07- 1192
- ag

Ciba o Me at Produ ct s v. NLRB U N IT E D S T A T E S C O U R T O F A P P E A LS F OR THE S EC OND C IR C U IT

_______________ August Term, 2008 (Argued: September

10, 2008 Dec ided: November 4, 2008) Docke t No. 07-1192-a g

________________________________________________________

C I B AO M E AT P R OD UC TS , I NC ., Petitioner , —v.— N A T I O N A L L A BOR R ELA T I O N S B O A RD ,

Re sp on de nt, T HE T RUS TEE OF THE U NI TE H ER E N A T I O N A L R ETI R EME NT AND H EA L TH F UNDS

In te rv e no r-Re

sp on de nts
.

________________________________________________________ B e f o r e : C ABRANES , P OOLE R , and K ATZ MANN , Circuit Judges
.

_______________ Petition for reviewof an or der of the National L abor Relations Boar d (NL RB) a ffirming in part the de cision of the Administrative L aw Judge that petitioner employ er e ng ag ed in an unfair la bor pra ctice when it unilatera lly cea sed pay

ments to employ ee- benef it funds following e xpir atio n o f t

he c oll e c tiv e -b arg a ini nga g re e me nt w iththe e mpl oye e s’ un ion . B e c a us e the NL RB did not err in findingthat petitioner’s a ction was not excused by an ec onomic exigenc y , or that the collec tive-bar g ainingag ree ment was a sufficie nt written ag ree ment pursuant to which petitioner could have continued pa y ments, we de ny

the petition for re view and grant re spondent’s application for

enfor ceme nt of the NL RB orde r.2 _______________ Counsel for Petitioner: I RE NE D ONNA T HOMAS , T h o m as & As s o ci ates, Br ookly n, NY. Couns e l f or Re sp on de nt: K EL L I E I SBE LL , Attorney (Da vid Habe nstr e it , Su p e r visory Attorney , and Ronald Meisburg, General Counsel, of counsel ), Natio na l L a

bo r R e latio ns B oa

rd , Wash ing ton , D C. Couns e l f or Inte rv e no r- Re sp on de nt: R ONAL D E. R I C HMAN , (S cott A. Gold and Max Garfield, of counsel ) Schulte Roth & Z abel L L P, New Yor k, NY.

_______________ K ATZ MANN , Circuit Judge : In this case, pe titioner-appe llant Cibao Meat Products, Inc. see ks review of an or der of the re sp on de nt- a

pp e lle e Natio na l L a

bo r R e latio ns B oa

rd (N L RB ) h old ingthat Cib a o e ng a g e d in an unfa ir labor pr actice when it ce ased pa y ments to employ ee- benef it funds after

the expiration of its collective- barg ainingag ree ment with its employ ees’ union. Cibao argues that it was
e xcu se d f ro m ma kin gtho se pa

y me nts be c a

us e the un ion ’s a c tio ns in s e e kin gto r e vie w c e rt a in company rec ords cr eate d an “e conomic exige ncy ,” and that, due to the expiration of the collective- barg ainingag ree ment and the be nefit funds’ me rg er into other la rg er f unds, additional
c on tr ibutio ns wo uld

have c on sti tut e d p ay

me nts to t he un ion wi tho ut a “ wr itt e n a g re e me nt, ” in vio latio n o f § 30 2 o f t

he L a bo r- Mana g e me nt R e latio ns Ac t ( L MRA ), 29 U. S.C. § 1 86 . We wr ite today principally

to clarify that an expired collec tive-bar g ainingag ree ment does constitute a written agree ment under which an e mploy er ma y leg ally continue bene fit pay

ments under § 302(c) (5)( B) of the L MRA. I ndeed, unde r § 8(a )(5) of the National L abor Rela tions Act (N L RA ), 29 U. S.C. § 1 58 (a )( 5) , a bs e nt a n im pa sse in n e g oti atio ns , a

n e mpl oye r’ s f

a ilure to continue makingsuch pay ments constitutes an unfair labor pra ctice. We ther efor e deny Cibao’s petition for re view and grant the N L RB’s a pplication for e nforc ement of its orde r.3 B AC K GR OUND P e t i t i o n e r C i b a o M e atP r o d

u c t s , In c . i s a

B r o n x - b a s e d

m e at - p r o c e s s i n gc o mp an y . In Marc h 2000, the NL RB ce rtified L ocal 169 UN I TE to serve as the ba rg ainingrepr esentative for Cibao’s production employ ees, me chanic s, and driver s. On Marc h 19, 2001, L ocal 169 a nd Cibao signe d a collec tive-bar g ainingag ree ment, which wa s set to expi re on F ebrua ry 28, 2005. Articles 18 a

nd 19 of the c ollective-ba rg ainingag ree ment g overne d pay ments of employ ee pension and insura

nce be nefits, re spectively . Article 18 pr ovided, in pertinent pa rt, that Cibao “shall be a

contributing employ er to the A malg amated Washa ble Clothing, Sportswea

r & Allied Industries Fund – The Pension Pl an of L ocal 169,” and that Cibao “sha ll, at the reque st of the Union, allow the Union or its re prese ntative to examine and copy [C ibao’s] pay

roll rec ords of barg ainingunit employ ees a s to insure compliance with this section of the Ag ree ment.” Simi larly , Article 19 pr ovided that Cibao “shall be a contributing employ er to the A malg amated Washable Clothing, Sportswea r & Allied Industries Fund – H ealth and Welfa re Plan,” and contained a

n identical provision re quiring Cibao to allow a Union re prese ntative to “examine and
c op y ” Cib a o’ s p ay

ro ll r e c or ds . B oth

pr ov isi on s a lso sp e c if

ie d th at su c h b e ne fi ts w ou ld b e pa id t o the Funds ( collectively

the “Washable Funds” ) ac cordingto the Plan Descr iptions “as established by the Trustee s.” The Washa ble Funds w ere multi-employ er f unds g overne d by

an Agree ment
and De c laratio n o f T ru st, wh ic h g ave the F un ds ’ t ru ste e s th e “ ri g ht at any

tim e and fr om t ime to time to modify , chang e, ame nd or terminate to any extent any

or all of the te rms and provisions of the Plan.” Sto rm c lou ds be g an to loo m in

Se pte mbe r 2 00 4, wh e n th e Was ha ble F un ds se nt a repr esentative to audit Cibao’s pay roll rec ords, as a

uthorized by

the collec tive-bar g aining ag ree ment. Upon re viewingthe pay roll rec ords, the auditor infor med the Company ’s vice4

president, L

utzi Vielf I sidor, that one employ ee did not appe ar to be rec eivingthe cor rec t amount of pay . I sidor responde d that the pay roll formula wa s corr ect. The auditor dema nded Cibao’s tax
rec ords and other

documents to monitor compliance w ith the fund-contr ibution provisions of the ag ree ment, and Cibao re fused, pur portedly beca use I sidor believed that the documents we re
unre late d to an a

ud it o f t he pe ns ion

and ins ur anc e be ne fi ts und e r t he Was ha ble F un ds
. In J anuar y 2005, the Union and Cibao he ld their first meetingto discuss the future of the
c oll e c tiv e -b arg a ini nga g re e me nt, wh ic h w a s se t to e xpir e on F e br ua ry 28 , 2 00 5. Pr e se nt at th is meetingwer e, amongothers, Alexandre Fue ntes, the chie f neg otiator for the Union, and He inz Vi e luf , th e n th e pr e sid e nt o f C iba o. Vi e luf te sti fi e d b e fo re the Ad

min istra tiv e L aw Jud g e in t

his
case that Fue ntes made a

proposal, but Vieluf r esponded that “we w ere looking to stopping the pay ments when the c ontrac t terminates. B eca use we wer e lookingat other pla ns.” A sec ond meetingwas he ld on Febr uary 11, 2005, at which a

ppare ntly Vieluf made a counte rproposa l inv olv ingCib a o’ s e sta

bli sh ingits own b e ne fi t pl ans , a nd a g a in i nti matin gthat it

pla nn e d to discontinue pay

ments to the Washable Funds at the expiration of the curr ent agree ment. After the me e tin g , F ue nte s a sk e d V ie luf if he wo uld be ame na

ble to s imp ly

e xten din gthe wh ole
c oll e c tiv e -b arg a ini nga g re e me nt. Vi e luf re sp on de d th at F ue nte s sh ou ld p ut t he pr op os a l in writing , but before Fue ntes could, on F ebrua ry 16, 2005, Vieluf sent a

letter to the Union informingit that “afte r ca ref ul consideration, Ci bao will not ag ree to ext end the c urre nt ag ree ment past Fe bruar

y 28, 2005. We are anticipatingthat the par ties, neg otiating in g ood faith,
can r eac h an appr opriate a g ree ment.” Cibao ce ased pa y ments to the Washable Funds f ollowing the expiration of the collec tive-bar g ainingag ree ment on Fe bruar y 28, 2005, and has not made any such pay ments since.5

Soon after Cibao c ease d contributions, on April 1, 2005, the Washable F unds merg ed wi th t he UN I TE Natio na l Ins ur anc e F un d a nd the UN I TE Natio na l Re tir e me nt F un d ( c oll e c tiv e ly the “National Funds”) . Acc ordingto the Funds, the me rg er w as nec essar y to ensure the sufficie ncy

of funds to cove r employ ee be nefits. The N ational Funds infor med Cibao of the
m er ger b y l et t er d at edJ un e 7 , 2 0 0 5
. T h e l et t er s t at es , i np art , th at“t h e m er ger d o es n o tch an ge the c on tr ibutio n r ate a s r e fe re nc e d in the c oll e c tiv e ba

rg a ini nga g re e me nt b e tw e e n U NI TE -H ERE and Cibao Meat Products, I nc. Additionally , the employ ee be nefit plan will rema in unchang ed at this ti me.” Neg otiations on a new c ollective-ba rg ainingag ree ment betwee n the par ties continued throug hout 2005 until early 2006. In a letter

dated F ebrua

ry 3, 2006, Cibao asserte d to the Union that the par

ties had re ache d an impasse. The Union disputed this assertion in its reply letter, dated F ebrua

ry 7, 2006, claimingthat further neg otiations mi g ht y et solve re maining disputes a nd
e xpre ssi nga

de sir e to m e e t f

ur the r. B ut n e g oti atio ns a

pp are ntl y did no t r e sume a ft e r t

his exchang e. In the meantime, the pa

rties litigate d befor e an A dminist rative L aw Judge (AL J ) the question of whethe r Cibao was justified in stopping pa y ments to the National F unds. Cibao
argue d b e low , a s it

do e s in thi s Co ur t, t hat th e a ud ito r’ s a c tio ns c on sti tut e d a n “ e c on omi c
e xig e nc y ” that e xcu se d p ay me nt t o th e Natio na l F un ds , a nd that, i n a ny e ve nt, any

su c h p ay me nts would be illeg al bec ause of the lack of

a valid “written ag ree ment” betwe en Cibao and the National F unds. The AL J conducte d a hea ringon J une 5, 2006, and issued a n opinion on September 25, 2006. In her opinion, the AL J held that Cibao was unjustified in stopping pay ments to the benef

it funds, but only

until Februa

ry 2006, when, in her

view, the pa

rties
rea ched a n impasse. B oth parties filed e x ceptions to the AL J ’s ruling s with the NL RB. On6

Marc h 6, 2007, the NL RB issued an or der a ffirmingthe AL J ’s dec ision with respect to Cibao’s unilatera l discontinuation of benef it pay ments, but rever sing he r findingthat the par ties rea ched
an im pa sse on F e br ua ry 10 , 2 00 6. Th e B oa

rd ru le d th at Cib a o w a s th e re fo re lia ble fo r i ts unp a id contributions to the National Funds f rom the expiration date of the collective- barg aining
a g re e me nt t

hr ou g h th e pr e se nt, su

bje c t to a late r c omp lia

nc e pr oc e e din gthat w ill de te rm ine if and whe n the par

ties rea ched a

n impasse. Cibao now appe als the NL RB’s de cision aff irming the AL J ’s rulingthat stopping pa y ments to the National F unds was an unf air labor prac tice. D I S C US S I ON Standard of Review “[W ]e uphold the NL RB’s f indings of f

act if suppor

ted by substantial evidence and the NL RB’s leg al deter

minations if not arbitrary

and ca pricious.” Long Island Head Start Chil d Dev

. Servs. v . NLRB , 460 F.3d 254, 257 ( 2d Cir. 2006) (interna l quotation marks and citation omitted). “Our revie w is defe rential: ‘This cour t review s the Boa

rd’s leg al conc lusions to ensure they have
a re asonable basis in law. In so doing, w e af ford the B oard a

deg ree of leg al leew ay .’” Id. (qu o t i n g NLRB v. Caval Tool Div., Chromall oy Gas Turbine Corp. , 262 F.3d 184, 188 ( 2d Cir. 2001) (inter

nal quotation marks omitted)). More over, the NL RB’s a nswer to the pa

rticular qu e sti on of wh e the r a

n e mpl oye r’ s c on du c t c on sti tut e s a re fu sa l to ba

rg a in i s “ e nti tle d to considera ble def ere nce.” Ford Motor Co. v. NLRB , 441 U.S. 488, 495 (1979). W he the r Ec on om ic Ex ige nc yEx c us e d th e Di

sc on tin ua tio n o

f B e ne fit s Se c tio n 8 (a )( 5) of

the NL RAmake s it

an unf a ir la bo r p ra c tic e fo r a

n e mpl oye r “ to r e fu se to b arg a in c oll e c tiv e ly

wi th t he re pr e se ntativ e s o f h is e mpl oye e s. ” 29 U. S.C. § 1 58 (a )( 5) . Co ur ts have lon ghe ld t

ha t, a bs e nt a n im pa sse in n e g oti atio ns , “ an e mpl oye r’ s unil ate ra l c ha ng e in
c on dit ion s o f e mpl oy

me nt u nd e r n e g oti atio n is
. . . a

vio latio n o f § 8( a )( 5) , f

or it i s a7

c ir c umv e nti on

of the duty to n e g oti ate wh ic h f

ru str ate s th e ob

je c tiv e s o f § 8( a )( 5) muc h a s d oe s a flat re fusal.” NLRB v . Ka tz , 3 69 U. S. 7 36 , 7 43 (1 96 2) ; accord NLRB v. W PIX, Inc
. , 906 F.2d 89 8, 90 1 ( 2d

Cir . 1 99 0) . A lon gthe se lin e s, an e mpl oye r m ay no t c e a se pa

yinge mpl oye e be ne fi ts afte r the e x piration of a c ollective-ba rg ainingag ree ment unless the par ties have r eac hed an impasse. Derrico v . Sheehan E merge ncy H

osp. , 844 F.2d 22, 26 ( 2d Cir. 1988). Her e, Cibao does not dispute that, in g ener al, ce asingpay ment of bene fits during
rene g otiation of an expired collec tive-bar g ainingag ree ment violates § 8(a) (5) of the NL RA. Nor does Cibao sug g est that it had rea ched a n impasse with the Union when it stopped making pay ments to the Washable Funds. Rathe r, Cibao attempts to rely on the ra re e x ception for “ec onomic business emerg encie s.” The N L RB has he ld that there is an e x ception to the g ener al bar a g ainst unilateral c hang es in the conditions of employ ment prior to neg otiations reac hing a n impasse under

“cir cumstance s which re quire implementation at the time the a ction is taken or a n economic busine ss emerg ency that require s prompt action.” RBE Elecs. of S.D., Inc. , 320 N. L .R. B . 8 0, 81 (1 99 5) ; se e als o Robert A. Gor don & Matthew W. Finkin, Basic Text on Labor Law: Unionizat ion and Coll ectiveBargaining 606 (2d ed. 2004) . But the N L RB has a lso noted, and we ag ree , that there is a “he avy burden” upon an employ er try ing to e stablish application of the e xce pti on , a

nd that th e “ B oa

rd ha s li mit e d it s d e fi nit ion of the se c on sid e ra

tio ns to extraordinary

events whic h are an unfor esee n occur renc e, havinga major e conomic ef fec t [requiring ] t he compa

ny to take immediate a ction. Absent a dire financ ial emer g ency , the B oard ha s h e ld t hat e c on omi c e ve nts su c h a s lo ss o f s ig nif ic ant a c c ounts or

c on tr a c ts, op e ra

tio n at a competitive disadvanta g e, or supply shortag es do not justify

unilatera l action.” RB

E E le cs. , 320 N. L .R. B . at 81 (i nte rn a l qu otatio n ma rk s a nd fo otn ote s o mitte d) ; se e als o D uff yToo l & Stamping, L.L .C. v. NLRB , 233 F.3d 995, 997 ( 7th Cir. 2000) (desc ribing the exception as8

requiringimmediate ac tion in order to “stave off disaster ”); Ange lic a H e alt hc ar e Se rv

s. Group, Inc. , 2 84 N. L .R. B . 8 44 , 8 53 (1 98 7) (l os s o f 1 4% of re ve nu e is n ot a

n e xig e nc y

); Trip leA F

ire Protection, Inc
. , 3 1 5 N. L
. R
. B. 4 0 9 , 4 1 4 -1 5 (1 9 9 4 ) ( “[ O] p er at i n g ata c o mp et i t i v e d i s ad v an t age does not nec essar ily

equate to an ec onomic emer g ency . . . .”). Cibao argues that there was a n economic e x ige ncy

in this case bec ause the auditor wa nted
acc ess to the company ’s tax and business recor ds to searc h for wa g e-a nd-hour violations, and Cib a o d id n ot b e lie ve that th e a ud ito r h a d p ow e r u

nd e r t he c oll e c tiv e -b arg a ini nga g re e me nt t o conduct a n audit for this purpose. Whether or not the auditor’ s actions wer e improper , and ther e is no evidence that they

wer e, cf. Cent. States, Se. &Sw. Areas Pension Fund v. Cent. Transp., Inc. , 4 7 2 U
. S
. 5 5 9 , 5 7 1 n . 1 2 ( 1 9 8 5 ) , i ti s h ar d t o s e e h o wth e y c o n s t i tu t e d ane c o n o m i c e x i g e n c y, espec ially g iven that Cibao continued to make benef it pay ments to the Funds for

four months afte r the supposedly

improper a

udit. Certainly , if Cibao had truly believed that the auditor’s actions posed a

n imminent threat to its busi ness, there wer e alter natives at its disposal to confront the iss ue oth e r t

ha n c e a sin gbe ne fi t pa

y me nts . G ive n th e “ he avy burd e n” on

the e mpl oye r t o demonstrate the application of the exigenc y exception, we see no rea son to disturb the NL RB’s finding that no such exige ncy exis ted her e. W ritten-Agreem ent Requirem ent of LMRA § 302( c) ( 5) ( B) Cibao argues that pay

ments to the National F unds would be illeg al under § 302 of the L MRA, 29 U.S.C. § 186. The statute makes it “unlawf ul for any employ er . . . to pa

y , lend, or deliver . . . a

ny money or other thingof value ” to any employ ee r epre sentative or la bor
or g anizatio n, un le ss c e rt a in e xce pti on s a pp ly . 2 9 U .S. C. § 18 6( a ). On e su c h e xce pti on , f ound in § 302(c) (5), a llows such pay ments to a trust fund for the benef it of employ ees if, a

mong othe r
re qu ir e me nts no t at is su e he re , “ the de ta ile d b a sis on wh ic h s uc h p ay

me nts are to b e ma de is9

specifie d in a written a g ree ment with the employ er.” 29 U.S.C. § 186(c)(5) (B ). As we have noted, the statute “ was princ ipally intended to protec t the collective ba rg ainingproce ss by eliminating the c orruptive influe nce of side pay ments by employ ers to union re prese ntatives.” Ha le yv . Pala tni k, 5 09 F .2 d 1 03 8, 10 40 (2 d Ci r. 19 75 ); see also S. Rep. No. 86-187, at 13 (1959) (noting that the purpose of § 302 is to make the L MRA “applica ble to all forms of e x tortion and bribery in labor-mana g ement re lations”). Today , we join seve ral of our sister circ uits in hol ding that an expired collec tivebarg ainingag ree ment satisfies the wr itten-ag ree ment require ment of § 302(c )(5) (B ). See, e .g. , Alas k a Trowe l Tra de

s P e ns ion Fu nd

v . Lo ps hire , 1 03 F .3 d 8 81 , 8 83 (9 th C ir . 1 99 6) ; Denv er Me tro . A ss’n o

f P lum bing, He ati ng

, Co oli ng Con tra c tor

s v . J ou rn e y ma n P lum be rs &

Ga s F itte rs Local No. 3 , 5 86 F .2 d 1 36 7, 13 73 (1 0th Cir . 1 97 8) ; se e als o Gariup v. Birchler Ceiling & Interior Co. , 777 F.2d 370, 375 ( 7th Cir. 1985) (findingthat the written a g ree ment need not be a signe d, unexpired collective- barg ainingag ree ment). This follows from both the re quirement that
an e mpl oye r m a int a in t

he sta tus qu o f oll ow inge xpir atio n o f a

c oll e c tiv e -b arg a ini nga g re e me nt, and that such c ontinued pay ments under a

n expired collective- barg ainingag ree ment do not implicate the purpose of § 302. Cibao argues that eve n if an e x pired c ollective-ba rg ainingag ree ment constitutes a written ag ree ment under § 302, the re w as no written a g ree ment betwee n Cibao and the National Funds. Rather, in Cibao’s view , its written ag ree ment was with only the Washable F unds, and it has no
su c h a g re e me nt w iththe Natio na l F un ds , th e Was ha ble F un ds ’ p os t- me rg e r s uc c e sso r. Th is argument need not longdetain us. Article s 18 and 19 of the c ollective-ba rg ainingag ree ment require d that Cibao make c ontributions to t he Washable F unds acc ordingto plans “as e stablished by the Trustee s” of the F unds. The F unds themselves we re g overne d by an Agree ment and10

De c laratio n o f T ru st gra

nti ngthe Tr

us te e s th e “ ri g ht .
. . to m od if y , c ha ng e , ame nd

or te rm inate to any extent any

or all of the te rms and provisions of the Plan.” T he De clar ation of Trust fur ther pr ov ide d th at “ [t]he de c isi on of the Tr us te e s in any matte r a dmi nis te ri ngthe a ff a ir s o f t his Tr us t shall be final a

nd binding on the F und, the Employ ees, a ny applicant or

claimant for

benef its, the Em plo y e r a nd the Un ion .” As su c h, un de r t he c oll e c tiv e -b arg a ini nga g re e me nt a nd the F un ds ’ g overningdocuments, the Tr ustees had the rig ht both to chang e the Washable Funds’ na me and to merg e them into the National F unds. The mer g er of the Washable F unds into the National Funds in no wa

y relieve d Cibao of its obligations to contribute to the National Funds whe n the collective- barg ainingag ree ment allowed the T rustees to e ffe ctuate the merg er. See D eVito v. Hempste ad China Shop , 38 F.3d 651, 654 ( 2d Cir. 1994) (findingthat the employ er r emained obligated to make c ontributions to a successor f und, afte r a me rg er, when the ter ms of the collective- barg ainingag ree ment and the de clar ation of trust authorized the trustee s to make the merg er de cision). Unlike Moglia v. Ge oghegan , 403 F.2d 110, 117- 18 (2d Cir. 1968), on which Cibao relies, in this case there was a valid, signe d collective- barg ainingag ree ment which g rante d the Funds’ trustees a

uthority to effe ct the mer g er. The ref ore, the collective- barg ainingag ree ment require d continued pay

ments to the National F unds after the merg er, a

nd those pay

ments were not prec luded by

§ 302 of the L MRA. C ONC L US I ON For the fore g oing r easons, we DENYCibao’s petition for re view and GR ANT the NL RB’s a

pplication for e nforc ement of its Marc h 6, 2007 order
.