding,” an overtime pay

system in which employees are compensated at the overtime rate

both for hours worked per day in excess of eight hours and for

hours worked per week in excess of 40 hours. Second, the

Company eliminated most available healthcare plans and

implemented a cost-sharing formula to gradually equalize

Company and employee contributions to healthcare costs.

In response to the Company’s implementation of its final

offer, the Union filed unfair labor practice charges with the

NLRB. In 1997, however, the Company and the Union entered

into a settlement agreement, in which the Company agreed to

restore pyramiding and freeze healthcare cost-sharing at the ratio

that existed as of 1996. The parties resumed negotiations over

a new CBA in 1998.

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Meanwhile, in 1995, after the Company declared the

impasse on the CBA negotiations but before the parties reached

the settlement agreement, the parties began a separate set of

negotiations concerning the discrete issue of finishing work (the

sanding of Corian shapes performed by finishers). Since 1985,

the Company had subcontracted finishing work off premises.

The Company announced in early 1995, however, that it

intended to bring finishing work back in-house. In August of

that year, the parties reached an agreement – even though

negotiations on the overall CBA were at that time stalled – in

which the Company promised to keep 85% of finishing work

in-house and the Union accepted a lower wage requirement for

finishing work. That agreement was called the “CCMC finisher

agreement.”

To summarize, by 1997 the Company and the Union had

entered into two agreements relevant to this case. The first was

a settlement agreement that preserved negotiations over the

overall CBA by restoring pyramiding and freezing the ratio of

healthcare cost-sharing at the 1996 level. The second was the

CCMC finisher agreement, which related to the discrete issue of

bringing finishing work in-house. 

2. From 1998 to 2001, the parties continued to bargain over

a new CBA. In January 2001, the Company presented the Union

with another final offer in the CBA negotiations. That final

offer, like the one in 1994, would have eliminated pyramiding

and resumed the gradual phase-in of healthcare cost-sharing. At

the same time, the Company proposed a “Supplemental

Agreement” that amended the CCMC finisher agreement. That

amendment would have committed the Company to gradually

raising the wages of finishers but would have eliminated the

requirement that the Company keep a minimum percentage of

finishing work in-house.

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In February 2001, the Company changed course and

informed the Union that it would terminate the CCMC finisher

agreement in June of that year. The Company told the Union

that emerging technologies would soon make it possible to

completely eliminate all finishing positions, as well as milling

positions. In response to this, the Union presented a “helping

hands” proposal that would purportedly have alleviated some of

the bottleneck problems at the factory, but the Company rejected

it. The Company also insisted that negotiations over the CCMC

finisher agreement be kept separate from negotiations over the

CBA. 

In April 2001, the Company informed the Union that it had

conducted a feasibility study; the study demonstrated that the

Company could save $1 million per year by subcontracting

finishing and milling work. As a result, the Company would

subcontract all of the finishing and milling work by May 1

unless the Union submitted a plan with comparable cost savings.

Throughout April, the Union submitted information requests to

the Company concerning the basis for the $1 million costsavings figure, most of which the Company complied with.

On April 12, the Company declared an impasse on the CBA

negotiations and implemented its final offer eliminating

pyramiding and gradually equalizing healthcare cost-sharing.

Then, on May 1, the Company declared an impasse on the

subcontracting negotiations and began to subcontract finishing

and milling work.

3. Before the NLRB, the Union challenged the legality of

the two impasses under Sections 8(a)(1) and 8(a)(5) of the

National Labor Relations Act. See 29 U.S.C. § 158(a)(1), (5).

In February 2006, the Board ruled (as relevant here): (1) the

Company had wrongfully failed to provide information in

response to seven specific requests by the Union on April 23,

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2001, and this failure rendered the impasse on the

subcontracting issue unlawful; (2) the Company had not violated

the duty to bargain in good faith by insisting on separate

negotiations over the subcontracting issue and the CBA; and (3)

the Company’s implementation after impasse of its plan to

gradually equalize healthcare costs did not confer upon the

Company such open-ended discretion as to be unlawful. See E.I.

du Pont de Nemours & Co., 346 NLRB No. 55, at 4-9 (2006)

(“Decision and Order”). Board Member Liebman dissented

from the latter two conclusions. See id. at 10-12.

The Company and the Union filed timely petitions for

review in this Court, with the Company challenging the Board’s

first holding and the Union challenging the other two holdings.

The Board filed a cross-petition for enforcement. We must

uphold the Board’s decisions if its factual findings are supported

by substantial evidence and the decisions are not arbitrary and

capricious. Carpenters & Millwrights, Local Union 2471 v.

NLRB, 481 F.3d 804, 808-09 (D.C. Cir. 2007). Among other

circumstances, the Board acts arbitrarily when it departs from its

own precedent without a reasonable explanation. See Jochims

v. NLRB, 480 F.3d 1161, 1167 (D.C. Cir. 2007).

II

1. The Company argues that its refusal to provide the

Union with information in response to seven specific requests

did not preclude a lawful impasse on the subcontracting issue,

contrary to the Board’s decision. In the Company’s view,

NLRB precedent requires the Board to find a “causal

connection” between the refused information requests and the

impasse – beyond the fact that the information requests were

relevant to the central issues on the table – such as specific

evidence that the Union would have formed a counterproposal

had the Company granted the information requests. Therefore,

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the Company argues, the Board unreasonably departed from its

own precedent by declaring the impasse invalid.

The Company’s objection to the Board’s decision is wrong

both factually and legally. 

As a factual matter, the Board clearly did find some causal

connection between the denied information requests and the

impasse. The Board explained that “[i]n order to assess the

accuracy of the [Company’s] claims [about cost savings], it was

necessary for the Union to examine the data that formed the

basis for the [Company’s] conclusions.” Decision and Order at

5-6. The Board found that at least one request was both

“relevant and essential to the Union’s ability to assess the

[Company’s] assertion that [certain] costs constituted 40 percent

of its labor costs.” Id. at 6. As to the other six requests, the ALJ

determined that they were “necessary and relevant in order for

the Union to either assess, or understand, the feasibility study,

or formulate its own proposals,” and the Board adopted this

finding. E.I. du Pont de Nemours & Co., JD-138-03, at 22, 2003

WL 23109100 (2003); Decision and Order at 1. In short, there

is no merit to the Company’s claim that the Board did not find

a causal link between the information requests and the impasse.

As a legal matter, although the Board has consistently

suggested the necessity for some causal connection between an

unfair labor practice and an interruption in bargaining before

declaring impasse, the Board has never required the

establishment of “but for” causation in absolute terms. The

Board has, however, repeatedly reiterated the principle that “a

finding of valid impasse is precluded where the employer has

failed to supply requested information relevant to the core issues

separating the parties.” Caldwell Mfg. Co., 346 N.L.R.B. No.

100, at 12 (2006) (emphasis added); see also Titan Tire Corp.,

333 N.L.R.B. 1156, 1159 fn. 11 (2001); U.S. Testing Co., 324

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N.L.R.B. 854, 860 (1997). As the Board has explained, “[a]

legally recognized impasse cannot exist where the employer has

failed to satisfy its statutory obligation to provide information

needed by the bargaining agent to engage in meaningful

negotiations.” Decker Coal Co., 301 N.L.R.B. 729, 740 (1991);

see also Roytype Div., Pertec Computer Corp., 284 N.L.R.B.

810, 812 (1987). And this Court, in a case in which an employer

refused to provide relevant information, held that the employer’s

“unlawful refusal to supply the requested [information]

preclude[s] the Company from declaring an impasse.” U.S.

Testing Co., Inc. v. NLRB, 160 F.3d 14, 20, 22 (D.C. Cir. 1998);

accord Raven Servs. Corp. v. NLRB, 315 F.3d 499, 505 (5th Cir.

2002); Olivetti Office U.S.A., Inc. v. NLRB, 926 F.2d 181,

188-89 (2d Cir. 1991); Cone Mills Corp. v. NLRB, 413 F.2d 445,

449-50 (4th Cir. 1969).

The Company points to Alwin Manufacturing Co. v. NLRB,

192 F.3d 133 (D.C. Cir. 1999). In that case, an employer had

unilaterally imposed new production standards and a new

vacation policy during negotiations, both of which the Board

later determined to be unfair labor practices. Id. at 135. The

Board further found that those practices had contributed to the

impasse and therefore ruled that the impasse was invalid. Id. at

135, 137. Before this Court, the employer argued that the Board

had applied an impermissible per se rule that any unfair labor

practice committed during negotiations necessarily precluded a

lawful impasse. Id. at 138. This Court agreed with the

employer that a per se rule would be inappropriate but found

that the Board had demonstrated “a causal connection between

the unilateral changes and the failure to reach an agreement.”

Id. Thus, Alwin Manufacturing stands for the unremarkable

proposition that an employer’s commission of an unfair labor

practice during negotiations does not necessarily preclude a

lawful impasse and that the demonstration of a “causal

connection” is important to a decision invalidating an impasse.

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That general principle says nothing about the legal effect of a

specific unfair labor practice central to the negotiation process:

the withholding of information relevant to the issues on the

bargaining table.

Likewise, in Sierra Bullets, the Board considered the

“precise issue” of “whether the mere existence of any

information request, regardless of its relevance to the core

issues that separate the parties at the bargaining table, precludes

a finding of impasse.” 340 N.L.R.B. 242, 244 (2003) (emphasis

added). The Board found that because the requested information

in that case was irrelevant, there was “no convincing argument

that [providing the information] would have changed the fact

that the parties were deadlocked.” Id. The key principle of

Sierra Bullets was relevance; the decision didn’t suggest that

any broader causal nexus is required when an employer fails to

provide relevant information. To the contrary, the clear

implication of Sierra Bullets is that denial of an information

request relevant to core bargaining issues precludes a lawful

impasse. See Caldwell Mfg. Co., 346 N.L.R.B. No. 100, at 12-

13.

In sum, Board and court precedents reflect the principle that

a denial of “information relevant to the core issues separating

the parties” can preclude a lawful impasse, and such a

commonsense principle is certainly reasonable. In this case,

moreover, the Board expressly and repeatedly stated that it

believed that the Union’s seven information requests were

“necessary” and “essential” to the bargaining over the

subcontracting issue. We therefore reject the Company’s

“causal connection” challenge.

2. The Company also argues that the information requests

by the Union do not meet the standard of relevance established

by the Board. In the Company’s view, “any discrepancies

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between the information provided and that later demanded by

the Union in the seven requests at issue are so small” that the

Union had “an adequate basis to evaluate [the Company’s]

claims.” Company Pet’r’s Br. at 54. 

The Board’s relevance standard is “a liberal discovery-type

standard, under which the requested information need only be

relevant to the union in its negotiations.” U.S. Testing Co., 160

F.3d at 19. As this Court has stated, “in the absence of a

countervailing interest [such as confidentiality concerns], any

requested information that has a bearing on the bargaining

process must be disclosed.” Id.

The thrust of the Board’s relevance finding in this case was

that the Company provided the Union with only “generalized or

bundled figures” to support its $1 million cost-saving assertions

and therefore the Union properly requested the hard data that the

Company used to arrive at its figures. Decision and Order at 5.

In the Board’s judgment, “it was necessary for the Union to

examine the data that formed the basis for the [Company’s]

conclusions.” Id. at 5-6. For example, to respond to the

Company’s claim that 40% of its labor costs were attributable to

employee benefits, the Union requested the cost data for benefits

of finishing and milling employees. See id. at 6. Similarly, the

Union requested information on the number of Corian bowls of

each style and color finished in-house versus off-site in order to

determine whether the Company had purposefully been

manufacturing the most labor-intensive kinds of bowls in-house

in order to skew upward the in-house costs. See id.

The Board’s relevance finding here was a reasonable

application of the well-established NLRB principle that a union

is entitled to inspect the data relied on by an employer and does

not have to accept the employer’s bald assertions or generalized

figures at face value. See, e.g., Republic Die & Tool Co., 343

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N.L.R.B. 683, 686-87 (2004) (financial information); Ormet

Aluminum Mill Prods. Corp., 335 N.L.R.B. 788, 802 (2001)

(purchasing information); Merchant Fast Motor Lines, Inc., 324

N.L.R.B. 562, 563 (1997) (financial information); McGuire

Steel Erection, Inc., 324 N.L.R.B. 221, 222-24 (1997) (payroll

records); cf. NLRB v. Truitt Mfg. Co., 351 U.S. 149, 152-53

(1956) (“If . . . an argument is important enough to present in the

give and take of bargaining, it is important enough to require

some sort of proof of its accuracy.”). The Company has

advanced no persuasive reason for this Court to disturb the

Board’s reasonable conclusion.

3. Before this Court, the Company also suggests that the

Board’s remedy in this case – an order to reinstate the finishing

and milling employees – imposes an “undue burden.” See Vico

Prods. Co. v. NLRB, 333 F.3d 198, 212 (D.C. Cir. 2003);

O’Dovero v. NLRB, 193 F.3d 532, 538 (D.C. Cir. 1999). The

Board responds that it has reserved that issue for a future

compliance proceeding and therefore that judicial review of the

question is inappropriate at this time. See Decision and Order

at 6 n.10. We agree. As we have explained, “[t]he first and only

opportunity for [the Court to vacate a Board-imposed remedy]

is ordinarily in a petition for review of the Board order imposing

the remedy but, if the Board reserves the issue for later

consideration, that opportunity will necessarily be deferred until

the Board resolves the issue in a subsequent order.” Scepter,

Inc. v. NLRB, 448 F.3d 388, 391 (D.C. Cir. 2006); see also

Great Lakes Chem. Corp. v. NLRB, 967 F.2d 624, 629-30 (D.C.

Cir. 1992). 

III

1. In its petition for review, the Union argues that the

Board unreasonably approved the Company’s separation of the

subcontracting negotiations from the overall CBA negotiations.

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In the Union’s view, the impasse in the CBA negotiations could

have been averted had the Union been able to bargain over the

CBA issues and the subcontracting issue together.

As a general matter, with respect to mandatory subjects of

bargaining, a party has the right to insist on negotiating an entire

contract rather than engaging in piecemeal negotiation over

particular issues. As the Board has stated, it “is well settled that

the statutory purpose of requiring good-faith bargaining would

be frustrated if parties were permitted, or indeed required, to

engage in piecemeal bargaining.” E.I. Dupont de Nemours &

Co. (Spruance), 304 N.L.R.B. 792, 792 n.1 (1991); see Vincent

Indus. Plastics, Inc. v. NLRB, 209 F.3d 727, 735 (D.C. Cir.

2000); Trumball Mem’l Hosp., 288 N.L.R.B. 1429, 1446-47

(1988); see also Duffy Tool & Stamping, LLC v. NLRB, 233 F.3d

995, 997-99 (7th Cir. 2000); Visiting Nurse Servs., Inc. v. NLRB,

177 F.3d 52, 59 (1st Cir. 1999). In this case, however, the Board

reasonably concluded that the Company did not violate its duty

to bargain in good faith because the parties had a long and

firmly established history of bargaining over issues related to the

milling and finishing operation separately from those issues

relating to the CBA.

The Union contends that this case is indistinguishable from

a previous case involving the same company. In Spruance, as

in this case, the Company insisted that negotiations on two

specific issues take place separately from negotiations on an

overall collective bargaining agreement. 304 N.L.R.B. at 802.

The Board found in that case that “management, by this course

of conduct, had . . . unreasonably reduced the flexibility of

collective bargaining and narrowed the range of possible

compromises.” Id. It was clear in Spruance that the employer

had purposefully bifurcated the negotiations in order to avoid

“horse trade” offers and accelerate impasse and implementation.

Id. The Union posits that the same thing happened in this case:

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The Company segregated negotiations in order to avoid

protracted negotiations and more quickly implement its

proposals.

We conclude that the Board reasonably distinguished its

precedent in Spruance. In that case, the parties did not have a

history of separate bargaining over the two issues. On the

contrary, the employer negotiated with the union over those

proposals at the same sessions where the CBA was discussed,

see id. at 793, and, far from accepting bifurcation, the union

insisted that the proposals were part of the CBA negotiations,

see id. at 794. In this case, by contrast, there was a long history

of separate negotiations between the Company and the Union

with respect to the subcontracting issue (as well as other discrete

issues). Here, the CBA’s “evergreen” clause permitted the

parties to negotiate components of the contract while the balance

of the contract’s terms remained in effect. As the Board found,

“[t]he parties utilized this clause throughout the life of the

contract, negotiating and implementing new terms in discrete

areas, such as bonuses, wage increases, and health benefits.”

Decision and Order at 4. Of specific relevance to this case, “the

issue of subcontracting the milling and finishing work . . . was

historically separate” from “general bargaining [and] was not

even in the unit, i.e., it was subcontracted, for about 10 years.”

Id. After all, the original CCMC finisher agreement was

“proposed, negotiated, and implemented separate and apart from

the rest of the contract” – during a period when overall CBA

negotiations were stalled. Id. Additionally, the CCMC finisher

agreement included its own, separate termination clause.

Whereas the CBA could be terminated upon notice by either

party 60 days prior to its expiration date, the CCMC finisher

agreement could not be terminated unless a party gave 120 days

notice. Furthermore, there were different committees to bargain

over the two sets of issues: a “contract committee” negotiated

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CBA issues, while issues related to the CCMC finisher

agreement were discussed by the “executive board.”

Moreover, not only did the Union not insist on unified

bargaining, since “1995, i.e., at the very inception of the inhouse milling and finishing work, the parties . . . willingly

bargained separately for that operation.” Id. And while “the

Union subsequently made a proposal to retain” the milling and

finishing operation, “it never protested on the ground that the

negotiations were separate.” Id. The Board’s finding that “the

issue of subcontracting the milling and finishing work . . . was

historically separate” from “general bargaining,” id., was

supported by substantial evidence. In light of that history, its

determination that the present case fell outside of its general rule

against bifurcated negotiations was reasonable.

The Board concluded that this history of separation

demonstrates that the Company did not insist on bifurcated

negotiations in order to distort the bargaining process; the

Company simply adhered to the parties’ longstanding practice

of separate negotiations. The Board’s judgment was reasonable.

Whether a party has bargained in good faith is assessed by

looking to the totality of the circumstances. See NLRB v.

Cauthorne, 691 F.2d 1023, 1026 n.5 (D.C. Cir. 1982). As the

Board has stated, “good faith or the lack of it depends upon a

factual determination based on overall conduct.” In re

Matanuska Elec. Ass’n, Inc., 337 N.L.R.B. 680, 681 (2002)

(internal quotation marks omitted). In this case, it was

reasonable for the Board to look to the parties’ long history of

bargaining separately on these issues (even to the point where

stalled negotiations on the CBA did not prevent the formation of

the CCMC finisher agreement in 1995). 

2. According to the Union, had it been given more time and

information to formulate a cost-saving plan in response to the

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Company’s feasability study on subcontracting, the Union could

have prevented the impasse in the CBA negotiations by coming

up with a “horse trade” linking the two sets of issues. In light of

our holding that the Board reasonably found that bifurcation was

lawful, however, we reject this argument. The Company

permissibly kept the two sets of negotiations separate, and

therefore the Company could properly declare a lawful impasse

in the CBA negotiations even though it could not declare a

lawful impasse in the subcontracting negotiations.

3. Finally, the Union argues that, even assuming a valid

impasse existed, the Company’s implementation of its

healthcare cost-sharing proposal was improper. As a general

matter, a lawful impasse entitles an employer to implement the

“last, best offer” it presented in negotiations. Detroit

Typographical Union No. 18 v. NLRB, 216 F.3d 109, 117-18

(D.C. Cir. 2000); see also TruServ Corp. v. NLRB, 254 F.3d

1105, 1114 & n.8 (D.C. Cir. 2001); Noel Foods, a Div. of Noel

Corp. v. NLRB, 82 F.3d 1113, 1120 (D.C. Cir. 1996). The

Board, however, has carved out a narrow exception to that

general rule: An employer may not unilaterally implement a

proposal that gives the employer standardless discretion over

future changes with respect to mandatory subjects of bargaining,

such as pay and benefits. See McClatchy Newspapers, Inc., 321

N.L.R.B. 1386, 1390-91 (1996); KSM Indus., Inc., 336 N.L.R.B.

133, 134-35 (2001), modified in part, 337 N.L.R.B. 987 (2002);

see also Detroit Typographical Union, 216 F.3d at 117-18. The

rationale for that exception is that such discretion would render

future bargaining impossible because the Union could not know

what criteria the employer was using to formulate its proposals.

Detroit Typographical Union, 216 F.3d at 117; McClatchy

Newspapers, Inc. v. NLRB, 131 F.3d 1026, 1032 (D.C. Cir.

1997); accord The Edward S. Quick Co. v. NLRB, 241 F.3d 41,

43 (1st Cir. 2001) (“[A]llowing a succession of unilateral

changes by the employer . . . would make a union seem impotent

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to its members over time and further undermine the union’s

bargaining ability by creating uncertainty about prevailing

terms.”). 

The Union contends in particular that a provision in the new

healthcare plan gives the Company too much discretion in

making future changes to employees’ healthcare plans. That

provision states: “Participants will pay for premiums, co-pays,

co-insurance and deductibles established for a particular plan

year. . . . Projected increases for future plan years will be shared

equally between Du Pont and participants, provided, however,

such increases may be allocated to premiums, components of

plan design, or any combination thereof.” Therefore, the

Company and the employees must share any future increase in

healthcare costs equally, but the Company has discretion to

allocate those costs among premiums and other components of

the healthcare plan as the Company sees fit. The Union seizes

on this comparatively small measure of employer discretion,

claiming that it violates the McClatchy Newspapers principle

and that therefore the Board has unreasonably departed from its

own precedent by upholding the Company’s implementation of

the healthcare proposal.

We disagree with the Union because the Board reasonably

distinguished this case from its precedents. The Board

explained that in prior cases where the Board invalidated

employer implementations after impasse, the employer had

implemented a “broad discretionary provision.” Decision and

Order at 8. For example, in McClatchy Newspapers, the

employer had implemented a “merit pay” clause that gave it

unlimited discretion to decide all future pay increases. Id.

(citing McClatchy Newspapers, 321 N.L.R.B. at 1391).

Similarly, in KSM Industries, the employer had reserved for

itself broad discretion over such fundamental healthcare plan

elements as the overall level of benefits – not just over which

USCA Case #06-1168 Document #1047140 Filed: 06/15/2007 Page 17 of 19
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specific components of a plan might be subject to future cost

increases. See id. (citing KSM Indus., 335 N.L.R.B. at 135). By

contrast, the Board explained, in this case the Company

implemented “a narrow, specific clause that, by its terms, sets

limits on the [Company’s] discretion to act.” Id. The

Company’s proposal specifically defines how future cost

increases will be shared and thus does not give the Company

“unfettered discretion to act.” Id. 

In Detroit Typographical Union, where we held that the

Board had unreasonably applied McClatchy Newspapers to

preclude an employer from implementing a wage proposal, we

made clear that even “a good deal of [employer] discretion” is

insufficient to invalidate an employer’s implementation of a

proposal after impasse. 216 F.3d at 118. In that case, the

employer’s plan had specified the average annual increase in

employee pay going forward, but had retained substantial

discretion for the employer to determine whether individual

employees should receive a raise. Id. The current case is more

analogous to Detroit Typographical Union than to McClatchy

Newspapers or KSM Industries. The Company’s plan broadly

cabins its discretion over healthcare costs by requiring a fixed

cost-sharing ratio for all future increases, just as the plan in

Detroit Typographical broadly set targets for future pay

increases. The Company’s limited discretion to allocate

increases among the various elements of the healthcare plan

does not set this proposal within the narrow McClatchy

Newspapers exception any more than the employer’s discretion

over individual merit pay determinations did so in Detroit

Typographical Union – or so the Board could reasonably

conclude.

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* * *

We deny the petitions for review and grant the Board’s

cross-petition for enforcement.

So ordered.

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