IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

 

No. 95-60358

 

EXXON RESEARCH & ENGINEERING COMPANY;

EXXON COMPANY, U.S.A.; EXXON CHEMICAL

AMERICAS; EXXON CHEMICAL COMPANY,

 Petitioners-Cross-Respondents,

versus

NATIONAL LABOR RELATIONS BOARD,

 Respondent-Cross-Petitioner.

 

Petition for Review and Cross-Petition for Enforcement of an

Order of the 

National Labor Relations Board

 

July 16, 1996

Before GARWOOD, HIGGINBOTHAM, and BENAVIDES, Circuit Judges.

HIGGINBOTHAM, Circuit Judge:

This case presents the question whether an employer's failure

to bargain with its unions regarding unilateral changes made to a

benefit plan governed by the Employee Retirement Income Security

Act, 29 U.S.C. §§ 1001 et seq., and ordered by the plan's trustees

constitutes an unfair labor practice. The National Labor Relations

Board held several divisions of Exxon Corporation and one of its

subsidiaries responsible for the changes authorized by the plan

trustees. The Exxon companies did not order the changes in the

plan's terms and we deny enforcement of the NLRB's order.
2

I.

Exxon Company, U.S.A., Exxon Chemical Americas, and Exxon

Chemical Company are divisions of Exxon Corporation. Exxon

Research & Engineering Company is a wholly-owned subsidiary of

Exxon. EUSA, ECA, and ERE operate a petrochemical refinery and

research complex in Baytown, Texas. ECC operates a chemical

manufacturing plant in Houston, Texas. We refer to the four Exxon

companies as "the Exxon subsidiaries"--their separate identities

are not material to this suit.

Four unions, the Gulf Coast Industrial Workers Union, the

Baytown Employees' Federation, the International Association of

Machinists & Aerospace Workers, Lodge 1051, and the International

Brotherhood of Electrical Workers Local No. 527, represent 1900 of

the employees in 10 distinct bargaining units at the Baytown and

Houston facilities. In late 1992, there were 10 separate

collective bargaining agreements in place between the four Exxon

subsidiaries and the four unions, one for each bargaining unit.

All but one of those agreements contained a provision identical or

substantially identical to the following:

This Agreement shall not affect the eligibility of

employees for participation in any company benefit plan

(annuity plan, thrift plan, disability plans,

contributory group life insurance plan, and

noncontributory group life insurance plan), dependency

pay for military leave and military-leave pay, or any

other Company benefit plan now in effect, all of which

plans and programs shall be governed by their separate

provisions. This provision, however, is not a waiver of
 

1 The other plan between Exxon Chemical Co. and the GCIWU

provides in relevant part that "nothing in this Agreement shall

apply to or affect the Exxon Benefit Plan or any other of the

Company's benefit plans or programs. This provision, however, is

not a waiver of such rights as the Union has to bargain concerning

such plans or programs." Neither Exxon or the NLRB assert that

this agreement's different wording distinguishes it from the other

collective bargaining agreements.

3

such right as the Union has to bargain concerning these

plans.1

In 1935, Exxon Corporation's predecessor, Standard Oil Company

of New Jersey, created the Thrift Plan to encourage long-term

savings and provide supplemental retirement income to company

employees. The Thrift Plan currently has $6 billion in assets and

includes approximately 35,000 participants. Five trustees

administer the Plan. Exxon retains the "virtually unbridled" power

to appoint, remove, and replace trustees at will. Under the Plan's

terms, employees contribute to the Plan and Exxon matches the

employees' contribution, up to 7% of each individual employee's

income. Significantly, the Plan allows participants to obtain

short-term loans from the Thrift Fund.

Changes may be made to the Plan's terms through one of two

mechanisms. First, the Plan's Trustor, Exxon, may amend the plan

pursuant to its authority under the Thrift Trust Declaration of

Trust. Second, the Plan trustees have limited authority to make

"administrative changes" to the Plan pursuant to various sections

of the Declaration, the mechanism at issue here.

In 1992, the trustees decided to make seven changes to the

Thrift Plan. Only two of the changes, both to the Thrift Plan's
 

2 The NLRB did not object to two of the changes in its

complaint. The ALJ found that, of the five amendments to which the

NLRB objected, three did not constitute "material, substantial, and

significant" changes so as to trigger the Exxon subsidiaries' duty

to bargain regarding those changes. The NLRB affirmed the ALJ's

finding on this point.

 

3 We assume but do not decide that the trustees possessed

the authority to make these changes to the loan program and that

the changes did not require an amendment to the Plan's Declaration

by Exxon itself.

4

loan program, concern us.2 Effective January 1, 1993, the maximum

number of allowable loans outstanding at one time were to be

reduced from four to two, and the minimum allowable loan amount was

increased from $40 to $1000. The Plan trustees enacted these

changes pursuant to the plan provision governing the loan program:

If an active participant, during the preceding six

months, has not borrowed any amount under this part,

then, to the extent and on the terms permitted by the

Trustee, such participant may at any time borrow from the

Trustee any amount of cash the participant specifies, but

not in excess of one-half of the accrued collateral value

of the participant's Thrift Fund Account on the date the

loan is granted.3

On August 12, 1992, David Clements, EUSA's human resources

manager for the Houston area, notified representatives of the four

unions of the proposed changes. Over two months later, the unions

demanded bargaining over the proposed changes. Responding to the

unions' demand, Clements met with the union representatives on

November 17, 1992. Clements asked the unions to withdraw their

request for bargaining. He informed them that their demand would

jeopardize the parties' bargaining relationship and that bargaining

would begin with "a blank sheet of paper." The unions reasserted

their request for bargaining, which the Exxon subsidiaries refused
5

as untimely. The unions subsequently filed unfair labor practice

complaints against the Exxon subsidiaries. The proposed changes to

the loan program went into effect as planned on January 1, 1993.

The NLRB Regional Director consolidated the unions' charges

and issued a complaint. The complaint alleged that the Exxon

subsidiaries violated § 8(a)(5) by refusing to bargain before

implementing the changes to their thrift plan and that they

violated § 8(a)(1) by threatening adverse consequences if the

unions pursued bargaining over the issue. The NLRB referred the

matter for a hearing before an Administrative Law Judge.

After conducting the hearing, the ALJ concluded that Exxon

violated § 8(a)(5) by refusing to bargain over the two plan

changes, namely, increasing minimum loan amount and reducing the

number of simultaneous loans. The ALJ also concluded that Exxon

violated § 8(a)(1) by informing the union representative that to

persist in seeking bargaining on these issues would "damage" the

bargaining relationship and that any such bargaining would "begin

with a blank sheet of paper." The ALJ ordered Exxon to cease and

desist from engaging in unfair labor practices and to bargain in

good faith over the two changes. However, the ALJ did not order

Exxon to rescind the plan amendments, reasoning that the Exxon

subsidiaries did not have the power to undo the changes--only the

plan trustees or Exxon Corporation, neither of which were a party

to the action, had such power. Both the Exxon subsidiaries and the

NLRB appealed the ALJ's order.
6

The NLRB adopted the ALJ's findings but ordered Exxon to

rescind the plan changes. The NLRB did not address the ALJ's

finding that the Exxon subsidiaries did not have the power to

rescind the Thrift Plan changes, but rather simply observed that

"it is the Board's customary policy to order Respondents to rescind

unilateral changes and to reinstate the conditions that existed

prior to the unilateral action." Member Cohen dissented in part.

Although he agreed that Clements' statements violated § 8(a)(1), he

disagreed that the Exxon subsidiaries had violated § 8(a)(5) by

refusing to bargain over the proposed changes to the loan program.

In addition, he agreed with the ALJ's refusal to order a rescission

of the plan changes because the Exxon subsidiaries "have no power

to rescind a change ordered by the trustees, or to compel

reinstitution of a benefit under the Thrift Plan." Exxon

petitioned for review of the NLRB's order, and the NLRB crosspetitioned for enforcement of its order. We have jurisdiction

pursuant to 29 U.S.C. § 160(e), (f).

II.

Section 8(a)(5) of the National Labor Relations Act prohibits

an "employer" from "refus[ing] to bargain collectively with the

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

NLRB found that the changes to the Thrift Plan by Exxon

subsidiaries made a unilateral change in the conditions of

employment by "implementing" the plan changes made by the trustees.
7

The Exxon subsidiaries challenge the NLRB's finding.

Specifically, the Exxon subsidiaries contend that they did not

order or implement the changes to the loan program; rather, the

trustees of the plan ordered the changes. The NLRB responds that

substantial evidence supports the NLRB's finding that Exxon, not

the Plan trustees, violated § 8(a)(5). The NLRB points to the

testimony of EUSA's chief human resources manager, James Rouse, who

testified that Exxon developed and proposed the amendments to

Exxon's senior management. We agree with the Exxon subsidiaries.

The NLRB's finding that the Exxon subsidiaries "implemented"

the loan program changes finds no support in the record. The

Thrift Plan trustees ordered several changes to the loan program.

Those changes went into effect on January 1, 1993 as specified by

the trustees. The NLRB does not explain what the Exxon

subsidiaries did to "implement" these changes. Indeed, the record

indicates that the trustees' order was sufficient to enact these

changes to the loan program, and no additional action by the Exxon

subsidiaries was necessary or taken.

The NLRB's reliance on Rouse' testimony is misplaced. At one

point, Rouse testified that the Thrift Plan trustees simply

implemented changes ordered by Exxon Corporation itself. At

another point, he testified that the trustees actively designed and

implemented the changes after receiving recommendations from

Exxon's human resources department. Rouse's testimony, which led

the ALJ to find that the trustees ordered the loan program changes

after "an uncertain internal process," shows only that Exxon and
8

its subsidiaries may have played some role in the origins of the

loan program changes. Rouse's testimony does not support the

finding that the Exxon subsidiaries "implemented" the changes

ordered by the trustees.

The difficulty in developing a remedial order to rescind the

plan changes confirms the NLRB's error. The ALJ refused to order

the Exxon subsidiaries to rescind the plan changes because it found

that they "have no powers whatsoever to 'rescind' a change ordered

by the trustee(s), nor in any other manner to compel the

'reinstitution' of a 'benefit' under the Thrift Plan itself."

Rather, the ALJ explained that "[t]o achieve those kinds of results

requires action by the trustee(s), or perhaps by Exxon Corporation

itself, as the trustor with powers to 'amend' the Trust

Declaration, and powers to remove trustees and replace them, if

need be, with ones willing to effect such results." Stated

bluntly, the Exxon subsidiaries could not rescind the changes

because they never made them in the first place. The NLRB ignored

this fundamental fact in ordering rescission of the plan changes.

In short, we are persuaded that the Exxon subsidiaries took no

action that constitutes a unilateral change in the conditions of

employment. We emphasize that there is no contention that the

Thrift Plan trustees were acting as the Exxon subsidiaries' agent.

Cf. NLRB v. Truck Drivers Local Union No. 449, 728 F.2d 80 (2d Cir.

1984) (holding that union charged with an unfair labor practice

resulting from the trustees implementation of a plan amendment was

not responsible for the acts of the trustees since the trustees
9

were not the union's agents); NLRB v. Driver Salesmen, Etc., 670

F.2d 855 (9th Cir. 1982) (holding trust was not union's agents

where union did not "cause" trust to implement plan changes).

The NLRB responds that the Exxon subsidiaries' duty to bargain

arose prior to the trustees' implementation of the plan amendments.

Stated another way, the NLRB contends that the Exxon subsidiaries

violated § 158(a)(5) by refusing to bargain over changes that they

did not make but that affected their employees' conditions of

employment. We disagree.

The NLRB's position would mark an unprecedented expansion of

NLRB v. Katz, 369 U.S. 736, 743 (1962). Katz held that an employer

that unilaterally changed its employees' conditions of employment

violated § 158(a)(5); it did not hold that an employer violates

§ 158(a)(5) by refusing to bargain over changes made by a separate

legal entity over whom the employer possesses no power. The NLRB

does not cite any authority for this proposition, and we do not

embrace it now. Imagine an employer who agrees to provide an onsite cafeteria for its employees by contracting with a food

services company. The employer further agrees to subsidize the

cafeteria by paying a fixed percentage of the cost of the food

purchased by its employees. However, the employer maintains no

control over the prices charged by the food services company.

Under the NLRB reasoning, the employer would violate § 158(a)(5) by

refusing to bargain with the union if, during the term of the

collective bargaining agreement, the food services company raised
 

4 The NLRB did not attempt to assert jurisdiction over the

Thrift Plan trustees here by including them in this suit.

10

the price of the food. See Ford Motor Co. v. NLRB, 441 U.S. 488,

503 (1979); id. at 505 (Blackmun, J., concurring in the result).

We hold that the record does not support the finding that the

Exxon subsidiaries unilaterally changed their employees' conditions

of employment. We express no opinion whether the NLRB has the

authority to regulate ERISA plan trustees. See NLRB v. Amax Coal

Co., 453 U.S. 322 (1981).4 Nor do we address whether the unions

waived, contractually or otherwise, their right to bargain mid-term

over Thrift Plan changes. These are thorny questions best left for

a case presenting them.

III.

Section 8(a)(1) of the National Labor Relations Act makes it

unlawful for employers "to interfere with, restrain, or coerce

employees in the exercise of the rights guaranteed in section 157

of this title," such as the right to bargain collectively. 29

U.S.C. § 158(a)(1). The NLRB unanimously held that the Exxon

subsidiaries violated that section by threatening adverse

consequences if the Unions pursued bargaining over the Thrift Plan

changes. The basis for this violation is Clements' statement to

the unions at the November 17 meeting that their demands to bargain

about the changes would injure the parties' bargaining relationship

and that bargaining would begin with "a blank sheet of paper."
11

The Exxon subsidiaries do not dispute that Clements made the

statements. Rather, the companies argue that Clements' statements

were not coercive when viewed in context. Specifically, they argue

that while such statements may be coercive when made to rank-andfile employees in the course of a union organizing campaign, they

are not unlawful when made to experienced union presidents in the

context of a mature bargaining relationship. The NLRB responds

that distinction is unfounded and that, if anything, Clements'

statements are more coercive when made to union presidents rather

than ordinary employees.

At the outset, we reject the NLRB's claim that the simple

statement that bargaining will begin with "a blank sheet," by

itself, constitutes an unlawful threat to engage in regressive

bargaining. There are no magical phrases the mere incantation of

which are coercive and therefore violate § 8(a)(1). Rather,

whether a particular statement is coercive "depends upon the

context in which it is uttered." TRW-United Greenfield Div. v.

NLRB, 637 F.2d 410, 420 (5th Cir. 1981). "When a close question

exists, '[t]he presence of contemporaneous threats or unfair labor

practices is often a critical factor in determining whether there

is a threatening color to the employer's remarks.'" Id. (quoting

Coach & Equipment Sales Corp., 228 N.L.R.B. 440, 441 (1977)); see

also Shaw's Supermarkets, Inc. v. NLRB, 884 F.2d 34, 40 (1st Cir.

1989) (holding that those cases finding "bargaining from scratch"

statements unlawful typically involved "other serious unfair labor

practices").
12

We are persuaded that, placed in context, Clements' statements

do not violate § 8(a)(1). As our opinion today makes clear, the

statements were made in circumstances free from other unfair labor

practices. In addition, there is no evidence in the record that

Clements' statements were coupled with other statements or company

conduct that would suggest to a reasonable audience that the

companies intended to eliminate benefits before bargaining. See

TRW, 637 F.2d at 421. In short, Clements' statements did not

violate § 8(a)(1).

IV.

The Exxon subsidiaries did not unilaterally change the Thrift

Plan, nor did they threaten to engage in regressive bargaining if

the unions persisted in their demand for bargaining.

PETITION FOR REVIEW GRANTED; ENFORCEMENT DENIED.