United States Court of Appeals

For the First Circuit

No. 00-1631

THE EDWARD S. QUIRK COMPANY, INC.,

d/b/a QUIRK TIRE,

Petitioner/Cross-Respondent,

v.

NATIONAL LABOR RELATIONS BOARD,

Respondent/Cross-Petitioner,

and

TEAMSTERS LOCAL UNION 25,

Intervenor.

ON PETITION FOR REVIEW AND CROSS-APPLICATION OF AN ORDER OF

THE NATIONAL LABOR RELATIONS BOARD

Before

 Boudin, Lynch and Lipez,

Circuit Judges.

Terence P. McCourt with whom Laurie J. Hurtt and Hanify &

King, P.C. were on brief for petitioner/cross-respondent.

Robert J. Englehart, National Labor Relations Board, with

whom Leonard R. Page, General Counsel, Aileen A. Armstrong,

Deputy Associate General Counsel, Howard E. Perlstein, Deputy

Assistant General Counsel, and Fred L. Cornnell, Supervisory

Attorney, were on brief for respondent/cross-petitioner. 

Joseph A. DeTraglia with whom Matthew E. Dwyer and Dwyer &

Jenkins, P.C. were on brief for intervenor.
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February 27, 2001

BOUDIN, Circuit Judge. On this appeal, the Edward S.

Quirk Company ("Quirk") petitions for review of an order of the

National Labor Relations Board (the "Board"). Quirk operates a

tire warehouse and service center in Watertown, Massachusetts.

In 1994, Quirk employed about 40 people, 15 to 20 of whom were

members of Local 25 of the Teamsters (the "union"). When the

existing contract expired in January 1994, the parties, with the

aid of a federal mediator, held bargaining sessions over the

next 18 months, but the union rejected Quirk's final offer for

a new contract on May 18, 1995.

On June 1, 1995, concluding that the parties were at

impasse, Quirk unilaterally implemented the health insurance and

wage proposals included in its final contract offer. The wage

plan at issue (there is no appeal as to wage proposals for

retail workers and the health insurance plan) provided that

Quirk's commercial employees would "be paid at a base rate of

not less than $8.90 an hour, however, the Company may continue

its current marketplace pay practices . . . ." During the

previous contract term, Quirk had increased wages above contract
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rates to stay competitive with other tire businesses in the

area.

Thereafter, Quirk and the union clashed on a number of

issues. Starting in August 1995, the Board's general counsel

filed several charges against Quirk, including claims that

Quirk had committed unfair labor practices by unilaterally

implementing its commercial wage plan (in June 1995) and by

discharging Kenneith Jones, who had been acting as the union's

shop steward (in March 1996). These claims (and the other

charges) were heard by an administrative law judge at a threeday hearing in December 1996.

On January 29, 1998, the ALJ found that Quirk had

committed a number of violations, two of which are pertinent to

this appeal. First, it found that Quirk's implementation of the

commercial wage plan violated section 8(a)(5) of the National

Labor Relations Act (the "Act"), 29 U.S.C. § 158(a)(5) (1994),

which makes it an unfair labor practice for an employer "to

refuse to bargain collectively with the representatives of his

employees." Second, Jones's discharge was found to be a

violation of section 8(a)(3) of the Act, id. § 158(a)(3), which

prohibits an employer from discriminating against an employee in

any "term or condition of employment to . . . discourage

membership in any labor organization."
1See 29 U.S.C. § 160(e); NLRB v. Beverly Enters.-Mass.,

Inc., 174 F.3d 13, 23 (1st Cir. 1999); Union Builders, Inc. v.

NLRB, 68 F.3d 520, 522 (1st Cir. 1995).

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The Board summarily affirmed the ALJ's decision on

these two issues as on most of the other charges. Edward S.

Quirk Co., 330 N.L.R.B. No. 137 (2000), available at 2000 WL

309115, at *1. Quirk's petition for review contests the Board's

action as to both the wage plan and the firing of Jones, but

only the first of these claims warrants much discussion. The

Board's orders are reviewable for mistakes of law, lack of

substantial evidence to support factual findings, and arbitrary

or capricious reasoning.1

We begin with the wage plan. Under the Act, an

employer is required to bargain collectively on a range of

issues, including wages, and it is ordinarily a violation of

this duty for the employer to make unilateral changes. Litton

Fin. Printing Div. v. NLRB, 501 U.S. 190, 198 (1991).

Nevertheless, where good-faith negotiations have led to an

impasse, an employer can unilaterally implement its pre-impasse

proposals, subject to qualifications. See American Fed'n of

Television & Radio Artists v. NLRB, 395 F.2d 622, 624 (D.C. Cir.

1968). The reason is that a union would otherwise be able to

freeze an employer into an expired contract through a

"unilateral veto" over adjustments. Colorado-Ute Elec. Ass'n v.
1The exception ultimately adopted by the Board and upheld by

the D.C. Circuit can be found in McClatchy Newspapers, Inc. v.

NLRB, 321 N.L.R.B. 1386, 1390-92 (1996) ("McClatchy II"),

enforced, 131 F.3d 1026 (D.C. Cir. 1997), cert. denied, 524 U.S.

937 (1998). An earlier approach by the Board was disallowed.

McClatchy Newspapers, 299 N.L.R.B. 1045, 1048 (1990) ("McClatchy

I"), enf. denied, 964 F.2d 1153, 1154 (D.C. Cir. 1992).

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NLRB, 939 F.2d 1392, 1404 (10th Cir. 1991), cert. denied, 504

U.S. 955 (1992).

Among the qualifications on this "right" of employers

is the so-called McClatchy exception.1 In that case, the D.C.

Circuit said that the Board could, even in the face of an

impasse, refuse to allow the employer to adopt a new wage plan

that effectively gave the employer carte blanche to pay almost

anything it liked and to change wage rates thereafter at will.

The Board said that an employer may not unilaterally implement

wage proposals "that confer on an employer broad discretionary

powers that necessarily entail recurring unilateral decisions

regarding changes in the employees' rates of pay." McClatchy

II, 321 N.L.R.B. at 1388.

The reasons for this limitation, on the part of both

the Board and the D.C. Circuit, are highly pragmatic. The Board

thinks that allowing a succession of unilateral changes by the

employer, as opposed to an initial change, would make a union

seem impotent to its members over time and further undermine the
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union's bargaining ability by creating uncertainty about

prevailing terms.

By contrast, permitting one set of unilateral changes per

impasse lets the employer make an initial adjustment, but forces

it to bargain again with the union if it wishes to make further

adjustments down the road. See McClatchy II, 321 N.L.R.B. at

1391; see also Detroit Typographical Union No. 18 v. NLRB, 216

F.3d 109, 117 (D.C. Cir. 2000).

In this case, the Board agreed that an impasse had been

reached in May 1995 when Quirk implemented its wage plan, but it

viewed the wage plan as one that retained too much employer

discretion to meet the McClatchy test. Quirk, 2000 WL 309115,

at *1 & n.2. In response, Quirk first says that the Board is

not entitled to impose the McClatchy qualification at all and

that McClatchy is contrary to Supreme Court precedent; and

second, it argues that even if McClatchy is sound, the proposal

Quirk actually implemented is not so discretionary as to violate

McClatchy and the Board was arbitrary and capricious in its

contrary determination.

Quirk has not properly preserved the broader of the two

objections. It did not squarely raise this broader claim before

the Board, which means that it forfeited the objection unless

adequately excused, see 29 U.S.C. § 160(e); Woelke & Romero
2There is equally little merit to Quirk's contention that

its statutory objection is a mere variation of an argument it

made to the Board. See Joseph T. Ryerson & Son, Inc. v. NLRB,

216 F.3d 1146, 1151 (D.C. Cir. 2000).

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Framing, Inc. v. NLRB, 456 U.S. 645, 665 (1982). Quirk's claim

that it did raise the issue with the Board is refuted by

examining the brief it filed with the Board; and its alternative

position--that the Board would have adhered to McClatchy anyway-

-is an excuse that has been roundly rejected by the Supreme

Court, United States v. L.A. Tucker Truck Lines, Inc., 344 U.S.

33, 37 (1952); see also Sousa v. INS, 226 F.3d 28, 32 (1st Cir.

2000).2

Nevertheless, Quirk's attack on McClatchy is

unimpressive. Nothing in the Act explicitly gives the employer

the right to impose its last offer unilaterally at impasse.

Arguably some inferences can be drawn from the statute's concept

of what collective bargaining is about and the limits of Board

power; but the "right" largely reflects a judgment by the Board

and courts as to workable balance rather than anything very

specific in the Act. See Laborer Health & Welfare Trust Fund v.

Advanced Lightweight Concrete Co., 484 U.S. 539, 543-44 n.5

(1988); McClatchy II, 131 F.3d at 1032 n.4.

Yes, the courts have said that the Board should promote

bargaining and is not entitled to impose on the parties its own
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substantive judgment as to terms. NLRB v. American Nat'l Ins.

Co., 343 U.S. 395, 404 (1952); cf. 29 U.S.C. § 158(d). But

McClatchy is designed to promote bargaining by requiring

management to return to the table at some later stage. Employer

discretion in setting wages is fine if the parties agree: it is

the unilateral use of such a plan to impair further bargaining

that concerns the Board. McClatchy has been upheld by one

circuit, McClatchy II, 131 F.3d at 1034-35, endorsed by another,

Retlaw Broad. Co. v. NLRB, 172 F.3d 660, 668 (9th Cir. 1999),

and rejected by none.

Quirk's claim that an employer has an unqualified right

to make such unilateral changes rests on out-of-context

quotations from Supreme Court decisions. Neither of the two

cases cited, American Nat'l Ins. Co., 343 U.S. at 404; Laborers

Health & Welfare Trust Fund, 484 U.S. at 543-44 & n.5, rejected

the Board's authority to impose reasonable restrictions on an

employer's right to make unilateral changes in the face of

impasse. The Supreme Court itself has (in a different context)

approved at least one limitation on unilateral changes after

impasse, see Charles D. Bonanno Linen Serv., Inc. v. NLRB, 454

U.S. 404, 418-19 (1982) (no unilateral withdrawal from multiemployer bargaining).
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Whether McClatchy applies in this case is a more

troubling question. The commercial wage plan adopted by Quirk

did not on its face reserve full discretion to Quirk to change

pay rates. Quirk proposed to continue its "current marketplace

pay practices" while promising employees that they would never

be paid less than $8.90 per hour. It is not clear whether the

Board is concerned with the "current marketplace pay" standard,

or the $8.90 option, or something else.

The Board may think that the phrase "marketplace pay"

is too vague and effectively reserves discretion to management

to change wage rates at will, so long as they remain greater

than $8.90. But if a contract for a commodity provided that a

price would be "the current market price" for the good, this

might well be a figure precise enough for a court or arbitrator

to enforce. See Coca-Cola Bottling Co. v. Coca-Cola Co., 988

F.2d 386, 412-13 (3d Cir.), cert. denied, 510 U.S. 908 (1993);

cf. Elkouri & Elkouri, How Arbitration Works, 1106-08 (Volz &

Goggin eds., 5th ed. 1997). And, as to keeping the union

abreast, a Teamsters local is likely to know very well what wage

rates in a community are for the job or jobs in question.

Alternatively, the Board may have been concerned that

even if marketplace pay was a sufficiently definite standard--or

could be made so through the arbitration and grievance
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procedure--Quirk was reserving too much discretion to itself by

providing that it could choose between marketplace pay and $8.90

per hour. One would think that providing a floor would be a

clear-cut benefit to employees and that in practice Quirk could

hardly pay less than the marketplace wage. In all events, if

the "may" is the Board's concern, Quirk is entitled to know this

(it could eliminate the floor next time) and the reviewing court

is entitled to know why the floor is excessive discretion.

The briefs filed by the Board and the union suggest yet

other concerns. One is that the use of marketplace pay

standards, even if the standards are precise, would provide

disparate pay for workers who would normally be grouped in

categories under a negotiated contract; another is that Quirk's

proposal might somehow be read to reserve to it a third option--

neither marketplace pay nor a floor but an unrestricted right to

pay whatever Quirk desired. If these were the concerns, they

are not spelled out by the Board, and it is the Board's

rationale that matters. See SEC v. Chenery Corp., 318 U.S. 80,

87-88 (1943).

The Board did not explain its reasoning but simply

adopted the ALJ's position. See Quirk, 2000 WL 309115, at *1.

The ALJ, in turn, summarily applied the McClatchy label to

Quirk's wage plan, saying that the Board in McClatchy condemned
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wage proposals "like the one here," adding that the new plan

allowed changes "without any established criteria." Id. at *19-

*20. But in McClatchy, the Board condemned a wage plan that

allowed wages to be determined in a way that "kept most raises

in McClatchy's complete discretion," McClatchy II, 131 F.3d at

1028, and the Quirk plan appears to contain more in the way of

standards.

Quirk says that its freedom of choice under the wage

plan is constrained because management's determinations remain

subject to binding grievance and arbitration provisions. If

this means that the marketplace wage for the job could be

determined by a neutral third party, this would appear to be a

significant limit on Quirk's discretion--one that was not

present in McClatchy itself. See McClatchy I, 299 N.L.R.B. at

1048; see also Colorado-Ute, 939 F.2d at 1395. The ALJ and the

Board are silent on this subject. 

Quirk also contends that the Board now mechanically

invokes the McClatchy exception without regard to the facts.

Consonantly, the D.C. Circuit not long ago criticized the Board

for "simply brandish[ing] McClatchy, without any real

explanation . . . ." Detroit Typographical, 216 F.3d at 118.

The Board counters that the same court recently upheld the

Board's application of McClatchy in Anderson Enterprises, 329
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N.L.R.B. No. 71 (1999), available at 1999 WL 883896, at *29-*33.

But the employer there claimed an almost unlimited authority to

vary wage rates and, by contrast to this case, the Board fully

discussed the proposal.

McClatchy is based on employer discretion and

discretion is a matter of degree, implicating policy judgments

informed by Board expertise. However, Quirk's plan is at least

narrower than that in McClatchy, and the Board owes the employer

and a reviewing court something more of a reasoned explanation

of where it draws the line and why the line has been crossed in

this instance. See Motor Vehicle Mfrs. Ass'n v. State Farm Mut.

Auto. Ins. Co., 463 U.S. 29, 43 (1983); Detroit Typographical,

216 F.3d at 118. This would also give guidance to other

employers facing similar problems in the future.

The other claim of error by Quirk is directed to the

Board's ruling that Jones was fired because of his union

activity. In concluding that this was so, the ALJ relied on

evidence of anti- union activities by Quirk, Jones's union

responsibilities, direct evidence of hostility to Jones because

of his union activities, and the thinness of Quirk's avowed

explanation for discharging Jones, namely, that his actions

showed that he had decided to quit. Quirk, 2000 WL 309115, at

*20-*31. Jones, whom the ALJ credited, said that he had been
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told to go home and then was formally fired two days later. Id.

at *31.

The Board's findings were amply supported by

substantial evidence, and the inference that Quirk fired Jones

because of his union activities was legitimate. Quirk's claim

on appeal is that the firing was done by a new supervisor, one

David Bradley, who allegedly did not know of Jones's union

activities. But Bradley consulted with Peter Quirk before

telling Jones to go home and before sending him a termination

letter, and the final call to Jones asking him to turn in his

keys and uniforms was delivered by another manager. Under such

circumstances, the Board was not required to believe Bradley's

testimony that he alone made the decision.

For the reasons stated, the Board's order is vacated

insofar as it pertains to the commercial wage plan and remanded

for further proceedings consistent with this opinion; and the

order is enforced so far as it concerns Jones's termination.

Each party shall bear its own costs.

It is so ordered.