1994 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

9-27-1994

Furniture Renters of Amer. v. NLRB

Precedential or Non-Precedential:

Docket 93-3336

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Recommended Citation

"Furniture Renters of Amer. v. NLRB" (1994). 1994 Decisions. Paper 143.

http://digitalcommons.law.villanova.edu/thirdcircuit_1994/143
 UNITED STATES COURT OF APPEALS 

 FOR THE THIRD CIRCUIT 

 

 Nos. 93-3336, 93-3395 

 

 FURNITURE RENTORS OF AMERICA, INC. 

 Petitioner/Cross-Respondent 

v. 

 NATIONAL LABOR RELATIONS BOARD, 

 Respondent/Cross-Petitioner 

 

 ON APPEAL FROM THE NATIONAL LABOR RELATIONS BOARD 

 (5--CA--20933, 21021, 21038) 

 

 Argued: February 28, 1994 

 Before: STAPLETON, and SCIRICA, Circuit Judges

 and SMITH, District Judge* 

 (Opinion Filed: September 27, 1994) 

Larry J. Rappoport, Esquire (Argued) 

Stevens & Lee 

Four Glenhardie Corporate Center 

P. O. Box 236 

Wayne, Pennsylvania l9087-0236 

 

 

 Attorney for Petitioner/Cross-Respondent 

David A. Fleischer, Senior Attorney (Argued) 

Charles P. Donnelly, Esquire 

Jerry M. Hunter, Esquire 

Yvonne T. Dixon, Esquire 

Nicholas E. Karatino, Esquire 

Aileen A. Armstrong, Esquire 

National Labor Relations Board 

Washington, D. C. 20570 

 Attorneys for Respondent/Cross-Petitioner 
* Honorable D. Brooks Smith, United States District Judge for 

the Western District of Pennsylvania, sitting by designation. 

 

 OPINION OF THE COURT 

 

SMITH, District J.

 Petitioner Furniture Rentors of America, Inc. ("FRA") 

appeals from a National Labor Relations Board ("NLRB" or "the 

Board") order holding that it violated Sections 8(a)(1) and (5) 

of the National Labor Relations Act, 29 U.S.C. §§ 158(a)(1) and 

(5) ("NLRA" or "the Act") by withdrawing recognition from its 

union without having reasonable grounds for doubting its majority 

status, and by failing to notify and bargain with the union 

before subcontracting out delivery services. Cross-petitioner 

NLRB seeks enforcement of its order. We will enforce the Board's 

order only in part. 

 I. Background

 Withdrawal of Recognition

 Furniture Rentors of America, Inc. ("FRA"), a Delaware 

corporation, is a regional renter of residential and office 

furniture in Virginia, Maryland, and Delaware. The company 

negotiated its initial collective bargaining agreement ("CBA") 

with International Brotherhood of Teamsters Union Local Nos. 639 

and 730 ("Union") on November 1, 1986. As drafted, the CBA was 
to expire on October 31, 1989; however, on October 21, 1987, a 

side-letter agreement was reached which increased wages and 

extended the CBA until December 31, 1989, and provided that the 

contract could be reopened "only to discuss wages." 

 In October 1988, FRA leased a warehouse in Jessup, 

Maryland, implementing its decision to move its center of 

operations from Alexandria, Virginia to a point between 

Baltimore, Maryland and Washington, D.C., more centrally located 

within its market. FRA continued to operate from its Alexandria 

warehouse until late 1989 because its lease there did not expire 

until the summer of 1990 and its Jessup facility was being 

renovated. Due to the longer commute from northern Virginia to 

Jessup, Maryland, FRA lost several Washington area employees and 

hired new ones from Baltimore, including Calvin Wilson, who was 

hired as a new warehouse manager. 

 FRA and the Union began negotiating their next CBA in 

the autumn of 1989. Petitioner contends that by that time, fewer 

of FRA's employees than ever before were Union members, as 

evidenced by dues check-off records. On October 6, 1989, a 

decertification petition was filed by Frederick Brown, one of the 

new employees who had been hired by warehouse manager Wilson. 

Prior to the filing of the petition, Brown had posted a notice in 

the Alexandria warehouse which asked employees to sign "for the 

Union" or "not for the Union." Only six employees signed "for 

the Union." There were also discussions between warehouse 

manager Wilson and other employees regarding their lack of 

interest in Union representation and discontent over having to 
pay Union dues and initiation fees. At a December 7, 1989 

bargaining session, FRA Vice-President James Senker ("Senker") 

questioned the Union's majority status. The Union 

representatives responded that they did enjoy majority support. 

On January 17, 1990, Senker sent a letter to the Union 

withdrawing recognition based on his doubt that the Union 

represented a majority of FRA employees. The Union failed to 

respond. A January 20, 1990 bargaining session was cancelled, 

and the parties did not meet again. 

 Decision to Subcontract Delivery Services

 Senker knew first-hand that FRA had experienced serious 

problems with employee theft and carelessness. In May and June 

of 1989, FRA investigated the theft of furniture by Union members 

at a loss to the company of $10,000. The investigation led to 

arrests and resignations of employees. Delivery service also was 

the cause of numerous customer complaints, and FRA experienced 

problems with furniture packing, delivery of damaged furniture, 

insurance claims and late deliveries. FRA delivery teams 

averaged three deliveries per day, compared to the industry 

standard of four or five deliveries per day. In August 1989, FRA 

fired three employees who raided a customer's refrigerator while 

relaxing in his apartment during what was supposed to be a 

routine delivery. 

 In mid-February 1990, Senker accepted a proposal by 

Sullivan Services, a contractor who provides trucking services, 

to share delivery services on a trial basis. For approximately 

one week, Sullivan Services made deliveries using a single crew 
and its own truck. Senker gave the Sullivan Services crew the 

hardest jobs, monitored their performance, spoke daily with 

Sullivan Services' President, Kent Sullivan, and visited job 

sites in order to talk with customers about the Sullivan Services 

crew's work. Senker did not retain Sullivan Services beyond that 

trial period. 

 On February 27, 1990, Senker received a tip that 

several FRA employees planned to steal furniture early the next 

morning. With the assistance of the Howard County (Maryland) 

Police, Senker apprehended a driver, a helper and a supervisor 

attempting to load furniture onto a delivery truck. The next 

day, without notifying the Union, Senker retained Sullivan 

Services to perform FRA's delivery work on an exclusive basis. 

FRA then terminated four drivers and three helpers, but continued 

to employ its warehousemen, several of whom were Union 

supporters. By using Sullivan Services to perform delivery 

services, FRA's delivery costs increased from $160 to $210 per 

day. 

 Union member Alvin Jones, Jr. and the Union filed 

charges against FRA on March 2, 1990 and March 12, 1990 

respectively. On March 28, 1991, the NLRB issued Complaints 

against FRA in 5--CA--20933 and 5--CA--21038. These Complaints, 

which were subsequently consolidated for hearing, alleged that 

FRA committed unfair labor practices when it posted a petition 

requesting that its employees indicate their union sympathies, 

unlawfully withdrew recognition from the Union, and subcontracted 
its delivery work to Sullivan Services without first notifying 

and bargaining with the Union. 

 An Administrative Law Judge ("ALJ") held a hearing from 

October 1-3, 1991. On May 13, 1992, the ALJ issued a decision 

that FRA had committed unfair labor practices in violation of 

Section 8(a)(1) and (5) of the NLRA when it interrogated 

employees about their union sympathies and withdrew recognition 

of the Union on January 17, 1990. The ALJ, however, relying upon 

the NLRB's decision in Dubuque Packing Company, Inc., 303 NLRB 

386 (1991), concluded that FRA's decision to subcontract its 

delivery work was not a mandatory subject of collective 

bargaining and that therefore FRA did not violate Section 8(a)(5) 

of the Act when it decided to subcontract without first 

bargaining with the Union. The ALJ's decision with respect to 

mandatory bargaining particularly hinged upon his finding that 

FRA's decision to subcontract delivery services "did not turn on 

labor costs in any way." App. 684 

 On May 28, 1993, the Board issued a Decision and Order 

reversing the third part of the ALJ's decision, holding that FRA 

violated Sections 8(a)(1) and (5) of the Act by failing to 

provide notice and to bargain with the Union concerning its 

decisions to subcontract delivery work and to lay off seven 

employees as a result of that decision. The Board also held that 

FRA violated Section 8(a)(1) through statements made by warehouse 

manager Wilson to new employee Alvin Jones, Jr. threatening to 

fire Wilson because of his association with the Union. FRA 
petitioned for review of the Board's order and the Board crosspetitioned for enforcement of its order. 

 II. Discussion

 Withdrawal of Recognition

 FRA argues that its proper withdrawal of recognition 

from the Union ended any duty to bargain over its decision to 

subcontract delivery services. Whether petitioner properly 

withdrew recognition from the Union turns on the factual question 

whether FRA had reasonable grounds for doubting the Union's 

continued majority status.1 

 FRA avers that its move from Alexandria, Virginia to 

Jessup, Maryland caused considerable employee turnover, and by 

January 17, 1990, the date Senker withdrew recognition, only six 

of 17 employees, all transferees, were members of the Union. No 

newly hired employee had executed a dues checkoff or expressed an 

interest in union representation. Therefore, FRA argues, the 

composition and attitude of its workforce had changed, supporting 

Senker's good faith doubt about continued majority status. 

Employee turnover alone, however, is not sufficient to establish 

good-faith doubt, NLRB v. Oil Capital Elec., Inc., 5 F.3d 459, 

462 (10th Cir. 1993), for without objective evidence of 

 

1 After one year beyond the date the NLRB certifies a union as 

the collective-bargaining representative of employees, the 

presumption of the union's continued majority status becomes 

rebuttable; the employer may withdraw recognition if it can show 

that the union has lost majority support or that it has a good 

faith, reasonable doubt of the union's continued majority status. 

NLRB v. Wallkill Valley Gen. Hosp., 866 F.2d 632, 636 (3d 

Cir.l989). 
dissatisfaction, "there is nothing to rebut the presumption that 

the [company's] newly hired employees supported the Union in the 

same ratio as the employees they replaced." Spillman Co. and 

Sheet Metal Workers' Int'l Assoc., Local Union No. 24, AFL-CIO, 

311 NLRB 18. See also NLRB v. W.A.D. Rentals Ltd., 919 F.2d 839, 

841-42 (2d Cir. 1990)(500 percent employee turnover did not 

overcome presumption of majority employee support for union where 

employer was found to be "stalling" to avoid bargaining with the 

union). Therefore, petitioner must adduce evidence of 

dissatisfaction with Union representation among its employees. 

 Petitioner's evidence of FRA employees' dissatisfaction 

with Union representation consists of the low number of employees 

who executed the dues checkoff and the petition signed by a 

majority of employees stating that they were "not for the Union." 

Instantly, only six of 17 or 20-262 employees had executed dues 

checkoffs at the time petitioner withdrew recognition. A high 

number of resignations or a low number of dues checkoff 

authorizations will not without more justify withdrawal of 

recognition, although they may be considered when assessing 

majority support for a union. Bickerstaff Clay Prods. Co. v. 

NLRB, 871 F.2d 980, 989 (11th Cir. 1989), cert. denied 493 U.S. 

924 (1989). As this court has said, "the issue is 'not how many 

employees belong to the union or paid dues but rather whether the 

 

2 Petitioner's brief is not consistent with respect to the 

number of employees working for FRA on January l7, l990. Compare

Petitioner's Brief at 7 (20-26 employees) with Petitioner's Brief 

at 36 (l7 employees). 
majority desired union representation for purposes of collective 

bargaining.'" NLRB v. Walkill Valley General Hosp., 866 F.2d at 

637 (quoting Retired Persons Pharmacy v. NLRB, 519 F.2d 486, 491 

(2d Cir. 1975)). As the ALJ noted, the fact that less than a 

majority of employees have dues checked off does not ipso facto

indicate opposition to union representation. See Colonna's 

Shipyard, 293 NLRB 136, 139 (1989). In order to overcome the 

presumption of majority union support, the employer must produce 

affirmative evidence of dissatisfaction sufficient to ground a 

good faith doubt of continued majority status. 

 Substantial evidence supports the Board's determination 

that FRA's petition was tainted because it was posted by FRA, 

albeit indirectly, rather than spontaneously by the employees 

themselves. An employer may only conduct polls to determine 

whether a union's majority status still exists if it "possesses 

substantial, objective evidence to establish that it reasonably 

doubts the union's majority status before conducting the poll." 

Hajoca Corp. v. NLRB, 872 F.2d 1169, 1173 (3d Cir. 1989)(emphasis 

added). An employer may not use its petition/poll as evidence of 

its good faith doubt, because in order not to engage in unfair 

labor practices, it must have had such doubt supported by 

independent evidence before posting the petition. Cf. NLRB v. 

Laverdiere's Enterprises, 933 F.2d 1045, 1051 (1st Cir. 

1991)(employee contact with employer regarding union 

representation lessens finding of taint). 

 Management Rights Clause
 The employer argues that the original CBA contained a 

broad management rights clause giving FRA the absolute right to 

subcontract work at any time until December 31, 1989, the date of 

contract expiration. Furthermore, FRA avers, when the CBA was 

reopened in October 1987, the parties to the contract agreed that 

renegotiations on December 31, 1989 would be limited to the 

discussion of wages only, and that all other contract terms were 

to continue beyond the expiration date. Therefore, petitioner 

concludes, FRA's contractual right to subcontract continued 

beyond December 31, 1989, the Union having waived its right to 

bargain over subcontracting. 

 We conclude that when the CBA was reopened in October 

1987, the Union did not waive its right to bargain after December 

3l, l989 over every contract term except wages. The 1987 

reopener language states in pertinent part that, "The contract 

shall ... remain in effect through December 31, 1989, but the 

parties will agree to meet to reopen the contract to discuss only 

wages." This language can most sensibly be read to mean that 

prior to the expiration of the contract on December 31, 1989, 

only wages could be changed, but when the contract expired, all 

terms were subject to bargaining. Although it is possible to 

derive FRA's construction from the reopener langugage, we decline 

to make the inference, for waivers of statutorily protected 

rights must be clearly and unmistakably articulated. 

Metropolitan Edison Co. v. NLRB, 460 U.S. 693, 708 (1983). 

Without such a clear waiver, the management rights clause does 
not survive the expiration of the CBA. Control Services, Inc., 

303 NLRB 481, 484 (1991), enforced 961 F.2d 1568 (1992). 

 Statutory Duty to Bargain

 Finally, FRA argues that the Board employed the wrong 

legal standard and thus erred when it determined that FRA's 

decision to subcontract its delivery work was a mandatory subject 

of bargaining. Sections 8(a)(5) and 8(d) of the Act, 29 U.S.C. 

§§ 158(a)(5) and 158(d), require employers to bargain in good 

faith with employee representatives about, inter alia, "wages, 

hours, and other terms and conditions of employement." Relying 

on its recent decision in Torrington Industries, 307 NLRB No. 129 

(1992), the Board held that FRA's decision to subcontract 

delivery work fell within the range of decisions that require 

bargaining. 

 Subcontracting may be a mandatory subject of collective 

bargaining under the Act, but it is not necessarily so. In 

Fibreboard Paper Prods. Corp. v. NLRB, 379 U.S. 203 (1964), the 

Court determined that an employer violated Section 8(a)(5) of the 

Act when it contracted out maintenance work in order to reduce 

labor costs without first bargaining with its maintenance 

workers' union. The Court noted that the employer subcontracted 

its maintenance work in order to reduce costs by "reducing the 

work force, decreasing fringe benefits, and eliminating overtime 

payments," and stressed that these factors were customarily 

regarded within the industry as "peculiarly suitable for 

resolution within the collective bargaining framework." Id. at 

213-14. 
 The Supreme Court further defined the requirements for 

mandatory bargaining over subcontracting when it held, in First 

National Maintenance Corp. v. NLRB, 452 U.S. 666 (1981), that an 

employer is not obligated to bargain with the union before 

closing a part of its business and discharging the employees who 

worked in that part of the operation. In First National, the 

Court identified three types of management decisions: (1) those 

with "only an indirect and attenuated impact on the employment 

relationship"; (2) those that "are almost exclusively 'an aspect 

of the relationship' between employer and employee," such as "the 

order of succession of layoffs and recalls ... [and] work rules"; 

and (3) those "that [have] a direct impact on employment ... but 

have as [their] focus only the economic profitability of" nonemployment-related concerns. Id. at 677. Because the First 

National employer's decision to terminate one part of its 

business affected employment but was motivated by considerations 

unrelated to the employment relationship, it fell into the third 

category of management decisions. Whether decisions within that 

category require mandatory collective bargaining, the Court 

reasoned, depends upon the extent to which "the subject proposed 

for discussion is amenable to resolution through the bargaining 

process." Id. at 678. Accordingly, bargaining over "management 

decisions that have a substantial impact on the continued 

availability of employment should be required only if the 

benefit, for labor-management relations and the collective 

bargaining-process, outweighs the burden placed on the conduct of 

the business." Id. at 679. 
 The First National balancing test was not conceptually 

novel, and the Court noted that the Fibreboard Court performed 

the same analysis "implicitly." Id. The Court in First 

National, reached the opposite result from Fibreboard because the 

employer's decision to close part of its business was not driven 

by labor costs. The Court concluded that because the union had 

no control over the factors motivating the company's decision to 

subcontract, collective bargaining would have been futile and was 

therefore not required. 

 In Otis Elevator Co., 269 NLRB 891 (1984), and Dubuque 

Packing Co., 303 NLRB 386 (1991), the Board followed the teaching 

of Fibreboard and First National by fashioning standards for 

mandatory bargaining that focused generally on the amenability of 

the disputed issue to resolution through the collective 

bargaining process, and specifically on the role of labor costs 

in the employer's decision. See Dubuque Packing Co., 303 NLRB at 

391; Otis Elevator Co., 269 NLRB at 892, 897 (Dennis, 

concurring). The Dubuque decision in particular contained a 

thoughtful discussion of the bargaining obligation imposed by the 

Act that accurately reflected the framework established by 

Fibreboard and First National, see United Food and Commercial 

Workers Int'l Union, Local No. 150-A v. NLRB, 1 F.3d 24, 32 (D.C. 

Cir. 1993)(NLRB's finding that the Dubuque test "accords with 

precedent is fully defensible"), but its holding was expressly 

limited to decisions to relocate unit work. Dubuque Packing Co., 

303 NLRB at 390 n.2. 
 In the matter sub judice, the ALJ applied the Dubuque

burden-shifting test,3 concluding that because labor costs did 

not prompt FRA to subcontract, its decision was not a subject of 

mandatory bargaining. App. 684-86. Within days after the ALJ 

issued his opinion, however, the Board issued its decision in 

Torrington Industries, 307 NLRB 809 (1992), which abandoned the 

flexible approach of Dubuque for a more rigid standard in 

subcontracting cases. When the ALJ's decision was appealed to 

the Board, therefore, the panel applied the more recent 

Torrington standard. 

 In Torrington, the employer unilaterally replaced two 

union truck drivers with non-bargaining unit drivers and 

independent contractor haulers. The Board rejected the 

employer's argument that its decision to replace the union 

truckers was entrepreneurial and did not turn on labor costs, 

holding that Dubuque's burden-shifting analysis is limited to 

relocation decisions and does not apply to "other types of 

management decisions that affect employees." Torrington, 307 

NLRB at 810. Finding that "all that is involved is the 

 

3 Under the test announced by the Board in Dubuque, the General 

Counsel must initially establish a prima facie case for mandatory 

bargaining by showing that the employer's decision involved a 

transfer of unit work unaccompanied by a basic change in the 

nature of its operation. Then, the burden of production shifts 

to the employer, who can rebut the prima facie case by showing 

that its decision involved a change in the direction of the 

business, or by showing "(l) that labor costs (direct and/or 

indirect) were not a factor in the decision or (2) that even if 

labor costs were a factor in the decision, the union could not 

have offered labor cost concessions that could have changed the 

employer's decision... ." Dubuque, 303 NLRB at 39l. 
substitution of one group of workers for another to perform the 

same work at the same plant under the ultimate control of the 

same employer," id. (quoting Fibreboard), the Board held that the 

employer had an obligation to bargain. In so doing, the Board 

established the following test for subcontracting cases: 

 [W]hen the record shows that essentially 

[Fibreboard] subcontracting is involved, 

there is no need to apply any further tests 

in order to determine whether the decision is 

subject to the statutory duty to bargain. 

The Supreme Court has already determined that 

it is.... 

Id. (citation omitted). The Torrington Board did not reject 

outright the employer's argument that Fibreboard could be 

distinguished because labor costs were not a factor in its 

decision; rather, it chose not to reach that issue, "because the 

[employer's] reasons had nothing to do with a change in the 

'scope and direction' of its business. Those reasons, thus, were 

not matters of core entrepreneurial concern and outside the scope 

of bargaining." Id. (citation omitted). Unwilling to consider 

the specific facts of the case, the Board simply determined that 

FRA had engaged in "Fibreboard subcontracting," triggering the 

mandatory duty to bargain. 

 Inflexibly applied, the holding in Torrington is at 

odds with the principles of Fibreboard and First National. Those 

cases discussed the statutory duty to bargain as a means of 

obtaining, when appropriate, the benefits presumed to attend the 

collective bargaining process, see Fibreboard, 379 U.S. at 213-14 

(bargaining over particular economies potentially derived from 
subcontracting deemed "peculiarly suitable for resolution within 

the collective bargaining framework"); First National, 452 U.S. 

at 681 (relevant question is "whether requiring bargaining over 

this sort of decision will advance the neutral purposes of the 

Act"), not as an end in itself. 

 The Board's decision in Torrington to limit the scope 

of Dubuque to relocations of unit work is essentially a policy 

choice "subject to limited judicial review." NLRB v. Local Union 

No. 103, Int'l Ass'n of Bridge, Structural & Ornamental Iron 

Workers, 434 U.S. 335, 350 (1978)(citations omitted). However, 

the Board's virtual per se rule that subcontracting decisions 

must be the subject of bargaining is fundamentally an 

interpretation and application of Supreme Court precedent, and 

while it must be upheld if reasonably defensible, we may not give 

it "rubber stamp" approval if it is "inconsistent with a 

statutory mandate or ... frustrate[s] the congressional policy 

underlying [the NLRA]." Bureau of Alcohol, Tobacco & Firearms v. 

FLRA, 464 U.S. 89, 97 (1983)(quoting NLRB v. Brown, 380 U.S. 278, 

292-92 (1965)). 

 Under the Torrington standard, if an employer 

subcontracts some work to nonunion workers without changing the 

scope and direction of its enterprise, and the nonunion workers 

perform essentially the same work as the bargaining unit workers 

did, the Board labels the employer's action "Fibreboard

subcontracting" and requires bargaining. But the Torrington

manner of examining the decision to subcontract only to see 

whether it is analogous to Fibreboard's general factual framework 
is simplistic and, as this case demonstrates, potentially hamhanded.4 The focus in determining whether a particular 

management decision requires bargaining under Section 8(a)(5) is 

not the employer's decision to subcontract, but whether 

"requiring bargaining over this sort of decision will advance the 

neutral purposes of the Act." First National, 452 U.S. at 681. 

In order to determine that, it is necessary to look behind the 

subcontracting decision itself to the reasons motivating the 

decision. If the employer's decision was prompted by factors 

that are within the union's control and therefore "suitable for 

resolution within the collective bargaining framework," 

Fibreboard, 379 U.S. at 214, then bargaining is mandatory. As 

the Board recognized in Dubuque, 303 NLRB at 392 n. 14, it is 

therefore imperative to "evaluate the factors which actually 

motivated the employer's" decision. 

 Fibreboard itself counsels against strict 

categorization according to the form of subcontracting. The 

 

4 Although conceptually simple, the Torrington approach is not 

well-fitted to the statutory duty to bargain, which, after all, 

is not simply a theoretical catchphrase, but implies real give 

and take negotiations. If during a bargaining session an 

employer were to broach the subject of contracting work out 

(whether or not in a manner similar to what the Board calls 

"Fibreboard subcontracting"), the negotiations would necessarily 

turn to the employer's reasons for wanting to contract the work 

out. The contracting out decision itself, regardless of what 

form it might take, is just a response to some underlying cost or 

other challenge that makes doing the work with bargaining unit 

employees relatively less attractive. Therefore, focusing on the 

form that the employer's decision takes (does it fit into the 

Fibreboard piegonhole?) is unhelpful, for the form of 

subcontracting bears little on the bargaining process encouraged 

by the Act. 
Fibreboard Court expressly noted that the employer's decision to 

subcontract turned on its desire to lower "the high cost of its 

maintenance operation," which, independent contractors had 

promised, could be reduced by eliminating employees and benefits. 

Fibreboard, 379 U.S. at 213-14. In determining whether a 

subcontracting case is legally similar to Fibreboard, it is 

important to consider not just the employer's decision to 

contract work out, and how that decision affects its operations, 

but whether, as in Fibreboard, the employer's decision was driven 

by labor costs or some other difficulty that can be overcome 

through collective bargaining. Those courts that have held an 

employer's decision to subcontract unit work was a mandatory 

subject of collective bargaining under Fibreboard have invariably 

made this finding. See e.g., Olivetti Office U.S.A., Inc. v. 

NLRB, 926 F.2d 181, 186 (2d Cir. 1991), cert. denied 112 S.Ct. 

168, 116 L.Ed.2d 132 (1991)(employer transferred work in order to 

"reduce manufacturing costs by $2.6 million, $2 million of which 

would be directly attributable to cheaper labor.... Obviously, 

labor costs were the driving force behind the Company's action"); 

NLRB v. Plymouth Stamping Div., Eltec Corp., 870 F.2d 1112, 1116 

(6th Cir. 1989), cert. denied 493 U.S. 891 (1989)(decision to 

subcontract motivated by failure to successfully negotiate 

economic concessions); W.W. Grainger, Inc. v. NLRB, 860 F.2d 244, 

248 (7th Cir. 1988)(decision to subcontract delivery services 

motivated by the desire to reduce the cost of "branch time," or 

time drivers' spent at depots rather than in truck, and thus was 

a "direct labor cost"); NLRB v. Westinghouse Broadcasting and 
Cable, 849 F.2d 15, 22 (1st Cir. 1988)(decision to subcontract 

prompted by a directive from employer's parent company to reduce 

its "body count" by eleven persons). 

 In this case, the ALJ found that, 

 From the time [FRA Vice-President] James 

Senker started with [petitioner] he noted 

that [petitioner] had a serious employee 

theft problem. Indeed two employees, Payton 

Finch and Terry Walls, were arrested in mid1989 for larceny from [petitioner]. In 

addition, service was, in Senker's opinion, 

horrible and Senker demonstrated part of the 

basis for this conclusion by producing 

correspondence from three customers, 

TravCorps, NV Property and North Park Ave, 

complaining about Respondent's services. In 

August 1989 three employees were fired for 

misconduct during a delivery, i.e., they 

"hung out" in the customer's residence and 

ate food which they took from the customer's 

refrigerator. Senker also observed that 

because of careless handling of furniture and 

improper padding of furniture by 

[petitioner's] delivery crew employees that 

too much of the furniture [petitioner] rented 

was being damaged. It was also Senker's 

opinion that [petitioner's] delivery crews 

were unreasonably slow in doing their job 

since they were making an average of three 

and one-half stops per day rather than four 

or five which was the industry standard. 

 The straw that broke the camel's back and 

motivated Senker to subcontract all the 

delivery work began in late February 1990 

when Senker received information from a 

confidential informant that some of his 

employees were planning to steal some 

furniture.... 

 The cost of delivery services by Sullivan 

Services was more expensive than the cost to 

[petitioner] of doing the delivery work with 

its own employees, i.e., $160 per day for one 

of [petitioner's] crews versus $210 per day 

for a Sullivan Services Crew.... 
 Labor costs were not a factor in the 

subcontracting decision. The decision was 

made because of [FRA Vice-President] Senker's 

dissatisfaction with the delivery crews, 

e.g., lower than expected productivity, 

unacceptable damage to furniture, complaints 

by customers, and thievery. 

App. 685-86. The Board purported to leave these findings 

unchanged, App. 691, n.1, but stated that because all of 

petitioner's stated reasons for subcontracting delivery services 

"involved employee conduct, an issue which would be of concern to 

the Union as well as to [petitioner] and an issue over which the 

Union was in a strong position to take action," App. 692, 

petitioner's decision to subcontract delivery services was 

subject to mandatory bargaining. The ALJ's phrase 

"lower than expected productivity," standing alone, rings of 

labor costs, a subject suitable for resolution through collective 

bargaining. However, the ALJ's decision read as a whole 

indicates that Senker's principal reason for turning to Sullivan 

Services was his exasperation over the irresponsibility and 

dishonesty of some of his delivery employees, not labor costs as 

traditionally understood. Petitioner argues that labor costs 

could not possibly have been the basis of its decision since it 

paid fifty dollars per day more to contract out its delivery 

services than it paid to employ its own delivery crews. The 

Board responds by characterizing even "employee work habits and 

conduct" as "labor costs in the broad sense of the term" because 

they "affect the employer's costs and thus the profitability of 

the business." NLRB Brief at 38-39. 
 Anything employees do, or do not do, that ultimately 

bears on their employers' economic condition may be designated a 

"labor cost" in some broad sense, but there is no reason to so 

expand the term beyond its ordinary meaning as used in Fibreboard

and First National, which contemplates subjects such as wages, 

fringe benefits, overtime payments, size of workforce and 

production goals. As the United States Court of Appeals for the 

Fourth Circuit recognized in Arrow Automotive Indus., Inc. v. 

NLRB, 853 F.2d 223 (4th Cir. 1988), employers may make business 

decisions based on general "economic reasons," which "are not 

reasons distinct and apart from a desire to decrease labor 

costs," but that does not mean that labor costs are somehow 

implicated by every employer's decision intended to improve the 

business's bottom line. Id. at 228. 

 Similarly, that an employer's decision is based on 

factors "involv[ing] employee conduct" does not necessarily imply 

that labor costs or other concerns amenable to resolution through 

collective bargaining are central to the decision. The factors 

that principally motivated FRA Vice-President Senker to contract 

out delivery services were, as found by the ALJ and as supported 

by the record, FRA's continuing problems with delivery workers' 

carelessness, misconduct, untrustworthiness and thievery. The 

Board suggests that "education," or the implementation of "an 

effective anti-theft program" would serve the same purpose as the 

wage and benefit concessions discussed in Fibreboard and First 

National. We do not read Fibreboard and First National as 

requiring employers to automatically bargain with employee 
representatives over the inviolability of their own property, 

without regard to the benefit likely to be obtained from that 

process. Nor are we able to perceive any likelihood of benefit 

to be derived from subjecting the problem of employee thievery to 

collective bargaining. 

 Our purpose in making these observations is not to 

substitute our judgment for that of the Board's on the possible 

benefits to be derived from collective bargaining in a situation 

like the one in this case. We intend only to convey our concern 

that the Board has not exercised the judgment that Fibreboard and 

First National require of it. We believe the Board needs to 

acknowledge that FRA's decision to subcontract its delivery work 

was primarily based on factors arguably not as amenable to 

collective bargaining as direct labor costs. The Board then 

needs to make a judgment about the likelihood and degree of 

benefit, if any, to be derived from collective bargaining in a 

situation of this kind and to weigh that benefit against the 

employer's considerable interest in taking prompt action. 

 III. Conclusion

 We will grant the Board's petition to enforce with 

respect to those provisions of its order designed to remedy the 

unfair labor practices related to FRA's withdrawal of 

recognition. We will deny its petition in all other respects. 

We will grant FRA's petition for review and remand for further 

proceedings on the charge that FRA violated sections 8(a)(1) and 

(5) of the Act by failing to provide notice and bargain with the 
Union concerning its decisions to subcontract its delivery work 

and lay off employees.